cogito ergo teneo; an intellectual property blawg

112807 IP News

2007-12-04T16:10:00.001-05:00

Oh, just had to comment on this one:

• SCOTUS has passed on taking up the Perfect 10 v. CCBill case. Story on Mashable, but the deliberations and breaking of the news to the law clerks may have gone a lot like this little bit presented by MZOnline.

Copyright Law: Viewfinder 060507

2007-11-28T12:21:00.001-05:00

Sarl Louis Fraud v. Viewfinder, 2nd U.S. Circuit Court of Appeals, No. 05-5927-cv (June 5, 2007):

Issue:
Viewfinder operates a site, "FirstView," that offers photographs from various national and international fashion shows. For old fashion shows, the viewing is free. For a current subscription to the site, it costs just shy of a thousand dollars a year. The company fashions (no pun intended) itself as an online fashion magazine of sorts. French fashion companies caught wind of the site and filed suit in the French courts. the French court system found that the pictures taken of the various designers fashions (as displayed at open-air fashion shows) were unauthorized, and the court entered judgment for the designers accordingly. The designers sought enforcement in the United States, and Viewfinder made an argument to the U.S. District Court for the Southern District of New York that it's First Amendment right of freedom of press was being stepped on by the French. The court, in a single sentence, agreed that the use of the pictures by an online magazine was obviously fair use. As such, the decision of the French court was repugnant to American law and must therefore be refused enforcement. The French designers appealed.

Pertinent issue of Copyright Law:
1) Does fair use trump the foreign intellectual property judgment in this case?

Conclusion:
To be continued, evidently. The court found that the U.S. judge dealt with the issue of fair use too cursorily to have made the proper determination. Issues such as how much of the dress designs were revealed by the posted photography of Viewfinder on FirstView and what relief or protections the French government could offer Viewfinder were unanswered by the record. The decision of the district court to not enforce the judgment was vacated pending further deliberations on the fair use angle.

Copyright Law: Loretta Lynn 060607

2007-11-28T12:00:00.001-05:00

Loretta Lynn v. Sure-Fire Music Company, 6th U.S. Circuit Court of Appeals, No. 06-5358 (June 6, 2007):

Issue:
The short of it is Loretta Lynn and Sure Fire were battling over copy rights to several songs penned by Loretta Lynn. Loretta Lynn brought six of her claims under state law. Sure Fire protested under the equivalency rule.

Pertinent issue of Copyright Law:
1) Does federal copyright law automatically preempt any state claims over penned lyrics?

Conclusion:
No.

"Lynn carefully pleaded her first cause of action to allege only ownership claims based exclusively on the interpretation of the 1966 written amended agreement entered by the parties. She has not asserted an infringement claim or any other theory equivalent to a right exclusive to the Copyright Act. ... A claim solely to determine ownership of copyrights is not among the exclusive rights conferred by § 106 of the Copyright Act and, ordinarily, is a matter of state law."

"Lynn's second and third claims are concerned with dominion over tangible personal property ... and they fall outside the scope of the Copyright Act."

"Lynn's fourth and fifth claims seek the recovery of money for mixed tort and breach of contract claims and not for damages related to the loss of any rights conferred by the Copyright Act. Stated differently, to prevail on her fourth and fifth causes of action, Lynn must prove the formation and breach of an enforceable written contract which she would not be obligated to prove if these claims were merely for copyright infringement under § 106. They are not "equivalent" to the exclusive rights conferred by § 106. Therefore, we hold that these claims are not preempted."

Lynn's sixth claim requesting an accounting likewise does not assert any of the exclusive rights protected by the Copyright Act, but asks only for the familiar common law equitable relief of a [*12] court-ordered accounting; in this instance, of earned foreign royalties. A request for an accounting of amounts at issue in a common law breach of contract case is uniquely a state law claim and it is neither a right nor a remedy conferred by the Copyright Act. Therefore, Lynn's sixth claim is not preempted by the Act.

112807 IP News

2007-11-28T09:37:00.001-05:00

A brief break between briefs:

• Knievel and Kanye have worked out a settlement about that whole jumping the canyon misunderstanding. -- Yahoo! News
• Tehranian speaks of Copyright Armageddon. The entire article takes a Flying Spaghetti Monster approach to the current wisdom of copyright law. It's a great read altogether, but this part about a Captain Caveman tattoo particularly tickled me: "Sporting the tattoo, John has become the infringing work. At best, therefore, he will have to undergo court-mandated laser tattoo removal. At worst, he faces imminent 'destruction.'" A worthy read at -- TurnerGreen.com
• Canada wants a DMCA of its own? Oh, Canada!!?? -- The Globe and Mail
• University research for big business is the hot item these days, but Scott Jaschik thinks that universities should give up on retaining the resulting IP. -- Inside Higher Ed
• Turns out the public does know the difference between often gross and unwanted email that everyone regrets experiencing and the mass-produced-and-processed-mixed-meat-food-product of the same name. -- CNNMoney
• Pharmaceutical companies and Sweden may not be happy, but the WHO and Doctors Without Borders are reporting progress in convincing countries to start thinking about a treaty to address the accessibility of developing medical research -- EPHA
• SCOTUS has refused to address a circuit court decision finding that M2 Software was not entitled to damages from M2, the MTV second channel owned by Viacom, since the infringement was not shown to be intentional. -- The Associated Press via the Houston Chronicle

Trademark Law: F.A.R. Food 053107

2007-11-12T17:03:00.001-05:00

F.A.R. Food v. R. Fresh, 7th U.S. Circuit Court of Appeals, No. 06 MA 149 (May 30, 2007):

The Rulli Brothers created a grocery food store 80 years ago. The Rulli family sold the Rulli Bros. chain several decades ago. Shortly after selling the chain, the family got into selling deli and produce in local flea markets in the same area. Nowadays, Rulli Bros. spends almost $275k/yr. advertising locally for its grocery store. Everyone in the area seems to call the store "Rulli's," and the name Rulli's is known throughout the Youngstown area as the grocery store chain. In the early 2000s, the Rulli family started expanding their deli and proiduce business into a more formal affair. They came up with signs, shopping bags for a new location, and the marks used were very reminiscent of Rulli Bros. Rulli Bros. took the Rullis to court. The court found for Rulli Bros., and the Rullis appealed citing seven errors.

Pertinent issues of trademark law:
1) Does the Rulli's informal use of the Rulli name in commerce for years during Rulli Bros. operation eliminate Rulli Bros. claim?
2) Does the Rulli name have secondary meaning, even though it is a surname?
3) Does a Youngstown, Ohio, only brand constitute interstate commerce?

Conclusion:
No and yes, and yes. Since the operation of the deli at the flea markets used no signs or stylized bags or any identifying marks for years, the Rullis could not claim constant use. Even though the Rulli name is a surname, Rulli Bros. spent so much on advertising the name and has been such a regular part of the lives of the local populace for 80 years that it indeed had secondary meaning, and the court could prevent the Rullis from using that name in conjunction with the sales of groceries. Last, even though the effect on interstate commerce may be very, very small, the court found that the Lanham Act through the Commerce Clause still had jurisdiction over the claims at hand.

Copyright Law: Welles 053007

2007-11-12T16:17:00.000-05:00

Welles v. Turner Entertainment Company, 9th U.S. Circuit Court of Appeals, No. 05-55742 (May 30, 2007):

Issue:
When Orson Welles (OW) signed on for "Citizen Kane," (CK) he actually signed on for a threefer of movies. When the movies, including CK, flopped, OW signed an exit agreement that essentially cancelled the first contract that RKO signed with Mercury and OW. According to those agreements, OW agreed to take $30,000 and 20 percent of $0 revenue as his pay for the movies. Decades later, Turner, the current owner of RKO's rights, wishes to release CK to home video. Beatrice Welles, OW's daughter, opposes the distribution on the grounds that she owns the copyright and home video rights. Her declaratory judgment action against Turner ended in a summary judgment for Turner. She appealed.

Pertinent issues of copyright law:
1) How does a court decide who owns the distribution rights to copies in a media that hadn't even been contemplated or even invented at the time of signing?
2) Who owns the copyright for works created pursuant to a now canceled contract?

Conclusion:
The court found that without further review of extrinsic evidence to the initial agreement, it would be impossible for it to determine the projected intention of the parties had they known that home videos would be invented. As such, the court found that this inquiry required remand. As the initial contract put the ownership of all positives or negatives of the film into the hands of RKO, then the cancellation of the initial contract had the effect of terminating, not rescinding, the initial contract. California law, which is the law of the state in which the contract was governed, interprets "rescind" as entirely different from revocation, termination, and cancellation. Only the word rescind, under California law, implies a retroactive removal from existence. Since the contract did not use that word to cancel the contract, the copyright interest remained in RKO's, and now Turner's, exclusive possession.

Copyright and Trademark Law: Perfect 10 v. CCBill 053107

2007-11-12T14:01:00.000-05:00

Perfect 10 v. CCBill, 9th U.S. Circuit Court of Appeals, Nos. 04-57143/04-57207 (May 31, 2007):

Perfect 10 became aware of an ISP that featured such sites as illegal.net and that featured unlicensed copies of Perfect 10's copyrighted pictures on such sites. Perfect 10 sued this company, CWIE, and its related company, CCBill (collectively, the ISP). The ISP claimed safe harbor under the safeharbor provisions of the DMCA, and the lower court agreed -- granting summary judgment for the ISP. Perfect 10 appealed the grant of summary judgment.

Pertinent issues of copyright law:
1) Can one disqualify an ISP from safeharbor if that ISP has been notified of the infringing behavior via multiple notices that collectively would meet the requirements for notification according to Section 512 of the DMCA?
2) What constitutes reasonable implementation?
3) What constitutes sufficient notice of infringing activity to an ISP under the DMCA?
4) Can sufficient notice to third parties constitute a red flag under the DMCA?
5) Is website access a standard technical measure under the DMCA?
6) Can a web link be, in itself, infringing?

Pertinent issue of trademark law:
1) To what degree are the CDA's safeharbors applicable to intellectual property claims?

Conclusion:
The appeals court found that for the ISP to qualify for safeharbor, it must first establish that it reasonably implemented a policy to keep infringers in check. While Perfect 10 argued that the ISP did not do this, the evidence that the lower court saw and with which the appeals court agreed demonstrated that the ISP did indeed keep track of infringers in a log, despite what Perfect 10 claimed. While there were some blanks in the log where information should have been, it was beyond doubt that the logs recorded most webmasters' information. Also, in contrast to past cases where reasonable implementation was not found, there were no efforts by the ISP to prevent reasonable implementation of its policy.

Perfect 10 argued that the implementation was not reasonable, though, as the ISP allowed for flagrant and continued violations despite notice. The court took issue with the notice provided as the DMCA sets out very specifically that the steps laid out for notice therein must be rigidly followed. Perfect 10 argued that it complied with the notice provisions in a piecemeal fashion, having met certain steps in certain notices and other steps in other notices. The court said that forcing ISPs to cobble together on their own whether or not a copyright holder has provided adequate notice of an infringer would be unduly burdensome. Each notice, taken individually, was insufficient under the DMCA, so Perfect 10 did not provide notice sufficient to disqualify the ISP from safeharbor.

To this, Perfect 10 argued that even if it did not provide sufficient notice of infringer activity, other copyright holders had provided sufficient notice to the ISP, and the infringing activity nonetheless continued unfettered. The court found that the record of the ISP in addressing infringing activity of which it has been properly notified by copyright holders that were not a party in this case was relevant to the inquiry as to whether the policy had been reasonably implemented by the ISP. This was a factor that would require further review.

Perfect 10 argued that claims by its client websites that they dealt in stolen or illegal goods -- or that disclaimed liability for what was posted -- were red flags. The court found that such descriptive terms may only have been used to increase the salacious appeal of legally possessed goods or services. The court not only noted that the ISP may not even know about the disclaimer mentioned, but that the disclaimer clearly asserted that the site had a right to post the materials but otherwise disclaimed liability for what was posted. Thus, even with awareness of such disclaimers, the ISP would not have known of the legitimacy of the site's content without unduly burdening itself into a premature investigation before proper notice. The court similarly dismissed any awareness the ISP may have had about alleged password hacking sites that it hosted. Without trying the products, how could the ISP have verified the claims?

Perfect 10 also argued that proper notice by third parties were a red flag for infringing activity in this case. The court found that this would be correct, but it required further proceedings to determine if such red flags properly existed.

Perfect 10 next argued that the ISP unfairly prevented Perfect 10 from utilizing the standard technical measure of accessing sites by requiring a subscription to enter such sites. The court was unsure if access was a standard technical measure under the law, so it remanded that issue for further review and proceedings. If it is a standard technical measure, then whether this right to access was violated hinged on a factual matter. Perfect 10 that it was denied access to the sites because the ISP was trying to hide its wrongdoing, but the ISP assured the court that had Perfect 10 not reversed the charges on its subscription, then Perfect 10 would have been allowed to enjoy the benefits of such subscription. The court said that if Perfect 10 was trying to force the ISP to pay for the charges connected to Perfect 10's own duty of vigilance, then that may be an undue burden to the ISP.

Perfect 10 argued that the billing arm of the ISP was liable for copyright infringement for providing links in the billing statements that provided the billed person a means to click on such links to travel to the infringing sites. The court found that since such links were not themselves infringing, the district court clearly erred in agreeing with Perfect 10 and denying the ISP protection under the applicable safeharbor for such transmissions. However, because the billing arm of the ISP's methods for collecting payment were unclear, the court remanded the case for further proceedings to determine if the billing arm was indeed a service provider for the purposes of the statute.

Further, said the court, Perfect 10 was making claims of vicarious liability against the ISP without ever showing that the ISP directly benefited from the infringing behavior. There was no genuine issue of material fact sufficient to maintain the claim.

Based on the findings from the proceedings that were ordered above, the court found that the ISP may be eligible for safeharbor under the DMCA. Further, since the court chose to interpret the Communications Decency Act's (CDA's) references to intellectual property as a reference to federal intellectual property, the court found that the ISP may be eligible for safeharbor under the CDA for state claims relating to federal intellectual property.

The court also addressed the issue of hornybees.com. Evidently, there was some evidence that the site -- one which triably may be posting unauthorized copies of Perfect 10's copyrighted works -- is owned by the ISP. Because the lower court did not reach this analysis, the court sent the matter back to the lower court for further proceedings.

As far as attorneys' fees went, the court found that Perfect 10's claims were not frivolous or otherwise inappropriate, so the lower court did not err in not awarding the ISP attorneys' fees.

Since reasonable implementation was a threshold inquiry, the court first remanded that issue. Pending the outcome of that issue, the other DMCA issues in need of review would also come under scrutiny. The court remanded the hornybees.com issue for further deliberations on its relationship to the ISP, and the ISP's potential liability for the site.

As the lower court had found that CDA immunity was available for all state claims against the ISP for unfair competition, false advertising, and the right of publicity, the court reversed the publicity judgment but affirmed the court's decision with regard to false advertising and unfair competition (since those two would qualify as federal intellectual property).

Trademark Law: Abercrombie & Fitch 052207

2007-11-12T09:46:00.001-05:00

Abercrombie & Fitch v. Moose Creek, 9th U.S. Circuit Court of Appeals, No. 06-56774 (May 22, 2007):

Issue:
Once upon a time, Moose Creek (MC) sued Abercrombie & Fitch (AF) about AF's use of moose logos. In this litigation, AF argued that the field of moose-themed marks was crowded, the companies had different marketing channels, and the professional buyers at issue in the litigation exercise a great deal of care in their selections. MC settled with AF, agreeing to greatly restrict its use of moose-indicia. Shortly thereafter, AF learned that MC was marketing its brand with moose-image marks. Now, AF sued MC. The court liberally applied estoppel against many of AF's argued Sleekcraft factors. Because of arguments in the prior litigation, the court estopped AF from arguing that the field was not crowded, that the channels used by MC had expanded to include AF's channels, and that the consumers don't exercise a great deal of caution. Further, the court would not consider post-purchaser confusion as an argument. Finally, the court found that the two marks were sufficiently dissimilar, and it denied AF a preliminary injunction against MC. AF appealed from the interlocutory order.

Pertinent issues of trademark law:
1) Should the judge automatically have estopped AF from arguing differently on the Sleekcraft factors than it argued in the recent litigation?
2) Since the issue of post-purchase confusion was not brought up in the prior litigation, was it proper for the judge to estop discussion of the issue in the current litigation?
3) How dissimilar can two moose silhouettes be?

Conclusion:
The two litigations had different demographics at their focus and took place at different times. Since the issue in the current litigation was end-purchasers, not professional purchasers, the court should have allowed AF to argue that the degree of caution exercised by end-users was not the same as the prior litigation and that MC's sales channels over the last few years have evolved to include AF's channels. Further, arguments on post-purchase confusion should have, thus, been allowed, since the court had framed its understanding of post-purchase confusion in terms of purchasers and not ultimate wearers. Indeed, said the appeals court, even the marks at play are different in this litigation than the last; in the last litigation, all moose-themed marks was a crowded field, but in this litigation the issue is only moose-image marks. (Silhouettes, in particular.) The scope of the field was far reduced. Last, the appeals court found that the lower court had compared the similarity of the two marks by comparing one mark as it was in one kind of use (embroidered), and the other as it appeared in another (catalog). This, said the court, was improper, as the two marks were very similar when compared on even terms. Both were left-facing, realistic silhouettes of moose used as the unaccompanied and single identifying mark on apparel. While the appeals court was unwilling to rule that the preliminary injunction should have been granted, it was willing to vacate the denial of such and send the case back for further proceedings.

Trademark Law: Bayer 052407

2007-11-11T16:28:00.000-05:00

In Re Bayer Aktiengesellschaft, Federal U.S. Circuit Court of Appeals, No. 2006-1279 (May 24, 2007):

Issue:
Bayer, a maker of aspirin-based pain relievers, wanted to register the word, "Aspirina," as a trademark. The examining attorney refused the trademark on the grounds that the term would either be applied descriptively or deceptively misdescriptively. Aspirina, said the examining attorney, is the Spanish word for aspirin according to an online dictionary and was the equivalent of aspirin in the great majority of search results on Google -- when Aspirina is used as the search term. Bayer shot back that Aspirina was a made up word with no meaning, the online dictionary was incorrect in not attributing the word to Bayer, and that Bayer was currently trying to work with Google to fix the search results to eliminate the false association. Further, Bayer provided evidence that Spanish-speaking individuals throughout the world understand Aspirina to be Bayer. In a final ruling, the examining attorney answered back that a search through Nexis for Aspirina also led to the conclusion that Aspirina was Spanish for aspirin, and two additional online dictionaries again confirmed this. Further, Bayer's aspirina.com site was a Spanish-language site for Bayer's aspirin product. Bayer submitted its own dictionary evidence to no avail, and so appealed to the TTAB.

The examining attorney argued to the Board that Aspirina was Spanish for aspiring, but the Board declined to look into the foreign equivalents argument. The Board said that it was clear to them that consumers would find Aspirina to be a misspelling or variation on the spelling for aspirin, or -- alternatively -- would assume that the word indicated that the products associated with the word were aspirin-based. Merely descriptive, said the Board, and Bayer appealed the TTAB.

Pertinent issues of trademark law:
1) Does an additional letter added to a generic word associated with an applying company's product make the resulting word trademarkable?
2) What is the reliability of online dictionaries and sources?

Conclusion:
The court found that the balance of dictionary evidence used in the initial determinations were generally in agreement that Aspirina meant aspirina, and the court found this to be a valuable factor in its analysis. Web searches, the aspirina.com site, and Nexis results showed mixed results as to whether Aspirina was a trademark of Bayer or just a foreign language equivalent of aspirin. However, the balance of the web search and Nexis search results weighed in favor of the descriptiveness ruling. Bayer's most recent argument that Bayer owned foreign trademarks for the word were not dispositive to the court, since -- in some countries -- Aspirin was still a valid trademark. Since the court could only review under the very deferential "substantial evidence standard," it could only come to the conclusion that -- where there was enough evidence to warrant more than one conclusion -- the TTAB's decision to favor one must be upheld.

Copyright Law: Darden 052407

2007-11-11T14:41:00.000-05:00

Darden v. Peters, 4th U.S. Circuit Court of Appeals, No. 06-1177 (May 24, 2007):

Issue:
Darden runs a site located at appraisers.com. For this site, Darden compiled U.S. Census maps and hired someone to touch them up. The work-for-hire contractor colored all the maps blue and added shading to all the objects on the maps to create a three-dimensional feel. Using standard fonts, Darden also added labels to the maps. Darden filed for copyright protection for the maps as a technical drawing. The claim was rejected for lack of a creative spark. Darden refiled, this time typifying his work as the compilation of maps. The claim was again rejected for lack of a creative spark. However, the examining attorney did say that the labels, as content, might be able to be copyrighted if submitted as a separate application. He submitted the case for review and heard the same. Not liking the second, or third, answer any more than the first, Darden filed suit looking for a de novo -- not abuse of discretion -- review, citing statutory and Constitutional grounds for such. Summary judgment was granted to the government, and Darden appealed. Darden argues that when another competitor used Darden's maps for its site, a large number of Darden's clients became confused as to the ownership of the competitor site, so -- clearly -- there was some level of creative expression in the maps sufficient enough to cause people to recognize the authorship in different contexts.

Pertinent issues of copyright law:
1) Was Darden entitled to a de novo review of the copyright rejections?
2) Were the maps copyrightable as a technical drawing or as a compilation?
3) Was the confusion of the customers a sufficient basis on which to challenge the rulings of the lower court and Copyright Office?

Conclusion:
No, no, no.

The court found that while copyrights were provided for in the Constitution, copyright protection was the exclusive jurisdiction of Congress. As such, review of copyright rejections were necessarily on their terms. Congress has provided disappointed copyright applicants the right to file for a review of their rejections and the right to seek judicial review of rejections during an action against an alleged copyright infringer. The court did not outright say but seemed to imply that if there was to be any additional forms of redress, it would be Congress, not the court, that would create it. Thus, an abuse of discretion, not de novo, review was proper.

The court found that the level of creativity, if any, involved in modifying the maps from their public document nature was so minimal that the prior decisions could not be flawed for an abuse of discretion.

As for Darden's customer confusion argument, the court found that Darden's argument was better suited for a trademark claim and bore no weight on the legitimacy of the copyright.

Judgment affirmed.

11/07/07 IP News

2007-11-07T10:37:00.000-05:00

Oh, I know I am still back on May cases, but things are winding down on this big case on which I have been working. Should free up some time here and there to do some serious catching up, I hope.

Anyway, your latest IP news:

• Hasbro doesn't want to be a toy company anymore; it wants to be a company that creates marketable intellectual property, kind of like Disney has become. Viva la revolucion or something. -- Honolulu Advertiser
• Google has created tech for YouTube that will severely hamper the ability of posters to post infringing material. -- Public Knowledge
• JK Rowling and Warner are suing a creator of a Harry Potter reference guide for unauthorized derivative work; a Harry situation indeed. -- The Trademark Blog
• Prince is threatening fan sites to remove all content related to his royal self; fans have responded by creating Prince Fans United, or Prince F.U., for short. --PC Pro (UK)
• Google's got a new mobile operating system, trademarked as Android. -- ClickZ
• Johnson & Johnson (J&J) just had a good part of their case against the American Red Cross (ARC) thrown out. Evidently, the court tossed the portion of the suit that argued that ARC had agreed not to compete with J&J using the ARC logo. -- Reuters
• Eros' virtual company SexGen is IRL (in real life) suing Thomas Simon for the allegedly trademark infringing actions of his virtual character Rase Kenzo, who all live in the virtual world of Second Life. The virtual world asks, "OMG, WTFIUWT?" -- C-Net

Trade Secret Law: XWave 051807

2007-11-07T09:47:00.000-05:00

XWave New England Corp. v. McLean and Pratt, Superior Court of Maine, Cumberland County, No. CV-07-16 (May 18, 2007):

Issue:
McLean and Pratt signed noncompete agreements with XWave. The restrictions in the agreements prevented them from competing with XWave for one year from the date of departure from the company. McLean and Pratt resigned from XWave in early 2006 and started Downeast, a directly competing company. XWave found out and, in mid-2006, sent reminders to McLean and Pratt that they had one-year restrictions on competing. McLean and Pratt continued to compete, allegedly by knowingly underbidding XWave by using XWave's allegedly confidential pricing information to their advantage. In early 2007, XWave filed a case for breach of the agreement, arguing misappropriation of trade secrets and goodwill. The case came up for a temporary restraining order hearing against the two.

Pertinent issue of trade secret law:
1) The restrictions placed on the two were for one year, and the action filed against the two was about a year after their departure, so, can XWave succeed in restraining the two for a period of one year from judgment instead?

Conclusion:
The superior court found that it was likely that XWave would succeed on the preliminary injunction claim. As such, the temporary restraining order was granted. In prior cases where a plaintiff company sought to move the start date of a restriction from the date of departure to the date of judgment, the defendant had already been abiding by the terms from the date of departure. That did not seem to be the case here. If the two had actually been using their goodwill and possession of XWave's confidential information to launch and maintain Downeast, then they could not have abided by the terms of the agreement from their date of departure. Thus, to not allow the restriction to begin at some other time where the enforcement of the terms could actually be enforced against the two would be inequitable to XWave.

Trademark Law: Colt v. Bush 051807

2007-11-06T14:54:00.000-05:00

Colt Defense v. Bushmaster Firearms, 1st U.S. Circuit Court of Appeals, NO. 06-1696 (May 18, 2007):

Issue:
Colt developed a more compact and lightweight M16 for the U.S. Military. In accordance with the U.S. military's naming conventions, the U.S. military called the gun "Model 4" or "M4" for short. Colt registered the trademark "M4." Years went by, and Colt competitors referred to guns of this type as M4s in their advertising. The media tended to use M4 as a descriptive noun to indicate this kind of gun. And consumers seeking to obtain such guns would refer to such guns as M4s. Bushmaster sells an allegedly "M4 type" gun. Colt sued Bushmaster and others for trademark infringement. In the lower court decision, the court found that the name was generic and not entitled to protection. Colt appealed.

Pertinent issue of trademark law:
1) Does a registered trademark defeat -- by virtue of its registration -- a claim of genericness?

Conclusion:
No. Registration of a trademark only creates a rebuttable presumption, not a dispositive answer. In light of the evidence showing genericness, the court affirmed the decision in favor of Bushmaster. Colt had presented a single military document wherein the military used the M4 name interchangeably with "Colt." However, as the military has an exclusive contract with Colt for M4s, the court found that this lone document was insufficient to surmount the evidence in favor of genericness. Colt also argued that the consuming public was simply confused when referring to M4s and was actually trying to invoke the name of Colt. The court found that requests by consumers to the Bushmaster site did not likely seek a Colt firearm when addressing Bushmaster. Genericness ruling affirmed.

Copyright Law: Kahle (Again) 051407

2007-11-06T14:26:00.000-05:00

Kahle v. Gonzales, 9th U.S. Circuit Court of Appeals, No. 04-17434 (May 14, 2007):

Issue:
Renewals of copyrights have become, via the CTEA, an opt-out rather than and opt-in process.

Pertinent issues of copyright law:
1) Did SCOTUS explicitly answer the question in Eldred as to whether such a change fundamentally alters the contours of copyright law with regard to public domain?
2) Does the CTEA violate the "limited times" requirement?

Conclusions:
In upholding the constitutionality of the CTEA in Eldred, SCOTUS impliedly answered the question. An explicit answer was not necessary.

With regard to the limited times requirement, "Put differently, the outer boundary of 'limited Times' is determined by weighing the impetus provided to authors by longer terms against the benefit provided to the public by shorter terms. That weighing is left to Congress, subject to rationality review. See Eldred, 537 U.S. at 206-07 ('Congress passed the CTEA in light of demographic, economic, and technological changes, and rationally credited projections that longer terms would encourage copyright holders to invest in the restoration and public distribution of their works.' (internal citations omitted)). The Court was cognizant of the meaning of 'limited Times' when assessing the current copyright term; it simply reached a different conclusion than that desired by Plaintiffs. Future extensions may or may not survive review, but the current term is constitutional. Plaintiffs' claim was properly dismissed."

Copyright Law: Perfect 10 v. Google 051607

2007-11-06T13:36:00.000-05:00

Perfect 10 v. Google (& Amazon), 9th U.S. Circuit Court of Appeals, Nos. 06-55405/06-55406/ 06-55425/06-55759/06-55854/06-55877 (May 16, 2007):

Issue:
Once upon a time, Perfect 10 sued Arriba for displaying thumbnails and lost. According to the court there, reference thumbnails were a very transformative use of pornographic pictures. Perfect 10 cut a deal with a cell phone media purveyor to allow such purveyor to display and distribute thumbnails via cell phones. Perfect 10 sued Amazon and Google (but mostly Google) for display and distribution infringement. The lower court found that linking to third parties that displayed the images was not infringement, but the display of thumbnails was infringement. Unlike in the prior case law, there was now a commercial use for thumbnails, and the court felt that the display of thumbnails on Google unreasonably superseded this use. Google and Perfect 10 both appealed from the partial grant of preliminary injunction.

Pertinent issues of copyright law:
1) Does linking to full-size images constitute a copyright violation?
2) Does a thumbnail infringe copyright?
3) Does the Copright Act provide relief from consumer confusion?
4) Is Google secondarily liable for infringement?

Conclusions:
Google never actually displays the full-sized images. Google doesn't actually store the full-sized images. Therefore, Google's linking to third party infringers of copyright does not constitute a direct copyright violation.

It was already decided that a thumbnail is a transformative work. The lower court believed that the commercial nature of Google's AdWords feature along with Perfect 10's commercial use of its own thumbnails weighed in more than the transformative use. The appeals court disagreed. The appeals court found that -- though the commercial use of the thumbnails could very well be superseded by the Google thumbnails -- Perfect 10 did not show that this was in fact happening and, in light of the immense public benefit that Google's service provides, this potential damage to Perfect 10's business was not enough to outweigh the transformative value of the thumbnails.

While clicking on a thumbnail does bring up the third-party infringer's site as framed by a Google frame, and while this Google framing of the infringing site might be confusing to some, the Copyright Act does not have provisions protecting rights holders from consumer confusion. That, said the court, is the realm of the Trademark Act.

Google did not encourage in any way the infringer's initial or continued violations, so it could not be contributorily liable. Google may make money off the continued infringement, but Google has no contracts with the third parties. As such, Google has no means to stop the infringers from infringing, so it can not be held vicariously liable. It wasn't like the infamous swap meet case, where the contracts with participants would have allowed the organizer to prohibit counterfeit sales.

051607 Copyright Law: Furkin

2007-08-27T15:08:00.000-05:00

Furkin v. Smikun, 7th U.S. Court of Appeals, No. 07-1067 (May 16, 2007):

Issue:
In 1985, Furkin hired Smikun to write a program called, "Silent Partner." This program was designed to keep track of sale on coin-operated machines, and the two agreed that they would split the profits. Furkin owned a sawed-off shotgun and was caught by authorities in 1994 with said shotgun, and so went to prison for a good 10 years.

In 2000, Furkin found out that Smikun had sold Silent Partner to an interested company, and Smikun thereafter sent a candid letter to Furkin confirming that he had taken such action. Over the next four or five years, Smikun sent the imprisoned Furkin bits of money in the amounts of $100 here or $500 there. In 2004, Furkin was released from prison.

Furkin demanded the full amount of money to which he believed he was entitled; half of the sale and half any profits. By 2006, Smikun stopped returning his calls. In response, Furkin filed suit that same year. The lower court found that -- whether by local law or by the Copyright Act -- the statute of limitations had passed for his claims of copyright conversion, etc.

Furkin appealed, arguing that the claim was still viable since he continued to receive payments from Smikun while he was in jail.

Pertinent issue of copyright law:
1) Do token payments made to a copyright holder after the explicit notification to the copyright holder of the conversion of the copyright holder's rights by the payor preserve the claim for conversion against the payor until the statutory period expires from the point where the payments stop?

Conclusion:
No. The court found that the letter sent to Furkin by Smikun clearly stating that Smikun had indeed sold the Silent Partners property, was clear notice to Furkin of a copyright claim. Furkin's argument that he was lulled into complacency by Furkin's payments to Furkin was -- even if the court was to believe that such token payments were legitimately believed by Furkin to be payments to Furkin of his share of profits -- insufficient. Once Furkin had notice of a ripe claim, the statute of limitations began to run. Whether or not sums of money were paid out to Furkin thereafter did not unripen and already ripe claim. The ruling of the lower court that the statute of limitations had run was affirmed.

08/27/07 IP News

2007-08-27T12:33:00.000-05:00

I need to catch up on cases, but I couldn't help but post this:

• Dale Spender, an Australian researcher and writer on new technologies, bemoans that the U.S. has set the international rules of intellectual property after first capitalizing on IP theft as a means of development for itself. -- On Line Opinion (Australia)

So, while I'm at it, a few more:

• Britney Spears' new fragrance, marketed as the word believe in green with a pink letter i, is running into a bit of trademark trouble with the social charity known as Mondonation and their T-shirts, characterized by the word believe in green with a pink letter i. -- Counterfeit Chic
• To simplify lengthy procedures and improve efficiency, China's reformulating its trademark law for the third time since the 80's. -- China Daily
• The iPhone has already been cracked by, who else?, a teenager. -- Freedom to Tinker
• Antigua has again won a WTO dispute with the U.S. about the legality of the U.S.'s ban on Internet gambling -- a huge source of income for the small tourist country -- and is now asking the WTO that if the U.S. refuses to go along with the ruling can Antigua be allowed to not go along with the sanctity of U.S. IP by creating a legal counterfeiting enterprise as a means to make up for the billions it has lost to the ban. -- NYTimes

050707 Trade Secret Law: AFM Insurance

2007-08-25T16:53:00.001-05:00

American Family Mutual Insurance Company v. Roth, 7th U.S. Circuit Court of Appeals, No. 06-3412 (May 7, 2007):

Issue:
Roth and at least one other insurance agent working with AFMI left and started out on their own using a client list called Exhibit 34 by Judge Posner and his court.

"An addendum to the agency contract [they signed] required the agent 'to submit all new business and changes through the system as directed by the Company.' By 'system' the company meant its digitized database of customer information. The addendum provided 'that software and database provided contains confidential, proprietary and trade secret information and that the agent and its employees will not use nor disclose to third parties such information unless in the ordinary course of the agent's business with the Company.' The agent had access only to the information in the database that concerned the customers whom he served. It might be customer information originated by the agent or information furnished to it by the company when another agent resigned and his customers had therefore to be reassigned. Some 2,000 policies were reassigned to the defendants in the course of their agency relationship with the plaintiff. "

Exhibit 34 was a 1,847 client-name long client list that contained AFMI client names almost exclusively, but not entirely.

The lower court granted an injunction against the rogue AFMI agents asserting that they could not download client names from AFMI, could not solicit any of the names in Exhibit 34, and could not service AFMI's customers. The agents appealed the injunction.

Pertinent issues of trade secret law:
1) Was it a trade secret?
2) Was the injunction properly granted?

Conclusion:
Posner said that the contract and addendum terms specifically stated that the agents were to treat the information and clients of the database as a trade secret and were not to use or disclose this information except in the normal course of business for AFMI. Posner said that whether this restriction was enforceable as a matter of trade secret law was a matter of whether it had value outside of as a measure to limit competition and was not otherwise contractually unconscionable. Posner found that since this database was contractually deemed confidential and a trade secret and was a pared down -- by AMFI -- list of potential and existing clients based on their suitability to buy insurance, he found that it met the Wisconsin UTSA's requirements (as it "derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use" and "is the subject of efforts to maintain its secrecy that are reasonable under the circumstances"). It was a trade secret and so had value outside of as a means of limiting competition. Further, the limitation was reasonable. The agents were given access to potential clients they did not previously have and inherited accounts; in return, they gave AMFI the right to keep as a trade secret all the clients the agents developed during their agency. While duration was not mentioned, Posner said this was not fatal when the clause met the WUTSA and was not contested as a trade secret by the other party. That was the case here.

Posner turned his attention to the injunction itself. Even though an injunction was merited in the case, the injunction required some editing. First, Posner suggested that downloading be expanded to include transcription of data into hardcopy. Second, he found that Exhibit 34 should not be off limits to the rogue agents with regard to those customers that were not in the database as it was when the agents left. Third, Posner found that "servicing" AFMI's customers was an overbroad and vague proscription. "Servicing" was too broad a word to have meaning in the injunction, and an injunction against soliciting AFMI's customers would go beyond those clients to which the agents had access prior to their departure; it would, for instance, require that they keep from future AFMI clients. With this one suggestion and these two orders for amending, the injunction was affirmed.

051107 Trade Secret Law: Gabriel Performance Products

2007-08-21T10:46:00.001-05:00

Gabriel Performance Products v. Cognis Corporation, Court of Appeals of Ohio, 11th App. Dist., Ashtabula County, No. 2006-A-0071 (May 11, 2007)"

Issue:
DSCC created the hardening agent known as Capcure in the 1960s. It created the Capcure agent at its Astabula, Ohio, plant. DSCC went through some hard times, and it was subsequently broken down into assets and sold off to buyers that then sold to other buyers. Fast forward to the 2000s, and the Capcure process and technology is owned by Cognis, but the plant where it is created is owned by GabePro. The two companies had a business symbiosis for a while until Cognis decided that it didn't need the Astabula plant, and GabePro by extension, anymore. Cognis told GabePro of its intent to manufacture in Spain, and GabePro thereafter decided to create its own hardening agent known as GPM-800. Unsurprisingly, GPM-800 was the same agent created the same way as Capcure. The products were identical.

GabePro sought a declaratory judgment from the lower court, and various orders were handed down that led to some level of appeal by Cognis about breach of trade secrets and/or confidentiality restrictions. In particular, in Cognis' latest appeal, Cognis argued that GabePro was contractually restricted from creating its hardening agent because of confidentiality and non-use clauses that existed in several incarnations of various manufacturing agreements between the predecessors in interest to Cognis and GabePro. Included in these various copies of the manufacturing agreement executed between the predecessors in interest was a standard clause in the confidentiality section that defined confidential information, at least in part, as that information you did not possess before the relationship was entered. Cognis argued that GabePro, via the contractual relationship between it, Cognis, and the various predecessors in interest, became aware of the formula and process for Capcure and so was restricted from manufacturing it independently.

Pertinent Issue of Trade Secret Law:
1) When the know how is separated from the mechanism, is the know how owner safe from competition from the mechanism owner?

Conclusion:
The court found that since Capcure was created and initially manufactured by the same entity, DSCC, then all subsequent possessors of interest are presumed to have had the process and formula information of their predecessor(s) within their knowledge. Although Cognis did retain possession of the formula as part of its succession in interest, it could not prevent GabePro from using its knowledge of the formula and process since this information was within GabePro's predecessors in interests' knowledge prior to the execution of the first manufacturing agreement between the first successors in interest to DSCC.

050807 Trademark Law: Tyler Green Sports

2007-08-20T11:28:00.001-05:00

Green v. Fornario, 3rd U.S. Circuit Court of Appeals, No. 06-2649 (May 8, 2007):

Issue:
Tyler Green was a Phillies baseball player that washed out quickly because of injuries but has stayed large in the Philadelphia-area baseball community with local media coverage of his coaching, and he has a sports business called Tyler Green Sports. Fornario was a Philadelphia-area sports-bar bartender that allegedly tried and failed to get into the handicapping business. He dropped out soon after entering. Said the court:

"Fornario did, however, market this short-lived venture as Tyler Green Sports. He testified that the business was never affiliated with anyone named Tyler or Green. Rather, he purportedly came up with "Green" because handicapping businesses, he said, typically have some reference to money in their names. Green is, of course, the color of money, so it fit. Fornario then tried to come up with something "catchy" to put with Green. He settled on Tyler, he claimed, because he is an Aerosmith fan, and Stephen Tyler is the group's lead singer. Thus, Tyler Green Sports. He testified that at the time he had never heard of Tyler Green the baseball player. He admitted, however, to being a fan of all sports except hockey. The Philadelphia teams have no allure for him, as he is a New York native. He described himself as a "diehard" Yankees fan. While all of this is more than a mite shaky, it is Fornario's story, and he is sticking to it."

A few years later, Fornario bought the rights to tylergreensports.com and began marketing a reportedly unsuccessful sports-themed event planning and entertainment service of the same name. The real Tyler Green's attorney called up the business and confirmed that no one associated with the business was named Tyler or Green, so the lawyer requested the company cease and desist using the name. Fornario refused, and Green brought actions for misdescription, dilution, and cybersquatting. Green was awarded costs but denied attorneys' fees, and Green appealed.

Pertinent Issue of Trademark Law:
1) What constitutes "exceptional" under the Lanham Act?

Conclusion:
The Lanham Act allows for the award of attorneys' fees in "exceptional" cases. Green argued that Fornario's refusal to cease and desist was a flagrant refusal to comply with federal law. The appeals court agreed that it could be, but it said that to presume so would require that the appeals court acknowledge that Fornario acted outside of good faith by refusing despite knowing that he had no right to use the mark. The appeals court refused to acknowledge such as the lower court did not acknowledge this fact either. The lower court refused to find that Fornario had to have been aware of Tyler Green's status as a local sports hero, since Green's sports history in the Major League was fleeting, and his career after that has been fairly small stage. Further, Fornario's company was otherwise legitimate, and this weighed upon the courts' consideration of cybersquatting, etc. Since the appeals court could not find the lower court's belief clear error, it could not find that the case was exceptional. Fornario had a colorable defense to the claims; he could have had a good faith belief in his right to the mark. As such, the lower court was affirmed.

05/03/07 Trade Secret Law: Los Cucos Mexican Cafe

2007-05-20T20:36:00.000-05:00

Los Cucos Mexican Cafe v. Sanchez, Court of Appeals of Texas, 13th Dist.. Corpus Christi - Edinburg, No. 13-05-578-CV (May 3, 2007):

Issue:
When two of its employees left the Los Cucos restaurant chain to start their own Mexican restaurant chain, Los Cucos sued. Los Cucos' multiple claims were largely based on its claim that its recipes -- which they argued were misappropriated -- were trade secrets. As evidence, they pointed to case law that had found that recipes could be considered trade secrets. The lower court found against them, and Los Cucos appealed.

Pertinent Issue of Trade Secret Law:
1) Are recipes per se trade secrets?

Conclusion:
The appeals court found that recipes must go through the same factor test as any other potential trade secret looking for protection. That a court case found that a recipe could be a trade secret did not mean that it will always be in every instance. Since Los Cucos offered no additional proof to establish the various factors needed to prove the existence of a trade secret, the court affirmed the lower court's findings on this matter.

04/30/07 Copyright Law: Chase Jarvis

2007-05-20T20:07:00.000-05:00

Chase Jarvis v. K2, 9th U.S. Circuit Court of Appeals, No. 05-35609 (April 30, 2007):

Issue:
Jarvis, of Chase Jarvis, Inc., was a freelance photographer whose photographs were often used in k2 ads. When the working relationship soured, Jarvis revoked K2's right to reuse his works. K2 created an advertisement thereafter that was a collage of pictures with various K2 trademarks and logos strategically placed throughout. In the collage were several of Jarvis' pictures. Jarvis sued for multiple counts of copyright infringement, lost at the trial court, and appealed.

Pertinent Issue of Copyright Law:
1) Does a collage count as a collective work or a derivative work for the purposes of copyright law?

Conclusion:
In this case, said the court, it counted as a derivative work. K2 was not simply reprinting a composition that included Jarvis' work, but it had created a collage that prominently featured Jarvis' work and that used other photographs from other photographers as well as a means to buttress and highlight Jarvis' pictures. The court said, in relevant part: "The changes to which K2 subjected Jarvis' images are examples of the 'recast[ing], transform[ing], or adapt[ing]' and 'editorial revisions, annotations, elaborations, or other modifications' that define derivative works. ... Jarvis delivered the images to K2 in one form, and they were subsequently used in the collage ads in a quite different (though still recognizable) form. The ads did not simply compile or collect Jarvis' images, but rather altered them in various ways and fused them with other images and artistic elements into new works that were based on -- i.e., derivative of -- Jarvis' original images." The court reversed the lower court's finding that the advertisement was protected from Jarvis' suit as a collective work.

04/30/07 Copyright and Trademark Law: Vincent

2007-05-20T19:01:00.000-05:00

Vincent v. City Colleges of Chicago, Ezekiel Morris, 7th U.S. Court of Appeals, no. 06-3082 (April 30, 2007):

Issue:
Ms. Vincent wrote a book, entitled "Smart Foreclosure Buying," in her tenure at the college. Things soured between the college and Vincent, and Vincent left. The college continued to teach the course -- keeping the name and the book in the course, and even Vincent's initials in the course description. Vincent faxed notice to the college that she revoked their right to her copyright, but the college claimed not to get the fax. Ms. Vincent also notified the college orally. The college stopped paying royalties to her, but they continued to print the book. Vincent argued to the lower court that the college had no right to create further copies of her book, could not use the name of her book, and could not use it's existent copies of her book as text books without her permission. After the lower court dismissed most of the complaint as fatally deficient, Vincent appealed.

Pertinent Issues of Copyright Law:
1) Was the oral termination of right sufficient to terminate the college's copyright?
2) Can the copyright holder limit the use of lawfully owned copies of her textbooks at the college?

Pertinent Issue of Trademark Law:
1) Can Vincent prevent the use of her book title in the course name or course?

Conclusion:
The court found that the lower court erred in finding that oral notification was insufficient to terminate the college's copyright. There is, said the court, nothing in the copyright law that states that oral modification of granted rights is insufficient. In fact, said the court, since the initial license was oral, if oral instructions could not modify a licensee's copyright, then the college would have no rights to the work at all. However, the court agreed with the lower court that Vincent could not limit the use of lawfully owned textbooks. Once the college owned the copies it had lawfully, then it could do with the copies as it pleased. This, said the court, is how libraries work. As far as the use of the book's title, the court found that the claim was not insufficient. In trademark parlance, said the court, Vincent's claim amounted to a claim of secondary meaning over the phrase. So, even though the phrase did predate the book, Vincent might still be able to restrict use of the phrase. The court sent the case back.

04/24/07 Trade Secret Law: Lydall

2007-05-20T18:24:00.000-05:00

Lydall v. Ruschmeyer, Supreme Court of Connecticut, No. SC 17612 (April 24, 2007):

Issue:
Ruschmeyer appealed several trade secret outcomes weighing against his favor. Chief among them was the lower court's assertion that because the entire strategic plan in question was a trade secret, each disclosure of a portion of that strategic plan was itself another misappropriation.

Pertinent Issue of Trade Secret Law:
1) If a plan is a trade secret, is each element of that plan also a trade secret?

Conclusion:
No, not necessarily. The court found that if the entire plan was a trade secret, then the only way that each element could also be a trade secret by virtue of being a part of the larger trade secret -- the plan -- is if the disclosure of that element of the plan would essentially disclose the whole plan. Since the lower court had assumed that -- regardless of the effect of the disclosure of certain elements of the plan -- each element of the plan was entitled to trade secret protection, the Connecticut Supreme Court voided the grant of injunction.

04/27/07 Copyright Law: PODS

2007-05-20T17:28:00.000-05:00

So tragically long since my last post. Things got really busy. Among these things, I have a new job at last. Anyway:

PODS v. Porta Stor, Federal U.S. Circuit Court of Appeals, No. 2006-1504 (April 27, 2007):

Issue:
PODS came up with a patent for lifting and moving storage units. Porta Stor went into business doing the same. PODS sued, claiming not only patent infringement but also that Porta Stor's leasing agreement was so identical to PODS' own that it was copyright infringement. The magistrate court granted judgment as a matter of law (JMOL) to PODS on the copyright claim, and Porta Stor appealed.

Pertinent issue of copyright law:
1) Does a company have a valid copyright interest in a leasing agreement?

Conclusion:
The court found that it depends. The leasing agreement was created by outside counsel. The court perhaps suggested that this might truly be a work-for-hire case, but -- as near as it could tell -- PODS was arguing that it created the leasing agreement only with help from outside counsel. PODS argued that the president and several vice presidents all gave input to the outside counsel, so -- as best as the court could determine -- the company was asserting that it had joint copyright ownership over the lease. Because the JMOL was granted on the premise that PODS owned the copyright on the contract outright, the court found that the grant of JMOL should be vacated, and the next jury should evaluate whether there is enough evidence to establish PODS as the owner of the lease.

04/29/07 IP News

2007-04-29T20:01:00.000-05:00

OK, this one isn't news, but it is IP-related and entertaining:

Strong Bad sues for trademark infringement

And now the news. It's been a while since the last one, so it's a big one:

Australia has passed its own sort of DMCA -- the Copyright Amendment Act -- in accordance with the Australia-U.S. Free Trade Agreement. -- MinterEllison
Robert Hooijer, director of CISAC Africa -- CISAC being "the world’s largest music licensing body" -- recently "said the objection [that "the Internet [is] a major threat to music business with downloading largely responsible for the stagnation and even decline in music sales] is now considered an old fashioned view and the new thinking sees liberalization in the communications sector as an opportunity for music business." -- The East African
According to a high-ranking member of the National Association of Chiefs of Police, the FBI's Operation Site Down managed to take down a great number of warez-website-based crime syndicates in at least 10 countries in the last few days as part of its effort to stop worldwide piracy. -- OpinionEditorials.com
The UK is having internal-political trouble coming up with recommendations for a potential Europe-wide harmonization of intellectual property laws. --New Europe
"A study by USA for Innovation in 2005 estimated that U.S. intellectual property today is worth between $5 trillion and $5.5 trillion, equivalent to about 45 percent of the U.S. GDP and greater than the GDP of any other nation in the world. The U.S. Patent and Trademark Office estimates that intellectual property theft costs America $250 billion and 750,000 jobs per year." (It's certainly a good thing that U.S. Congress represents the citizens and not the businesses, or that GDP figure would equate to a 45 percent stake in our legislature. ;) ) -- USA for Innovation
Wii; it's official(ly a trademark)! -- Wii - UK
Ubuntu has joined other open-source OS's in saying that an open-source copyright policy does not mean everyone can play fast and loose with its trademarks. -- EWeek
Viacom has admitted that it issued the takedown order to YouTube for the MoveOn.org's Colbert Parody -- "Stop the Falsiness" -- and the suit against Viacom has been dismissed. -- EFF
Worldwide brand values are out, and Google took the top spot with $66.4 billion. GE, Microsoft, Coca Cola, and China Mobile rounded out the top five. Brands with the highest brand momentum: Google (again), Apple, and then Louis Vuitton, followed by Starbucks and Porsche for the top five. -- BrandZ
Reps. Goodlatte and Delahunt have, reportedly, reintroduced a bill that would give added intellectual property protection to fashion. -- Public Knowledge
The Mormon Church sent a C&D letter to a coffee company, Just Add Coffee -- also based in Utah, for the use of the angel Moroni -- a Mormon angel featured prominently on every Mormon church and the name from which Mormon was derived. Just Add Coffee has so far complied with the C&D despite it being a C&D for a religious symbol. -- The Trademark Guy
On April 25, an SDNY court ruling found that ASCAP could not collect performance fees for lawful downloads. -- Excess Copyright, Public Knowledge
The Copyright Royalty Board won't reconsider its per play netcast radio royalty rate decision, so Reps. Inslee and Manzullo are actually going to bat against the decision -- introducing the Internet Radio Equality Act. -- Hollywood Reporter, Public Knowledge

04/19/07 Trade Secret Law: Awards.com

2007-04-27T10:21:00.000-05:00

Awards.com v. Kinko's, Supreme Court of New York, App. Div., 1st Dept., No. 8875, Index 603105/03 (April 19, 2007):

Issue:
Kinko's and Awards.com had a store-in-store situation brewing when Kinko's was bought out by FedEx, and the relationship with Awards.com soured. In a subsequent action enumerating many claims, Kinko's won summary judgment against Awards.com. In an appeal of summary judgment, Awards.com claimed that Kinko's violated a nondisclosure agreement by posting a Kinko's Power Point presentation in the appendix of the motion. In its original opposition to the motion, Awards.com also filed the Kinko's Power Point presentation as part of its opposition.

Pertinent issue of trade secret law:
1) Should any information of Awards.com's in the Power Point presentation be considered for trade secret protection?

Conclusion:
No. By filing the Power Point presentation in its opposition, Awards.com made public knowledge whatever trade secrets it had theretofore sought to protect. Without secrecy, there could be no trade secrets.

04/17/07 Trade Secret Law: Triple Tee Golf

2007-04-27T09:54:00.000-05:00

Triple Tee Golf (TTG) v. Nike, 5th U.S. Circuit Court of Appeals, Nos. 05-10934/05-11442 (April 17, 2007):

Issue:
TTG designed some golf clubs with an adjustable weighting system. The designs tended to use various methods to solve arguably age-old problems with such a weighting system in golf clubs. TTG sent its designs to Stites, hoping to have Stites manufacture a prototype club for him. Stites agreed but was shortly thereafter hired by Nike on a full-time employee basis. Stites told TTG of his new association and that he would no longer be able to manufacture the prototypes. TTG submitted its designs to Nike for consideration, but was turned down. While Gillig, the founder of TTG, was at a golf industry trade show, he noticed that several of the new Nike golf clubs seemed very reminiscent of TTG's adjustable golf club designs. TTG filed suit. At the district court level, the court found that although TTG may have had trade secrets for adjustable clubs, the Nike clubs were not adjustable. Thus, no trade secrets were misappropriated. TTG filed an appeal.

Pertinent issue of trade secret law:
1) Was the district court inquiry into trade secret misappropriation properly limited to the definition of the trade secret as post-manufacture adjustable-weight golf clubs?

Conclusion:
The court found that the lower court did properly evaluate whether the trade secret of adjustable clubs was misappropriated, but it incorrectly stopped the analysis there. Yes, defining "adjustability" as "adjustability at the factory" would render the idea of "adjustability" meaningless, but the golf club designs were perhaps in themselves trade secrets for the manner in which they solved various problems plaguing non-adjustable clubs of the same basic type as TTG's. Particularly, one expert noted: "While Stites had prototypes and other 'iron' heads with weight bars within a 'hollow back' or 'cavity back,' none of them achieved as substantial of a displacement of the CG [center of gravity] away from the club face [as did TTG's prototypes]. It is my opinion, that Stites did not learn this design technique until he met with Gillig in September 2000." The expert went on to make other similar observations about Stites' designs for Nike. Thus, the court found that the lower court had improperly rendered summary judgment for Nike without considering whether the Nike golf club designs -- even though not adjustable -- had misappropriated certain unique design elements from TTG's designs presented to Stites. "[E]ven though TTG's trade secrets describe a club-weighting system that is adjustable post-manufacture, Defendants could not lawfully appropriate the proprietary design elements of that system into a permanently weighted club any more than they could copy it directly."

04/17/07 Copyright Law: Hudson

2007-04-23T17:58:00.000-05:00

U.S. v. Hudson, 10th U.S. Circuit Court of Appeals, No. 06-6199 (April 17, 2007):

Issue:
BFS got a fax advertising Microsoft products at closeout prices. BFS bought 537 copies of Office for $85k, but checked out the authenticity. When the authenticity check failed, BFS refused to pay the bill and turned over the copies to the government. Hudson pled guilty to conspiracy to infringe, and the district court added restitution of $321k to Microsoft as part of the judgment. Hudson appealed this amount, which was what Microsoft would have charged for the 537 copies.

Pertinent issue of copyright law:
1) While restitution to the copyright holder does seem to be available in criminal infringement cases, what measure of restitution should be used?

Conclusion:
The court found that there was no proof that BFS would have bought the 537 copies from Microsoft at Microsoft's much higher price. "Furthermore, given the fact that BFS quickly turned the counterfeit software over to the government, we are unable to see how Defendant prevented Microsoft from selling its software to BFS. Nothing in the record suggests that Microsoft's potential to sell software to BFS was changed by Defendant's actions--if anything, Microsoft was just made aware that BFS was a potential purchaser of its products. " Thus, the court found that restitution was not necessary since there was no actual loss.

04/12/07 Trade Secret Law: Planned Parenthood of LA

2007-04-22T21:58:00.001-05:00

Planned Parenthood Los Angeles v. Gonzalez, Court of Appeal of California, 2nd App. Dist., Div. 2, No. B190490 (April 12, 2007):

Issue:
Gonzalez was fired for what Gonzalez claimed to be a whistleblower threat but what PPLA called activities that threatened their nonprofit status. When PPLA learned during Gonzalez's suit against PPLA that Gonzalez had what PPLA considered confidential documents, it filed a crossclaim alleging misappropriation. Gonzalez moved to strike the crossclaim as a SLAPP, but the court denied his anti-SLAPP motion. Gonzalez appealed.

Pertinent issue of trade secret law:
1) Did PPLA's confidential documents meet the standard for trade secret status under California law?

Conclusion:
Yes. California's trade secret law weighed out PPLA's investment, how little the cost was to Gonzalez,whether the taking by Gonzalez was unauthorized, and PPLA's injury. "The documents [provided by PPLA] evidence substantial investments in time and effort by PPLA employees in their preparation. For example, exhibit 2 ... is a 24-page document that includes statistics, flow charts, tables and other information. Exhibit 3 is a ... six-page document that summarizes the state of the budget, various regulatory issues, revenues, purchasing and inventory, and an information technology systems review. Exhibits 4 through 14 consist largely of internal e-mails, memoranda and letters written by PPLA employees about PPLA operations. The exhibits also contain minutes of meetings. The index to the CD-ROM likewise lists PowerPoint presentations, accountings, audits, financial status reports and the like. These are all matters that in the normal course of any business take substantial employee time and effort to compile and create. ... The Gonzalez declaration establishes that he took electronic copies of many of the disputed writings, copied others and took some originals. These activities typically generate little or no cost. ... [T]he acting CEO or senior vice-president of PPLA ... declared that she 'never gave Gonzalez permission or the authority to remove any documents from the premises of PPLA.' Nor did she authorize him to 'use and/or publish any of the documents and data he unlawfully removed from PPLA premises, including off PPLA's computer system.' [She] also declared: 'As far as I am aware, Gonzalez has not obtained the permission of any of the authors of the documents/reports/e-mails, which he has attached as exhibits or which are found on the CD-ROM, to use and/or publish their documents/reports/e-mails.' ... The most obvious injury to PPLA was the public disclosure of confidential business documents which, even if they do not substantiate illegalities-an issue which we do not reach in this appeal-potentially impact PPLA's reputation. ... Another injury that PPLA suffered ... was the deprivation of information it needed for the underlying lawsuit. ... Gonzalez implies that PPLA cannot be injured by the disclosure of trade secrets because it is a nonprofit rather than a commercial concern. But that contention is contrary to the law, which recognizes that a nonprofit organization may hold trade secrets. ... The writings attached to the FAC and identified by the Swiller declaration contain compiled business information, descriptions of business processes, accounting and pricing information and are sufficient for a prima facie showing." Thus, the court found that there were some teeth to the misappropriation claim that prevented it from going down as a SLAPP.

04/12/07 Trademark Law: In Re Reed Elsevier

2007-04-22T21:36:00.001-05:00

In Re Reed Elsevier Properties, Inc., Federal U.S. Circuit Court of Appeals, No. 2006-1309 (April 12, 2007):

Issue:
The PTO said that Lawyers.com was generic, and Reed appealed to the court to say that it isn't.

Pertinent issue of law:
1) Does a website bearing the name of a profession and providing services related to that profession meet the standards for generic disqualification from trademark protection?

Conclusion:
"Reed's own assertions illustrate the fundamental flaw in its position. It argues here that 'the services recited in the application [i.e., information exchange concerning the law, legal news, and legal services] were discrete from those excluded during prosecution [i.e., information exchange concerning lawyers].' ... However, as Reed and Martindale-Hubbard should know, for better or worse, lawyers are necessarily an integral part of the information exchange about legal services. ... In fact, looking to Reed's website makes clear that an integral, if not the paramount, aspect of 'information exchange about legal services' as Reed defines it concerns identifying and helping people to select lawyers. This is amply demonstrated by the ubiquitous nature of the 'search for lawyers' and 'find a lawyer' functions both on web pages providing information about legal services generally and on pages providing information about specific legal practice areas. ... In its services relating to legal news, lawyers, not surprisingly, are a focus. ... Moreover, under 'related links,' articles are included such as 'do I really need a lawyer?' and 'selecting a lawyer.' With respect to information exchange about the law, Reed's homepage features a section entitled 'discuss legal issues,' and included in this feature is a 'chat with lawyers' forum. Therefore, contrary to its contention, information exchange about lawyers is not at all discrete from information exchange about the law, legal news, and legal services, as illuminated and defined by Reed's website. In fact, as the board found and substantial evidence supports, they are 'inextricably intertwined.' Accordingly, the board's genus determination was proper.
... Reed does not take issue with its finding that the relevant public 'would readily understand the term to identify a commercial web site providing access to and information about lawyers.' ... [I]n determining what the relevant public would understand LAWYERS.COM to mean, the board considered eight websites containing 'lawyer.com' or 'lawyers.com' in the domain name, e.g., www.massachusetts-lawyers.com, www.truckerlawyers.com, and www.medialawyer.com. It discussed the services provided by these websites in order to illuminate what services the relevant public would understand a website operating under Reed's mark to provide. These websites are competent sources ... and they provide substantial evidence to support the board's finding."

04/12/07 Trademark Law: Rudolph International

2007-04-22T21:04:00.000-05:00

Rudolph International v. Realys, 9th U.S. Circuit Court of Appeals, No. 05-55605 (April 12, 2007):

Issue:
Rudolph created a way to disinfect what otherwise were disposable items in a salon -- things like nail files and such. Initially, it marketed the products as "sanitizable," but it thereafter changed the term to "disinfectable" -- Rudolph himself going so far as to comment on how sanitizable should be removed from the trade lexicon and substituted with disinfectable. Rudolph International sent letters to state cosmetology boards urging them to adopt disinfection standards, and many did. An attempt by Rudolph to register a U.S. trademark for the term failed. When one of Realys' top customers required that Realys change its label to say that it was disinfectable , Realys did so. Rudolph sent a C&D letter to Realys, claiming trademark on the term. In the subsequent litigation, Rudolph lost and appealed.

Pertinent issue of trademark law:
1) Is Rudolph entitled to a trademark for a word the company coined?

Conclusion:
No. The court found that "disinfectable" answered the "what am I" not "who am I" question. Thus, it was a generic term. Furthermore, there was evidence that the term had been used in several patent descriptions since 2000 and was even a word featured in some states' legislations. Thus, Rudolph lost the appeal.

04/13/07 Copyright Law: Troll Company

2007-04-21T21:04:00.000-05:00

Troll Co. v. Uneeda Doll Co., 2nd U.S. Circuit Court of Appeals, no. 05-6487-cv (April 13, 2007):

Issue:
Troll dolls are a Danish creation that came into the public domain in 1965 -- the same year as they emerged into the American market -- because a copyright notice formality. Congress enacted the Uruguay Round in 1994 to put the United States in line with the Berne Convention. One of the effects of this round was to retroactively restore any copyrights that had been invalidated in the United States on a technicality. Around the same time as the troll's emergence into the American market, the predecessor in interest to Troll Co. licensed the predecessor in interest to Uneeda the right to create "Wish-nik" trolls in the United States as a licensed product of the Danish company. The predecessor to Uneeda did so right up to, arguably, the early 1990s -- perhaps even 1996. When the copyright was restored in 1994, the Troll Co. sought and was granted a registration certificate in 2000. In 2001 and 2004, the president of Troll Co. met the manager of a Uneeda affiliate at a toy fair, and the manager confirmed for the president that Uneeda was no longer producing Wish-niks. Nonetheless, while Troll Co. planned its resurgence, it learned that as late as 2005 that Uneeda had furnished for Walmart brand new Wish-niks. Troll Co. filed for copyright infringement against Uneeda, and Walmart pulled the Wishniks. Uneeda lost the case, and it appealed arguing that Troll Co. never established that it owned the restored copyright, and -- if it had -- then Uneeda was reliance party entitled to some period of time to clear existing stock.

Pertinent issue of copyright law:
1) How does the restored copyright work in the case of a "reliance party" conflict such as this?

Conclusion:
The court found that the proof that the creator had bestowed the copyright to the trolls on Troll Co. and the fact that Troll Co. had a copyright registration notice in its name for the trolls were good enough to establish that Troll Co. was likely to succeed on the merits of proving that it owned the restored copyright. Further, the court found that a reliance party only existed so long as the infringing act continued uninterrupted. Thus, the hiatus from 1997 to 2005 marked a break in continuity that removed Uneeda from reliance party eligibility.

03/27/07 Trade Secret Law: Porex

2007-04-14T19:39:00.000-05:00

Porex Corp. v. Haldopolous, Court of Appeals of Georgia, 3rd Div., No. A06A1650 (March 27, 2007):

Issue:
Haldopolous worked for Porex before leaving and starting Micropore at one of Porex's client's, Safari's, property. Porex sent a letter. "Porex stated that it was aware that Haldopoulos was manufacturing plastic products on Safari's premises, and professed a 'strong reason to believe' that he was using Porex's trade secrets to make products for Safari that Porex had previously supplied. The letter did not, however, identify any particular confidential information that it believed Haldopoulos was using. Porex ended the letter by requesting information about the nature of Haldopoulos's operations. The letter to Safari similarly expressed concern that the company was supplying Porex's confidential information to Haldopoulos. After Haldopoulos responded to Porex's letter, the company indicated that its concerns were not allayed and expressed disbelief that Haldopoulos could have established his business with only his general knowledge, public information and specifications supplied by customers. These letters, along with the other information in the record, reflect that the only objective information Porex possessed in April and May, 2000 was the knowledge that within a few months of leaving the company's employ, Haldopoulos was manufacturing plastics out of a facility owned by one of its former customers and had hired another former Porex employee to assist him. This information caused Porex to suspect that Haldopoulos was using its trade secrets to supply products to Safari." The trial court granted summary judgment for Micropore, finding that the five-year Georgia statute of limitations on trade secrets had run out after beginning around the time of the letter. Porex appealed, arguing that it did not have reason enough to exercise a due diligence investigation of Micropore's activities until much later, so it would not be until that later time -- within five years of the filing -- that the statute began to run.

Pertinent issue of trade secret law:
1) What is enough evidence to trigger the discovery rule for the running of trade secret action statutes?

Conclusion:
"We find that the information reflected in Porex's letters was insufficient as a matter of law to trigger the statute of limitations," said the court. The court found that Porex did not have enough information at the time of sending the letter to charge the company with the running of the statute at that time. "The letter did not ... identify any particular confidential information that it believed Haldopoulos was using. Porex ended the letter by requesting information about the nature of Haldopoulos's operations. The letter to Safari similarly expressed concern that the company was supplying Porex's confidential information to Haldopoulos. After Haldopoulos responded to Porex's letter, the company indicated that its concerns were not allayed and expressed disbelief that Haldopoulos could have established his business with only his general knowledge, public information and specifications supplied by customers. These letters, along with the other information in the record, reflect that the only objective information Porex possessed in April and May, 2000, was the knowledge that within a few months of leaving the company's employ, Haldopoulos was manufacturing plastics out of a facility owned by one of its former customers and had hired another former Porex employee to assist him. This information caused Porex to suspect that Haldopoulos was using its trade secrets to supply products to Safari." However, the court did find that there was a genuine issue of material fact as to whether a due diligence investigation would have revealed enough information to get the statute to run, so it reversed the grant of summary judgment on the trade secret misappropriation claim.

03/28/07 Trade Secret Law: Hilb, Regal & Hamilton

2007-04-11T07:24:00.000-05:00

Hilb, Regal & Hamilton Company of Atlanta v. Holley, Court of Appeals of Georgia, 2nd Div., Nos. A06A1657/A0611658 (March 28, 2007):

Issue:
When Holley sold his company to HRH, he signed a merger agreement and a noncompete -- both with broad confidentiality restrictions and restrictions on his future employment. Allegedly, he signed these contracts because -- months earlier -- he felt that he had reached a final deal and had taken extensive measures to wind up and transition his business in reliance on the settled deal. Unfortunately, the final deal actually contained far more restrictive clauses than the prior, and Holley -- feeling that he had already escorted himself out of the business and could not reverse the winding up and transitioning process without facing some sort of highly damaging insurer retribution -- signed the contracts anyway. However, when he left, Holley also took with him his electronic organizer that two employees had earlier given him as a Christmas present, and it contained a complete customer list. After he left, Holley was solicited by a competitor of HRH, IOA. After inquiring with HRH counsel about the legitimacy of his restrictions, Holley transitioned to IOA -- taking with him about 20 percent of his former HRH clientèle. He had contacted numerous former clients by sometimes referencing his electronic organizer or other times using publicly available lists. He did eventually erase his customer information on his organizer at the request of HRH. At trial, holley moved for summary judgment on the misappropriation of trade secret charge, and he was denied.

Pertinent issue of trade secret law:
1) In referencing his own personal electronic organizer -- which was equipped with the customer list -- did Holley create a genuine issue of material fact as to whether he misappropriated trade secrets?

Conclusion:
"The record shows that Holley signed a confidentiality agreement in which he promised to keep customer lists confidential, that he took the electronic organizer containing contact information for actual customers with him when he resigned from HRH, and that he used the organizer to look up phone numbers after his resignation. Tangible customer lists are the property of the employer and may warrant protection as trade secrets. The evidence is sufficient to create a genuine issue of material fact as to whether Holley misappropriated trade secrets."

03/26/07 Trademark Law: Milstein

2007-04-10T21:46:00.001-05:00

U.S. v. Milstein, 2nd U.S. Court of Appeals, No. 06-1869-cr (March 26, 2007):

Issue:
Milstein bought foreign versions of domestic prescription drugs and repackaged them to look like their domestic counterparts. Milstein was eventually caught and -- among other results of his successful prosecution -- was ordered to pay approximately $3.5 million in lost sales to the two domestic drug manufacturers to whom his medications falsely designated their origins. Milstein appealed this decision.

Pertinent issue of trademark law:
1) Can violation of a criminal trademark law justify the imposition of paying restitution fees to the wronged trademark holders?

Conclusion:
Yes. The Victim Witness and Protection Act of 1982 provides that in the event that a criminal act causes a loss of property, that property must be returned, or, "if return of the property ... is impossible, impractical, or inadequate, pay an amount equal to the greater of-- (i) the value of the property on the date of the damage, loss, or destruction, or (ii) the value of the property on the date of sentencing, less the value (as of the date the property is returned) of any part of the property that is returned." Said the Second Circuit: "On its face, subsection (b)(1) uses the term 'property' without qualification. Furthermore, that subsection implicitly recognizes that not all property covered by the provision will be tangible in nature, because it provides that if return of the property to the owner is 'impossible, impractical, or inadequate' -- terms neatly applicable to the misappropriation of intellectual property -- restitution may be awarded in an amount equal to the 'value of the property.' The standard measure for determining the value to the victim of infringed trademarks is the victim's lost sales." Thus, the imposition of lost profits on Milstein was appropriate.

03/28/07 Trademark Law: ITC

2007-04-10T10:42:00.000-05:00

ITC Limited v. Punchgini, 2nd U.S. Circuit Court of Appeals, No. 05-0933-cv (March 28, 2007):

Issue:
ITC owns the Bukhara restaurant in New Delhi, and the food at this restaurant has reached a certain level of international acclaim. ITC has opened a few Bukhara-themed restaurants in the U.S., but all have been shut down for a number of years. Some workers from the New Delhi and New York restaurants gathered to create the Bukhara Grill and Bukhara Grill II in the United States -- each with a very closely copied Bukhara restaurant theme. ITC sued, claiming that although it has not used the mark in the United States in more than three years, it is still entitled to trademark protection under a "famous marks" doctrine recognized internationally and by the 9th U.S. Circuit Court. The lower court found for the Grill, and ITC appealed.

Pertinent issue of trademark law:
1) Is the famous marks doctrine U.S. law?

Conclusion:
"We are mindful that Congress has not hesitated to amend the Lanham Act to effect its intent with respect to trademark protection, having done so almost thirty times since the statute took effect in 1947." From this reasoning, the 2nd Circuit parted with the 9th -- saying that Congress constant revision of the Lanham Act establishes that: 1) If it wanted to make the famous marks doctrine law, it would have; and 2) Congress has essentially implied with all of its revisions that any policy arguments in favor of further revision should be directed to Congress, not the courts. However, the court did not rule out that the state of New York might recognize the famous marks doctrine, so it remanded this portion of the inquiry to the lower courts for further consideration. It otherwise affirmed.

03/30/07 Trademark Law: Rennaissance Greeting Cards

2007-04-10T08:37:00.000-05:00

Renaissance Greeting Cards (RGS) v. Dollar Tree Stores (DTS), 4th U.S. Circuit Court of Appeals, No. 06-1131 (March 30, 2007):

Issue:
RGC, in some form or another, had been around and using some form of its 'Renaissance' trademark in the greeting card industry since 1992. It had made a few ventures into expanding its market -- into bows, ribbons, and bags, for example -- but was ultimately bought out by the flower company, FTD. As, primarily, the greeting card brand of FTD, the company takes in less than 1 percent of the greeting card market. DTS, allegedly without having done a trademark check first, created its trademark "Renaissance Gift Bags" in 1993, expanding later into gift wrap, bows, boxes, and ribbon. In 2003, DTS did ultimately do a trademark search on the Renaissance name and decided that enough people used that mark that DTS should (and did) change the trademark to Voila for its bags and other thus-branded products. Meanwhile, in the same year, RGC filed suit against DTS for trademark violations after an effort at discussions went nowhere. The district court granted summary judgment for DTS, and RGC filed an appeal on two points, only one of which dealing with the trademark claim. RGC alleged that the lower court placed too much emphasis on the strength of the mark factor, to the disadvantage of other factors, and thereby committed clear error by finding no likelihood of confusion. Of seven factors evaluated, only three weighed in favor of RGC: similarity of the marks, goods or services, and facilities. The strength of the mark, similarity of advertising, defendant's intent, and evidence of actual confusion all weighed in favor of DTS.

Pertinent issue of trademark law:
1) Does the potential over-weighing of one factor amongst seven per se create clear error?

Conclusion:
The court found that even if the lower court had overvalued the weight of the first factor -- the strength of the mark -- that there were still another four factors weighing against a likelihood of confusion established that the lower court did not create clear error.

03/29/07 Copyright Law: Perfect 10

2007-04-09T13:52:00.000-05:00

Lot of meat to this DMCA safe harbor case; it's a beast:

Perfect 10 v. CCBill, 9th U.S. Circuit Court of Appeals, Nos. 04-57143/04-57207 (March 29, 2007):

Issue:
The executive vice president of Cave Creek Wholesale Internet Exchange and CCBill were the same person, and this person had told the court at one time that the site, hornybees.com, operated by Cave Creek Web Hosting and CCBucks were also related to these other two operations (CWIE). Perfect 10 became aware that hornybees.com and several other sites serviced by CWIE displayed some of the more than 5,000 images of women under the copyright of Perfect 10. Perfect 10 sent three notifications to CWIE of the infringing material, and, Perfect 10 argues, no action was taken. At one point, Perfect 10 seems to have accessed the various sites through CWIE's services, but it was then banned from future access; CWIE argues it was because of Perfect 10's reversal of the charge for CWIE's services. At court, the district court found that CWIE was eligible for certain safe harbors under the DMCA, was entitled to some limited protection under the Communications Decency Act (CDA), and should bear its own attorneys fees. The court also refused to look into the hornybees.com site ownership issue. Both sides appealed the ruling.

Pertinent issues of copyright law:
1) Perfect 10 argued that CWIE did not qualify for safe harbor because it did not 'reasonably implement' a policy for dealing with infringers and complaints of infringement, as dictated by 17 USC 512(i)(1)(A) of the DMCA, but what constitutes reasonable implementation?
2) Do blanks in a DMCA log of infringer activity dispositively establish that the server did not make any effort to track infringers, as required by the DMCA for eligibility under a safe harbor provision?
3) Does ignoring some form of repeated notification automatically establish unreasonableness in the application of an infringer policy?
4) Are examples of poor infringer policy implementation in the cases of non-suit parties relevant?
5a) Does the fact that some of the websites serviced had 'illegal' or other such incriminating domain names act as a per se 'red flag' moment forcing the service provider to act or waive safe harbor?
5b)What if one of the sites posted this disclaimer: "The copyrights of these files remain the creator's. I do not claim any rights to these files, other than the right to post them."?
5c) What if the service provider hosts sites that claim to be password-hacking sites?
6) Does the fact that CWIE blocked Perfect 10's ability to investigate potentially infringing sites hosted by CWIE constitute safe-harbor-disqualifying interference?
7) To the degree that CWIE's contact with the infringing material is transient, is CWIE immune from any charges arising from such transient involvement?
8) Can CWIE take refuge for all of the claims under the safe harbor of § 512(d)'s protection of "information location tools" since some of its allegedly infringing behavior took the form of referential hyperlinks in billing statements?
9) Is CWIE entitled to safe harbor under Section 512(c), even though it accepts a flat set-up fee and monthly service charges for webhosting?
10) Do state-based intellectual property claims limit how much a defendant can rely on the federal CDA for protection?
11) Did the trial court ignore a triable issue on whether horneybees.com was the responsibility of CWIE?
12) Perhaps due to the large number of claims against it, CWIE argued that Perfect 10s claims were frivolous and indicative of a serial filer. Should CWIE be awarded attorneys fees for all of its legwork?

Conclusions:
"The statute does not define 'reasonably implemented.' We hold that a service provider 'implements' a policy if it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue such notifications. ... The statute permits service providers to implement a variety of procedures, but an implementation is reasonable if, under 'appropriate circumstances,' the service provider terminates users who repeatedly or blatantly infringe copyright."

"Perfect 10 references a single page from CCBill and CWIE's 'DMCA Log' ... show[ing] some empty fields in the spreadsheet column labeled 'Webmasters [sic] Name,' [but the] remainder of the DMCA Log indicates that the email address and/or name of the webmaster is routinely recorded in CCBill and CWIE's DMCA Log. CCBill's interrogatory responses ... contain a chart indicating that CCBill and CWIE largely kept track of the webmaster for each website. [In fact,] it is undisputed that CCBill and CWIE recorded most webmasters." The appeals court found that there was no "triable issue of fact [about whether] CCBill and CWIE ... implement[ed] a repeat infringer policy."

"Section 512(c)(3) reads: [that t]o be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following: (i) [the] signature of a person authorized to act on behalf of the [allegedly infringed right] owner; (ii) [i]dentification of the copyrighted work [allegedly] infringed, or ... a representative list of such works at that site[;] (iii) [i]dentification of the [allegedly infringing] material ... and information reasonably sufficient to permit the service provider to locate the material[;] (iv) ... reasonably sufficient [contact information], such as an address, telephone number, and, if available, an [e]mail address ... ; (v) [a] statement [of] good faith belief that [the complained of] use ... is not authorized ... [;] (vi) [a] statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. ... The statute ... signals that substantial compliance means substantial compliance with all of § 512(c)(3)'s clauses, not just some of them." "The first [and second] set[s] of documents ... did not contain a statement under penalty of perjury that the complaining party was authorized to act ... On December 2, 2003, Perfect 10 completed interrogatory responses which were signed under penalty of perjury. These responses incorporated the July 14, 2003 spreadsheet by reference. Taken individually, Perfect 10's communications do not substantially comply with the requirements of § 512(c)(3). ... Permitting a copyright holder to cobble together adequate notice from separately defective notices also unduly burdens service providers. ... It would have taken Fisher substantial time to piece together the relevant information for each instance of claimed infringement."

"Perfect 10 also cites to notices of infringement by other copyright holders [as relevant to the reasonable implementation issue, and the court agrees.] Section 512(i)(1)(A) requires an assessment of the service provider's "policy," not how the service provider treated a particular copyright holder. ... We remand for determination [of the reasonableness of CWIE's implementation of its infringer policy] with respect to any copyright holder other than Perfect 10."

"Because CWIE ... provided services to 'illegal.net' and 'stolencelebritypics.com,' Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree. When a website traffics in pictures that are titillating by nature, describing photographs as 'illegal' or 'stolen' may [simply] be an attempt to increase their salacious appeal[; w]e do not place the burden of determining whether photographs are actually illegal on a service provider. ... Contrary to Perfect 10's assertion, th[e] disclaimer [in question] is not a 'red flag' [but instead] specifically states that the webmaster has the right to post the files. ... While ... sites [purported to be set up for password hacking] ... may well contribute to ... infringement[, w]e find that the burden of determining whether passwords on a website enabled infringement is not on the service provider. ... Password-hacking websites are thus not per se "red flags" of infringement."

"Under § 512(i)(1)(B), a service provider that interferes with 'standard technical measures' ['used by copyright owners to identify or protect copyrighted works'] is not entitled to the safe harbors at §§ 512(a)-(d). ... We are unable to determine on this record whether accessing websites is a standard technical measure, which was 'developed pursuant to a broad consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards process.' § 512(i)(2)(A). We thus remand [this issue.] If allowing access is a standard technical measure, ... Perfect 10's method of identifying infringement -- forcing CCBill to pay the fines and fees associated with chargebacks -- may well impose a substantial cost on CCBill. [Thus,] we remand [this issue as well.]"

"Section 512(a) provides a broad grant of immunity to service providers [('under a more restrictive definition')] whose connection with the material is transient[, but, o]n the record before us, we cannot conclude that [CWIE] is a service provider under [the more restrictive definition of] § 512(a). Accordingly, we remand [on this issue]."

"Even if C[WIE's] provision of a hyperlink is immune ... C[WIE] does not receive blanket immunity for its other services."

"[Perfect 10's allegation that CWIE financially benefits from the infringing behavior by collecting webhosting fees] is insufficient to show that the infringing activity was 'a draw' ... Furthermore, the legislative history expressly states that 'receiving a one-time set-up fee and flat, periodic payments for service from a person engaging in infringing activities would not constitute receiving a 'financial benefit directly attributable to the infringing activity.'"

"The immunity created by [CDA] § 230(c)(1) is limited by § 230(e)(2), which requires the court to 'construe Section 230(c)(1) in a manner that would neither 'limit or expand any law pertaining to intellectual property,' [but] does not contain an express definition of 'intellectual property' ... Because material on a website may be viewed across the Internet, and thus in more than one state at a time, permitting the reach of any particular state's definition of intellectual property to dictate the contours of this federal immunity would be contrary to Congress's expressed goal of insulating the development of the Internet from the various state-law regimes. [Thus, i]n the absence of a definition from Congress, we construe the term 'intellectual property' to mean 'federal intellectual property.' Accordingly, [CWiE is] eligible for CDA immunity for all of the state claims ..."

"Because Perfect 10 has raised a triable issue [of] whether ... CWIE directly infringed Perfect 10 copyrights by operating hornybees.com, and because the district court did not address this issue in its order granting summary judgment in favor of Perfect 10, we remand this issue ..."

"[T]here is ample support for the district court's finding that Perfect 10's legal claims are not frivolous or objectively unreasonable ... and did not abuse its discretion in ... denying costs and attorney's fees to defendants."

I assure you that I tried to keep it brief, but there was just an awful lot to this case.

03/23/07 Trade Secret Law: Saint Matthews Churches

2007-04-02T21:50:00.000-05:00

Saint Matthews Churches (SMC) v. Kachavos, Court of Appeal of California, 2nd App. Dist., Div. 8, No. B188579 (March 23, 2007):

Issue:
Kachavos was hired to work SMC's member database. "SMC takes various steps to secure its membership list from others. It keeps the list locked in a secure location. Only people who work on the list or who have a need to know have access to the list. Several employees, including Kachavos, had motion activated cameras on their personal computers because they were working with sensitive information about members' donations and money reports. To maintain confidentiality, SMC has 'spiked' its membership list by planting names on the list that would alert SMC if other organizations should attempt to use its list. ... SMC created the 'spike' system after an employee used a copy of the list to solicit funds for another organization in the late 1960's or early 1970's. The employee's conduct greatly disturbed the membership and caused such a reduction in tithes and offerings that the church had to declare bankruptcy and start over. About the same time, SMC obtained a restraining order against another employee who let another organization have part of the list. SMC was able to stop this attempted use before it got too far along. ... All SMC employees, including Kachavos, received employee manuals that included both a "Client Confidentiality" section and a "Code of Ethics." SMC mandated that employees follow the Code of Ethics to maintain the integrity of the membership list." When SMC discovered that Kachavos was not erasing the various pieces of the church member list that she had accumulated on her home hard drive, they terminated her and tried to insist that she sign a confidentiality agreement with regard to the list and that she return all SMC's property. Kachavos refused to return the list and would not sign the agreement. Allegedly, she retained the list because she felt that she needed to turn the list over to the local authorities as evidence of something illegal that was happening at the church. Kachavos appealed an order granting a preliminary injunction against her and ordering her to pay attorneys fees.

Pertinent issues of trade secret law:
1) Was there an enforceable trade secret even though Kachavos did not sign the confidentiality agreement?
2) Does Kachavos insistence that she needs the list so that she can bring it to the authorities as evidence of an ongoing crime vitiate her duty to protect any of SMC's trade secrets?
3) Do past attempts at theft reduce the protected information to a public status?

Conclusions:
"When the owner of a trade secret has taken reasonable steps to insure the secrecy of its protected information, a former employee's failure to sign a confidentiality agreement alone will not defeat UTSA's protection." Since SMC had taken significant measures to protect its list, the lack of a confidentiality agreement from Kachavos did not mean that the company failed to relay to Kachavos through other means her duty to protect the information. Further, even though Kachavos argued that she needed the list as evidence, compliance with the court order would not have stopped her from bringing what she knew of any illegal activities in which SMC was involved to the attention of the relevant law enforcement authorities. Last, past attempts at theft do not destroy the existence of a protectable trade secret.

03/22/07 Trade Secret Law: CertainTeed

2007-04-02T21:05:00.000-05:00

CertainTeed Corporation v. Williams, 7th U.S. Circuit Court of Appeals, No. 06-3043 (March 22, 2007):

Issue:
Despite signing a noncompete forbidding him from working for another roofing company for a year, Williams defected from CertainTeed to IKO within a year's time. Williams argued to the court that there was no proof that he had used any of CertainTeed's confidential information or trade secrets at IKO. The district court agreed and found for the defendant Williams, and CertainTeed appealed.

Pertinent issue of trade secret law:
1) Does actual use of confidential or trade secret information need to be manifest to enforce a noncompete?

Conclusion:
The venerable Judge Easterbrook said in relevant part:
"One reason why employers solicit promises such as clause (ii) in addition to promises not to use confidential information is that it may be very difficult to show that the ex-employee has used confidential information. Williams has a great deal of information about CertainTeed's manufacturing processes that could be valuable to IKO and that IKO has no other way of learning. (Witnesses testified that manufacturing processes cannot be inferred from inspecting or reverse engineering the finished shingles.) Williams may be tempted to use this knowledge to make his new plant more efficient. Has he yielded to temptation? Unless Williams confesses, CertainTeed may have no way to tell--the same limits on reverse engineering that prevent IKO from learning how CertainTeed makes its shingles also prevent CertainTeed from learning (from IKO's finished product) whether IKO has used CertainTeed's secret processes." Since it was virtually assured that Williams would be tempted to use his verboten knowledge in his knew position for a competitor, Easterbrook vacated the lower court's decision and ordered a prompt preliminary injunction until the matter was resolved in the lower court.

03/21/07 Copyright Law: In Re Juan O.

2007-04-02T20:44:00.000-05:00

In Re Juan O. v. the People, Court of Appeal of California, 2nd App. Dist., Div. 5, No. B190141 (March 21, 2007):

Issue:
Juan was convicted of counterfeiting after an officer witnessed him transacting a DVD for money at a table full of DVDs with the name of production companies written "clearly" in "poor quality" block letters. The companies listed were the actual production companies for the movies, not the production company that created the counterfeits. Juan appealed the order rendering him a ward of the court because the description of the DVD prints as both clear and blurry contradicted the officer's testimony with itself.

Pertinent issue of copyright law:
1) Does an apparent contradiction in the arresting officer's testimony of self-witnessed counterfeiting -- when it is the only witness testimony -- create a lacking evidentiary situation for a proper conviction?

Conclusion:
The court found that regardless of the officer's conflicting testimony, the DVDs themselves had -- unequivocably by the officer's testimony -- featured the names of production companies that had not produced those poor-quality DVDs. Since the names presented as the producers of those DVDs were not the actual producers, the California counterfeiting charge was established.

03/20/07 Copyright Law: Fartman

2007-03-31T10:31:00.000-05:00

JCW Investments v. Novelty, 7th U.S. Circuit Court of Appeals, No. 05-2498 (Mar. 20, 2007):

Issue:
Scenes a faire or copyright infringement? The subject was a farting doll called Fartman that looked an awful lot like another couch-potato plush with pull-finger farting action, Fred.

Pertinent issue of copyright law?
1) Where do you draw the line between scenes a faire and copyright infringement?

Conclusion:
Access. "Novelty contends that the district court protected too much of Tekky's toy--not just the expression but the idea or common elements known as scenes a faire, which we defined in Atari as 'incidents, characters or settings which are as a practical matter indispensable or at least standard, in the treatment of a given topic.' ... Novelty also takes issue with the district court's finding that it had access to Fred, that Burkhart copied rather than independently created Fartman, and that Fred and Fartman were substantially similar. As we explain below, we are unpersuaded. Tekky had a valid copyright in Fred, Novelty (the company) indisputably did have access to Fred, and the two dolls are so similar that the inference of copying even without access is irresistible." "It is notable that Green, Novelty's president, admits that he saw and perhaps photographed Fred, and that Fred gave him the idea for Fartman. While Burkhart denies having seen Fred or even a picture of him, she drew the model for Fartman at Green's direction. Moreover, Fred was already on the market in the United States at the time Fartman was created. In Moore v. Columbia Pictures Industries, Inc., 972 F.2d 939, 942 (8th Cir. 1992), the Eighth Circuit found that a 'reasonable possibility of access can be established under the 'corporate receipt doctrine,' under which: 'if the defendant is a corporation, the fact that one employee of the corporation has possession of plaintiff's work should warrant a finding that another employee (who composed defendant's work) had access to plaintiff's work, where by reason of the physical propinquity between the employees the latter has the opportunity to view the work in the possession of the former." So, although Burkhart created Fartman, it was at the direction of Green -- who had access to Fred -- and was therefore copyright infringement and not scenes a faire of your typical farting couch patron.

03/26/07 IP News

2007-03-26T21:35:00.000-05:00

It's been a bit since my last news update, but here it is:

"Stop the Falsiness," a tongue-in-cheek parody of Move-On's mission for political earnesty and The Colbert Report's tongue-in-cheek parody of the right wing, has been hit with a take-down order by Viacom, the owners of Comedy Central. -- EFF
Perhaps armed with pitchforks and torches, the Katonah Village villagers meet tonight about whether to fight Martha Stewart for the name of their town. -- LoHud.com
Well, it was bound to happen: digital radio provider XM is being sued by an association of music publishers for its "XM + MP3" program. Welcome to the music industry club; bring a warm jacket. -- Digital Silence
Disney is getting sued by Starz for copyright infringement. Evidently, Disney had an exclusive agreement with Starz for Disney content distribution via the Web, and Disney has been selling its stuff on Wal-Mart.com and iTunes. With the possible absence of its Disney inventory, might iTunes begin to feel a bit drafty? -- gadgetell
Stan Lee Media is suing Marvel for co-ownership of Spidey and his pals -- claiming that Stan Lee had transferred his share of ownership of his characters to the company, meanwhile Stan Lee is suing Stan Lee Media and its management that no longer includes Stan Lee. -- iFMagazine.com
Cablevision will not be able to roll out its boxless DVR service after all, says a local court that found the service tantamount to copying and streaming by Cablevision. -- CE Pro
Audible Magic has been getting good press -- for its copyright policing abilities -- lately. -- Creative Mac

03/15.07 Trade Secret Law: In Re Universal Coin & Bullion

2007-03-25T21:53:00.000-05:00

In Re Universal Coin & Bullion, Court of Appeals of Texas, 9th Dist., Beaumont, No. 09-06-519 CV (March 15, 2007):

Issue:
A judge acknowledged the existence of trade secret privilege in certain claims, denied the existence of such privilege in interrelated claims, and issued no protective order -- though the record showed that protective orders were contemplated. In claims where disclosure was granted, the court found that evidence of fraud warranted the disclosure. The trade secret holder appealed the ruling.

Pertinent issues of trade secret law:
1) Did the lower court abuse its discretion by issuing such a self-defeating order?
2) Can the lower court justify the disclosure of trade secrets on reason of fraud evidence?

Conclusions:
The appeals court found that the lower court abused its discretion. By not issuing a protective order for the trade secrets, the court did not protect the sanctity of the trade secrets, even though the existence of trade secret privilege was acknowledged by the court in some of its orders regarding the disclosure requests. The necessary protective order would have made it possible to disclose trade secret information in the granted disclosure requests while protecting trade secret information in the denied disclosure requests. Further, the lower court granted some of the requests on evidence of fraud, but the proper standard required that the requesting party establish that the information is necessary to its argument. The requesting party made -- nor was asked to make -- such a showing.

03/14/07 Copyright Law: In Re: Napster Copyright Litigation

2007-03-21T21:01:00.000-05:00

In Re: Napster, Inc. Copyright Litigation, UMG Recording, Inc., 9th U.S. Circuit Court of Appeals, Nos. 06-15886/06-72515 (March 14, 2007):

Issue:
On its way to bankruptcy, Napster decided to transform itself to a licensed music distributor. Bertelsmann loaned about $85 million to Napster allegedly to help it transition itself. Napster went bankrupt before it could make this transition. Parties suing Napster for copyright infringement now added Bertelsmann to the litigation -- claiming vicarious and contributory liability. According to the contributory and vicarious liability claims, the idea of a loan to cover Napster's transition to licensed works was just smoke and mirrors, and Bertelsmann actually offered the money for a large stake in Napster's future. These parties sought and were granted access to the confidential conversations between Bertelsmann and its counsel. Bertelsmann appealed before such disclosures could be made.

Pertinent issue of copyright law:
1) Can a strong possibility of finding evidence of contributory or vicarious liability justify the disclosure of attorney-client communications?

Conclusion:
The court found that regardless of what was discovered from the attorney-client communications, the fact was already evident that Bertelsmann gave $85 million dollars to a then-active infringer. Clearly, to what end these funds were intended did not matter; "[a]ny 'financial stake' that Bertelsmann had in Napster and in 'the outcome of [its] litigation against the record labels' was inherent in the loan itself, regardless of whether 'overhead costs' included litigation expenses or simply rent, salary, servers, and software." Since Bertelsmann's loan prolonged the demise of an infringer, the need to disclose attorney-client conversations was not manifest -- even under a crime-fraud argument.

03/05/07 Trade Secret Law: Woo

2007-03-17T20:13:00.000-05:00

Robert C. Woo, DDS v. Fireman's Fund Insurance Company, Court of Appeals of Washington, Div. 1, No. 56944-9-I (March 5, 2007):

Issue:
When Woo -- while working on an employee's mouth -- played a very poorly chosen practical joke on her while she lay unconscious, she chose to sue him for intentional tort and medical negligence. Fireman's Fund declined to cover Woo for the joke, and Woo sued Fireman's Fund. After two years of litigation, the lower court granted a motion by Fireman's Fund to render the claims manuals that had been introduced in trial two years' prior as protected trade secrets. Fireman's Fund, in its argument, had pointed to another case that had had established that a claims manual was a trade secret, but the record in the case here did not show any protective efforts by Fireman's Fund prior to the sealing. Woo appealed the decision, and Fireman's Fund argued -- in general terms -- that the information contained in the manuals was presented in a novel and unique way, in accordance with the state definition of trade secrets granted for commonly available materials.

Pertinent issues of trade secret law:
1) Is a claims manual always a trade secret?
2) What makes a claims manual a trade secret?

Conclusions:
The court found that just because another case had found a claims manual was a trade secret did not mean that the claims manuals in this case were -- per se -- trade secrets. The prior case only served to show that claims manuals could be trade secrets. Further, the fact that these claims manuals were public knowledge for two years before finally being sealed and that the Fireman's Fund could not list any specific examples of innovation in their manuals -- only conclusorily assert their innovativeness -- created an improper framework for the lower court to have granted the motion to seal the manuals as trade secrets. "In summary, there is insufficient evidence of a trade secret. The manuals lack novelty, and Fireman's Fund has not maintained their secrecy. ... The trial court lacked a tenable basis for sealing the exhibits and abused its discretion by doing so."

03/09/07 Trade Secret Law: Gould & Lamb

2007-03-14T21:25:00.000-05:00

Gould & Lamb v. D'Alusio, Court of Appeal of Florida, 2nd Dist., No. 2006-2552 (March 9, 2007):

Issue:
When D'Alusio started at his company, he signed a noncompete agreement. When he was fired, the severance agreement mentioned no noncompete provision. The company -- after the agreement was made -- sought to have the severance agreement amended to include the noncompete, and the lower court refused. The company appealed, asserting that the company had higher-than-average profit margins, D'Alusio knew the company's top clients, and -- "in the briefest and most general terms" -- asserted "Gould & Lamb's desire to protect 'marketing plans, product plans, business strategies, financial information, forecasts, and the like.'"

Pertinent issues of trade secret law:
1) Do severance agreements trump preexisting noncompetes?
2) Was there need to impose a noncompete on D'Alusio anyway because of the existance of trade secrets at the company?

Conclusion:
The appeals court agreed with the lower court that the severance agreement should not be amended to include the noncompete, agreeing in particular "that no mistake of fact or inequitable conduct by Mr. D'Alusio would support reformation of the severance agreement." Further, the appeals court found no trade secrets at the company in need of protection. With regard to the company's offerings of evidence of trade secret: "Generalized statements of concern cannot substitute for proof."

03/12/07 IP News

2007-03-12T18:51:00.001-05:00

Here's some recent IP news:

Colleges' favorite teams are now the teams of IP lawyers. -- Brandweek
There's border trouble between the United States and Canada when it comes to biodiesel. -- West Central Tribune
Of the 268,000 patents granted last year in China, 80 percent were granted to applicants local to China. -- People's Daily Online
In Indiana, one does not need to put counterfeit goods into commerce in order to be charged for brand counterfeiting. -- The (Sharon) Herald
People keep cybersquatting all over the Internet. -- NewsFactor Network
Homeland Security workers have accidentally file-shared sensitive data while downloading their favorite music files from P2Ps; whoops! -- InformationWeek
Small-time Internet radio is already starting to die out, now that the royalty rates have been set for Internet radioplay on a disheartening per play basis. -- Reuters, UK
The Fair Use Act is being proposed as an answer to the persecution of academia by copyright holders. -- Stater Online

02/26/07 Trade Secret Law: Clarus Systems

2007-03-10T21:22:00.000-05:00

Clarus Systems v. Variphy, Court of Appeal of California, 1st App. Dist., Div. 4, No. A115360 (Feb. 26, 2007):

Issue:
Tran and Hoo left Clarus to found Variphy -- despite the fact that they were both signatories to a nondisclosure clause in each of their employment agreements. Clarus sued the two former employees and the new company for misappropriation of trade secrets and various other claims stemming from the misappropriation claim. In accordance with an arbitration clause in the provisions of their employment agreements, Tran and Hoo moved for arbitration. The court denied the motion because Variphy was not a signatory. Tran, Hoo, and Variphy appealed.

Pertinent issues of trade secret law:
1) Does a defendant company that was not a signatory to an employment agreement featuring nondisclosure and arbitration clauses but is a product of the alleged misappropriation of trade secrets prevent its codefendant founders -- both signatories -- from compelling arbitration?

Conclusion:
The appeals court found that because the nature of the claims against Variphy -- the nonsignatory -- were "intimately founded in and intertwined" with Tran and Hoo's alleged contractual breach, "under the applicable law, Clarus can be required to arbitrate its claims against Variphy at Variphy's behest."

02/28/07 Trademark Law: M2 Software

2007-03-08T21:13:00.000-05:00

M2 Software v. Viacom, 9th U.S. Circuit Court of Appeals, No. 04-56794 (Feb. 28, 2007):

Issue:
MTV owns MTV2, a second channel devoted to music television. MTV created a new logo for MTV2: "M2: Music Television." M2 Software (M2S) is a software company that had trademarked "M2." and was the senior user of that branding. In 1998, M2S sued MTV for reverse confusion trademark infringement, lost at summary judgment, and appealed. MTV maintained that it was not aware of the trademark issue and felt its products wholly different. M2S maintained that MTV's interactive software put it into competition with M2S, and the 1999 amendments to the Lanham Act did away with any willfulness requirement.

Pertinent issue of trademark law:
1) Do the 1999 amendments to the Lanham Act have a retroactive effect?

Conclusion:
No. The court found that whether the 1999 amendments did eliminate the willfulness requirement was not at issue, since the amendments had no expressed retroactive effect. "The amending statute contains no express provision mandating retroactive enforcement, and the 'traditional presumption' prohibits retroactive enforcement of provision that would 'increase a party's liability for past conduct.'" Thus, the decision of the lower court that the lack of willfulness was fatal to the claim was not in error.

03/04/07 IP News

2007-03-04T12:57:00.000-05:00

It was a slow week for decisions, but here's the latest IP news:

European copyright societies are calling upon YouTube and MySpace to license the copyrighted works they display. -- DigitalMediaWire
The Copyright Royalty Board has set fees for Internet radio play at a per song play -- not percent of revenue -- rate. -- Radio INK
IP verdicts accounted for over $1.3 billion last year. -- Law.com
XenSource sent notice to other hypervisor and hypervisor-compliant software companies that it owns the word, Xen. (Hypervisors are software designed to enable multiple OS's on a single computer.) -- DABCC
The NFL is claiming trademark rights on the "Big Game." -- Examiner.com
Starbucks continues its trademark fight with the country that is arguably the home of the first coffee bean, Ethiopia. -- TimesOnline, UK

(TM) Hell's Angels? -- ABC News 10

02/22/07 Trade Secret Law: Mark III Systems

2007-03-02T22:29:00.000-05:00

Mark III Systems v. Sysco Corporation, Court of Appeals of Texas, 1st Dist., Houston, No 01-05-00488-CV (Feb. 22, 2007):

Issue:
BI and Mark III worked together on many projects, including a Sysco project for which the two shared responsibility. Huckins, from Sysco, was hired to coordinate the work between the two companies. At some point, BI obtained -- allegedly through Huckins -- Mark III's bids for its part of the project, and BI underbid Mark III -- thereby winning the account. Mark III sued Sysco for "participating and assisting" in the misappropriation of trade secrets. Incredulous of the validity of the claim, the lower court dismissed the action. Mark III appealed -- arguing that they had a legitimate claim for which there was more than a scintilla of evidence.

Pertinent issue of trade secret law:
1) Can one be guilty of participating and assisting in the misappropriation of a trade secret?

Conclusion:
Not in Texas. "Mark III offers no authority, and we found none, that embraces a cause of action for participating and assisting with the misappropriation of trade secrets and commission of fraud. We decline to adopt such a cause of action today."

02/23/07 Trademark Law: Universal Communication Systems

2007-02-28T23:06:00.000-05:00

Universal Communication Systems v. Lycos, 1st U.S. Circuit Court of Appeals, No. 06-1826 (Feb. 23, 2007):

Issue:
Lycos allowed several messages that were disparaging of UCS to be posted to Lycos' bulletin boards. As a result, UCS filed suit against Lycos for various claims, including trademark dilution. The lower court found that 47 USC 230, governing Internet postings, protected Lycos and dismissed the complaint. Lycos appealed on various grounds that included that 47 USC 230(e)(2) could be construed to prevent the dismissal of intellectual property claims raised against bulletin board posters and their hosts.

Pertinent issue of trademark law:
1) Can a bulletin board posting that utilizes a trademark name in its commentary on the company bearing the trademark be a form of trademark dilution?

Conclusion:
"The injury that UCS alleges, however, is not a form of trademark injury. Trademark injury arises from an improper association between the mark and products or services marketed by others. ... But any injury to UCS ultimately arises from its being criticized on the Raging Bull site. To premise liability on such criticism would raise serious First Amendment concerns." Thus, because the most plausible basis of complaint in the use of the trademarked name was defamation, not dilution, Section 230(e)(2) -- which preserves intellectual property claims -- could not be properly invoked.

02/21/07 Copyright Law: Lopez

2007-02-27T21:05:00.000-05:00

Lopez v. Musinorte Entertainment Corp., 9th U.S. Circuit Court of Appeals, No. 05-15486 (Feb. 21, 2007):

Issue:
For 20 years, Lopez was the drummer for Los Huracanes del Norte (Huracanes), and -- as of court -- Lopez wanted his due. The question for the court was whether he was a joint author for the purposes of copyright law. The Huracanes argued that he did not write any of the songs, so he was not entitled to share in the copyright over the authorship. Lopez argued that he was loooking for rights in the recordings, not the songs -- so he should get to share in the copyright. The lower court granted summary judgment for the Huracanes, and Lopez appealed.

Pertinent issue of copyright law:
1) What factors would help estabish that a band member has a share in the copyright of his band's music recordings?

Conclusion:
"First, Lopez came forward with evidence that he made an independently copyrightable creative contribution to the sound recordings on par with the other musicians when he developed and performed the rhythmic and percussion elements during the master recordings. The fact that Lopez did not write the songs is irrelevant. None of the band members wrote the songs. Lopez was not claiming copyrights in the songs, just in the recordings. Second, Lopez came forward with evidence of the objective intent of the parties to be joint authors when the work was created. Absent a written contract among the parties, we apply the factors set forth in Aalmuhammed. 202 F.3d at 1234-35. Although the parties had not signed written contracts with each other, the individual band members jointly signed the 1992 Artist Recording Agreement and agreed that they owned the catalog of already-recorded albums and 'retain[ed] all ownership rights, including copyright,' in those albums and in the three new 'licensed albums.' In addition, Lopez testified that he exercised control over his part of the music-making by developing and performing the rhythmic and percussion elements during the studio recordings. Finally, the parties agreed that the band members were equally billed in recordings and performances for the 20 years that Lopez played as a drummer in the band. This evidence was sufficient to create a genuine issue of material fact regarding the parties' objective intent to be joint authors under the Aalmuhammed factors." Thus, the summary judgment in favor of the Huracanes was reversed and remanded for further proceedings consistent with the findings of the appeals court.

02/26/07 IP News

2007-02-26T08:55:00.000-05:00

Last week was another case-filled week, but -- at long last -- your IP news:

Apple and Cisco have agreed to share equal worldwide rights over the iPhone trademark, and Apple will look into making the Cisco and Apple products more interoperable. -- The Trademark Blawg
EFF has filed an amicus brief for Google in its dispute over whether sponsored links can count trademarks among their trigger terms. -- iTNews, Australia
Somebody at Microsoft was asleep at the wheel ... Office Live, LLC is filing suit against Microsoft for infringing upon its trademark. -- Tech2
A federal jury in Seattle has agreed that Microsoft is liable for over a billion dollars in a patent infringement suit filed by -- France's Lucent Alcatel. While the common knowledge dictates that Germany's Fraunhofer Institute is who you need when you're talking MP3s, Lucent Alcatel -- according to the federal court -- has the CD-MP3 conversion market. -- Casper Star Tribune
The United States has put its plans to bring China to international court for IP piracy on hold as it seeks to come to terms with China instead. -- VOA
In New Zealand, a new piece of legislation before Parliament will make librarians and educational institutions the caretakers of any fair use requests; critics are screaming apocalypse. -- ComputerWorld, New Zealand
P2Ps, BitTorrent and Joost, are being heralded by copyright owners as they plan to turn their services into vendors of authorized copyrighted content. -- PCPro, UK
MySpace and YouTube are going legit -- using Audible Magic to detect infringing works uploaded to their sites. -- The Spacelab

02/12/07 Trade Secret Law: BFS Retail

2007-02-26T08:10:00.000-05:00

BFS Retail and Commercial Operations v. Smith, Court of Appeals of Tennessee, at Nashville, No. M2006-00163-COA-R3-CV (Feb. 12, 2007):

Issue:
"As a condition of promotion, [Bridgestone Firestone (BFS)] required that ... Smith[, later to be put in charge of BFS' Pittsburgh region,] sign an employment agreement containing a covenant not to compete which prohibited ... Smith, for a period of eighteen months after termination, from competing with [BFS] with respect to its 'Company Business' in any 'area where [he] worked or had responsibilities.' On March 7, 2005, Mr. Smith gave two weeks notice of his resignation and of his intent to accept a new position with BFRC's competitor, Tire Kingdom, as the regional director of sales in South Carolina." In an action seeking to enjoin Smith from working for Tire Kingdom, the lower court found that the conditions of the noncompete were not violated as Smith was not seeking employment in the same Pittsburgh region as his in his former BFS assignment. BFS appealed -- arguing that its various regions work as a network, not in a vacuum and that its postponement of employment clause -- which provided 125% of an employee's base pay for the 18 month period of the noncompete -- compensated for the lack of geographic limitations on the noncompete.

Pertinent issue of trade secret law:
1) Does resignation from a regional assignment in a nationwide company allow for immediate future employment in a different regional assignment for a different company, despite the existence of non-geographically limited non-compete?

Conclusion:
"Whether the competitive restrictions of the Agreement are geographical or include products areas involves material questions of fact as to the intentions of the parties. The judgment of the trial court granting summary judgment to [Smith] is reversed and the case remanded for further proceedings. Costs of the cause are assessed to [Smith]." The court agreed with BFS that BFS' assertion that BFS acted as a network and not a series of vacuums and that the compensation during the 18 months of the noncompete made up for any lack of geographical limitation were material questions of fact that were not assessed in the lower court. Since assessments of these facts could have spoken to the intentions of the parties, the decision of the lower court had to be overturned and relitigated.

02/13/07 Trade Secret Law: Apa Security

2007-02-24T22:52:00.000-05:00

Apa Security v. Apa, Supreme Court of New York, App. Div., 2nd Dept., No. 2006-04610 (Feb. 13, 2007):

Issues:
Apa worked at ASec from time to time, and Rose worked at ASec in the sales division. Apa and Rose tried and failed to execute a takeover of the company, and Rose -- who was the only one of the two still at ASec at the time -- was terminated. Apa and Rose started Apa & Rose Security thereafter, and the company took as many of its customers companies that ASec counted among its clients. ASec filed a claim against Apa & Rose alleging trade secret misappropriation, among others, and seeking an injunction. There was no confidentiality agreement or noncompete in place.

Pertinent issue of trade secret law:
1) Does the poaching of customers from one company presume a misappropriation of trade secrets?

Conclusion:
The court found that the customer list could have been easily ascertainable to any person without access to ASec's customer list. Further, ASec provided no proof that Apa or Rose participated in any level of copying or memorizing of ASec customers prior to founding their own company. With such a lack of evidence on ASec's side, the court could not say that ASec had met its burden for establishing the need of an injunction, and the injunction was denied.

02/13/07 Trade Secret Law: Chun

2007-02-23T20:23:00.000-05:00

New Jersey v. Chun, Supreme Court of New Jersey, No. 58,879 (Feb. 13, 2007):

Issue:
The reliability of the Alcotest came into question, and the courts wanted to evaluate the product to ensure its reliability. Unfortunately, the maker of the Alcotest was unwilling to share many aspects of the product due to concerns of trade secret. Rather than secure patents or copyrights on the Alcotest, the maker instead chose to rely on the power of trade secret law to maintain the profitability of its product indefinitely. The court and the maker reached a standoff.

Pertinent issue of trade secret law:
1) What compromise could be reached to assure the reliability of the product while not endangering the maker's trade secrets?

Conclusion:
"ADDENDUM A

(1) The software source code will be examined by an independent software house agreeable to Draeger and the parties in this case. This software house will examine the source code for obvious concerns within the code, and also for consistency with the algorithms as documented in the software. The source code, with the algorithms as documented in the software, will be provided to the independent software house under a confidentiality agreement acceptable to Draeger and will not be disclosed to the public, thereby preserving whatever trade secrets Draeger asserts. However, the software house will certify to the State and the public that the software properly employs the algorithms and that no errors exist in the source code.
(2) The software will be programmed so that it will be "locked" and incapable of change without such change being printed out on any alcohol influence report produced by an Alcotest 7110 MKIIIC in which it is employed. The "software lock" will be verified by the independent software house specified in (1) and any subsequent revisions made under the process contemplated which result in subsequent software versions will be reflected by the printout of the new version numbers on the alcohol influence report.
(3) The Alcotest 7110 MKIIIC using the newly-created software version, after undergoing the source code review as specified in (1), will be tested against and measured in compliance with the O.I.M.L. specifications adopted and current at the time of such tests. This examination will be undertaken by a laboratory in the United States, and the software will be revised, if necessary, in accordance with any deficiencies in the event that the O.I.M.L. specifications are not met for anticipated version NJ 3.12. In the event the O.I.M.L specifications are not met and the software is modified, the modified software will be presented to the independent software house indicated in (1) for its review and certification. It is expected that if the software house is satisfied the changes necessary are minor, the secondary review will be substantially modified compared to the initial review.
(4) Draeger agrees to sell to New Jersey attorneys and experts Alcotest 7110 MKIIIC units on the same terms as are in force with the State of New Jersey at the time the purchase was made with the then-current version of the New Jersey software. Draeger also agrees to offer training to the purchasers and the purchaser's employees in regard to use of the Alcotest 7110 MKIIIC on reasonable monetary terms and to warrant and service the instruments at the same rates as paid by the State of New Jersey. In the event that future software revisions take place, Draeger will facilitate upgrades of purchased Alcotest 7110 MKIIIC units to the then-currently available New Jersey software version. (Although Draeger understands that this entire agreement is subject to review and reasonable approval by the State of New Jersey, this power is clearly within the State's purview. However, the intent of this clause is to make all current versions available to all non-governmental owners for a reasonable administrative fee.)
(5) Further, it is contemplated that in the future when the State of New Jersey requires any further software revisions, the State would give notice of such to the public and the independent software house would examine the source code changes and determine whether a complete review is necessary or whether the software house could certify that the changes made would not require an additional software review and O.I.M.L. testing. In the event of any major changes in the operational conditions of the instrument, a new and complete O.I.M.L. procedure laboratory examination, or such subset of such tests as the laboratory may determine are appropriate in light of the extent of the changes per the revision, would be required. To the extent possible, the parties envision using the same software house and testing lab so as to have the benefits of institutional memory; the future stability of those organizations is an important element to consider in deciding which to retain for these purposes."

02/15/07 Trade Secret Law: Madison/Graham Colorgraphics

2007-02-23T18:04:00.000-05:00

Madison/Graham Colorgraphics v. Graphic Press, Court of Appeal of California, 4th App. Dist., Div. 3, No. G034973 (Feb. 15, 2007):

Issue:
Good was retained by ColorGraphics as a sales person. His main accounts either left the company or moved to a new competitor, Graphic Press. Graphic Press was run by industry leaders and had taken possession of Good's primary sales account. Good got a job with Graphic Press, but continued to work at ColorGraphics several more months. Allegedly, Good told ColorGraphics that he was just tying up loose ends at ColorGraphics, but he actually devoted the majority of his time, allegedly, manipulating the two positions to best benefit his own bottom line, which in turn primarily benefitted Graphic Press. When ColorGraphics became wise, it brought suit against Good, Graphic Press, and Graphic Press' president for multiple claims including trade secret misappropriation. Because Graphic Press was allegedly ignorant of Good's double-dealing, ColorGraphics sought damages against Graphic Press under the doctrine of respondeat superior. Graphic Press argued that what Good allegedly did was outside the scope of his duties and forbidden in the employee handbook. Nonetheless, the jury found Good to be liable for acting purposefully outside the scope of his duties at Graphic Press when he misappropriated trade secrets and otherwise allegedly sabotaged ColorGraphics, and the jury also found that Good acted negligently when Graphics Press allegedly looked away from what Good was doing. Graphic Press appealed the decision.

Pertinent issues of trade secret law:
1) Were the findings of the jury consistent with each other, and do they need to be?
2) Should Graphic Press be held responsible for Good's acts under the doctrine of respondeat superior?

Conclusions:
The court found that Good could not be acting inside and outside of the scope of his duties when he committed the same acts, so the jury findings were inconsistent. Since a finding of intentional action specifically precludes the possibility of negligent action on the same acts, such a jury determination could not stand. Further, while there was evidence that Graphic Press committed negligent interference, the court also found that there was "no legal ground to hold [that Graphic Press] would owe a duty of care to not act negligently." Absent a finding of a wrongful action on the part of Graphic Press, Graphic Press could not be held liable for the trade secret misappropriation, even considering the doctrine of respondeat superior, since such a finding would require a wrongful act.

02/15/07 Trade Dress Law: Hassan

2007-02-22T21:47:00.000-05:00

Hassan v. Greater Houston Transportation Company, Court of Appeals of Texas, 1st. Dist., Houston, No. 01-05-00494-CV (Feb. 15, 2007):

Issue:
Yellow Cab had been around for decades, with its distinctive yellow paint job. Many other cab companies sprung up around Yellow Cab sporting yellow paint jobs as well. Yellow Cab sent out cease and desist letters -- offering to repaint competitor cabs at Yellow Cab's expense -- and Safe Cab refused. Yellow Cab brought suit. In court, the jury was told that "'secondary meaning' means that the color at issue has acquired a meaning beyond the primary meaning, by having become associated by use, promotion or advertising, in the public mind with the business of Yellow Cab." Safe Cab objected to this characterization, instead offering that "secondary meaning requires in the minds of the consuming public the color has become uniquely linked with only one provider of the service to the exclusion of all other providers of the service as causes confusion to its origin." The objection was overruled. Safe Cab also argued that there was, in accordance with several prior federal cases, no subject matter jurisdiction for Yellow Cab to bring the trade dress case, since the "in commerce" requirement was jurisdictional. This objection was also overruled. Safe Cab lost and appealed.

Pertinent issues of trade secret law:
1) Does use "in commerce" imply a subject matter jurisdictional requirement?
2) Was the jury instruction on secondary meaning appropriate?

Conclusions:
The court found that -- as a state court -- it was not necessarily under the restriction of abiding by federal case law. Further, the state court was a court of general jurisdiction, unlike federal courts. Thus, unlike in federal court, every matter brought before the court was presumed to be in the subject matter jurisdiction of the court unless proven otherwise. The court, therefore, took the initiative to presume that the commerce requirement as it applied in state court only spoke "to the right of the plaintiff to obtain relief, not to the right of the court to entertain the suit." However, "[t]he instruction given to the jury in this case did not track either the instruction in the federal model charge or the language found in Two Pesos or Wal-Mart. ... The definitions propounded by the [U.S.] Supreme Court ask for more than the 'association' of a color through advertising and other promotional activities; the correct definition requires that the trade dress be 'uniquely associated with a specific source' and 'identify the source of the product rather than the product itself.'" Thus, the jury instruction was erroneous, and the court found that the error could have prejudiced the outcome of the case -- since the jury was, by the given definition, not able to consider the effect of the other yellow-painted cab companies on the potential for secondary meaning. Thus, this portion of the case was, as Safe Cab alleged, a point of error.

02/13/07 Trademark Law: The Grateful Palate

2007-02-22T21:28:00.000-05:00

The Grateful Palate v. Joshua Tree Imports, 9th U.S. Circuit Court of Appeals, No. 06-55855 (Feb. 13, 2007):

Issue:
Citing a California trademark case brought in federal court, a district court rejected The Grateful Palate's complaint that its right to first sale over its trademarked good had been infringed -- finding that without more the sale did not constitute trademark infringement. While brought in federal court, the decision rested on California trademark law grounds, which were analogous to federal trademark laws. The Grateful Palate appealed.

Pertinent question of trademark law:
1) Has the issue of whether the violation of a trademark owner's right of first sale amounts to trademark infringement been settled in federal case law?

Conclusion:
The court found that -- although the prior case had been brought in federal court and was rested upon California law that was analogous to federal trademark law -- a decision rested upon only state laws could not have settled a trademark infringement claim based on federal law, no matter how analogous.

02/14/07 Trademark Law: Optimum Technologies

2007-02-21T09:36:00.000-05:00

Optimum Technologies v. Home Depot, 11th U.S. Circuit Court of Appeals, No. 06-14432 (Feb. 14, 2007):

Issue:
Optimum made adhesives that held rugs and flooring in place. The product, Lok-Lift, was sold in Home Depot locations through Optimum's distributor, Henkle. Henkle developed its own flooring adhesive, calling it Hold-It. It notified Home Depot that it was going to be phasing out its distribution of Lok-Lift as it instead substituted Lok-Lift product with Hold-It. Home Depot allowed the substitution, but did not change its aisle markings or cash register receipts to reflect the change in products. When Optimum found out, it notified Home Depot of its error by sending it a courtesy copy of the complaint Optimum had against Henkle for breach of a confidential relationship. Home Depot did not, at that time, make the appropriate changes. About five months later, optimum notified Home Depot that it had visited some Home Depot locations and noticed that the trademark issue was not rectified and needed to be immediately. Home Depot took emergency maintenance action to make all necessary changes and offered to help coordinate visits from Optimum to ensure that the Hold-It product was not being misleadingly called Lok-Lift. Nonetheless, a few months later, Optimum filed suit against Home Depot seeking Home Depot's profits on the Hold-It products sold with the Lok-Lift identification, enhanced damages, and attorney fees. Home Depot argued on a motion for partial summary judgment that even if it had infringed Optimum's trademark, Optimum was not entitled to the profits, enhanced damages, or attorney fees. The court agreed, and Optimum appealed.

Pertinent question of trademark law:
1) Does negligent store misidentification of a clearly labeled product entitle the holder of the trademarked product not being sold to the profits on the product that is sold with the mistaken store identification?

Conclusion:
"This Court has determined that an accounting of a defendant's profits is appropriate where: (1) the defendant's conduct was willful and deliberate, (2) the defendant was unjustly enriched, or (3) it is necessary to deter future conduct." There was "scant" evidence to show that Home Depot's actions were deliberate, no evidence to show that sales of Hold-It were attributable to the store misidentification, and Home Depot -- which apparently did not benefit from the issue -- had rectified the issue prior to the start of the case, so there was no threat of future actions of the like. Further, because there was discernibly no ill intent on the side of Home Depot, in the events leading up to court or in court itself, there was no need for an award of attorney fees or enhanced damages.

02/15/07 Trademark Law: Starbucks Corporation

2007-02-21T09:09:00.000-05:00

Starbucks Corporation v. Wolfe's Borough Coffee, 2nd U.S. Circuit Court of Appeals, No. 06-0435-cv (Feb. 15, 2007):

Issue:
Wolfe's marketed a coffee under the name of "Mister Charbuck's Coffee," and Starbucks sued for trademark infringement and trademark dilution. The court found that Starbucks had not established trademark infringement or actual trademark dilution. On Oct. 6, 2006, the Federal Trademark Dilution Act (FTDA) was passed, and Starbucks sought review of the lower court decision.

Pertinent issues of trademark law:
1) What major change to dilution law was effected by the FTDA?
2) Does that change apply to the case at hand, decided prior to the passing of the FTDA?

Conclusions:
The FTDA changed the standard for proving dilution from one where actual dilution must be shown to one where a likelihood of dilution must be shown. This essentially changes the framing of the core question for trademark dilution litigation from "Were and/or are people confused?" to "Could people be confused?" The court found that this change did affect the lower court decision, and the decision was vacated for further proceedings in recognizance of the passing of the FTDA. In the new case, Starbucks will have to show that the Starbucks and Mr. Charbucks brands are likely to be confused with each other, instead of showing clear evidence that the Mr. Charbucks brand has confused consumers of Starbucks products.

02/12/07 Copyright Law: Phelps & Associates

2007-02-20T22:07:00.000-05:00

Phelps & Associates v. Galloway, 4th U.S. Circuit Court of Appeals, No. 05-2266 (Feb. 12, 2007):

Issue:
Phelps creates custom homes for a living, and he had designed a house for Bell and Brown. The deal fell through, but -- with a few minor adjustments -- Phelps was able to sell the design for $20,000 to Bridgeford. Meanwhile, Galloway did not like the plans that the architect of his dream retirement home had created, so he took his son-in-law -- a construction worker -- to look over some homes in an upscale area a bit of distance away. When Galloway found a house that he liked, he had his son-in-law ask for the plans. When the son-in-law confirmed with the owner -- Bridgeford -- that the Galloway retirement home would not be built nearby the Bridgeford home, Bridgeford let the Galloways have the plans for the house. On each page of the plans was a notice warning that the plans were copyrighted by Phelps and could not be reused without permission. When the workers had questions on the plans, they contacted Phelps' office for clarification. One worker on the Galloway house expressed copyright concern to Galloway, but Galloway responded that the copyright owners would have to catch him first. Eventually, Phelps caught on to what was happening and filed a claim against Galloway for copyright infringement, seeking $200,000 in profits Galloway allegedly realized as a result of the infringement and an injunction asking that: 1) the continued construction of the house be enjoined, 2) the court prevent the legal conveyance of the house to any successors, and 3) that the plans be destroyed or returned promptly. Galloway argued that the valuation of the house was going to be less than the amount of money put into its creation. This was evidenced by the sale of the Bridgeford home at a loss as well as numerous receipts presented by Galloway. The court found that the Bridgeford plans were derivative and that there were zero profits on the Galloway house, but a $20,000 fee was due Phelps. The injunction was denied. While the appeal pended, Phelps never sought an injunction for the period before appellate resolution, and Galloway paid the $20,00 and completed the house.

Pertinent issues of copyright law:
1) Should the lower court have instructed the jury that the copyrighted work was only the material distinct to the Bridgeford design; a derivative work?
2) Were the damages correctly assessed?
3) Should the injunction, in any part, have been granted?

Conclusions:
The lower court was incorrect in its determination that the copyright was a derivative work. While the Bridgeford home was a derivative work in relation to the Bell and Brown home, the Bell and Brown home was itself the copyright of Phelps as well. Thus, in relation to Galloway, the entirety of the Bridgeford home was protected by copyright law, since the derivative and original copyrights merged under the one owner. However, the monetary damages were correctly awarded. Although Phelps argued that the court incorrectly assessed the damages at $20,000 for infringement of the derivative work, the appeals court found that the jury -- though instructed that the work in question was a derivative work -- was told to consider the entire house when assessing damages. Thus, the $20,000 award was not meant to represent the increase in the house's value as a result of the derivative work improvements -- since the identical Bridgeford home was sold at a loss, and Galloway himself seemed on track to also take a loss at sale -- but it was the fee amount that Phelps would have charged for a custom home design, had Galloway purchased the design from Phelps. This $20,000 award of damages was all that was needed to make Phelps whole, converting the copyright infringement into a lawful sale. "By bringing an infringement action against Galloway, Phelps & Associates essentially sold him its interest in the house in exchange for the appropriate remedies under the Copyright Act. Once those remedies have been sought and a judgment has been rendered, the copyright holder loses his right to sell that particular manifestation of his copyright." Thus, the denial of an injunction on completing the house or of leasing or selling the house would not have been equitable, since Galloway -- having paid the $20,000 before completing the home -- was converted from an infringer to a lawful purchaser before taking any further action that, prior to the $20,000 payment, would have been continued infringement. As a lawful purchaser using a lawful copy of a copyrighted work, Galloway was entitled to be free to complete the house and to be free from restraints on sale or lease. However, the court found problematic that the lower court did not seem to give much analysis on the motion to force Galloway to destroy or return the plans for the Bridgeford/Galloway home, finding that Phelps had already been made whole by the jury award and required no further remedy. "Being made whole in the circumstances of this case, however, could only have referred to the jury award of damages for the cost of a license and its finding that Galloway realized no profits for disgorgement. It could not have related to other questions, such as the existence of infringing plans or future acts of infringement." Thus, the court sent back this portion of the case for further deliberations.

02/13/07 Copyright Law: Roger Miller Music

2007-02-20T17:45:00.000-05:00

Roger Miller Music v. Sony/ATV Publishing, 6th U.S. Circuit Court of Appeals, Nos. 05-6824/6880 (Feb. 13, 2007):

Issue:
Miller created music from 1958 to 1964, and he received royalties for these creations in accordance with several contracts that Miller made with Tree (Sony) to forfeit all copyright and renewal copyright over the music in exchange for royalties. Miller died in 1992, after the majority of his work had vested a renewal for their copyrights but before his 1964 works had vested. In 1995, Miller's family sent Sony an audit report, mentioning underpayments for royalties due right up to and extending into the renewal period for Miller's works. In December of 2004, the family filed suit against Sony on claims of copyright ownership and infringement dating back to the beginning of the copyright renewals of each year's works. In court, Sony argued that it owned all of Miller's music from 1958 to 1963, but it conceded to the court that it did not own the rights to the 1964 works -- since Miller died before the renewal vested. Sony argued that Miller had expressly contracted away his renewal rights, and Miller's family argued that -- since renewal-term copyrights are considered a separate property from original-term copyrights -- Miller did not contract away his renewal-term copyrights to Sony. The lower court found that all but the 1964 recordings belonged to Sony, and the family owned the remaining 1964 year of recordings. However, the lower court limited recovery for the violations of the copyrights for 1964 to violations that occurred after December of 2001. Sony sought to amend the lower court's order with regard to the 1964 recordings, but the lower court found that Sony's concession that the family owned the 1964 recordings counted as a legally binding judicial admission. Both parties appealed.

Pertinent issues of copyright law:
1) Was Sony's concession about the 1964 recordings legally binding?
2) Why was the family's recovery limited to violations after December of 2001?
3) Were the family's copyright claims time-barred?
4) What consititutes a legally valid assignment of a renewal-term copyright?
5) What effect does the death of a creator immediately before the vesting of a renewal-term copyright have on the ownership of that copyright?

Conclusions:
The family's claims were not time-barred, since there was never an express repudiation by Sony of a claim of right over the copyrights. Royalty agreements continued to be in effect after the renewal period had begun, and yet the Miller family did nothing to assert ownership over the copyrights. So Sony never repudiated the family's claim of ownership. Further, the family's claim was properly limited to violations after December of 2001, since the three-year statute of limitations to copyright ownership and infringement claims meant that -- after clearly being on notice during the 1995 audit -- the family waived any claims until 2004, when they filed suit. The copyright statute of limitations counted backward from that date to 2001, the earliest date of violations that were not time-barred by the copyright statute. However, Miller's clearly worded assignment of his renewal rights and original-term copyrights -- instead of just his copyright, in general -- in his contracts belied the family's contention that Miller did not forfeit his renewal rights. Any ambiguity regarding whether renewal rights were meant to be incorporated into the rest of the original assignment contract was brought to light by a course of dealing analysis. Subsequent contracts between Miller and Sony made clear that the entirety of the preceding contracts -- including the sections on renewals -- were to be incorporated into the later contracts. Further, the family's audit of Sony -- which included listings for royalties on copyrighted material in the renewal period -- indicated an understanding on the family's part that the renewals belonged to Sony. The appeals court found that Sony's concession about the 1964 recordings was not legally binding, since the statement was an interpretation of law and not a judicial admission of fact. So, the effect of Miller's death immediately before the vesting of his 1964 works' renewal-term copyright needed to be further argued, so that portion of the decision was remanded.

02/18/07 IP News

2007-02-18T13:14:00.000-05:00

Been a busy week of cases, but -- at long last -- here's the latest in IP news:

Ned Arlen "Carlos" Mencia and Joe Rogan have not had the friendliest of relationships, with Rogan consistently making mention of how Mencia -- allegedly -- pirates material from other comics' routines. Rogan recently released to YouTube a video of Rogan and Mencia having an onstage dispute, wherein Mencia denied specific examples of stealing from specific comics. The video is a bit of a remix, interspersing amidst Mencia's denials video footage of those specific comics affirming that Mencia did indeed steal those specific examples from them. Alleging copyright violations, Mencia had YouTube pull the video. Rogan has since been banned from the Comedy Store, where Mencia also haunts, and has lost his agent, that he shared with Mencia. The journey on this story begins at -- The Trademark Blog
"Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period." That's what's been published in the latest issue of the Journal of Political Economy, as reported by -- Excess Copyright
The use of "bin Laden" in a trademark application is -- according to USPTO attorney Karen K Bush (relation unknown) -- immoral and scandalous matter and thereby unregistrable. You have to wonder if she would have come to the same conclusion if Osama's last name was Bush. Besides, according to Bush, the applicant would need Barack Obama and Osama bin Laden's permission to trademark "Obama bin Laden," if it were registrable. -- chron.com
Cisco is giving Apple three more days to resolve the iPhone dispute before Apple must file its response to Cisco's compaint. -- techshout.com
Said the judge working the suit, expect a decision on a motion to dismiss a case against Google -- because of Google's policy of allowing companies to buy ads on searches for competitor trademarks -- sometime in March. -- InformationWeek, courtesy of Reuters
“Transformative appropriation,” the process by which creativity evolves over time by tweaking preexisting works is being threatened by the current efforts of copyright holders -- thereby threatening the future of creativity -- says Joanna Demers, author of _Steal This Music: How Intellectual Property Law Affects Musical Creativity_. -- PopMatters.com
Slesinger -- the owner of the Winnie the Pooh trademarks -- will not be stripped of his copyright holdings by the descendants of the intellectual property creators. This comes as a blow to Disney, which hoped to have the descendants permanently assign rights to the characters to Disney. There is still no word on whether the US PTO will honor the request of Slesinger to cancel Disney's registrations for the Winnie the Pooh properties. -- MiamiHerald.com, courtesy of the Associated Press
Belgian newspapers scored a blow against Google for Google's practice of keeping copyrighted snapshots of pay-per-archive newspaper footage in its (in)famous cache. The Internet and media giant will not only remove infringing properties but also will pay large fines for each day the infringements existed. -- Digital Journal
Republicans were forced to backpeddle after first accusing House Speaker Pelosi of posting C-Span's copyrighted footage of Iraq-war-debate to her website last week and then finding out that C-Span claimed no copyright in the coverage. -- Law.com
The United States is prepared to file a WTO case against China, alleging that China is the Captain Sao Feng to its East India Trading Company. -- inthenews.co.uk
Protesting that the Learning Channel promoted some marketing featuring bikers in thongs that read "Spank My Monkey," spankmymarketer.com was established to allow visitors to parody the marketing by composing word bubbles to attach to the offending pictures. The Learning Channel wants the site taken down for copyright infringement, and the EFF is defending the site on grounds of parody. -- EFF

02/07/07 Trade Secret Law: Blackburn

2007-02-17T23:08:00.000-05:00

Blackburn v. Coon Restoration and Sealants, Court of Appeals of Ohio, 5th App. Dist., Richland County, No. 2006-CA-0037 (Feb. 7, 2007):

Issue:
While aiding in the construction of a new high school, Blackburn walked through an open corridor, only to be accidentally sprayed by "Sure Klean 101 Lime Solvent" in the face. Blackburn suffered serious chemical burns to his face and eye, wounds that continue to defy healing efforts. In its suit against the cleaning company that was using the solvent, Blackburn sought the ingredients to the solvent from Prosoco, the manufacturer. For improper warnings and instructions, Blackburn also sought judgment against Prosoco. Prosoco responded to the request that the ingredients were only hydrochloric acid and water, and Blackburn notified Prosoco that the response was very inadequate and that he would submit to a confidentiality order. Prosoco asked why Blackburn wanted to know, and Blackburn mentioned that he would like to know how to treat his disfigured face and to build evidence against Prosoco that they improperly labeled the solvent with warnings far less indicative of the dangerousness of the product than Prosoco should have. Prosoco refused further information on the ingredients, citing trade secret law. Blackburn sought a motion to compel, and Prosoco sought a protection order that would limit the release of the ingredients to the medical team treating Blackburn. The court used a balancing test to weigh the interests of both parties, and it granted a protective order to Prosoco, but allowed for the release of information to the doctors and for Blackburn's case against Prosoco. Prosoco appealed, claiming that the court improperly used the balancing test for protective orders on the motion to compel.

Pertinent question of trade secret law:
1) Did the lower court overextend its reach by using the balancing test in its decision to release ingredient information to the case against Prosoco?

Conclusion:
The appeals court found that the lower court had not used the balancing test to decide on a motion to compel; it merely granted the protective order in a way broader than Prosoco would have liked. "The court's order implies [that it] found the information [that Blackburn seeks] is necessary both as potential proof of [Blackburn's] claims for relief and for full diagnosis of appellee ... Blackburn's medical condition."

02/05/07 Trade Secret Law: Synergetics

2007-02-15T22:00:00.000-05:00

Synergetics v. Hurst, 8th U.S. Circuit Court of Appeals, No. 06-1146 (Feb 5, 2007):

Issue:
In 2000, Hurst and McGowan were hired to work sales for Synergetics, a competitor of Iridex -- the industry leader in surgical lasers for a particular kind of eye operation. Iridex lasers were in hospitals virtually everywhere, so any company that wished to create add-ons for such lasers would essentially need to create an add-on for the Iridex laser. Iridex sold its own add-ons for its lasers, but -- after about four years of research -- Synergetics was able to enter this market as well. McGowan and Hurst signed confidentiality agreements "in which each agreed that-while employed or after the termination of their employments--they would not 'disclose or use in any manner whatsoever, any of the Confidential Information' acquired during their employment with Synergetics. The agreements further provide that Hurst and McGowan must return all company materials such as records, files, and photographic materials upon termination of their employment." In 2002, Hurst and McGowan -- around the time that they were resigning for poor job performance or getting terminated -- asked one of the employees at Synergetics to create an add-on that was not the same as the company add-on, and the employee did so in six hours' time and using Synergetics spare parts. This employee then had another employee draw up the specs for the part, which the second employee did by copying and pasting several of the specs for the Synergetics add-on. McGowan -- after finding out about the use of the second employee -- checked in with this employee periodically as he drew up the specs over a period of months. McGowan and Hurst founded Innovatech, a competitor of Synergetics that targeted the customers of Synergetics' add-ons with Innovatech's add-ons -- offered at a lower price. In 2004, Synergetics brought suit for various claims, including trade secret misappropriation. In 2005, the lower court found for Synergetics; granted a two-year injunction under a head-start theory, $1.75 million in damages for lost profits, and punitive fees totalling nearly $300,000 each for McGowan and Hurst; and Innovatech appealed.

Pertinent issues of trade secret law:
1) Did McGowan and Hurst know that they were misappropriating a trade secret?
2) Did the confidentiality agreements require time and geography limitations?
3) Had the head-start period expired by the time the injunction was granted?
4) Were the awards for damages and punitive fees excessive?

Conclusions:
McGowan and Hurst were aware that it took about four years for Synergetics to create the add-on, and that it took their contracted Synergetics employee only six hours to create another one. McGowan also kept in close contact with the second employee, who was busily copying and pasting together the specs for the Innovatech add-on from the Synergetics add-on specs. Considering these factors, the two must have realized that they were missappropriating trade secrets. The confidentiality agreements were not -- as the two argued -- really restrictive covenants, since they placed no limitation of McGowan and Hurst's right to find employment. As such, there was no state law or court decision to which the two could point that would establish that confidentiality agreements required time and geography limitations. The court therefore refused to be the first to impose such limitations. The development of the Synergetics add-on took four years, so the imposition of an injunction for two years would simply delay Innovatech for the period of time remaining for which they would have an unfair headstart. With regard to the actual damages, the jury's acceptance of expert testimony on the amount of lost profits suffered by Synergetics was not out of line, and the assessment of punitive fees were also appropriate. "The jury was permitted to consider the nature of this conduct, the Appellants' high-level sales positions at Synergetics, the damages suffered by Synergetics, and the steps taken by Appellants to conceal their activities, in reaching the punitive damages determination ... The district court did not abuse its discretion in denying the motion for remittitur (for the punitive fees)."

02/09/07 Trademark Law: Keener

2007-02-15T18:44:00.000-05:00

In Re the Marriage of Keener, Supreme Court of Iowa, No. 130/05-1257 (Feb. 9, 2007):

Issue:
The Keener's met and started a toy company, Alpha, together. Although originally a distributor of closeout toys, the company eventually became a very successful toy manufacturer. Unfortunately, some time after purchasing the trademarks of an insolvent Empire of South Carolina, the marriage did not fare as well as the toy company, and the two sought divorce. Because the two began the company together and worked in equal shares on the development of their assets, the lower court found an even split appropriate. The problem was in the execution. The purchased trademarks were intangible property, for which dollar amounts needed to be assessed. Unfortunately, for many of these active trademarks, the company did not currently have toys associated with the brands. The Keeners had expected to resurrect the trademarks from the ashes of the bankrupt companies from which they purchased them. Although the trademarks were claimed by Mrs. Keeler -- the beneficiary of the company -- to be valueless, the company had, previously, sold the "Buddy L" trademark for $7.7 million and "Yo-Yo Balls" for $475,000. "Although Alpha owns many trademarks, the testimony at trial focused on the value of 'Grand Champions' and 'Big Wheels.' Since 2003, Alpha has been marketing toys under both names. Additionally, Alpha is developing new product lines under those names. Moreover, the company is pursuing litigation in an effort to protect both brands." Clearly, such efforts established worth, so the lower court estimated the liquidated value of the company's remaining trademarks to be $5 million -- the value given by an Alpha consultant as the potential future profitability of the Grand Champions toyline. Mr. Keener had estimated the value to be around $25 to $30 million. Not too keen on the finding, both Keeners appealed.

Pertinent issue of trademark law:
1) What is the true value of trademarks purchased at an asset sale and intended for reintroduction into the market?

Conclusion:
The state supreme court found that the value of Alpha's trademarks -- including Grand Champions and Big Wheels trademarks -- to be $0 (zero). The future valuation of the trademarks by the consultant did nothing to assess the value of the trademarks today. Mr. Keener's competing valuations were anecdotal in nature and failed to create a credible assessment of today's fair market value for those trademarks. Consequently, the valuation of the trademarks was reduced to nothing at all, since to create any value using the facts at hand would be unlawful speculation.

02/08/07 Trademark Law: Custom Vehicles

2007-02-14T20:10:00.000-05:00

Custom Vehicles v. Forest River, 7th U.S. Circuit Court of Appeals, No. 06-2009 (Feb. 7, 2007):

Issue:
Custom Vehicles (CV) created a van that could be converted from a portable office to a recreational trailer and registered the name, "Work N Play," with the PTO as an intent to use. In about six months, CV sold its first Work N Play van, but without using the trademark. About a year later, it sold a second van using the trademark, but it was sold to a family member of the company's owner at a very discounted price. Meanwhile, Forest River (FR), created a van that could be used to house or repair small recreational vehicles. FR dubbed this creation the Work and Play, and sold several million dollars' worth of them by the time that CV and FR noticed each other selling similarly named goods at a trade fair. CV sued for trademark infringement, lost, and appealed.

Pertinent question of trademark law:
1) Does the stated intent to use a mark by registering with the US PTO establish a protectable trademark against those that later enter the same market with a similar mark?

Conclusion:
The appeals court, with Judge Posner writing, found that the Work N Play mark was descriptive, so could not be protected as a trademark without first acquiring secondary meaning. Since by the time FR entered the market, CV had only sold two Work N Play vehicles -- one without trademark identification and the other outside the realm of usual commerce -- there was no way that the Work N Play mark had attained secondary meaning. CV argued that it had registered its mark, so -- regardless of secondary meaning -- it should be protected. Posner said that registration with the US PTO is only the beginning for a trademark holder. The trademark must be used in commerce for it to retain significance as a trademark. At the time that FR entered the market with its Work and Play, CV had still not yet followed through on its commitment to use the registered mark in commerce. It was not entitled to protection.

02/09/07 Trademark Law: Negron-Torres

2007-02-13T21:05:00.000-05:00

Negron-Torres v. Verizon Communications, 1st U.S. Circuit COurt of Appeals, No. 06-1147 (Feb. 9, 2007):

Issue:
The telephone company in Puerto Rico, PRTC, is wholly owned by TelPRi, and Verizon Communications has a majority interest in TelPRi. When PRTC accidentally shut off 911 service to the Negron household, Negron's son suffered breathing difficulties and lost consciousness. By the time that the Negrons were able to bring the son to the hospital, he was pronounced dead on the scene. Negron brought an action -- on behalf of her son -- against Verizon Communications. The District Court for the District of Puerto Rico dismissed the action for lack of personal jurisdiction. Negron appealed, asserting to the First Circuit that because Verizon Communications is essentially the owner of PRTC and because of the predominance of companies in Puerto Rico with "Verizon" in their name, there were sufficient minimum contacts to bring Verizon Communications under personal jurisdiction. Verizon Communications answered back that it is only a holding company that does happen to wholly own or partially own many independent companies that use the Verizon name in the company name, but Verizon Communications does not have a trademark for just "Verizon."

Pertinent issue of trademark law:
1) Does the use of an unregistered trademark of an out-of-state company by in-state companies demonstrate a level of minimum contacts sufficient to bring the out-of-state company under personal jurisdiction?

Conclusion:
The appeals court found that Negron was playing "fast and loose" with her identification of "Verizon." She seemed to identify several companies as Verizon without explaining their relationship to each other, and she failed to rebut Verizon Communications' assertion that it is no more than an uninvolved holding company that does not have a protected trademark in "Verizon." As such, the mere identification of companies in Puerto Rico that use the term "Verizon" in their company name did not benefit the claim of sufficient minimum contacts. Since Negron never offered any evidence that Verizon Communications ever had any direct control over PRTC, the court also refused to pierce the corporate veil -- a decision that doomed any last hopes of demonstrating sufficient minimum contacts to establish personal jurisdiction over Verizon Communications.

02/05/07 Copyright Law: Thompkins

2007-02-12T21:46:00.000-05:00

Thompkins v. Lil' Joe Records, 11th U.S. Circuit Court of Appeals, No. 05-10143 (Feb. 5, 2007):

Issue:
Thompkins -- known in the music industry as "JT Money" and along with his former partner as "Poison Clan" -- was discovered by 2 Live Crew, a music group, and Luther Campbell -- a member of this group -- signed Poison Clan to his own record labels, particularly a predecessor of Luke Records, years ago as a result. Under his agreement, Thompkins assigned 100 percent of his copyright stake in Poison Clan's sound recordings and 50 percent of his copyright stake in Poison Clan's musical composition to Luke Records in return for a promise to commercially release Poison Clan's music and provide Poison Clan royalties. After the release of Poison Clan's third record, Thompkin's partner forfeited his rights under the contract so that he could pursue other projects, Campbell was subjected to bankruptcy proceedings, and the issue of Poison Clan's contract came to the consideration of the bankruptcy court. The court rejected the contract and provided a 30-day window for Poison Clan to claim damages for the rejection. Thompkins never made such a claim, but -- within a year -- Thompkins filed a claim in the Campbell bankruptcy proceeding for services rendered, and -- while doing so -- verified that the address he listed in the claim and to which the prior notices of the bankruptcy proceedings had been sent were, in fact, his past and present home address. The court sold Luke Records' Poison Clan holdings to Lil' Joe Records free of any liens, claims, encumbrances, charges, etc. as part of the liquidation process. Six years later, Thompkins filed suit against Lil' Joe Records for copyright infringement, claiming that the rejection of Thompkins' contract by the bankruptcy court effectively terminated the contract and, in turn, reverted any rights Luke Records had over Poison Clan's work to Poison Clan. The lower court found the transferral of the Poison Clan works to Lil' Joe Records by the bankruptcy court to have been valid and binding on Thompkins inasmuch as Campbell or Lil' Joe Records. Thompkins appealed.

Pertinent issue of copyright law:
1) What is the effect on an assignment of copyright when the contract in which that assignment existed is rejected by a bankruptcy court?

Conclusion:
The court found that a rejection of a contract by a bankruptcy court did not effectively revert the contract parties to their prior state; it just just rendered the obligations of the bankrupt party under the contract unenforceable. Thus, Luke Records -- even after the contract rejection -- still could count the Poison Clan copyrights among its assets and could transfer those assets to Lil' Joe Records. To this Thompkins argued that the bankruptcy court could not grant the bankrupt party the benefits of the contract without also burdening the bankrupt party. The appeals court agreed and found that that the rejection of a contract by a bankruptcy court entitled the disadvantaged contractual party to a claim of damages. Since Thompkins -- despite having received notice of the bankruptcy proceedings and resolutions -- did not make a claim for damages in the 30-day window offered by the bankruptcy court following the rejection of Poison Clan's contract, Thompkins effectively waived his claim for loss of royalties under the record contract.

02/08/07 IP News

2007-02-08T19:44:00.000-05:00

Here's what people are talking about today in IP news:

What do you do when patenting organics comes back to bite you in the ass? That's the question many are probably asking now that Indonesia is claiming intellectual property rights on a strain of H5N1 that may prove very important to the prevention of the next bird flu pandemic; it's refusing samples to even the WHO. -- Technocrat
MacJoy, a restaurant in the Phillipines, just lost a major court battle over there with McDonald's over the use of the MacJoy name and logo. Evidently, MacJoy could not answer the Filipino Supreme Court's inquiry as to why the company chose MacJoy as its name, as opposed to any other of the infinite combinations of letters that could be used to name a blossoming fast food franchise in the Phillipines. -- Sun Star, Manila, MyCebuPhotoBlog
Bowing to Japan's new vigor in intellectual property protection, YouTube has agreed to post warnings on its Japanese site that asks users to not post copyrighted material. -- digitalmediawire
Warner Music isn't digging Steve jobs' suggestion to do away with DRM. -- MSN Money, courtesy of FT.com
If you haven't heard of it yet, you will. Two senators are making a splash in the IP world by proposing an intellectual property rights enforcement task force that would mimic the system the United States has in place to fight money laundering. Though allegedly introduced many moons ago in 2005, Bayh recently explained the initiative again on Wednesday. -- Manufacturing.net, Senator Bayh's U.S. Senate website, EBJ.biz
The National Arbitration Forum is looking to pick up some press, after recently deciding three big-name domain disputes. In one case, the arbitrator found that the MagicJohnsonTravelGroup.com domain name -- which sold LA Lakers gear and linked to Magic Johnson sites -- was confusingly similar to the "Magic Johnson" and "Magic Johnson Travel Group" trademarks and that the domain owner's registering of the domain name only a few days after Magic Johnson's public announcement of the creation of the Magic Johnson Travel Group showed bad faith enough to decide in favor of Magic Johnson. MGM lost a bid for transferrence of the wargames.com website, since the current owner was a bonafide vendor of military simulation games -- even though the domain owner had initially started the website out as a pay-per-click for eight years. New Pig Corporation lost a bid for the transference of the pig.com website because its trademark of "pig" is generic, and the pay-per-click website was not established to take advantage of the trademark associated with the animal. The press release by the forum has gained some pretty good coverage for the National Arbitration Forum; now if they could just establish an RSS feed for decisions... -- Yahoo! Finance
Slesinger, the owner of Winnie the Pooh IP rights, has moved to cancel Disney's registration of the Winnie the Pooh marks. -- International Herald Tribune, courtesy of the Associated Press
India is adjusting its trademark law to be more in line with the requirements of the Madrid Protocol. -- EarthTimes.org

02/02/07 Trade Secret Law: Dow Agrosciences

2007-02-07T20:04:00.000-05:00

Glenn v. Dow Agrosciences, Court of Appeals of Indiana, No. 06A01-0607-CV-278 (Feb. 2, 2007):

Issue:
Glenn worked for Pioneer, left Pioneer to work for a leading competitor, Mycogen, and Mycogen was bought out by Dow. Upon Glenn's incorporation into the Dow entity, Glenn signed a required employee agreement that featured a noncompete clause. This clause read:

"Article 4 -- NonCompetition

I agree that, for a period of two years from the date of the termination of my employment with [Dow], I shall not, directly or indirectly, whether as owner, partner, officer, director, consultant, employee, or otherwise engage in or contribute my knowledge to any work or activity involving an area of technology or business that is then competitive with a technology or business with respect to which I had access to Confidential Information during the five years immediately prior to such termination of my employment at [Dow]. However, I shall be permitted to engage in such proposed work or activity, and [Dow] shall furnish me a written consent to that effect signed by an officer, if I shall have furnished to [Dow] clear and convincing written evidence, including assurances from me and my new employer, that the fulfillment of my duties in such proposed work or activity would not inevitably cause me to disclose, base judgments upon, or use any Confidential Information.

I further agree that, for said two-year period, I will inform any prospective employer, prior to accepting employment, of the existence of this Agreement and provide such prospective employer with a copy thereof.

I also agree that, for such two-year period, in addition to any obligations provided by law, I will not interfere with, disrupt or attempt to disrupt, the relationship, contractual or otherwise, with respect to the business carried on by [Dow] with any customer, supplier, lessor, lessee, licensor, licensee, or employee of [Dow]."

After a number of years with Dow, Pioneer wooed Glenn, Glenn let Pioneer know of the terms of the noncompete, and Pioneer's lawyers still felt like they could offer him the position sought to be filled. Glenn let his direct supervisor know of his intended move, and the supervisor told him that he would need to speak to others. The supervisor spoke to the president, and the president thereafter spoke to Glenn -- leaving Glenn with the feeling that Dow would not stand in the way of the move. Despite the words of the president, the direct supervisor later told Glenn that he thought that the new duties Glenn would have at Pioneer would directly conflict with Glenn's noncompete terms, that what the president had told Glenn was not meant to be interpreted as a committment to not enforce the employee agreement, and that Glenn needed to talk to in-house counsel about the planned move. In-house counsel said that whether the employee agreement would be enforced was a business, not a legal decision. Dow told Glenn and Pioneer that it wanted Pioneer to withdraw its offer to Glenn, and Pioneer refused. Despite written and highly detailed assurances from Pioneer and Glenn, Dow maintained its position. When Glenn's personal lawyer told Glenn that there was room to maneuver in this matter, and when Pioneer added that it would pay for any legal expenses that incurred as a result of any Dow litigation to enforce the employee agreement, Glenn finally moved on to Pioneer. Dow sued, seeking an injunction against Glenn's employment at Pioneer to prevent leakage of its trade secrets and confidential information, and the lower court granted the motion. Glenn appealed the decision.

Pertinent issue of trade secret law:
1) Is the language of the noncompete clause enforceable?

Conclusion:
The appeals court found that Dow's interest in using the noncompete to protect its confidential information and trade secrets was legitimate, since Glenn had access and/or direct involvement in many confidential matters or matters that involved trade secrets. However, the court reversed the decision of the lower court, as the scope of the noncompete was too broad. The prohibition on "Glenn from interfering with, disrupting, or attempting to disrupt business relationships between [Dow] and "any" of its customers, suppliers, lessors, lessees, licensors, licensees, or employee[s] ... makes no distinction between past, current, or future customers, suppliers, lessors, etc." Thus, the limitation on Glenn could be worldwide in nature, since all businesses could be past, present, or future customers of Dow. The court found that the enforcement of this noncompete clause would unnecessarily restrict Glenn's freedom to contract for employment. Public policy dictates that Dow cannot "effectively prevent[] Glenn from carrying on his calling," and it is precisely this that the noncompete, if enforceable, would do in the name of protecting trade secrets and confidential information. Thus, the noncompete was unenforceable, so the injunction to enforce the terms of the noncompete should not have been granted.

02/01/07 Trademark Law: Grand Tobacco

2007-02-06T21:26:00.000-05:00

State v. Grand Tobacco, Court of Appeals of Ohio, 10th App. Dist., Franklin County, No. 05AP-213 (Feb. 1, 2007):

Issue:
Grand Tobacco is an Armenian cigarette maker of various lesser-known brands that does business with a New York distributor, ITP, whose president is often listed as the domestic representative for Grand Tobacco and who also "acted at various times on behalf of Grand Tobacco." The company caught the eye of the Ohio attorney general because Grand Tobacco cigarettes were sold in Ohio (as well as the other states), but Grand Tobacco was neither part of the big cigarette-maker settlement nor a participant in the Ohio statutory requirement of a precautionary escrow account for non-settlement cigarette makers. Grand Tobacco argued that there was no personal jurisdiction over it, so it could not be compelled to participate in the statutory requirement. The lower court found that it could exercise personal jurisdiction, and Grand Tobacco appealed for a second opinion.

Pertinent issue of trademark law:
1) Can a foreign maker of cigarette brands be excused from state statutory requirements of cigarette makers?

Conclusion:
"In the instant case, the trial court found that Grand Tobacco, by taking steps within the United States to patent/trademark its products, to comply with federal regulations for the sale of cigarettes, and to distribute its products, purposely availed itself of conducting business in all 50 states, including Ohio. We agree." Grand Tobacco had taken steps with the U.S. PTO to protect it's inventions and trademarks. It had worked with the federal government to comply with surgeon general labeling requirements. Last, it worked inextricably with a New York distributor to sell its products throughout the 50 states. The appeals court found this evidence sufficient to show that Grand Tobacco had purposefully availed itself to conducting business throughout the United States, so it was subject to personal jurisdiction in Ohio.

02/02/07 Trademark Law: Agha

2007-02-05T21:25:00.000-05:00

People v. Agha, Supreme Court of New York, App. Div., 4th Dept., No. 1653 KA 06-01189 (Feb. 2, 2007) :

Issue:
A New York State Attorney General's Organized Crime Task Force informant walked into Agha's store and purchased two DVDs of movies that were still in theaters but bore the movies' trademarks as if officially licensed. After a check with the MPAA, the task force confirmed that the DVDs bore counterfeit trademarks and were unlicensed. The informant had said that Agha told him that he expected to get many more such DVDs soon. Believing that it had enough specific and articulable facts to warrant reasonable suspicion of trademark counterfeiting in the first degree (i.e. in excess of $100,000), the task force sought and were granted a pen register on Agha's phones. The success of this pen register created enough evidence of trademark counterfeiting and drug activities for the courts to issue many more eavesdropping measures. In finding "that the People failed to establish the necessary reasonable suspicion that Helmi Agha was involved in a conspiracy to commit trademark counterfeiting in the first degree inasmuch as the People failed to establish that the DVDs containing a counterfeit trademark had a total value in excess of $ 100,000," the lower court also found that the initial pen register was improperly granted, so suppression of all evidence gained through the initial discoveries made via that first pen register was proper. The government chose to appeal this suppression order.

Pertinent question of trademark law:
1) On the basis of the evidence produced by the informant -- by mouth as well as by physical presentation -- was there enough evidence of trademark counterfeiting in the first degree to grant the pen register?

Conclusion:
The appeals court found that the lower court had taken too "hypertechnical" a stance to its analysis. Whether law enforcement had soundly established that the counterfeiting to be further investigated amounted to an excess of $100,000 was not the proper question for analysis. The proper analysis by the appeals court found that the government had "set forth 'specific, articulable facts[] warranting the [People's] reasonable suspicion' that Helmi Agha and others unknown at the time were committing the crime of trademark counterfeiting in the first degree and conspiracy to commit that crime," so the pen register was properly granted.

02/02/07 IP News

2007-02-02T19:52:00.000-05:00

Here's the latest:

Blackboard is now vowing to never sue anyone for a violation of their e-learning patent. -- Blackboard
Tony Sleep is a well-employed and well-respected photographer in the UK that bewails the recent discussion in the EU about changing the 1988 Copyright Designs and Patents Act. While the recent talk discusses the protection of rightsholders rights and the balance of public utility to rightsholders earnings, the discussions fail to redress the inequality that exists between creators and rightsholders. Evidently, in the UK -- at least -- there are only a few companies that represent photographers, and the cost of representation is often a total surrender of rights. While the recent discussions on changing the 1988 act address the interests of the public and the rights holders, Sleep argues that the proposed changes still do nothing to protect the interests of the creators for whom copyright laws were presumably originally created. Sleep's proposed solution is radical: a total ban on the ability of creators to sell their copyrights and/or waive their moral rights on any created work. -- Tony Sleep Photography Blog
Complaints of copyright violations by college students in California have remained steady or even risen despite efforts by the RIAA and cooperating college administrations to curb the unlicensed downloading of copyrighted materials. -- UE Crescent, courtesy of McClatchy-Tribune Newspapers
Following up on its renewed interest in protecting its intellectual property exports, Japan is welcoming the anime-saturated YouTube over to Japan to discuss how YouTube can better limit the appearance of unauthorized content on its site. -- Digit Online
Experts are expecting the passage of the Trademark Dilution Revision Act will see the one-size-fits-all six-factor dilution test prove a great boon to trademark owners. -- Mondaq
Owen Smigelski, the Trademark Guy, predicts that Mariah Carey -- the singer and arguably poor actress -- will lose any claim it proceeds with against Mary Carey -- the swinger and certainly porn actress -- because of laches. -- The Trademark Guy

02/01/07 IP News

2007-02-01T20:23:00.000-05:00

Here's the rundown on the latest in IP news:

Leo Stoller -- the man known for his claims of trademark infringement against so many well-known brands -- is being sued by Google for false advertising under the Lanham Act, unfair competition, and racketeering under RICO; the 222-page complaint, no doubt, means that Google wants to put Stoller up as a scarecrow. -- Roylance, Abrams, Berdo, and Goodman, LLP
A Canadian national -- originally from China -- is being charged with the theft of U.S. military trade secrets, stolen allegedly for the benefit of China, Malaysia, and Thailand. -- Inside ICE
The Chicago Auto Show is threatening to sue the Auto Show SHUTDOWN Festival -- a festival that celebrates bicycles and raises awareness of global warming -- for being one giant trademark infringement; EFF cries parody. -- EFF
The European trademark office has ruled that Google cannot register "Gmail" as a trademark across the whole of Europe, seeing as a German man allegedly patented the name years before Google's mail system came about; resultingly, the mail service will continue to be called Gmail virtually everywhere but in Germany and the U.K., where it is called "Google Mail." -- CNet News
Now that Vietnam has joined the WTO, it has strived to bring its protection and regulation of intellectual property rights up to treaty standards, and it has subsequently seen a precipitous jump in trademark applications. -- Viet Nam News
In iPhone news, Cisco has agreed to extend the time Apple has to respond to Cisco's lawsuit so that the two can return to the negotiating table. -- Canada.com
Belarus credits its current boom in economic growth to its recent intellectual property development and WIPO cooperation. -- The National Center of Legal Information of the Republic of Belarus
The United States, U.K., Germany, France, and Japan are the top five most intellectual-property-friendly countries, according to a recent study by the International Chamber of Commerce; the 10 worse -- in order from most friendly to least -- are China, Russia, India, Brazil, Indonesia, Vietnam, Pakistan, Turkey, and then the Ukraine in dead last. -- The New Anatolian
GEMA -- a German version of the RIAA on steroids -- is going after MySpace and YouTube for copyright violations, and Europe doesn't have much in the way of safe harbor provisions. -- NewTeeVee.com
Microsoft won a civil suit against the Canadian company, Inter-Plus, for the maximium allowed damages of $500,000. After twice catching Inter-Plus with counterfeit goods, twice seizing those goods, and then twice refusing to press charges, Microsoft had enough of the RCMP's handling of the problem, took custody of the counterfeit items seized by the RCMP, and then initiated this suit. While $500,000 is a small prize for Microsoft, it also allegedly sought an injunction to keep Inter-Plus out of the market, and the judge declined this motion. -- p2pnet.net
The Canadian Music Creators Coalition, following a year of 120% growth in digital music sales and 10% overall music growth in Canada, is now arguing that "because music sales have never been greater, there is no need to push for legislation that makes it easier for record companies to file lawsuits against alleged copyright infringers and make it illegal to bypass DRM." -- Slyck News
At a recent symposium, the deputy director general of WIPO envisioned a point in the not-too-distant future wherein all, worldwide, IP applications were funneled through a single registration which would then register the IP in all of the world. -- ag-IP-news
The real economies created by the sale of a game character's virtual property or the sale of the character itself is dead, at least on eBay. -- bloggingstocks.com
Google's top 10 most searched terms this year were 4/5ths trademarks: Bebo, MySpace, “World Cup,” Metacafe, Radioblog, Wikipedia, “video“, Rebelde, Mininova, and “wiki." -- CircleID

01/26/07 Trade Secret Law: Lambda Research

2007-01-31T22:07:00.000-05:00

Lambda Research and Surface Enhancement Technologies v. Jacobs, Court of Appeals of Ohio, 1st App. Dist., Hamilton County, Nos. C-050464/C-050502 (Jan. 26, 2007):

Issue:
Jacobs, an employee of Lambda, a burnishing technology company, left Lambda to work for Ecoroll, a competitor. Jacobs thereafter allegedly contacted former clients of Lambda -- allegedly disclosing to these clients Lambda's trade secrets and interfering with Lambda's business relationships with them. One of those former clients, GE, thereafter developed its own burnishing technology. In an action against Ecoroll and GE for trade secret misappropriation, Lambda "broad[ly] subpoena[ed]" GE to produce a wide array of documentation and testimony. GE objected, claiming that the request would force GE to produce all burnishing technology research it had done before GE's dealings with Lambda or Ecoroll, as well as independent research done thereafter. GE filed a motion to quash and for a protective order. This, said GE, would intrude upon its trade secrets. The lower court judge -- citing a general policy during discovery that "I let people get what they want to get" -- denied the motion to quash. When Lambda reneged on an agreement to work with GE on the production of documents and refused to grant GE a protection order, Lambda filed a motion to compel, and GE filed a motion for a protective order. Saying that it earlier had intended to deny the request for a protection order along with the denial of the motion to quash, the court denied the motion for a protection order and granted the motion to compel. GE, meanwhile, had provided to Lambda all of GE's documentation and communications relating to its involvement with either Jacobs or Ecoroll, but it redacted any trade secret. At this time, the motion to compel was signed, and GE added an appeal of the motion to compel to its already pending appeal of the denied motion to quash -- which was filed at the time of the denial.

Pertinent questions of trade secret law:
1) Is the motion to quash appealable?
2) Should the motion to quash have been granted?
3) Is the motion to compel appealable?
4) Should the motion to compel have been granted?

Conclusions:
The lower court order differed from a prior decision by the court compelling the production of trade secret information in that there were no safeguards in place to protect the confidentiality of the trade secrets. As such, the court went beyond a position of "providing advice and guidance concerning any discovery," so the order denying the motion to quash was appealable.
Further, because the court gave no sound reasoning for not protecting the trade secrets of GE aside from its general policy, the court placed itself at odds with the Ohio rules of civil procedure which provided for the protection of trade secrets; the lower court committed an abuse of discretion. The appeals court found that the motion to quash should not have been granted for the reasoning offered by the lower court. Further, the lower court's grant of the motion to compel was an exercise in law beyond its jurisdiction, as the first appeal had already been filed -- thus transferring jurisdiction of the subject matter of the first appeal from the trial court to the appeals court. The motion to compel concerned the subject matter of the first appeal; the grant of Lambda's motion to compel was a "legal nullity."

01/22/07 Copyright Law: Corwin

2007-01-30T20:10:00.000-05:00

Corwin v. Walt Disney World Company, 11th U.S. Circuit Court of Appeals, Nos. 04-16554/05-12869 (Jan. 22, 2007):

Issue:
Corwin was the neighbor of Waters who -- in the 1960s -- created a painting for Jaffray. Jaffray needed the painting as a visual to his vision of a theme park of "cities, villages, and landscapes representing nineteen nations from six continents. It included animals, buildings, landscaping, and human figures carved from wood. For each nation represented, the model would include representations of places of particular historical or geographical interest including recognizable structures such as the Roman Coliseum or London's Big Ben. Everything was to be in miniature." Despite having created the work for Jaffray, Waters -- according to Corwin -- retained his copyright in the painting. Jaffray -- according to the memories of his family members -- presented the vision and painting to Walt Disney, who rejected the proposal after considering it for a month. In 1982, EPCOT opened. When Waters died, he left the painting to Corwin, who -- upon notice of the inheritance -- promptly copyrighted the work. Corwin brought suit not long after. At trial, Corwin presented testimony from four experts that each, upon observation of the painting and EPCOT, concluded that EPCOT was based on the painting. One such report read in relevant part: "At every level, from the basic concept and basic organization, to the way nationally themed pavilions are arranged around a vast lake while being visually and functionally separated by landscaped, wooded areas with plantings indigenous to the nations under consideration to the way the artistic renderings are composed with landscaped access to parking on the lower left hand side and festive lake on the upper righthand side these two projects are the same." The majority of expert testimony was struck from the record for two reasons: "1) [T]hose portions utilized improper methodology, impermissibly comparing ideas in the Painting and EPCOT rendering and failing to compare expressive or protectable elements; and 2) the reports contained lists of similarities that are inherently subjective and unreliable." Further, the court found the testimony of the families of Jaffray and Waters to be largely inadmissible, so there was no way for Corwin to prove that Walt Disney or the Walt Disney World Company(WDW) had access to the painting. Under the remaining striking-similarity analysis, the lower court found that a 1981 rendering of what was to be EPCOT was not strikingly similar to the painting, and it accepted WDW's uncontroverted evidence of its painting-free creation route to EPCOT. Corwin appealed the order of summary judgment in favor of WDW.

Pertinent issues of copyright law:
1) Does Corwin have standing to bring this copyright claim?
2) Was there sufficient evidence of striking similarity?

Conclusions:
The lower court had found that the arrangement of certain features in the painting created a valid copyright interest in the painting, and Corwin -- as the owner -- had standing. However, the appeals court affirmed the lower court's grant of summary judgment in favor of WDW because: 1) The expert testimony offered by Corwin that purportedly established the striking similarity spoke in terms of ideas, not protectable expression; 2) the particular features of EPCOT -- like the appearance of the globe and location of pavillions in relation to the water -- were different in many ways than the features seen in the painting; and 3)WDW presented evidence of independent creation.

01/22/07 Copyright Law: Kahle

2007-01-29T21:26:00.000-05:00

Kahle v. Gonzales, 9th U.S. Circuit Court of Appeals, No. 04-17434 (Jan. 22, 2007):

Issue:
The decision in Eldred posed whether retroactively extending the copyright terms was constitutional. Kahle, like Eldred before him, also took issue with the copyright extensions -- focusing on those granted by the Copyright Renewal Act (CRA) and Copyright Term Extension Act (CTEA). Kahle operates the Internet Library, a digitized library of "audio, books, films, websites, and software" offered at no charge. Kahle argued that before the recent copyright extensions, the two-tiered system of copyright -- copyright and then the option to renew -- meant that copyrighted works that were orphaned by their owners would seldom see protection for the maximum two terms available. However, under the CRA and CTEA, people that created works between 1964 and 1977 could rely on continued copyright protection without having to "opt-in" a renewal. Kahle argued that the significant lengthening of the copyright term under these acts adjusted the "traditional contours" of copyright law and consequently triggered First Amendment review. Further, while Eldred had argued that lengthening existing copyrights could create perpetual copyrights, Kahle argued that the acts effectively created perpetual copyrights. The lower court dismissed Kahle's action.

Pertinent questions of copyright law:
1) Does switching the copyright system for works created between 1964 and 1970 from "opt-in" to "opt-out" trigger First Amendment scrutiny?
2) Does extending the copyright terms for works created between 1964 and 1970 violate the Copyright Clause's "limited times" restriction?

Conclusions:
"Both of Plaintiffs' main claims attempt to tangentially relitigate Eldred. However, they provide no compelling reason why we should depart from a recent Supreme Court decision." As SCOTUS said in Eldred, echoed the circuit court, the CTEA simply placed works created between 1964 and 1970 at parity with future works. Therefore, the automatic renewal of works created between 1964 and 1970 did not alter a "traditional contour" of copyright law, and, thus, did not trigger review under the First Amendment. Further, the court found that the founders had always envisioned that copyright was a balancing act between "the impetus provided to authors by longer terms against the benefit provided to the public by shorter terms," and Congress is entrusted to do the balancing -- subject to rationality review. As in Eldred, the circuit court said that SCOTUS understood the meaning of "limited times" and "simply reached a different conclusion than that desired by Plaintiffs." Kahle's case was properly dismissed.

01/26/07 Copyright & Trademark Law: Brilliance Audio

2007-01-28T22:18:00.000-05:00

Brilliance Audio v. Haights Cross Communications, 6th U.S. Circuit Court of Appeals, No. 05-1209 (Jan. 26, 2007):

Issue:
Brilliance and Haights were in direct competition for the audiobook market and were not working together. Brilliance had two prices for its audiobooks; one for limited use by the average consumer, and one for much wider use by libraries and other such institutions. Haights, allegedly, was in the business of purchasing retail editions of Brilliance audiobooks and repackaging them as library editions for rental. Notice given in the Haights packaging allegedly relayed that Haights had a longstanding business relationship with Brilliant and was an authorized distributor. All audiobooks rented out by Haights bore the original Brilliance trademark without the consent of Brilliance. Brilliance alleged trademark infringement and copyright infringement under 17 USC Section 109's prohibition against profiting without consent on the rental of a musical phonorecord. Haights argued that the doctrine of first sale protected Haights from a trademark infringement claim, and the copyright claim failed because audiobooks were not the same as musical phonorecords. The district court dismissed both claims against Haights. Brilliant appealed.

Pertinent issues of copyright and trademark law:
1) Does Section 109 protect all phonorecords from unlicensed rental agencies?
2) Does the doctrine of first sale allow for Haights' to repackage Brilliance's product and redisplay Brilliant's logo?

Conclusions:
The doctrine of first sale provides that -- with adequate notice of repackaging and resale -- a first purchaser's use of a trademark for goods "materially different than those sold by the trademark owner" is protected. Because Haights did not adequately inform the public of its repackaging and unauthorized redistribution of Brilliance's audiobooks, there was a high risk of consumer confusion; in effect, the two companies were in direct competition for the same market with the same goods. The doctrine of first sale was not intended to protect such actions, and the appeals court -- noting that neither of the factors for protection under the doctrine were present -- reversed the lower court's decision to dismiss the trademark complaint. Because the text of that section of the copyright statute was ambiguous, the appeals court looked to the legislative history and other historical evidences of the legislation's intent. "At the time Congress adopted the exception in 1984, the exclusive focus of the testimony and the legislators was on protecting the music industry. The Senate Report accompanying the bill explicitly references the need to 'remove the threat that commercial record rentals pose to the health of America's musical community.' ... The Report focuses on the danger record rentals pose to 'musical creativity' and the willingness of 'record companies and music publishers' to take risks on 'unknown artists and songwriters' or 'to experiment with innovative musical forms.'" As such, the appeals court found that only phonorecords created by the music industry was protected by that section of copyright law, and the audiobook-maker's copyright claim was correctly dismissed.

01/27/07 IP News

2007-01-27T23:07:00.000-05:00

Here's the rundown of the latest in IP news:

Netflix is rewriting the movie rental biz all over again as it is now rolling out its "Watch Now" program, where current subscribers can opt to stream desired movies directly to their computer in exchange for a chunk of their monthly fee. -- NYTimes.com
YouTube is rolling out its next big idea, too: revenue sharing. Somehow, the online video giant that grew so big with its hands-off approach to posted content will pre-screen posted content for original works -- without somehow miring them in the copyright war taking place all over its site daily. -- BBC
Bill Gates -- seeing the incredible growth of the Internet as a network media outlet -- predicts that in five years, T.V.s will be antiquated relics -- so the networks best prepare themselves for the technological change. -- Reuters
Evidently, when conceived of as brands, Sydney is the most successful city this year. London, Paris, Rome, and New York rounded out the top five, and Washington D.C. and San Francisco -- with rankings of sixth and seventh -- were the remainder of the U.S. top 10 winners. -- ag-IP-News
"The US Chamber of Commerce and the Coalition Against Counterfeiting and Piracy (CACP) announced in a Thursday press release the recommendations on steps companies can take to protect their supply chains from counterfeiters and modern-day pirates." -- ag-IP-News
In response to a formal request by the Software Freedom Law Center, someone at the patent office thought it might be a good idea to re-evaluate the patent issued to Blackboard, Inc. for "Internet-based education support system and methods" (U.S. 6988138). -- Software Freedom Law Center
A wiki on intellectual property rights? -- Aww; it's just a baby.
The Federal Circuit has announced that intends to remind --with sanctions -- lawyers that researching whether an order is final or not before appealing is part of a lawyer's job. -- I/P Updates
A startup company thinks that watermarking might be a better idea than DRM. -- Ars Technica

01/26/07 IP News

2007-01-26T21:41:00.000-05:00

Here's today's rundown:

While the world laughs at Second Life's alleged do not cease or desist answer to Get a First Life's parody, Public Knowledge marvels at what the letter really is: a limited-license "Proceed and Persevere" letter. -- Public Knowledge
As Spocko blogged criticism of and provided audio examples of a KSFO morning show's bad taste, the parent company sent a C&D letter alleging copyright infringement. Although a classic fair-use example -- criticism -- Public Knowledge expresses concern that current WIPO considerations might put KSFO's parent in the right. -- Public Knowledge
"GoDaddy's terms of service say the company 'reserves the right to terminate your access to the services at any time, without notice, for any reason whatsoever.'" The other day, GoDaddy chose to execute such authority after receiving and confirming that one of its domains was posting MySpace usernames and passwords; an anti-censorship firestorm has erupted as a result. -- CNet, The Trademark Blog
After reading M&M's lengthy list of restrictions on customizing M&M messages, LawMeme wonders "how you could infringe on a patent in two lines of eight characters each." -- LawMeme

01/25/07 IP News

2007-01-25T22:09:00.000-05:00

Here's the rundown of the latest news:

WIPO is holding a Global Anti Counterfeiting and Piracy meeting in Geneva at the end of this month. According to the announcement, top business leaders from NBC, Daimler Chrysler, Eli Lily, Microsoft, and Universal Music Group will not only discuss market costs, but also the new wrinkle that is the danger to human health and safety posed by counterfeit prescriptions, and how counterfeiting, somehow, undermines the economic development of lesser developed countries. -- WIPO
The Canadian Trademark Blog reports that Google's German domain, google.de, was temporarily kidnapped. China is evidently taking litigious offense to some pranksters that are teasing the country about its choice of trademarks for the 2008 Beijing Olympic Games. The blog also does a bit of talking about the Scotch Whisky case. -- The Canadian Trademark Blog
China, generally, seems to be waking up to the realization that it needs to fiercely protect its intellectual property or suffer the consequences. Beijing News is kicking off the beginning of what some are calling a brewing Chinese media war by suing Tom.com for stealing several of its copyrighted articles and pictures since 2003. -- The Trademark Blog
After losing its case to the Canadian Trade-Marks Opposition Board, the Scottish Scotch Whisky Association promises to appeal its loss in the Glenora Distillers International case at the federal level. At issue is whether Glenora's Glen Breton Whisky implies by using the word 'glen' in its title that it is whisky created in Scotland. The opposition board found that people don't think of Scotland when they think of glens and that the bottle has a great big Canadian maple leaf on it -- so the Scotch Whisky Association lost. The association says that the result is against the tide of international law on the matter. -- The Canadian Trademark Blog, cbcnews
The Diet Coke and Mentos sensation that was kicked off with a viral video created by a juggler and his lawyer friend is taking new root as the lawyer looks to expand his relations with Coke and Mentos as he continues to brand more "quality online video content." Coke is looking to increase its presence in the emergent marketing field of viral Internet video. -- The Invent Blog
A UK man upset with the way his franchise with Subway ended founded the Internet site: SubwayUncovered.com. Subway is seeking -- in U.K. courts -- to have the site shut down for trademark abuse and infringement. -- The Register
Cisco, perhaps in light of the legal troubles it has conjured, has downplayed the Cisco-Apple fallout as a "minor skirmish" and says that it would have been perfectly willing to license the iPhone trademark to Apple if Apple offered Cisco product interoperability. -- O'Grady's PowerPage.org
Stevie Wonder's manager is pleading with the EU and the public at large to think not of the record industry when considering the copyright extension issue, but of the starving artists. -- The Register
The intellectual property arm of the Japanese prime minister is arguing that Japan's dominance in anime is not turning into the yen that it should because of a dearth of qualified international intellectual property lawyers in Japan. -- ToonZone

01/14/07 - 01/20/07 Trade Secret Case Law

2007-01-24T22:24:00.000-05:00

Andrew Greenberg, Inc. v. Svane, Inc., Supreme Court of New York, App. Div., 3rd Dept., No. 500562 (Jan. 18, 2007):

Issue:
Greenberg created a game called Wizardy for Sir-Tech Software (SUS), and SUS thereafter went bankrupt. Royalties for Greenberg's game stopped, but Wizardy games and products continued to be made at Sir-Tech Canada (SC) -- SUS' heir. In August 2001, Greenberg initiated a suit for, among other claims, the act of trade secret misappropriation around the time of January 1998 or earlier -- claiming that SUS unlawfully shared with SC the Wizardy trade secrets. The lower court found for Greenberg on the trade secret issue, and SC appealed.

Pertinent questions of trade secret law:
1) Is Greenberg's claim subject to SUS' bankruptcy?
2) Is Greenberg's claim barred by the statute of limitations?

Conclusions:
Although the loss of trade secrets passed from SUS to SC, an award of damages to SUS or its creditors would not have cured the injury. Since SUS was part of the misappropriation, it was not entitled to recovery for the misappropriation of the trade secret. Greenberg has a claim distinct from the creditor claims of the bankruptcy settlement. Thus, the bankruptcy settlement did not end Greenberg's standing to sue for trade secret misappropriation. Further, though New York law made trade secret misappropriation claims subject to a three-year statute of limitations -- and this would make Greenberg's claim time-barred -- SC's commercial use of a misappropriated trade secret made the tort ongoing, so the statute of limitations never tolled. Thus, the appeals court affirmed the lower court's trade secret decision.

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Aero Fulfillment Services v. Tartar, Court of Appeals of Ohio, 1st App. Dist., Hamilton County, No. C-060071 (Jan. 19, 2007):

Issue:
Tartar worked for Aero -- a packing and shipping fulfillment company in Cincinatti -- beginning in 1990 and signed a noncompete in 1998. "The noncompete agreement provided that Tartar would return confidential materials, and that he would not (1) disclose confidential information; (2) solicit Aero's employees to terminate employment for 12 months after his departure; or (3) for 12 months after termination of employment compete within 100 miles of Cincinnati, Ohio, or solicit Aero prospects or customers. The agreement further stipulated that a violation of the covenants would result in irreparable injury and damage to Aero." In 2005, Tartar left Aero for Wilde, a more front-end fulfillment company based in Brocton and Holliston, Mass. At Wilde, Tartar used the Brock study -- a marketing report created by Aero based on generally ascertainable marketing information -- during a trade presentation at a trade association to which Aero also belonged. Astrazeneca sought a contract, and the trade association suggested some names that included Wilde. When Astrazeneca found out that Tartar had a noncompete restriction, it dropped Wilde from the bidding. Nonetheless, Aero sought an injunction on Tartar for breaching the noncompete. Finding that convincing evidence was lacking that irreparable harm would be suffered, the injunction was denied. Aero appealed.

Pertinent questions of trade secret law:
1) Does stipulating to irreparable harm in a contract ensure that irreparable harm will be found in a breach case against the signee?
2) Was there, otherwise, irreparable harm?

Conclusions:
The court found that stipulation that irreparable harm would be suffered upon breach did not render any breach by Tartar to be irreparable harm. In evaluating the strength of Aero's claim to irreparable harm, the court found three failings: "Aero (1) was not reasonably prompt in its motion for injunctive relief, (2) failed to treat the Brock study as confidential, and (3) failed to show a threat of harm sufficient to justify equitable relief--in other words, Aero had an adequate remedy at law." With regard to the first failing, the court said: "Aero moved for injunctive relief in October 2005--about three months after the action was filed, almost ten months after Tartar had left, and two and a half months before the expiration of the noncompete and nonsolicitation-of-employees covenants." With regard to the second failing, the court found that Aero had a "lax" record of protecting the Brock study, marketing reports go stale very quickly, and Aero failed to explain to the court how a marketing report built off of generally ascertainable data would have given Aero a competitive edge. Aero had claimed as its damages that it had to scrap its plan to discuss the Brock study at the trade association -- because it found out that it had already been discussed by Tartar -- and then create a new marketing study. While this shows damages, said the court, the damages caused by this alleged misappropriation of a trade secret if fully remediable at law, so there was no need to turn to a resolution at equity. The denial of the injunction was affirmed.

01/14/07 - 01/20/07 Trademark Case Law

2007-01-23T19:35:00.000-05:00

CreAgri v. USANA Health Sciences, 9th U.S. Circuit Court of Appeals, No. 05-15305 (Jan. 16, 2007):

Issue:
In 2001, CreAgri brought to market "Olivenol," a supplement utilizing the allegedly beneficial nutrient properties of olive oil. Originally, it labelled the product for sale with a notification that it contained 25mg of the active ingredient. Because of alleged difficulty in measuring, CreAgri was unsure of the accuracy of this number but chose to go with the number rather than file for an exemption to federal labeling requirements. One year later -- after hearing concerns about the amount of the active ingredient represented to be in the product -- CreAgri did further analysis that established that there was no more than 5mg of the active ingredient in the product. It then adjusted its label text to read 5mg -- adding that the amount had been certified by a particular standardized process, even though the company had not yet been able to isolate any process that could create a standardized measurement of the quantity of Olivenol. In June of 2002, USANA filed an intent to use for a product it called "Olivol" that had similar origins and properties as Olivenol. It began to use the name Olivol in commerce that August, and CreAgri sued USANA for trademark infringement. As a result of this suit, the lower court had CreAgri retest with a more accurate measure, and -- in 2004 -- the labelling for Olivenol products was again changed, this time to reflect 3mg. By this time Olivenol had been rejected for admission to the primary register and Olivol had been granted admission with a June 18, 2002, priority date. However, with the amended labelling, Olivenol was added to the supplementary register with an Oct. 9, 2002, priority date. USANA asked for summary judgment in its favor and that Olivenol be wiped from the supplementary register, and the lower court obliged. CreAgri appealed.

Pertinent question of trademark law:
1) Should CreAgri's unlawfully labeled use of the Olivenol name in the market before USANA's appearance there trump USANA's earlier priority date for Olivol?

Conclusion:
The court found that for a mark to receive trademark protection, it must be used in lawful commerce. Since CreAgri's product was unlawfully labelled until after USANA's priority date, USANA was the first to use its mark in lawful commerce. The court -- calling the lawful commerce requirement a longstanding one -- said the rationale for this rule is twofold: "First, as a logical matter, to hold otherwise would be to put the government in the 'anomalous position' of extending the benefits of trademark protection to a seller based upon actions the seller took in violation of that government's own laws. Second, as a policy matter, to give trademark priority to a seller who rushes to market without taking care to carefully comply with the relevant regulations would be to reward the hasty at the expense of the diligent." CreAgri argued that its noncompliance was too attenuated from the trademark issue and cited a particular case, but the court cited the concurrence in the same case -- a concurrence stating that unlawful mislabelling is a good example of a proper nexus. CreAgri argued that it was impossible to have complied without a means to measure properly, but the court shot back that CreAgri should have filed an exemption in that case. Last, CreAgri argued that the labelling issue was immaterial, but the court found that the mislabelling was material because of the long delay in appropriately correcting the mislabelling and the fact that the ultimately correct label did not materialize until after USANA had filed. For these reasons, the decision of the lower court was affirmed.

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3M Company v. Stongard, Court of Appeals of Washington, Div. 1, No. 56911-2-I (Jan. 16, 2007):

Issue:
Stongard is a well-established maker of car bras -- coverings for the fronts of cars to protect them from stones and other paint-altering hazards. 3M created a product called "Scotchcal" that was a film that could be used to provide paint protection. While 3M did not directly market this product, it had -- since 1991 -- contracted Stongard to cut and market the film. When the deal soured in 2003, 3M not only terminated its agreement with Stongard but changed the name of Scotchcal to its more familiar trademark of "Scotchgard." Stongard found this new use of the Scotchgard trademark to be a deliberate attempt at trademark infringement of Stongard's common-law Stongard wordmark. While Stongard had a registered logo, it had never registered Stongard, the word, as a trademark in itself. The lower court found that Stongard's only Stongard trademark was its Stongard logo, and 3M did not infringe upon the Stongard logo. Stongard appealed.

Pertinent question of trademark law:
1) Is Stongard, as a word, eligible for common-law trademark protection?

Conclusion:
The court found that Stongard, like many others, manufactured stone guards for cars. The lower court had said: "The term 'stongard' (and its phonetic equivalent 'stone guard') is a generic term. These terms are used generically by the public and in the identifications of goods in third-party trademark registrations to refer to products that guard automobiles from damage by stones." The appeals court found that because "stongard" was a generic term -- a descriptive-use name -- it could only attain trademark status by demonstrating "secondary meaning." Because Stongard failed to establish that "the consuming public" identified "stongard" with the Stongard company -- in essence that stongard had achieved secondary meaning -- the appeals court affirmed the decision of the lower court.

01/22/07 IP News

2007-01-22T20:40:00.000-05:00

Here's the rundown on the latest in intellectual property news:

Orphaned works retain their copyright, said the 9th Circuit today, calling recent arguments by counsel for Kahle in the Kahle v. Gonzales case a revisitation of SCOTUS' Eldred. Saying that copyright was a matter of weighing interests, the court deferred to the scales of Congress. -- Reuters, Jurist
The top criminal court in Rome has thrown out a case against two students that had downloaded copyrighted materials illegally, saying that it wasn't a crime to download copyrighted works for reasons other than profit. -- KansasCity.com, courtesy of the Associated Press
A new licensing agency has sprung up to fight for independent artists' rights, and Merlin -- as it is called -- is vowing to be tough on copyright infringers. -- Out-Law.com
A recent European study has reported that employers surveyed find that to maximize the utility of their intellectual property it was best to collaborate with other companies on research and development matters rather than to keep such efforts strictly in-house. -- CORDIS: News
A new study says that scientific research "may not be as constrained by intellectual-property rights as many have feared." -- The Chronicle of Higher Education
iPhone ... is an intellectual property mess. Cisco was angered when Apple introduced its new wonder phone as iPhone because Cisco had already registered and been using the trademark. However, Cisco may not own the trademark still, since it used an iPhone sticker slapped onto a LinkSys box in its Declaration of Use, which may have been overdue anyway. Further, Cisco's WIP300 iPhone uses Linux and -- according to Linux's open-source licensing agreement -- Cisco is in violation of the open-source-code requirement for Cisco's use of Linux. Last, hopefully, whichever party comes out with the superior claim to the iPhone trademark in the United States will hit further obstacles if Canada is considered a future market; ComWave in Canada already has used the iPhone trademark there for VoIP equipment. -- Ed Burnett's ZDNet blog, Enterprise Networks & Servers, Security Focus, Geek.com, Linux Today
The U.S. PTO has declared that it will no longer publish its yearly top 10 of which organizations and companies filed the most patents during the year; moving forward, they want to stress quality and not quantity. IBM, by the way, won again. -- Forbes

01/07/07 - 01/13/07 Trade Secret Case Law

2007-01-22T10:48:00.000-05:00

GTFM v. Nagy, Supreme Court of new York, App. Div., 1st Dept., No. 10055, Index 602601/02 (Jan. 11, 2007):

Issue:
Nagy owned an independent sales agency and was wooed by GTFM to become their vice president. Orally, Nagy accepted and became privy to what all parties agree was confidential information. Negotiations on the terms of the position went south, and Nagy instead took a position with a competing set of companies. There is evidence that Nagy may have breached his fiduciary duties to GTFM, and GTFM's sales certainly went down after Nagy joined with the competition. GTFM sued Nagy for -- among other things -- a misapprpriation of trade secrets, namely the confidential information shown to him while he was in negotiations about the terms of his employment.

Pertinent question of trade secret law:
Does access to trade secrets, a motive and opportunity to disclose those trade secrets, and subsequent poor sales by the adversely affected corporation provide prima facie evidence of trade secret misappropriation?

Conclusion:
No. The court required actual knowledge that Nagy's new employers received the confidential information discussed during Nagy's employment negotiations. "In light of the lack of evidence sufficient to support an inference that [Nagy's new employers] were actually provided with the [confidential information], the causes of action for misappropriation of trade secrets, conversion, and unfair competition were also properly dismissed."

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Matrix v. Ginn, Court of Appeals of Texas, 5th Dist., Dallas, No. 05-06-00604-CV (Jan. 12, 2007):

Issue:
Matrix sells closed-circuit digital video recorders (DVRs) so security services. When Matrix realized that the systems it had purchased from the manufacturer could be adapted to provide remote monitoring, it set to work to develop this project with ADT, the security company. When ADT dropped out of the plans, the project was placed into the hands of Ginn, an employee. Ginn left the company before the project was finished, and continued to work for the company on a contract basis only. While away from Matrix, Ginn developed an alternative way to provide remote monitoring security services with a DVR system. This DVR system was brought to market before Matrix's, and had more features than the one planned by Matrix, was arguably targeted to a general audience, and did not require the embedded software on which Matrix's product would rely. Matrix, claiming injury from trade secret misappropriation, requested of the lower court that a temporary injunction be entered against Ginn. This motion was denied, and Matrix appealed.

Pertinent question of trade secret law:
In the light most favorable to Ginn, Ginn took the idea of a product on which he was working, created a new product from scratch that seems to have the same function, released it before the release of the other product, and then marketed it to a much wider consumer demographic than was envisioned for the prior product; is a temporary injunction an appropriate court action?

Conclusion:
The court found that Matrix had not met its burden of proving that the a temporary injunction was necessary. In this court, to be awarded a temporary injunction against another party, the moving party must: "plead and prove: (1) a cause of action against the defendant; (2) a probable right to the relief sought; (3) a probable, imminent, and irreparable injury in the interim; and (4) no adequate remedy at law." Matrix argued that by allowing the competing product to go to market before Matrix's, Matrix would lose the competitive advantage. The court pointed out three factors that led this motion to failure: 1) Matrix did not establish that the Ginn system -- seemingly made from completely different hardware and software -- would actually be in competition with Matrix; 2) Matrix did not establish that Ginn was trying to poach Matrix's customers with Ginn's new system; and 3) Matrix did not show that its damages could not be reduced to a liquidated amount at the end of litigation. Thus, the court could not find that there was "probable, imminent, and irreparable" injury to Matrix and heard no evidence suggesting that a remedy at law (damages) would be inappropriate, and -- with two of four factors lacking -- there could be no temporary injunction.

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In Re Diamond Shamrock Refining Company, Court of Appeals of Texas, 7th Dist., Amarillo, No. 07-06-0315-CV (Jan. 10, 2007):

Issue:
Moore County sought to perform an appraisal of the McKee Refinery owned by Diamond Shamrock. During the course of this ongoing appraisal, the person in charge of the appraisal chose to use the cost -- as opposed to the income or comparable sales -- approach to appraising the refinery. Continuing on with the cost-approach appraisal, the county required certain data that were trade secrets. When Diamond Shamrock refused, the county filed a motion to compel -- telling the court that such information would be useful but not specifying how. The court granted the motion, and Diamond Shamrock sought a writ of mandamus to rescind the order.

Pertinent question of trade secret law:
1) Must trade secrets yield to facilitate a county appraisal of the business possessing the trade secret?

Conclusion:
The appeals court found that the county could have looked into other approaches at analysis that may not have been so intrusive but chose not to do so. Further, the court found the county's vague assurance of convenience or need did not demonstrate necessity. Last, the court found that past appraisals had been made without intruding upon the company's trade secrets, and this would seem to indicate that an appraisal without the trade secret information was possible. Because the county could not establish that the trade secret information "was necessary for a fair adjudication of [the county's] claim or defense," the lower court had abused its discretion by granting the motion to compel, and the appeals court's issuance of a writ of mandamus was proper.

01/07/07 - 01/13/07 Trademark Case Law

2007-01-21T22:44:00.000-05:00

Gianni Versace, S.p.A. v. Alfredo Versace, 2nd U.S. Circuit Court of Appeals, No. 06-0526 (Jan. 10, 2007):

Issue:
Alfredo sold watches, jeans, handbags, and water -- amongst other items -- under the Versace name. In 1998, 2000, 2002, and 2004, Alfredo ran into legal trouble for selling items under the Versace name -- an internationally recognized trademark -- without a disclaimer that Alfredo was not the famous designer. In 2005, Versace pushed for a permanent extraterritorial injunction against Alfredo's use of the name, and the district court agreed that it was necessary. One year later, the terms were agreed upon and judgment entered. Alfredo appealed.

Pertinent question of trademark law:
1) Was it proper for the court to enter an order prohibiting Alfredo from using his last name as a mark of commerce in any country?

Conclusion:
Considering Alfredo's long-continued pattern of using his last name as a mark of commerce and without a disclaimer despite court orders, it was not an abuse of the district court's discretion to refuse to permit "Alfredo to use 'Versace' accompanied by a disclaimer or ... limit the injunction to certain (unspecified) countries." Said the court: "A district court must be permitted to fashion an 'injunction which will keep a proven infringer safely away from the perimeter of future infringement.' ... For that reason, we have recognized that 'a party who has once infringed a trademark may be required to suffer a position less advantageous than that of an innocent party.'"

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Horphag Research v. Garcia, 9th U.S. Circuit Court of Appeals, No. 04-55373 (Jan. 9, 2007):

Issue:
Masquelier discovered that a certain French pine-tree-bark extract seemed to aid nutritional distribution and proper circulation when taken as a nutritional supplement. In 1978, Masquelier brought the supplement to market as Pycnogenol (Pyc), and he received a French trademark for it in 1989. In 1987, he contracted with Horphag to sell the supplement in the United States, and -- in 1993 -- Horphag received a U.S. trademark for the Pyc name. Horphag and Masquelier's relationship went sour some time before the U.S. trademark was established, but Horphag, nonetheless, since has made extensive efforts to market Pyc and better its quality. Garcia owned a website and sold Horphag products through the site. When Garcia found out that Masquelier had originally created Pyc, he dropped his relationship with Horphag in favor of selling Masquelier products. Masquelier still sold the extract, but under a different name. Even so, Garcia metatagged his site with the Pyc name. Further, Garcia, when speaking of the supplement, spoke of it generically as Pyc and substituted the Pyc brand name with Masquelier's competing product's name whenever studies or testimonials on the Horphag product were offered on Garcia's site to benefit the competing product's sales. Horphag sued Garcia for trademark dilution and infringement. The lower court entered summary judgment in favor of Horphag, and Garcia appealed.

Pertinent questions of trademark law:
1) Was there infringement, particularly dilution?
2) If so, was this infringement in fair use?
3) Is this a case of derivative fame?

Conclusions:
Garcia certainly used Horphag's product name, Pyc, to sell Masquelier's product, not just for comparative value. Thus, there was trademark infringement. particularly, there was dilution by blurring. By genericizing the brand name and substituting the Masquelier brand name for the Pyc brand name in testimonials and studies, Garcia created confusion in consumers by blurring the distinctiveness of the Pyc mark. For the use of the trademark to have been fair use, Garcia could have simply used the Pyc brand name for comparison purposes, but the use far exceeded such a purpose. Although Garcia argued that Pyc's fame in the United States was created by the French fame of Pyc, Garcia offered no evidence to show that the United States citizenry was familiar with the French brand name before it became a U.S. trademark of Horphag. Thus, the judgment of the lower court was affirmed.

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First Niagara Insurance Brokers v. First Niagara Financial Group, U.S. Court of Appeals for the Federal Circuit, No. 06-1202 (Jan. 9, 2007):

Issue:
First Niagara Insurance Brokers (FNCA) is a Canadian insurance broker that operates on the U.S.-Canadian border. Not only does it provide Canadian customers with insurance policies for property in Canada, but it also provides services for Americans with property in or to be used in Canada and Canadians with property in or to be used in the United States. On the New York side of the border, First Niagara Financial Group (FNUS) is a U.S. company offering similar services and using a similar name and logo. In 2000, FNUS filed an intent to use trademark claim for its name and logo. FNCA filed an opposition and lost. The board rejected the opposition because, though FNCA's services and FNUS's services overlapped, FNCA could not show that it had used its purported trademarks in U.S. intrastate commerce. FNCA appealed.

Pertinent questions of trademark law:
1) Did the board frame the issue correctly?
2) If not, then did FNCA waive its ability to correct the framing of the issue because its acceptance of FNUS' argument in the improper framing?

Conclusions:
The court found that the board did not frame the inquiry properly. FNUS had framed the argument according to the definition given of "used in commerce" in 15 USC Section 1127. This section provides definitions and rules of construction. It argued that FNCA did not use its marks in U.S. commerce, and the board seemed to have accepted FNCA's acceptance of this framing when the board found that FNCA did not meet the heightened hurdle that FNCA and FNUS had set for FNCA. However, 15 USC Section 1052(d) -- the section on registrable trademarks -- framed the issue more appropriately as use in the United States, not commercial use in the United States. Although FNCA had created an argument for appeal within FNUS' and the board's framework and had brought this argument to the appeals court, the appeals court found that it would be improper to evaluate FNCA's appeal on whether it cleared the heightened level of scrutiny; to do so would be against the clear wording of the 15 USC 1052(d). Instead, the court found that FNCA did use its name and logo in the United States, thereby rendering them registrable use in accordance with 15 USC Section 1052(d), and this entitled FNCA's trademarks to protection.

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Lorillard Tobacco Company v. Engida, 10th U.S. Circuit Court of Appeals, No. 06-1115 (Jan. 8, 2007):

Issue:
Lorillard Tobacco Company (Newport) obtained two packages of counterfeit Newport cigarettes from Engida's small store. On the basis of this seizure, Newport sought a preliminary injunction against Engida's store, even though one of the packages was of uncertain origin. The court denied the motion, and Newport appealed.

Pertinent question of trademark law:
1) Does prima facie evidence of trademark infringement constitute per se grounds for a preliminary injunction order?

Conclusion:
No. Arguably, Newport only had one box of counterfeit cigarettes in its possession to establish that Engida was a trademark violator. While Newport argued that prima facie evidence of trademark infringement established the irreparable harm portion of a preliminary injunction analysis, the court found there to be no need for a preliminary injunction. In eBay, Inc. v. MercExchange, L.L.C., (126 S. Ct. 1837, 1840-41, 164 L. Ed. 2d 641 (2006)), SCOTUS cautioned against using categorical rules in intellectual property cases where injunction was sought. However, the court said, even if it did assume that prima facie evidence of trademark infringement was per se evidence of irreparable harm, Newport still could not show that the balance of the harm affected Newport more than Engida. ("A party seeking injunctive relief must establish four factors: (1) it will suffer irreparable harm if the injunction is not granted, (2) its threatened injury outweighs the harm caused to the opposing party as a result of the injunction, (3) the injunction is not adverse to the public interest, and (4) it has a substantial likelihood of success on the merits of the case.") As a small store owner, Engida's small business would be profoundly affected if he could not sell Newport cigarettes for fear of violating the injunction; whereas, Newport only had confirmed evidence of one package of counterfeit Newport cigarettes. Thus, though the court would not entertain whether SCOTUS' 2006 eBay decision prohibited interpreting prima facie evidence of a trademark infringement as irreparable harm, it did refuse to find such evidence of infringement to be dispositive of the need for a preliminary injunction.

12/31/06 - 01/06/07 Trade Secret Case Law

2007-01-21T00:26:00.000-05:00

Patricia Adkins Insurance Agency v. State Farm Mutual Automobile Insurance Company, Court of Appeal of California, 3rd App. Dist., No. C050591 (Jan. 4, 2007):

Issue:
State Farm hired agents to act on its behalf in the binding and handling of insurance policies. Agents, according to State Farm, were independent contractors tied to State Farm via a contractor agreement that included trade secret and nonsolicitation provisions. In the 1970's State Farm allowed its agents to hire its own employees to act on behalf of the agents in binding and handling insurance policies. In the interests of regulating its insurance obligations, and in accordance with the agent contracts, State Farm created agreements for agents' employees that regulated the handling of insurance matters. Following State Farm's foray into financial services, State Farm updated the agents' employees agreements to reflect the new field of work. However, this updated agreement also included a trade secret and nonsolicitation provision that echoed those same provisions in the agent agreements. The agents sued for breach of their contracts and violation of California's unfair competition statutes. State Farm maintains that the agreement is within the scope of regulating its business interest to solicit insurance and service policy holders.

Pertinent question of trade secret law:
1) Is the imposition of trade secret and nonsolicitation provisions on its independent contractors employees' within the scope of State Farm's interest to solicit insurance and service policy holders?

Conclusion:
While State Farm does have the authority to control the realm of who and how agents and agents' employees can bind State Farm to insurance obligations, the imposition of trade secret and nonsolicitation requirements on its agents' employees goes beyond this realm into one of the core powers of an employer. In finding someone an employee, a court will look to whether the alleged employer controls the employment opportunities of the employee. State Farm attempts to limit the employment opportunities of its independent contractors' employees by imposing the trade secret and nonsolicitation restrictions. "State Farm has chosen the independent contractor model for its agents, and there are legal consequences to that choice." One such consequence is that State Farm cannot declare the employees of its agents independent contractors on the one hand and then exercise the power of an employer over them on the other. State Farm cannot impose trade secret and nonsolicitation restrictions on its agents' employees.

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Aldrich Supply Company v. Hanks, Court of Appeal of California, 4th App. Dist., Div. 2, No. E039154 (Jan. 5, 2007):

Issue:
When Daly bought Aldrich Supply Company, he committed Hanks to a five-year employment agreement that included a trade secrets clause. When the relationship between Daly and Hanks soured in 2001, Hanks resigned his presidency over the company and created American Pipe in 2002. American Pipe competed with Aldrich Supply Company, and Daly sued Hanks for a breach of trade secrets. In trial, Hanks made several objections of Daly's testimony, and these objections were sustained:
1) "Richard Hanks committed this confidential information to his mind or memory, and thus took the information with him when he left Aldrich."
2) "During the 24 years that Richard Hanks worked at Aldrich Supply Company, he developed a formula and method of pricing jobs to make the company profitable."
3) "Richard Hanks also knew the special needs or requirements for Aldrich's customers. For example, Hanks knew that a company like Astleford Construction would primarily order perforated pipe, while C.P. Construction would order pipe fittings, while Magco Drilling would order corrugated steel pipe, while ACI would place more diverse orders for perforated pipe, metal fabrication work, slotted pipe, Typar filter fabric, grids, pipe fittings, corrugated steel pipe, and high density polyethylene pipe."
4) "In addition, Aldrich Supply Company has protected its confidential information by creating a culture of confidentiality and secrecy concerning this information. Aldrich Supply Company installed a very elaborate and sophisticated security system at its offices, which not only provided monitored alarms for the doors and windows, but also a motion detector for the outside areas surrounding its yard."
5) "Moreover, Aldrich Supply Company has a system of shredding documents containing confidential information which are no longer needed."
6) "Aldrich Supply Company's confidential information was ... only given to those employees who needed it to perform their job functions. For the most part, the confidential information was imparted only to the sales force, which was almost exclusively Richard Hanks and his son, Curt Hanks..."
7) "The design of Aldrich's perforating machine is not known generally throughout the industry and as such gives Aldrich an edge over competitors. This confidential and propriety [sic] information was learned by Defendant Hanks during his employment with Aldrich."
8) "Throughout this litigation, Richard Hanks has produced more than 8,000 pages of documents. Many of those documents are invoices from his company to Aldrich customers. From these, I prepared a detailed listing, by customer, of all invoices, as well as a month-by-month summary, by customer, of the business Hanks has unfairly stolen from Aldrich. Just between January 2002 and June 2003, the amount of business Hanks unfairly stole from Aldrich was almost $ 2 million."
9) "Based upon the most recent financial statement for Aldrich, which is as of December 31, 2004, Aldrich's sales are down approximately $ 1.5 million from the year ending December 31, 2001 ($ 4,003,041 to $ 2,580,031)."
10) "I have personally reviewed the books of Aldrich for its sales during 2001 and 2002 for the customers listed below. The figures listed are accurate amounts of money Aldrich realized in gross sales for the customers and years indicated. This is just a representative sample demonstrating that Richard Hanks and his company have improperly stolen business from Aldrich. There are many more companies which show a similar, and in some cases worse, picture. However in the interest of judicial economy, a sample is provided below[.]"
Daly appealed the lower court's decision to sustain these objections, as well as others of a similar nature from other witnesses.

Pertinent question of trade secret law:
1) Were the objections properly sustained?

Conclusions:
The court affirmed the verdict of the lower court and all objections. Daly had asserted that many things were confidential, but he failed to explain why the things he claimed to be confidential were, in fact confidential, and further failed to show how -- assuming that the information was confidential -- his company made reasonable efforts to protect the secrecy.
Thus:
1) The first objection was properly sustained because it was: a) unproven speculation, and b) not shown to be confidential aside from the assertion by Daly that it was.
2) The second objection was properly sustained because it: a) spoke in ultimate facts, and b) did not show Daly's personal knowledge that Hanks had created such formulas or methods or the specifics of the formulas or methods.
3) The third objection was properly sustained as speculation, since Daly did not establish that he was qualified to opine Hanks' specialized knowledge of client needs.
4) The fourth objection was properly sustained because "[t]here is no time frame relative to the presence of the alarm system, other than the fact that it was present at the time Daly signed his declaration. Additionally, the phrase 'a culture of confidentiality and secrecy' is vague and ambiguous. There is no showing that any information is 'confidential.'"
5) Similarly, the fifth objectionable statement also lacked a time frame and so was properly sustained as an objection.
6) The sixth objection was properly sustained because, while the company may have limited information, Daly did not show that such information was of a confidential nature.
7) The seventh objection was properly sustained because "[t]here is nothing in the record to even suggest [that Daly] has contact with others in the industry, let alone be able to state what they know and do not know. There is additionally nothing in the record to support an inference that the design of the perforating machine is in any way unique, or that Aldrich has taken steps to protect this "proprietary" information."
8) The eighth objection was properly sustained because the document created to calculate the loss was improper hearsay not subject to the protection of the business records exception. Further, it improperly concluded that Hanks "unfairly stole."
9) While the ninth objection may have been admissable to show damages, it was harmless error under the circumstances. Further, in as far as the statement might have been used as a business record, there was no proper foundation to establish the financial statement as a proper business record exception to the hearsay rule.
10) The 10th objection was properly sustained for the same reasons as the eighth.
Thus, the decision of the lower court to sustain these objections was affirmed.

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Niemi v. American Axle Manufacturing of Michigan, Court of Appeals of Michigan, No. 269155 (Jan. 4, 2007):

Issue:
American Axle Manufacturing (AAM) hired the Niemis to design benders for them. The Niemis designed the benders, which AAM then manufactured for its contract. The Niemis assigned the invention and the right to patent the invention on the Niemis' behalf, and they also claimed that there was an "oral or implied agreement that the parties would keep the design confidential. AAM never filed a patent application." When AAM continued to use the design in future contracts, the Niemis sued AAM for the misappropriation of its trade secret -- the designs. The lower court granted summary judgment for AAM, and the Niemis appealed.

Pertinent question of trade secret law:
1) Was there a trade secret?

Conclusion:
Under the Michigan Uniform Trade Secrets Act, the Niemis had to take reasonable efforts under the circumstances to maintain the secrecy of their designs in order for their designs to qualify as a trade secret. Toward establishing this fact, the Niemis only offered to the court their assertion that there was an implied agreement with AAM to not distribute the information freely as they understood the proprietary nature of the designs. The Niemis took no other efforts of their own to protect the secrecy of their designs. This was not enough to have established a genuine issue of material fact as to whether the Niemis had adequately protected the secrecy of the designs. The claim of breach of trade secret was properly subjected to summary judgment in AAM's favor by the lower court.

01/07/07 - 01/13/07 Copyright Case Law

2007-01-20T20:28:00.000-05:00

Chirco v. Crosswinds Communities, 6th U.S. Court of Appeals, No. 05-1715 (Jan. 10, 2007):

Issue:
Chirco created a very distinctive and space-effective condominium-complex blueprint. At some point, Chirco learned that Glieberman, as an agent -- for all intents and purposes -- of Crosswinds Communities had broken ground on a condominium complex that was essentially a copy of Chirco's blueprinted vision. Chirco filed suit for copyright infringement and -- during discovery -- discovered Glieberman's plans to build yet another copycat complex. Despite Chirco's knowledge that Glieberman was moving forward with the second complex, Chirco made no legal challenge to the plans -- even when the project for this second copycat complex broke ground. In fact, Chirco did not file a claim for copyright infringement on this second project until 18 months later, by which time "168 of the planned 252 units had been constructed, 141 of them sold, and 109 [were] already occupied by the buyers." The lower court found that the doctrine of laches applied -- even though the claim was filed before the three-year statute of limitations set out in 17 USC 507(b) of the Copyright Act -- and found in favor of Crosswinds. Chirco appealed.

Pertinent question of copyright law:
1) Can the equitable doctrine of laches trump the federal statute of limitations on a copyright claim?

Conclusion:
Yes. Breaking with the 4th Circuit and in following with the 7th Circuit, the 6th Circuit has found that in compelling circumstances, laches is an appropriate affirmative defense to a copyright claim filed within the statute of limitations. Said the court: "In this matter, despite the plaintiffs' knowledge of the defendants' plans and intentions, Chirco and Moceri deliberately delayed as those plans were submitted to local officials as part of the permitting process, as ground was broken on the project, as advertisements about the development were disseminated, as construction on Jonathan's Landing began, as 168 of the planned units were completed, as the defendants sold 141 of those condominiums, and as 109 individuals or families actually occupied what they hoped to make their homes. Only at that point, more than two-and-one-half years after having plans for Jonathan's Landings in their files, did the plaintiffs see fit to file their copyright infringement suit, requesting not only money damages and an injunction against future infringement, but also the destruction of 'all architectural works which have been built using plans which infringe the Copyrighted Materials.' Such a request smacks of ... inequity." The 6th Circuit affirmed the lower court's application of laches.

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Roper v. Jo-Ann Stores, U.S. Court of Appeals for the Federal Circuit, No. 2006-1575 (Jan. 9, 2007):

Issue:
Roper wrote books on plant cultivation and invented the "cloth farm," a structure composed of several tiers of cloth on which plants could grow for the maximum botanical use of minimal space. Jo-Ann's -- selling floral foam, a green square of foam used to create floral arrangements -- included in its commercial advertising "simple descriptions and images of floral arrangements." In addition to a patent challenge, Roper argued that this commercial advertising, or perhaps the idea espoused to the advertising, violated his copyrighted works.

Pertinent question of copyright law:
1)Can the ideas or simple descriptions and images wrapped into an item of commercial advertising create a copyright violation?

Conclusion:
No. "Jo-Ann's commercial advertising for floral foam, expressing simple descriptions and images of floral arrangements, cannot, as a matter of law, infringe the copyrights on Roper's works on plant cultivation. To the extent that Roper's complaint challenges not Jo-Ann's advertising, but rather alleged similarities between Jo-Ann's floral foam and Roper's ideas, we echo the district court's observation that 'copyright protects only an author's expression of an idea and not the idea itself.'" Textbook.

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Jeffrey A. Grusenmeyer & Assoc. v. Davison, Smith, & Certo Architects, 6th U.S. Circuit Court of Appeals, No. 06-3293 (Jan. 8, 2007):

Issue:
G&A won a bid to draw up a master plan for a school. In the process of drawing this master plan, G&A also created a layout of the current conditions of the area -- using computer graphics programs, G7A field measurements, and data provided by the school. All designs and layouts were registered copyrights. G&A lost the subsequent bid to build a facility on the area, and the winning bidder -- DSC -- used G&A's current-conditions layout as part of its tools in creating the new facility. G&A sued DSC for copyright infringement, and the lower court found in DSC's favor. G&A appealed.

Pertinent questions of copyright law:
1) Can the layout of the current conditions be copyrighted?
2) If so, would fair use by DSC apply?
3) Did G&A's initial contract with the school amount to a release of the current-conditions-layout use by winning bidders?

Conclusion:
The court found it hard to believe that the master plan contents could only be viewed or utilized by G&A or the school, when -- by G&A's own admission -- it was generally understood by all parties that a bidder other than G&A may be used to -- figuratively as well as literally -- build upon that master plan. Thus, it was within the scope of the master-plan contract for the school to share the master plan, including the layout of current conditions, with the successful bidders for the building project. As such, whether the layout of current conditions was sufficiently original to warrant copyright protection was an unnecessary analysis, as was any fair use defense. The argument that the layout was distinct from the contract fell short because it was clear that the layout of existing conditions would be necessary to move forward with the building project that was at the heart of the school's need for a master plan.

12/31/2006 - 01/06/07 Copyright Case Law

2007-01-19T21:48:00.000-05:00

Wiredata, Inc. v. Village of Sussex, Court of Appeals of Wis., Dist. 2, No. 2005AP1473 (Jan. 3, 2007):

Issue:
In one of the backgrounds described in this decision, Grota and Pelkey programmed Pelkey's Market Drive, a Microsoft Access-based database application, to compile property data for appraisers. Sussex hired Grota to appraise the real estate in the town, and Grota did so using Market Drive -- providing Sussex with a read-only sublicense that allowed them to print reports using the application general user interface (GUI). WIREdata (Wire) submitted an open-records request (Wis. Stat. Section 19.35(1)(h)) to Sussex for data from those records. Notified by Sussex of the request, Pelkey asserted copyright over the raw data requested, claimed that the data was not subject to an open-records request, and offered to charge Wire for the cost of accomodating the request. However, Pelkey also asserted that there would also be a copyright and an annual update fee, and the data could only be for Wire's personal use. Additional fees would neccesarily have to be paid by Wire to distribute the data to other parties. The 7th Circuit found that Pelkey's proprietary data was in the data presentation on the GUI, not the raw property data contained by Microsoft's proprietary Access software and that Wire was entitled to the data requested. Pelkey sent Wire the information in Adobe PDF files.

Pertinent questions of copyright law:
1) Given that Sussex could not delegate its open-records responsibility to Pelkey -- a private contractor, did Sussex essentially deny Wire's open records request by allowing Pelkey to demand from Wire copyright fees for the data?
2) Despite the finding by the 7th Circuit on the nature of his copyright, Pelkey nonetheless sought to limit the open-records distribution of the raw data by offering PDF copies of the data requested; did this adequately comply with the open-records request for the raw data?

Conclusions:
The court found that Sussex had, in fact, essentially denied Wire's request by allowing Pelkey to try to collect copyright fees in exchange for the completion of the requested work. The law required that such requests be handled promptly, so the introduction of a copyright fee condition to completing the work, even if by Pelkey, amounted to a denial of the request -- which ripened Wire's mandamus action.
Because the information contained in the database on which Pelkey's application operated was not a copyrighted property of Pelkey, and because the municipality maintained the database on its premises and at its own expense, Pelkey could not limit the means by which Wire received its requested data. Thus, the receipt of a PDF-processed form of the data, instead of the raw database entries that Wire had requested violated Wire's right to such data.

Welcome

2007-01-19T20:42:00.000-05:00

This blog is designed to provide information on the latest in U.S. intellectual property law. Particularly, this blog seeks to report on the latest U.S. copyright and trademark cases and any interesting intellectual property news of any sort.

My name is Sean FWJ Fowler. I have written and reported for Lawyers Weekly and -- most recently -- written and edited for Thomson West. Following my lifelong love of intellectual property matters, I am now writing this blog and taking up the practice of law in Massachusetts. I am a graduate of Boston University and Northeastern University School of Law.

I welcome feedback, and -- should you have any -- please feel free to contact me at haffathot (at) gmail (period) com.