Monthly Archives: January 2009

M.D. Tenn.: Defendants ordered to produce discovery that is more than three years old

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Shourin Sen - 12 January 2009 – 10:09 pm
Filed under Statute of Limitations

Frank Betz Associates, Inc. v. J.O. Clark Construction LLC, 08 cv 00159, 2009 WL 47143 (M.D. Tenn. Jan 7, 2009) (discovery order).

In this suit, Frank Betz Associates, Inc., an architecture firm,  alleged that J.O. Clark Construction and Clark & Howell Building Group, home construction corporations, infringed their architectural designs.  During discovery, Betz sought documents and information related to houses that the defendants had built and sold in the previous nine years.

The defendants only provided information relating to the 179 houses that they had sold within three years prior to the filing of the suit.  The defendants further moved for a protective order that would limit the scope of the plaintiff’s written discovery to three years prior to the filing of the suit.

17 U.S.C. § 507 provides that a civil action under the Act must be “commenced within three years after the claim accrued.”  The defendants argued that the E.D. of Tenn. should follow the rule, adopted by the S.D.N.Y., that a claim begins to accrue at the actual time of the injury, not when the plaintiffs discovered the injury.   See Auscape Int’l v. National Geographic Soc’y, 409 F.Supp.2d 235 (S.D.N.Y.2004).

The Court concluded that the ruling in Auscape was a “minority view,” finding that the “vast majority” of courts that have addressed this issue mark the plaintiffs’ discovery of harm, not the moment of actual harm, as the time when the statute of limitations begin to accrue.   The Court further cited Bridgeport Music, Inc. v. Diamond Time, Ltd., 371 F.3d 883, 889 (6th Cir.2004) for the finding that “[a] cause of action accrues when a plaintiff knows of the infringement or is chargeable with such knowledge,” an enunciation of the “discovery rule.”

However, despite the strong language, the Court refrained from explicitly endorsing the “discovery rule,” and instead, based their order on the fact that the Magistrate Judge should refrain on ruling on dispositive issues during discovery:

In ruling on an issue involving the scope of discovery, it is more appropriate to permit a wider scope, if it is defensible and has legitimate underpinnings, leaving the dispositive issue to be resolved by the District Judge. The applicability of the “discovery rule” in the Sixth Circuit is at least defensible and has the authority of the Sixth Circuit pronouncements. This discovery ruling is not, however, intended to foreshadow or have any impact on any corollary dispositive issue.

Documents:

architecture copyright attorneys

Jacobsen v. Katzer: Order on motions to dismiss, denies preliminary injunction citing Winter v. National Resources Defense Council

1
Shourin Sen - 11 January 2009 – 9:35 pm
Filed under License v. Contract, Preliminary Injunction

image The saga of Jaconsen v. Katzner continued this past week, as Judge Jeffrey S. White of the Northern District Court of California ruled on a series of motions to dismiss and denied a motion for preliminary injunction.  To review the facts in this dispute, the plaintiff, Robert Jacobsen was a professor of physics at Berkley.  Jacobsen was a model train enthusiast and a member of the Java Model Railroad Project, an online  community that developed opensource model train software.   The defendant, Matthew Katzer, was the chief executive officer and chairman of the board of directors of Matthew Katzer and Kamind Associates, Inc. (“KAM”), a company that developed software for model railroad hobbyists.   In this suit, Jacobsen sought “declaratory judgment of the unenforceability and invalidity of KAM’s patent, non-infringement of Jacobsen’s work, violation of copyright laws, violation of the Digital Millenium Copyright Act (“DMCA”), breach of contract under California law, and cybersquatting in violation of 15 U.S.C. § 1125(d).”

In the order, the Court reached the following holdings:

Jacobsen’s Contract claim preempted

The Court dismissed Jacobsen’s breach of contract claim as preempted by federal copyright law.   17 U.S.C. § 301 establishes a two-part test for courts to use when deciding whether a competing claim is preempted: (1) the claims must come within the subject matter of copyright; and (2) the rights granted under state law must be equivalent to any of the exclusive rights within the general scope of copyright as set forth in the Act.

Addressing the first prong, “subject matter,” Judge White found that the claim for breach of contract was “within the subject matter of the Copyright Act” as the “claim deals exclusively with the misappropriation of the JMRI Project decoder definition files.”   As per the second prong, “equivalent rights,” the Court found that Jacobsen’s contract claim alleged “violations of the exact same exclusive federal rights protected by Section 106 of the Copyright Act, the exclusive right to reproduce, distribute and make derivative copies.”

Patent Declaratory Claims Are Mooted

Judge White dismissed Jacobsen’s claim for declaratory judgment of the unenforceability and invalidity of KAM’s patent in the software.  The Court found that the claim was moot because Katzner had filed a Disclaimer in Patent, under 37 C.F.R. § 1.321(a), that disclaimed all claims in the patent.

Motion to strike prayer for attorneys’ fees

Katzner argued that the prayer for attorneys’ fees should be stricken from the complaint under F.R.C.P. 12(f).  12(f) provides that a court may “order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”  Katzner argued that Jacobsen wasn’t able to seek attorneys’ fees damages because he registered the copyright after the alleged infringement occurred. The Court denied the motion on the grounds that Jacobsen may find additional instances of infringement during discovery.

Motion to dismiss DMCA

The Court denied Katzner’s motion to dismiss Jacobsen’s claim for violation of the DMCA.   The Court stated that Jacobsen’s complaint alleged “some technolgical process engaged to protect the author’s name, a title, and reference to the license and where to find the license, a copyright notce, and the copyright owner of Jacobsen’s work.”   The Court found that it would be inappropriate to dismiss the claim without further discovery.

Motion on preliminary injunction

Most interestingly, the Court denied a motion for a preliminary injunction citing the recent Supreme Court case Winters v. National Resources Defense Council.  To review, a court grants a preliminary injunction if it finds: “(1) a combination of probable success on the merits and the possibility of irreparable injury, or (2) the existence of serious questions going to the merits, where the balance of hardships tips sharply in plaintiff’s favor.”  The Court stated that the legal standard for preliminary injunction had changed from when the action was filed.   According to the Court, until recently “federal copyright law provided that a plaintiff who demonstrates a likelihood of success on the merits of a copyright claim was automatically entitled to a presumption of irreparable harm.”  But, after Winters,

“a plaintiff is not granted the presumption of irreparable harm upon a showing of likelihood of success on the merits. Instead, a plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

The court denied the motion for preliminary injunction stating that “Jacobsen ha[d] failed to proffer any evidence of any specific and actual harm suffered as a result of the alleged copyright infringement and . . .  failed to demonstrate that there is any continuing or ongoing conduct that indicates future harm is imminent.”

This part of the unpublished order will certainly be appealed.   I’d be curious to hear Professor Comulkiewicz’s view of the order, given how he cautioned that courts need to play a critical role when evaluating whether to grant an injunction for breach of a license condition.

Counsel:

  • Robert Jacobsen: Law Office of Victoria K. Hall (Bethesda, MD)
  • Matthew Katzer: Gorman & Miller (San Jose, CA); Field & Jerger LLP (Portland, OR)

Documents:

Joseph Stiglitz lecture: “Economic Foundations of Intellectual Property”

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Shourin Sen - 9 January 2009 – 12:10 am
Filed under Academia, TRIPS

I recently stumbled upon a rather impassioned intellectual property lecture by Joseph Stiglitz.  The Nobel Laureate gave the talk at Duke University’s Center for the Study of Public Domain in February 2007.   A transcript of the speech is included in the April 2008 issue of the Duke Law Journal.  The lecture touches on an array of subjects, if only tangentially, but the most interesting comments perhaps were in regards to the implementation of TRIPS.  At the risk of discussing a topic that is old hat (it was new to me), I’ve included two snipits below:

Joseph E. Stiglitz, Economic Foundations of Intellectual Property Rights, 57 Duke L.J. 1693 (2008).

[p 2] When I was at the Council of Economic Advisors we opposed the Trade-Related Aspects of Intellectual Property Rights agreement (TRIPS), part of the Uruguay Round of trade negotiations. Interestingly, so did the Office of Science and Technology Policy. We were not alone in our opposition; indeed, it was a view held by many, if not most, of the people who understood the issues. These views stood in contrast to the views of most of the people who had some special interest on this issue, particularly from the pharmaceutical and entertainment industries, who argued that the stronger the intellectual property rights the better. When I went to the World Bank, I continued to be involved in the issue. We had concluded that what separates developed and developing countries is not just the disparity, the gap, in resources, but also the disparity in knowledge, and closing that gap in knowledge is an essential part of successful development. We had become concerned that TRIPS might make access to knowledge more difficult—and thus make closing the knowledge gap, and development more generally, more difficult. We also worried about the effects of TRIPS on access to life-saving medicines; TRIPS attempted (successfully) to restrict access to generic medicines, putting these drugs out of the financial reach of most in the developing countries.

* * * * *

[p 9] One example that shows the magnitude of what is at stake (and that has received a lot of attention), are the AIDS drugs. One year’s treatment of the brand name drugs, not the most recent ones, but the older ones which are less expensive, costs $10,000.21 In a poor developing country, where the per capita income is $300, or even $3,000, a person with AIDS is not going to be able to afford $10,000. They might be able to afford the generic medicines, which sell for less than $200. When the trade ministers signed the TRIPS agreement in Marrakesh in the spring of 1994, they were in effect signing the death warrants on thousands of people in sub-Saharan Africa and elsewhere in the developing countries.

copyright attorneys

Stanford Launches IP Litigation Clearinghouse

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Shourin Sen - 8 January 2009 – 9:01 am
Filed under News

This news comes via Liklihood of Confusion, via Seattle Trademark Lawyer, via the  Chicago IP Litigation Blog.  Stanford has launched a “clearinghouse” that collects recent litigation and filings.  The site looks delicious, though they have yet to complete a section dedicated to copyright or trademark case law; so the site will be of limited use to soft-IP practioners for a while.  I’m tempted to donate whatever it is I’m gong to waste sifting through filings on PACER to help them get everything fully functional.  Thanks for the service!

copyright attorneys

S.D.N.Y. grants Paramount’s motion to dismiss in suit over use of pinball machine in What Women Want

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Shourin Sen - 6 January 2009 – 8:07 pm
Filed under Preemption

Robert Pritikin, the man who composed the rice-a-roni jingle, has generated a fair amount of press recently. Priikin claimed that the use of Hitler’s Globe in Valkyrie, Tom Cruise’s recently released blockbuster, infringed his copyright in the work.  The claim, of course, is frivolous, given that Pritikin isn’t the author of the Globe, only the owner of the tangible item.  Though, Pritikin appears to know exactly what he’s doing.  He recently put the Globe up for sale, and as Techdirt pointed out, there is probably no better way to generate interest.  On the general subject of claiming copyright in an item depicted in a film, the S.D.N.Y. granted motion to dismiss in a similar suit this past week.

imageIn Gottlieb Development LLC, v. Paramount Pictures Corporation, 08 civ 2416 DC (S.D.N.Y. Dec. 29, 2008), the distributor of the “Silver Slugger” pinball machine alleged that Paramount’s use of one of their machine in the movie “What Women Want,” sans permission, constituted copyright and trademark infringement, a violation of N.Y. State Deceptive Trade Practices, and common law unfair competition and unjust enrichment.   Paramount used the “Silver Slugger” in the background of a scene where Mel Gibson and Helen Hunt brainstormed new ways to market products to women.

Judge Chin granted Paramount Pictures’ motion to dismiss on all claims.  In regards to copyright infringement, the Court found that the use of the Slugger sporadically, for seconds at a time, in a three and a half minute scene was de minimis as a matter of law.  Judge Chin distinguished the current suit from Ringgold v. Black Entm’t T.V. Inc., 126 F.3d 70, 75 (2d Cir.1997), where a poster was shown nine times (1.86 to 4.16 seconds at a time, for a total of 26.75 seconds) during a five-minute scene at the end of a television episode.  Further, Judge Chin noted that in Ringgold there was a “qualitative connection between the poster and the show” that was lacking in Paramount’s use of the Silver Slugger.

In regards to the Lanham action, the Court found that Gottlieb failed to allege facts to suggest that Paramount’s use of its trademark would likely cause confusion, or that Paramount’s use was motivated by ill-intent to free-ride on Gottlieb’s good will.  Gottlieb’s counsel forwarded the creative argument that its “business reputation will be injured by any association of its products with the actor Mel Gibson and his purported anti-Semitic beliefs.”  The Court, however, rejected as “absurd” the idea that consumers would “think less” of Gottlieb because of the brief shots of the Slugger and Gibson.

The Court dismissed the New York General Business Law Section 349 Deceptive Trade Practices claim, and found that Gottlieb failed to allege any facts that showed either harm to the public interest or material deception.  Judge Chin found that the unfair competition and unjust enrichment claims were preempted.

Documents:

C.D. Cal. holds DMCA’s 512(c) “by reason of storage” language shields Veoh.com

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Shourin Sen - 5 January 2009 – 10:58 pm
Filed under DMCA

UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D.Cal. December 29, 2008) (order denying UMG’s motion for partial summary judgment) (A. Howard Matz, j.)

Veoh Networks, Inc. runs a site, veoh.com, that allows users to share videos.  UMG brought suit alleging direct, contributory, and vicarious copyright infringement, and for inducement of copyright infringement. Veoh asserted, as an affirmative defense, that their actions were shielded under the DMCA’s safe harbor provisions.  In this motion, UMG sought partial summary judgment, asking the Central District Court of California to find that Veoh is not entitled to the safe harbor provisions codified in 17 U.S.C. 512(c). image 17 U.S.C. 512 states, in part, that a service provider shall not be liable for “infringement of copyright by reason of the storage at the direction of a user of  of material that resides on a system or network controlled or operated by or for the service provider”; provided that the service provider:

(A)(i)  does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

(C) upon notification of claimed infringement as described . . . responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

UMG argued that four of Veoh’s software functions were neither “storage” nor undertaken “at the direction of a user”; and thus, didn’t qualify to be shielded from liability under 512(C):

  1. automatically creating “Flash-formatted” copies of video files uploaded by users;
  2. automatically creating copies of uploaded video files that are comprised of smaller “chunks” of the original file;
  3. allowing users to access uploaded videos via “streaming”;
  4. allowing users to access uploaded videos by downloading whole video files.

The Court denied UMG’s motion for partial summary judgement, finding that the four software functions fall within the DMCA’s safe harbor provision, “because all of the[ functions] are narrowly directed toward providing access to material stored at the direction of users.”

(1.)  Flash-Formatted Copies:  In regards to the first software function, flash-formatting copies, Judge Matz found that the question was already settled by previous case law.   The Court cited Lo Group, Inc. v. Veoh Networks, Inc. No. C06-03926 HRL, 2008 WL 4065872 (N.D. Cal Aug. 27, 2008) for the holding that flash-formatting copies were shielded by the safe harbor provision.

(2., 3. and 4.) Chunks, Streaming, and whole video files:  UMG argued that § 512(c) didn’t apply because Veoh’s activities didn’t constitute “storage,” and weren’t undertaken “at the direction of a user.”

Veoh agreed that some of the software functions at issue didn’t constitute “storage,” but forwarded that it wasn’t excluded from the safe harbor provisions on two grounds.  First, Veoh argued that the “by reason of the storage” language in 512(c) is “broad causal language that is clearly meant to cover more than mere electronic storage lockers.” Veoh forwarded that 512(c) doesn’t require that the infringing conduct constitute storage in and of itself.  Instead, under the provision, the infringing conduct must only occur as a result of the storage.

Secondly, Veoh argued that the language in 512(c) “presupposes that the service provider will be providing access to the user’s material.”

Judge Matz found UMG’s interpretation of § 512(c), that the safe harbor applied “only to operational features that provide or constitute storage-and nothing more,” was overly restrictive and not consistent with the plain wording of the statute or Congressional intent:

Common sense and widespread usage establish that “by reason of” means “as a result of” or “something that can be attributed to ….“ So understood, when copyrighted content is displayed or distributed on Veoh it is “as a result of” or “attributable to” the fact that users uploaded the content to Veoh’s servers to be accessed by other means. If providing access could trigger liability without the possibility of DMCA immunity, service providers would be greatly deterred from performing their basic, vital and salutary function-namely, providing access to information and material for the public.

Counsel:

  • UMG Recordings, Inc. et al: Irell & Manella (Los Angeles, CA).
  • Veoh Networks, Inc.: Winston & Strawn (Los Angeles, CA).

Documents:

Robert W. Gomulkiewicz: Conditions and Covenants in License Contracts: Tales from a Test of the Artistic License

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Shourin Sen - 4 January 2009 – 7:01 pm
Filed under Academia, License v. Contract

Robert Gomulkiewicz, Professor of Law and Co-Director of the Intellectual Property Law & Policy Graduate Program at the University of Washington School of Law, recently posted a new paper on open source licensing and Jacobsen v. Katzer.

Professor Comulkiewicz began his paper by outlining four lessons that were reinforced in Jacobsen:

  1. “[I]f a licensee fails to abide by a condition placed on a license grant, then he or she infringes the licensor’s copyright.  In other words, ignoring the condition not only breaches a contract, it infringes a copyright.”;
  2. “[C]ourts can grant injunctive relief for breaches of open source licenses. As the Federal Circuit highlighted in Jacobsen, injunctive relief is particularly critical in open source licensing because the standard remedy for breach of contract, monetary damages, normally is beside the point.”
  3. “[L]icense provisions fall into two categories: a pure contractual
    covenant or a license condition. . .[A] breach of a license condition covenant can trigger copyright infringement, not merely breach of contract. Pure contractual covenants . . . only can trigger breach of contract. Thus, the distinction is vital because of the teaching of lesson two about the importance of injunctive relief in open source licensing.”
  4. “[C]ontract law applies to open source licenses.”

Professor Comulkiewicz then addressed two issues, or complexities, that wasn’t addressed in the opinion.  First Comulkiewicz touched on whether and how much the intent of the drafters should matter when interpreting a contract/license.  This remains an issue because, oftentimes, a party that uses a form in open source software is unaware of the original drafters intent.  Comulkiewicz argued that “[t]o the extent it is relevant, the form drafter’s intent should not be dispositive. The licensor or licensee may not be well schooled in the form drafter’s interpretation of the finer points of the license form and, even if they are, may not agree with it.”image

Secondly, in the main push of the article, Professor Comulkiewicz examined “to what extent can” and should license drafters be able to “choose whether a particular license provision is a pure covenant or a license condition.”  Comulkiewicz analyzed two competing views on whether courts should consider deeper copyright policy issues when evaluating whether to allow parties to “manipulat[e] the distinction” between contracts and licenses.

View 1: Conditions Must Touch on Copyrights:  Under the first view on the issue, “only a condition touching on the exclusive rights under copyright qualifies as a license condition;” e.g. “Copying onto what? Using what to make copies? How many copies? What type of copies? Who can make copies?” For a condition on the right to distribute, the condition should relate to issues such as: Where (and where not)? When? To whom? By whom? For how long? For a condition on the right to make derivative works, the condition should relate to: What type of works? Who can make derivatives?”

Although Professor Comulkiewicz acknowledged that this view “checks the power of copyright licensors,” he concluded that this method of interpretation would inhibit the “useful business model innovation” “characterized by open source licensing.”

View 2: Parties can “freely choose” whether a provision is a license condition or a pure covenant.

Professor Comulkiewicz advocated the second view, that parties should be able to “freely choose” whether a provision is a license condition (license) or pure covenant (contract).  Comulkiewicz noted that “[a]s open source licensing so nicely illustrate[], licensing fosters flexibility and choice in both the creation and distribution of works. If someone can right-size a license, then that person is more likely to grant permission than to hold it back.”

However, Professor Comulkiewicz also cautioned that courts need to play a critical role when evaluating whether to grant an injunction for breach of a license condition.

Exercising prudence will safeguard against the effects of a licensor’s attempt to improperly expand copyright power via proliferation of license conditions.  For example, the farther a license condition strays from touching on an exclusive copyright and the less it contributes positively to the underlying purposes of copyright law, the less compelling the case may be for emergency.

business and transactions attorneys

Facebook files suit against Power.com alleging copyright & trademark infringement, CAN-SPAM violation, and state law claims

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Shourin Sen - 3 January 2009 – 7:54 pm
Filed under News

Facebook, Inc. v. Power Ventures, Inc., 08 cv 05780 JF (N.D.C.A. filed Dec. 30, 2008).

On December 30, 2008, Facebook, Inc. filed suit against Power Ventures, Inc. in the Northern District of California, alleging direct, vicarious and contributory copyright infringement and DMCA violations; state and federal trademark infringement; unfair competition; violation of of the California Comprehensive Computer Data Access and Fraud and Abuse Act; and violation of the CAN-SPAM Act. image

According to the complaint, Power.com is a website that integrated multiple social networking accounts “into a single experience.” Power.com solicited, stored, and used Facebook login passwords to access information stored on Facebook computers.   Power.com would “scrape” proprietary data from Facebook users who had given them their login, as part of their integration services, and re-display the content on their site.

In regards to the DMCA violation, Facebook alleged that, after a back and forth between counsels, Power Ventures informed them that they would remove Facebook content, but then reversed their decision.  Facebook implemented technical measures to block power.com, which the Power Ventures circumvented.

Facebook also alleged that Power Ventures used Facebook’s trademark without authorization in a manner that is likely to cause consumer confusion, and that Power Ventures induces Facebook users to provide it with email addresses of users contacts for the purpose of sending unsolicited commercial messages that claim that they come from the “Facebook Team.”

Documents:

software and technology attorneys