Monthly Archives: March 2010

CCC podcast interview with Patry about Moral Panics

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Shourin Sen - 31 March 2010 – 2:53 pm
Filed under News

Copyright Clearance Center has released a podcast interview of William Patry on his book Moral Panics and the Copyright Wars. An excerpt of the interview, conducted by Chris Kenneally:

[T]he term copyright wars is a common one and I didn’t coin it. There are many people who use it on either side of the debates. For example, Edgar Bronfman Jr., who is the CEO of Warner Music, in a speech in Singapore said that the copyright owners had gone to war with consumers and as a result, they believe they lost that war. So it’s a common term and I think what is meant by that is a more widespread debate about issues rather than any particular case. You could complain about what a particular company is doing and that wouldn’t be a war, but if it’s a more sociological thing, if it’s a more societal thing, that’s what a war means. Now I think wars change things. Before a war, there’s the world as it is, status quo, and then there’s status quo ante. We’re moving into a status quo ante, aren’t we? With regard to copyright.

Intellectual Property Colloquium: The First Sale Doctrine

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Shourin Sen - 31 March 2010 – 9:00 am
Filed under First Sale

UCLA Law Professor Doug Lichtman has released a timely new IP Colloquium podcast on the first sale doctrine.Guests include R. Anthony Reese (UC Irvine, and author of “The First Sale Doctrine in the Era of Digital Networks“) Michael Salinger (Boston University School of Management), and Josh Wright (George Mason University). Professor Lichtman’s description:

Copyright law’s first sale doctrine might seem straightforward. On its face, it tells us that, after the first sale of a particular object that embodies a copyrighted work, the copyright holder’s rights are exhausted, and the relevant embodiment is therefore free to flow in the stream of commerce. But what happens if the original buyer agrees by contract not to resell?  And what if the original sale is not a sale at all, but instead is characterized by the parties as a license? And what if that embodiment is not physical but instead digital? On this edition of the IP Colloquium, we set out to understand the first sale doctrine, tracing its public policy justifications and comparing copyright’s approach to that of antitrust. Guests include UC Irvine’s Tony Reese, Boston University’s Michael Salinger, and George Mason Law Professor Josh Wright.  UCLA’s Doug Lichtman hosts.

Cease and desist letters followed by statement of intent not to sue support declaratory relief

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Shourin Sen - 30 March 2010 – 9:00 am
Filed under Declaratory Relief, Permanent Injunction

Cosa Instrument Corp. v. Hobre Instruments BV, 2010 WL 1141385 (E.D.N.Y. 2010)

The declaratory judgment co-plaintiff Cosa Instrument Corp manufactured calorimeters. Cosa purchased components for its calorimeters from Hobré, which it modified before incorporating into one of its products. After a dispute between the two companies, Cosa began to purchase the component parts from another party, Xenataur,  the other declaratory judgment co-plaintiff, in order to develop and market a new calorimeter.

Hobré sent a cease and desist to Cosa in 2008 alleging that Cosa was exploiting its confidential proprietary information and was infringing Hobré’s various intellectual property rights. The company stated that “[u]nless Cosa acknowledges within a reasonable period of ten business days … that it will cease the production of the [the relevant product] … Hobré will seek legal remedies for infringement of its (intellectual) property rights.” A back and forth ensued that ended with Hobré alleging that Cosa had engaged in unfair competition, trademark and trade dress infringement, and copyright infringement.  Hobré also demanded, inter alia, that Cosa and Xenataur impose a litigation hold on any documents or materials relevant to the parties’ dispute.

After settlement discussion broke down, Cosa and Xenataur filed suit seeking a declaration of noninfringement/lack of liability on the tort-based claims, an order enjoining Hobré from challenging their right to sell the relevant product, and attorneys’ fees under the Lanham Act, 15 U.S.C. § 1117(a)(3), and the Copyright Act, 17 U.S.C. § 505.

Hobré never answered the Complaint. After default judgment was awarded Hobré filed a “Memorandum of Law in Opposition to Plaintiffs’ Motion for a Default Judgment,” including a declaration explaining its failure to answer:

[d]ue to the expense of pursuing a lawsuit in the United States, and due to the fact that Hobré had developed its next generation of calorimeters, we decided to let our products battle in the competitive marketplace. After negotiations broke off in spring 2009, Hobré took no affirmative legal steps against Cosa.

The Judge Magistrate denied the motion for declaratory relief finding that the “sole basis for plaintiffs’ request for relief are two cease-and-desist letters sent by Hobré and its counsel in October and December 2008 …”; and that, given the assurances from the letter sent to the Court, the declaration served no “useful purpose.”

The Judge Magistrate also denied the motion for an injunction (the breadth of the parties’ proposed injunction suggested that it sought to use the “proceeding to gain a competitive advantage over future products not at issue”) and the motion for attorneys’ fees (the parties failed to present any evidence of bad faith, unreasonableness, or frivolousness on the part of Hobré that would justify an award of attorneys’ fees.)

The E.D.N.Y. rejected the Judge Magistrate’s recommendation in regard to the declaratory judgment and the injunction. The Court found that the recommendation did not address the parties’ ”legitimate concern that at some point in the not too distant future, Hobré may reconsider its legal options with respect to Cosa’s continued sale of the [relevant product].” Stated the Court, “a declaratory judgment will definitively establish Cosa’s rights to market and sell the [relevant product] and resolve any uncertainty about which party holds the intellectual property rights to this product.” The Court further found that a revised, narrowly tailored, injunction that only enjoined Hobré from challenging the parties’ right to manufacture, supply, service, sell, and distribute the [relevant product and components] in the United States, or interfering in any manner with Plaintiffs’ marketing and sale of [the relevant product] in the United States” would make it “crystal clear” that the injunction was not overbroad.

copyright litigation attorneys

Solicitor General recommends denial of cert in Costco v. Omega

4
Shourin Sen - 29 March 2010 – 10:00 am
Filed under Distribution Right, Extraterritoriality, First Sale, Importation

Costco Wholesale Corporation v. Omega, S.A. (Brief for the United States as Amicus Curiae)

The Office of the Solicitor General last Wednesday filed an amicus brief in Costco v. Omega arguing that the Supreme Court should deny cert. To briefly review, Omega distributed watches to authorized dealers in Egypt and Paraguay. One or more of the authorized dealers imported the watches into the U.S. and then sold them to Costco. This stream of commerce enabled Costco to distribute the watches to customers below the regular U.S. retail price. In 2003, Omega began to engrave its watches with a small emblem — no more than a half centimeter across — which Omega registered with the copyright office. Omega filed suit alleging that Costco’s acquisition and sale of the watches constituted copyright infringement under 17 U.S.C. §§ 106(3) and 602(a).

The issue

Costco argued that under the first-sale doctrine Omega’s initial sale of the watches to the authorized dealers in Paraguay and Egypt denied it the ability to enforce exclusive distribution rights against Costco. 17 U.S.C. § 109 states in relevant part (emphasis added):

[T]he owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

If this all sounds eerily familiar, it should. In 1998 the Supreme Court found in Quality King Distribs., Inc. v. L’Anza Research Int’l, Inc. that if a purchaser in the United States acquires a work that is lawfully manufactured domestically, distributed abroad, and then imported back into the United States, the purchaser is free to distribute the work without infringing a rightsholder’s copyright.

Quality King would be direct precedent for Costco except for a number of substantive factual and legal differences. In Quality King the works at issue were manufactured in the U.S. and took a round trip abroad and then back to the U.S. In Costco the watches were manufactured and distributed abroad and then were imported to the U.S. The issue in this case, thus, turns on whether 17 U.S.C. § 109’s requirement that works be “lawfully made under this title” for the first sale doctrine to apply should be interpreted as meaning “manufactured in the U.S.,” or if the phrase includes copies that were lawfully made abroad under a foreign copyright Act and imported.

Another factual difference between the two cases is that Quality King involved infringement via the importation right under Section 602, which the Act provides constitutes infringement under 106(3). Omega similarly brought suit alleging unlawful importation, along with infringing distribution directly under 106(3), but the facts did not fit the traditional definition of importation. A third-party, not Costco, brought the watches into the United States. Omega argued that Costco’s act of acquiring watches manufactured abroad that were not authorized for sale in the US was defacto importation. A finding otherwise, according to Omega, would allow a party to readily avoid liability under the rights granted in 602 by using a straw man.

The Ninth Circuit in Costco found that “lawfully made under this title” should be interpreted as “granting first sale protection only to copies legally made and sold in the United States.” The Ninth Circuit found that the Supreme Court’s holding in Quality King didn’t conflict with the Circuit’s previous precedent BMG Music, which found that “[c]onstruing [§] 109(a) as superseding the prohibition on importation set forth in . . . § 602 would render § 602 virtually meaningless.” Id. (quoting Scorpio, 569 F. Supp. at 49). And secondly, that recognizing a first-sale defense as to goods manufactured abroad would impermissibly extend the Copyright Act extraterritorially. See id. (citing Scorpio, 569 F. Supp. at 49).

The legal landscape has also changed since the Supreme Court addressed the interaction between Sections 109 and 602 in Quality King. Shortly after the Ninth Circuit issued its opinion in Costco v. Omega, President Bush signed into law the PRO-IP Act, which amended the language of 602 (new language in bold):

(a) INFRINGING IMPORTATION OR EXPORTATION.

(1) IMPORTATION—Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.

(2) IMPORTATION OR EXPORTATION OF INFRINGING ITEMS.—Importation into the United States or exportation from the United States, without the authority of the owner of copyright under this title, of copies or phonorecords, the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable, is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under sections 501 and 506.

It’s possible to argue that by creating the new importation and exportation rights in 602(a)(2), Congress reframed how we should read the grant in 602(a) pre-amendment. Congress, it could be contended, explicitly stated its intention that the first sale doctrine should apply to works manufactured in the U.S. through the passage of the Amendment. If 602(a)(2) of the post-amendment Act states that it’s infringing to import a work “the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable” then 602(a)(1) would be superfluous if it isn’t read to encompass works that were made and distributed in a non-infringing way abroad. One could contend, thus, that Congress made it clear through the enactment of the PRO-IP Act that it intended for the for the first-sale doctrine to only limit the distribution of works manufactured domestically.

Policy considerations

Costco and a group of amicus petitioners argued, inter alia, that the Ninth Circuit’s decision created negative policy considerations for domestic manufacturing. The Ninth Circuit’s opinion could be read to provide companies that manufacture goods abroad with an additional mechanism to enforce third-tier price discrimination that is not available for works made in the United States. A rightsholder who manufactured works abroad could theoretically bring a suit against all subsequent distributions of the work in the United States (though the S.G.’s brief noted that the Ninth Circuit explicitly refrained from addressing the question of whether “parties can raise 109(a) as a defense in cases involving foreign-made copies so long as a domestic sale has occurred.”). If the first-sale doctrine only applies to works manufactured in the U.S., contended amicus petitioners, and not those manufacturd abroad– if domestic manufacturing offers a copyright holder less ability to prevent arbitrage, and less rights in general, than overseas manufacturing — then the Copyright Act is actively creating incentives for companies to ship manufacturing, and manufacturing jobs, overseas.

A second potential policy problem with the Ninth Circuit’s opinion, argued petitioners, is that it creates a number of “nonsensical” liability outcomes. As Costco argued in its petition:

[T]he decision below mandates a number of nonsensical outcomes, including the following, non-exhaustive list:

  • Imported copies of copyrighted material – be it a British version of a Harry Potter book imported by an individual consumer under the §602(a)(2) “suitcase exemption,” a Picasso fine art print purchased from a foreign art dealer, or a foreign-made classical compact disc – cannot lawfully be resold, loaned, or even given away by the purchaser without committing copyright infringement.
  • Libraries are unable to lend foreign-language texts made abroad.
  • Movie rental businesses such as Netflix and Blockbuster and used-DVD and -CD resale shops, whose existence depends on the first-sale doctrine, can be shut down merely by shifting disc duplication to Mexico or Canada.
  • It is impossible to rent or resell a foreign-produced automobile whose on-board computer systems are loaded with control software covered by a United States copyright registration.

The Solicitor General’s brief

The SG argued that the Supreme Court should deny cert because the Ninth Circuit’s finding in Costco was consistent with Quality King, and the findings of other Circuits, and because there was no evidence that the “most serious potential consequences” had “materialized.”

  • An interesting part of the SG’s brief was how it dealt with the petitioner’s amicus’ policy arguments. The SG noted that the adverse policy effects were “indeed troubling” and “legitimate concerns,” but that the petitioner’s had provided “no basis for concluding that the most serious policy concerns . . . have actually materialized.” The SG stated that the petitioner has forwarded “no evidence that the differential treatment of domestic- and foreign-made copies has caused increased outsourcing of manufacturing operations, and it [has cited] no case in which a copyright owner has sought to extract royalties at multiple stages at an otherwise lawful distribution chain within the United States.”
  • The SG also raised, but took no position on, whether the plaintiffs’ claims should be denied by a finding of copyright misuse.  Argued the SG:

The ‘principal fuction’ of copyright law is the protection of original works, rather than ordinary commercial products that use copyrighted material as a marketing aid.” Quality King, 523 U.S. at 151. Although the doctrine of copyright misuse is both controversial and rarely invoked, it has been recognized by at least one court of appeals. See Lasercomb Am., Inc v. Reynolds, 911 F.2d 970, 973-077 (4th Cir. 990). The United States takes no position on the appropriate resolution of petitioner’s copyright misuse defense. To the extent that the particular type of copyrighted material at issue here raises distinct policy concerns, however, those concerns are best addressed on remand under a legal theory specifically targeted at that alleged abuse.

  • The SG’s brief led with a discussion of how there is no split between the Ninth Circuit’s interpretation and other circuits. I’ve seen the data detailing how a large segment of the Supreme Court’s docket is comprised of cases that involve circuit splits. My initial impression, though,  is that the Supreme Court grants cert in copyright cases that involve a fundamental question of the structure of the Act, and that circuit split considerations play a smaller, if not marginal, role. This is probably an issue that is worth looking into in more detail at a later time.

copyright litigation attorneys

Intellectual property and arts law events 3/22-4/4

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Shourin Sen - 29 March 2010 – 8:30 am
Filed under Events

When What
March, 2010

  • March 29, 2010
  • 7:00 pm
  • 9:00 pm
  • Add event to google
  • Austin, TX: Income Tax Seminar for Artists co-sponsored by the Austin Music Foundation
  • [link]This income tax seminar for individual artists is co-sponsored by Texas Accountants and Lawyers for the Arts (TALA) and the Austin Music Foundation and will give attendees on overview of tax regulations pertinent to individual artists and the process for filing an individual 1040 return.
  • Show in Google map
  • Austin Community Foundation 4315 Guadalupe Street Austin, TX 78751-3644

  • March 30, 2010
  • 6:00 pm
  • 8:30 pm
  • Add event to google
  • Minneapolis, MN: Recordkeeping and Financial Management for Artists
  • [link]Presenter: Kathleen Richert, Springboard for the Arts
    Tuition: $45 in advance, $50 at the door- or take all three for $120
  • Show in Google map
  • Highpoint Center for Printmaking, 912 West Lake Street, Minneapolis, MN, 55408

  • March 31, 2010
  • 12:00 pm
  • 1:00 pm
  • Add event to google
  • Santa Monica, CA: Promoting Your Art Through New Media Location
  • [link]With Richard Tucci.
  • Show in Google map
  • Ken Edwards Center, 1527 Fourth Street

  • March 31, 2010
  • 12:00 pm
  • 1:00 pm
  • Add event to google
  • Sacramento, CA: Maintaining Your Arts Nonprofit Organization
  • [link]With Debbie Cooke.
  • Show in Google map
  • 1418 20th St. Suite 201, Sacramento, CA 95811
April, 2010

  • April 1, 2010
  • 9:00 am
  • 11:00 am
  • Add event to google
  • NY, NY: Topics in the Fashion and Cosmetics Industries
  • [link]Please join the Trademark Law Committee in a lively and educational breakfast roundtable event on Hot Topics in the Fashion and Cosmetics Industries presented by our distinguished panel of industry experts:
    •Guillermo Jimenez, Professor, Fashion Institute of Technology, New York, NY
    •Barbara Kolsun, Esq., Executive Vice President, General Counsel, Stuart Weitzman, New York, NY
    •Heather McDonald, Esq., Partner, Baker Hostetler, New York, NY

    Our panelists will be discussing issues of particular concern in the noted industries, including:
    •Anti-counterfeiting strategies
    •Best practices for dealing with grey market goods and parallel imports
    •Fashion licensing
    •The Design Piracy Prohibition Act
    •Commentary on recent cases and the scope of IP protection in the fashion industry
    •Cosmetics compliance issues

    This program has been approved for 2.0 MCLE credits in the area of Professional Practice. Please note that this program is a non-transitional course. Newly admitted attorneys will not receive MCLE credit for their participation.

    Registration fees are $25 for NYSBA Intellectual Property Law Section members; $35 for all others. The fee includes a light breakfast.

  • Show in Google map
  • Thomson CompuMark 530 Fifth Avenue, 7th Floor New York, NY 10036

  • April 2, 2010
  • 6:00 pm
  • 7:45 pm
  • Add event to google
  • San Jose, CA: Music Law 2: Intermediate
  • With Keith Cooper.
  • Show in Google map
  • Room 210 of the Music Bldg. at San José State University

  • April 3, 2010
  • 9:00 am
  • 5:00 pm
  • Add event to google
  • Miami, FL: FREE LEGAL SERVICE DAY FOR MIAMI ARTISTS AND ARTS ORGANIZATIONS
  • To register contact us at legalartprograms-at-gmail.comThe Free Legal Service Day is open to artists and arts organizations to discuss any current or envisioned art, entertainment, intellectual property, real estate, contract, estate planning, immigration law issues and other business related questions. LegalArt membership is required to participate. To become a LegalArt member ($30 annual fee for individuals, $45 for organizations), email legalartprograms-at-gmail.com.

    Artists and arts organizations must register in advance to have their individual legal issues addressed at the Free Legal Service Day. Prior to the consultation, UM law students and professional attorneys will do preliminary background research on the issues, allowing for a thorough counseling session. Individuals will have appointments with their assigned attorneys and consultations will take 30-60 minutes.

  • Show in Google map
  • University of Miami School of Law Room E352, 1311 Miller Drive, Coral Gables, FL 33146

  • April 3, 2010
  • 12:00 pm
  • 2:00 pm
  • Add event to google
  • Seattle, WA: MOVING FORWARD: RESOURCES FOR ARTISTS
  • [link]Miguel Guillen, Artist Resources Manager for Artist Trust, will discuss the essentials of presenting your work; how to get informed about the funding and exhibition possibilities available to Washington State artists; and information on health care, insurance, emergency assistance, and legal services available to artists. Miguel will also present information about Artist Trust’s grant programs, professional resources, and the EDGE Professional Development Program
  • Show in Google map
  • Pratt Fine Arts Center, 1902 South Main Street

Friday Fun Trivia: Creative Commons first evers?

2
Shourin Sen - 26 March 2010 – 9:00 am
Filed under Friday Fun

I haven’t written a Friday Fun post in a while. There was an Endangered Species Act decision concerning the Cape Sable seaside sparrow issued a couple of weeks ago in Miccosukee Tribe of Indians of Florida v. U.S., 2010 WL 1037962 (S.D. Fla. 2010).  The order included an appendix containing a picture of the sparrow distributed under a Creative Commons license.

Cape Seaside Sparrow

Cape Sable seaside sparrow photograph by David A. La Puma. This photograph is available at Wikimedia Commons. See http://commons.wikimedia.Org/wiki/File:CapeSableSeasideSparrow_2.jpg. The photograph is published under a license that provides: “I, the copyright holder of this work, hereby publish it under the following license: This file is licensed under the Creative Commons Attribution 3.0 Unported license. You are free: to share-to copy, distribute and transmit the work; to remix-to adapt the work [u]nder the following conditions: attribution-You must attribute the work in the manner specified by the author or licensor (but not in any way that suggests that they endorse you or your use of the work).”

This is the first time an American court, and perhaps any court, has included an image in an order under a Creative Commons license. Congratulations go out to Dr. La Puma — who joins the pantheon of Great American pioneers, alongside Neil Armstrong (first man to walk on the moon),  and my Sophomore year undergrad roommate (first man to listen to ska music in Chapin Hall.)

On to our Friday Fun question: Please feel free to include your guesses in the comments. I’ll swing back with the correct response if no one provides it. As usual, the first correct answer will be crowned copyright dork for the week. Decision of the judges is final.

Q: Name the Supreme Court concurring opinion that references Creative Commons works? What case is it from, and which Justice penned it?

SDNY grants summary judgment on hot news claim

0
Shourin Sen - 25 March 2010 – 9:00 am
Filed under Misappropriation, Preemption

Barclays Capital Inc. v. Theflyonthewall.com, 2010 WL 1005160 (S.D.N.Y. 2010)

There was an order issued in the Southern District of New York (Cote, J.) in a case that merits very close watching. Theflyonthewall.com is a subscription based internet news service that aggregated and published investment recommendations and research from sixty-five investment firms along with investor orientated items. Brokerage firms created the research and recommendations, often at substantial cost, and distributed them to select investors as a means to drive trading.

Theflyonthewall obtained the stock recommendations of the investment management firms primarily via employee leaks. The President of Fly, however, testified that by 2009 “he was engaging in a ritualistic and labor-intensive process of “confirming” each Firm’s Recommendations from at least two and sometimes three independent sources before publishing them, still typically before the market opening.” Theflyonthewall.com had twenty-eight full time employees at the time of discovery and manually selected which stories to bring to the attention of its readers.

A group of four investment management firms brought suit (Lehman later dropped) for misappropriation of the time-sensitive recommendations contained in their equity research reports. The firms also brought a total of seventeen copyright infringement claims for the distribution, in each case, of a paragraph from the reports with attribution. In the action at bar, the investment firms moved for summary judgment on all claims. The copyright portion of the suit was resolved without a fight. The investment firms only pursued the minimum available statutory damages ($750 per work) along with attorneys’ fees, and Fly didn’t raise a fair use defense.

Misappropriation

The Court applied the five-factor test from National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir.1997)  and determined that the misappropriation claim was not preempted by the Copyright Act. Fly did not dispute the plaintiffs’ arguments that they (1) incurred substantial expense in generating their research reports and recommendations, and (2) that the information gathered was time-sensitive.

(3) Free-Riding

The Court’s analysis of free-riding was particularly interesting. Fly “vigorously” argued that it expended substantial energy aggregating the news. The Court found that “[t]o the extent that Fly add[ed] value through its collection and aggregation of information, . . .  the value reflected in that act of aggregation d[id] not controvert the fact that Fly expend[ed] no effort to produce the Recommendations and d[id] not contribute to the underlying research and analysis process.”

Fly also argued that, because it no longer appropriated the recommendations from the investment firms’ research reports, but instead relied on third-parties, the recommendations were public knowledge. Fly pointed to the “frequent publication of the Recommendations by other news services, both mainstream and internet, in advance of Fly’s own publication of headlines and to the widespread discussion of the Recommendations in market chat rooms and “blast IMs,” among other sources.” The Court’s response:

The fact that others also engage in unlawful behavior does not excuse a party’s own illegal conduct. Although the practices of other potentially liable parties is highly relevant to the fashioning of equitable relief and will be considered below, the conduct of third parties is simply of no moment in finding Fly liable for hot-news misappropriation. Similarly, even if true, it is not a defense to misappropriation that a Recommendation is already in the public domain by the time Fly reports it. In [ International News Service v. Associated Press, 248 U.S. 215 (1918)], for example, AP’s news was already widespread and publicly available on the East Coast and was obtained by the defendant from public sources, and yet, the Court granted an injunction against INS’s further dissemination of news gained through those means. INS, 248 U.S. at 245-46; see also Bond Buyer, 267 N.Y.S.2d at 946 (enjoining defendant’s misappropriation of plaintiff’s bond-market reports even though they were already in the public domain).

(4) Direct competition

The Court found that Fly was in direct competition with the plaintiffs because “the Recommendations from those reports, [were] one of the “primary” businesses for each of the Firms.”

(5) Reduced economic incentives

The continued activities of Fly and similar actors, according to the Court, “would so reduce their incentive to invest the resources necessary to produce equity research reports that the continued viability of plaintiffs’ research business is and ‘would be substantially threatened’”; and that the “ability of the Firms to ‘monetize’ their research is critical to its continued production.”

Injunction

The Court enjoined Fly from distributing information from the research reports released when the market is closed for the later of either one half-hour after the opening of the New York Stock Exchange or 10:00 a.m. The Court further enjoined Fly from distributing recommendations issued while the NYSE is open for two hours after their release by the Firms. The Court included a provision that allowed Fly after a year to pursue the modification or vacating of the “injunction in the event that it can demonstrate that the Firms have not taken reasonable steps to restrain the systematic, unauthorized misappropriation of their Recommendations, for instance, through the initiation of litigation against any parties with whom negotiation proves unsuccessful.”

Comments:

I think many of us are eagerly anticipating a Second Circuit if not a Supreme Court opinion on the viability of hot news claims in the internet age. The Court’s order in this case was framed almost more like an arbitration decision than a federal court order. The Court appeared to strive for an injunction that the defendant’s could possibly abide by, and that wouldn’t be a target for appeal. So, this case may not end up being the vehicle that makes appellate law on misappropriation claims. If this case isn’t appealed, any site that aggregates financial news has a giant court-mandated target on it.

copyright litigation attorneys

2d Cir finds that trademark license royalties paid on an agreement that contains a QC provision may be immediately deducted

2
Shourin Sen - 24 March 2010 – 9:00 am
Filed under Tax, Trademark

Robinson Knife Mfg. Co., Inc. v. C.I.R., 2010 WL 986532 (2d Cir. 2010)

There was a rather fetching decision issued by the Second Circuit (Cabranes, Parker, Calabresi writing) on Friday. The Circuit reversed a decision by the Tax Court that would have essentially eliminated the ability of corporations to deduct royalty payments for trademark licenses.

The tax code differentiates between ordinary and necessary business expenses and capital expenditures. Business expenses can be deducted during the taxable year; capital expenditures must be amortized over time. It’s often financially advantageous for a company to be able to immediately deduct a given expense.

Trademarks raise perhaps the most complex intellectual property taxation issues. Royalties that are paid on the number of sales of a product, or contingent serial payments made by a licensee, are generally immediately deductible if they satisfy three requirements: (1) payments by the transferee must be contingent on the productivity, use, or disposition of the trademark; (2) payments must be paid not less frequently than annually during the entire term of the agreement, including renewals; and (3) payments must be substantially equal in amount or paid under a fixed formula. 26 U.S.C. 1253 (“Transfers of franchises, trademarks and trade names.”)

Robinson Knife was a major manufacturer of kitchen products. In the year at issue, Robinson licensed, inter alia, Pyrex and Oneida, two widely-known kitchen trademarks for it’s ware. The agreement entered into between Robinson and its licensors did not include a lump-sum or a minimum production limit — Robinson was free to use the trademarks on as many or few tools as it wanted, provided that it paid a royalty fee when a kitchen item was sold. And Robinson sold a lot.

The licensing agreement between Robinson and the third-parties included a quality control provision. The provision stated that Robinson must obtain a trademark owner’s approval for product design, packaging and promotional materials before selling a branded product. Quality control provisions, of some type, are included as a matter of course in almost all trademark licensing agreements.

Treasury regulations state that taxpayers “must capitalize [amortize] all direct costs and certain indirect costs properly allocable to property produced…. Indirect costs are properly allocable to property produced … when the costs directly benefit or are incurred by reason of the performance of production … activities.” 26 C.F.R. § 1.263A-1.

The I.R.S. contended that the royalty payments must be amortized because the royalties directly benefited Robinson’s production activities or were incurred by reason of those activities.  The Tax Court agreed finding that the QC provisions from the trademark licensing agreements made “obtaining approval from the licensors to use the Pyrex and Oneida trademarks on new kitchen tools . . . an integral part of developing and producing the Pyrex- and Oneida-branded kitchen tools.” The Tax Court concluded that “acquiring the right to use the Pyrex and Oneida trademarks was part of petitioner’s production process. Consequently, the royalties paid to Corning and Oneida directly benefited petitioner’s production activities and/or were incurred by reason of petitioner’s producing the Pyrex- and Oneida-branded kitchen tools and [were] therefore indirect costs properly allocable to the Pyrex-and Oneida-branded kitchen tools petitioner produced.”

The Second Circuit reversed, finding that the Tax Court confused royalties from the licensing agreements with the agreements themselves. The royalty costs, according to the Second Circuit, were not “directly . . . incurred by reason of the performance of the production . . . activities.” Wrote the Second Circuit:

The Tax Court is clearly right that “without the license agreements, petitioner could not have legally manufactured” the Pyrex and Oneida kitchen tools, Robinson, 2009 Tax Ct. Memo LEXIS 10, at * 16. It is equally clear, however, that Robinson could have manufactured the products, and did, without paying the royalty costs. None of the product approval terms of the license agreements referenced by the Tax Court relates to Robinson’s obligation to pay the royalty costs. Robinson could have manufactured exactly the same quantity and type of kitchen tools-that is, it could have “perform[ed]” its “production … activities” in exactly the same way it did-and, so long as none of this inventory was ever sold bearing the licensed trademarks, Robinson would have owed no royalties whatever. Robinson’s royalties, therefore, were not “incurred by reason of” production activities, and did not “directly benefit” such activities. In other words, while we may agree with the Tax Court’s implicit conclusion that “directly benefit or are incurred by reason of” boils down to a but-for causation test, we hold that under the plain text of the regulation it is the costs, and not the contracts pursuant to which those costs are paid, that must be a but-for cause of the taxpayer’s production activities in order for the costs to be properly allocable to those activities and subject to the capitalization requirement.

trademark attorneys

Weekly intellectual property and arts law events: March 23 – March 28

0
Shourin Sen - 23 March 2010 – 5:55 pm
Filed under Events

When What
 
March, 2010

  • March 23, 2010
  • 6:00 pm
  • 8:30 pm
  • Add event to google
  • Minneapolis, MN: Legal Considerations for Artists
  • Presenter: Kathleen Richert, Springboard for the Arts
    Tuition: $45 in advance, $50 at the door- or take all three for $120
  • Show in Google map
  • Highpoint Center for Printmaking, 912 West Lake Street, Minneapolis, MN

  • March 24, 2010
  • 7:30 am
  • 4:30 pm
  • Add event to google
  • Minneapolis, MN: Remix, Refresh, Reload: 2010 Nonprofit Technology and Comm Conference
  • [link]Remix*Refresh*Reload is a daylong conference designed to provide an overview of current and emerging technology resources and tools and specific hands-on information to help you create effective communications to reach and engage your audience. The conference is designed for nonprofit leaders and practitioners at any level of experience.
  • Show in Google map
  • March 24, Hyatt Regency Minneapolis, 1300 Nicollet Mall, Minneapolis, MN

  • March 24, 2010
  • 1:00 pm
  • 2:30 pm
  • Add event to google
  • Webcast: Identification and Negotiation of Key Issues in Sport Sponsorships and Facility Naming Rights Transactions
  • [link]Part of the ABA Forum on the Entertainment and Sports Industries 2010 Teleconference Series.

    Jeffrey B. Gewirtz, Senior Vice President/General Counsel, NETS Basketball / Brooklyn Sports & Entertainment, New York, NY

    Richard L. Brand, Partner, Arent Fox LLP, Washington, DC

  • Show in Google map
  • Webcast/ Teleconference

  • March 24, 2010
  • 6:00 pm
  • 7:00 pm
  • Add event to google
  • Newark, NJ: Copyright panel discussion
  • [link]Seton Hall University School of Law Arts Law Society Copyright panel discussion featuring NJVLA Executive Director Tracey I. Batt, Esq.
  • Show in Google map
  • Seton Hall University School of Law One Newark Center Newark, NJ 07102

  • March 24, 2010
  • 7:00 pm
  • 8:30 pm
  • Add event to google
  • San Francisco, CA: Getting Permission to Use Someone Else’s Work
  • [link]Presented by attorney Kathryn Wheble.
  • Show in Google map
  • Fort Mason Center, Building C, Room 265

  • March 24, 2010
  • 7:00 pm
  • 8:45 pm
  • Add event to google
  • Los Angeles, CA: How Many Billboards? Panel: Visual Rights to the City
  • [link]The panel will be facilitated by panel series curator Anne Bray of Freewaves.

    Participating Panelists:
    Toby Miller, Professor of Media & Cultural Studies, UC-Riverside
    Rick Robinson, General Manager, MacDonald Media
    Christine Pelisek, Journalist, LA Weekly
    John Tehranian, Attorney and Partner, One LLP

  • Show in Google map
  • ALOUD at Central Library Mark Taper Auditorium, Fifth & Flower Streets, Downtown Los Angeles, 90071

  • March 25, 2010
  • 12:00 pm
  • 1:30 pm
  • Add event to google
  • Tacoma, WA: Intellectual Property Essentials
  • [link]Rebekah O’Hara and Wade Neal will explain the differences between copyrights, trademarks and patents. You’ll also learn about copyright and trademark registration, including the benefits of registration and the costs. You’ll learn about who owns the copyright in a work created by more than one person and works created in the course of employment.
  • Show in Google map
  • Tacoma Art Museum, 1701 Pacific Ave, Tacoma, WA 98402

  • March 25, 2010
  • 12:00 pm
  • 1:30 pm
  • Add event to google
  • Seattle, WA: INTELLECTUAL PROPERTY ESSENTIALS
  • [link]FEE:
    In advance: $35 attorneys and paralegals; $10 artists and students
    At the door: $40 attorneys and paralegals; $15 artists and students

    REGISTRATION:
    To register, click here to visit Brown Paper Tickets online, or call 800.838.3006. To pay at the door, RSVP to Washington Lawyers for the Arts at 206.328.7053. Please note that the event is subject to cancellation; visit thewla.org or call 206.328.7053 for more information.

    CLE Credit:
    1.5 CLE credits Approved

  • Show in Google map
  • Photographic Center Northwest, 900 12th Ave, Seattle, WA 98122

  • March 25, 2010
  • 4:00 pm
  • 6:30 pm
  • Add event to google
  • NY, NY: Legal Issues in Film
  • [link]This class will provide an overview of the legal issues and common business arrangements used in film and television projects.

    * 2.5 CLE Credits Available, 1 Professional Practice, 1 Skills and .5 Ethics (Transitional Only)

  • Show in Google map
  • VLA, 1 East 53rd Street, NY, NY 10022 (Auditorium)

  • March 25, 2010
  • 6:00 pm
  • 7:45 pm
  • Add event to google
  • San Jose, CA: Music Law 1: Basic
  • [link]With Edward Hearn.
  • Show in Google map
  • Room 210 of the Music Bldg. at San José State University

  • March 25, 2010
  • 7:00 pm
  • 8:00 pm
  • Add event to google
  • Washington, DC: Trademark Basics Workshop
  • [link]To register or for more information, contact legalservices@thewala.org.
  • Show in Google map
  • Finnegan, 901 New York Avenue, NW, Washington, DC 20001

  • March 25, 2010
  • 7:00 pm
  • 9:00 pm
  • Add event to google
  • Olathe, KS: Sales Tax for Artists
  • [link]
  • Show in Google map
  • Cedar Lake Village, 15329 S. Lone Elm Rd., Olathe, KS

  • March 26, 2010
  • 11:30 am
  • 2:00 pm
  • Add event to google
  • NY, NY: Calculation of Damages in a Patent Case
  • [linkWright Brothers v. Curtis-Herring: Direct and Cross Examinations of Patent
    Damages Expert
    Sharon Barner, USPTO Deputy Director, as the presiding Judge
    John R. Lane, Frommer Lawrence & Haug LLP – as the expert for the patentee
    Richard L. Rainey, Covington & Burling – as counsel for Wright Brothers
    Robert G. Krupka, P.C., Kirkland & Ellis – as counsel for Curtis-Herring

    Calculation of Damages in a Patent Case
    Hon. Barbara S. Jones, District Judge, U.S. District Court, S.D.N.Y.
    Hon. William G. Young, District Judge, U.S. District Court, D. Mass.
    Edward E. Vassallo, Fitzpatrick Cella Harper & Scinto
    Annemarie Hassett, Goodwin Procter LLP
    Ira J. Levy, Goodwin Procter LLP: Moderator

    $165 NYIPLA Member; $190 Non-NYIPLA Member

  • Show in Google map
  • The Starlight Roof at The Waldorf=Astoria, 301 Park Avenue, New York, NY

  • March 26, 2010
  • 12:00 pm
  • 1:00 pm
  • Boston, MA: Provenance Research at the MFA
  • [link]Victoria Reed, Museum of Fine Arts, Boston, will be speaking on provenance research.
  • Show in Google map
  • Boston Bar Association, 16 Beacon Street, Boston, MA 02108

  • March 26, 2010
  • 7:00 pm
  • 10:00 pm
  • Add event to google
  • Seattle, WA: EDGE Artists’ Final Presentations, Program for Writers
  • [link]If you enjoy getting acquainted with artists and their work, consider attending EDGE Artists’ Final Presentations! These events occur at the end of each cycle of the EDGE Professional Development Program, and they are a great way to learn directly from filmmakers, writers and visual artists about their work and creative process.
  • Show in Google map
  • Jack Straw Productions 4261 Roosevelt Way NE Seattle, WA 98105

Weekly intellectual property and arts law events: March 12 – March 21

0
Shourin Sen - 12 March 2010 – 9:00 am
Filed under Events

Dear Friends:

I apologize for posting infrequently this past week. I’ll be back on schedule starting Monday. Here are the intellectual property and arts law events for the upcoming week.
When What
March, 2010
  • March 12, 2010
  • Until March 13, 2010
  • Add event to google Amery, WI: Spreading The Word: Marketing, participant recruitment and advocacy
  • [link]Rural Arts Management Institute presented in partnership by Arts Wisconsin and Northern Lakes Center for the Arts at the Northern Lakes Center for the Arts, Amery, WI.
  • Show in Google map Northern Lakes Center for the Arts, Amery, WI
  • March 12, 2010
  • 11:00 am
  • 6:00 pm
  • Add event to google NY, NY: Film · Music · Interactive Legal & Business Bootcamp
  • [link]Sessions will include:· Intellectual Property (copyright, trademarks, non-disclosure agreements)
    · Contract Essentials and Negotiation Skills
    · For-Profit, Non-Profit, Fiscal Sponsorship Models
    · Considerations for Documentary and Fact-Based Projects
    · Internet, Websites, Blogs

    Program Faculty:
    Elena M. Paul, Esq.
    Executive Director
    Volunteer Lawyers for the Arts
    Sergio Muñoz Sarmiento, Esq.
    Associate Director
    Volunteer Lawyers for the Arts
    Brian Taylor Goldstein, Esq.
    Fettmann, Tolchin and Majors, P.C.
    Peter Rienecker, Esq.
    Vice President and Senior Counsel, Original Programming
    Home Box Office, Inc.
    Frederick N. Samuels, Esq.
    Cahn & Samuels, LLP

  • Show in Google map Herrick, Feinstein LLP, 2 Park Avenue, New York, New York 10016
  • March 13, 2010
  • 2:30 pm
  • 4:30 pm
  • Add event to google Wenatchee, WA: Moving Forward: Resources for Artists
  • [link]Miguel Guillen, Artist Resources Manager for Artist Trust, will discuss the essentials of presenting your work; how to get informed about the funding and exhibition possibilities available to Washington State artists; and information on health care, insurance, emergency assistance, and legal services available to artists.
  • Show in Google map Wenatchee Valley Museum and Cultural Center
  • March 15, 2010
  • 1:00 pm
  • 4:00 pm
  • Add event to google NY, NY: Nonprofit Incorporation and Tax Exemption Workshop
  • [link]*3 CLE credits (2 Professional Practice and 1 Skills, traditional format, transitional and non-transitional)This workshop provides valuable information about starting a nonprofit organization. State issues to be covered include articles of incorporation, bylaws, and the first organization meeting.
  • Show in Google map VLA Auditorium, 1 East 53rd Street, NY, NY 10022
  • March 16, 2010
  • 6:00 pm
  • 8:00 pm
  • Add event to google Kansas City, MO: What Everyone Needs to Know About Copyrights
  • [link]
  • Show in Google map Arts Incubator, 115 W. 18th St., Kansas City, MO
  • March 16, 2010
  • 6:00 pm
  • 8:30 pm
  • Add event to google Minneapolis, MN: Marketing for Artists
  • [link]This session is devoted to identifying the right audience for your artistic output, positioning yourself, and developing marketing strategies and a marketing plan geared for that audience.
  • Show in Google map Highpoint Center for Printmaking, 912 West Lake Street, Minneapolis, MN, 55408
  • March 17, 2010
  • 12:00 pm
  • 1:30 pm
  • Add event to google Seattle, WA: Tips for Success Before the BPAI
  • [link]Topic: Tips for Success Before the BPAI
    Speaker: William F. Smith, Of Counsel, Woodcock Washburn LLP

    Chapter Members:$55.00
    Non Members:$75.00
    Students:$35.00

  • Show in Google map Washington Athletic Club 1325 Sixth Avenue Seattle,WA 98101
  • March 17, 2010
  • 12:30 pm
  • 1:30 pm
  • Add event to google Boston, MA: Patent Ownership & Licenses: A Map to Landmines Laid by the Federal Circuit
  • [link]Vickie L. Henry and Nathan C. Henderson, both of Foley Hoag LLP, will distill patent ownership and licensing options to maximize patent value and avoid undercutting patent litigation rights.
  • Show in Google map Boston Bar Association, 16 Beacon Street, Boston, MA 02108
  • March 17, 2010
  • 1:00 pm
  • 2:00 pm
  • Add event to google Webcast: False Marking and Private Enforcement After Forest Group v. Bon Tool
  • [link]Sponsors: The American Bar Association Section of Intellectual Propery Law and the ABA Center for Continuing Legal Education.Joshua R. Slavitt
    Pepper Hamilton, LLP
    Philadelphia, PA
  • Show in Google map Online and teleconference
  • March 18, 2010
  • 12:00 pm
  • 1:00 pm
  • Add event to google Webcast: Supreme Court Reversal Rates: Evaluating the Federal Courts of Appeals
  • [link]Sponsors: The American Bar Association Section of Intellectual Property Law, Judicial Division and the ABA Center for Continuing Legal Education.Denise W. DeFranco (Moderator)
    Finnegan, Henderson, Farabow, Garrett & Dunner LLP
    Cambridge, MA

    Chief Judge Paul R. Michel
    U.S. Court of Appeals for the Federal Circuit
    Washington, DC

    Carter G. Phillips
    Sidley Austin LLP
    Washington, D.C.

  • Show in Google map Online and Teleconference
  • March 18, 2010
  • 3:30 pm
  • 6:00 pm
  • Add event to google Philadelphia, PA: Federal Circuit Year in Review
  • [link]
  • Show in Google map The Union League, 140 South Broad St., Philadelphia, PA 19102.
  • March 18, 2010
  • 4:00 pm
  • 6:00 pm
  • Add event to google NY, NY: Forming Your For-Profit Arts Business
  • [link]This class will be taught by VLA’s Executive Director, Elena M. Paul, Esq. This workshop provides valuable information about starting an arts-related business.
  • Show in Google map VLA, 1 East 53rd Street (auditorium), NY, NY 10022
  • March 19, 2010
  • 9:30 am
  • 12:00 pm
  • Add event to google
  • Eden Prairie, MN: Legal Considerations for Artists
  • Presenter: Kathleen Richert, Springboard for the Arts
    Tuition: $45 for members, $50 non-members, please go to http://www.edenprairie.org to register
  • Show in Google map Eden Prairie Arts Center, 7650 Equitable Rd., Eden
  • March 20, 2010
  • 4:00 pm
  • 11:00 pm
  • Add event to google Phoenix, AZ: Downtown Phoenix Festival of the Arts (fundraiser for
  • [link]A festival of all things art. An event to benefit Artlink, Volunteer Legal Assistance for Artists, First Fridays, and the Rosson House Museum.
  • Show in Google map Heritage & Science Park, Phoneix, AZ