Copyright Law Blog: Exclusive Rights

Category Archives: Preliminary Injunction

Live365 denied preliminary injunction in Appointments Clause challenge of CRB

Shourin Sen - 2 March 2010 – 9:00 am

Filed under Appointments Clause, Copyright Royalty Board, Preliminary Injunction

Live365, Inc. v. Copyright Royalty Bd., 2010 WL 621718 (D.D.C. 2010)

We previously discussed this case in early September. Live365 filed a facial challenge against the CRB and the Librarian of Congress, arguing that the appointment of the Board transgressed Article 2, Section 2, Clause 2 of the U.S. Constitution. In the motion at bar, Live365 sought a preliminary injunction seeking a stay of In Re Digital Performance Right in Sound Recordings and Ephemeral Recordings, Docket No. 2009-1 (CRB Webcasting III). The Defendant’s responded with a motion to dismiss for lack of subject matter jurisdiction. The D.C. District Court denied both.

Defendants motion to dismiss for lack of subject matter jurisdiction

The Defendants argued that the Court had no jurisdiction to hear the challenge because under 17 U.S.C. § 803(d)(1), “[a]ny determination’ of the Copyright Royalty Judges in the Webcaster III proceeding [is vested exclusively with] the District of Columbia Circuit.” The Defendants also contended that the case didn’t come within the exception that permits a district court to exercise jurisdiction over a facial challenge to the constitutionality of a statute under which the agency was proceeding because the plaintiff’s claim was a direct challenge to the Webcaster III proceeding itself.

In this regard, the defendants argue that this case is distinguishable from Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 537 F.3d 667, 676 (D.C.Cir.2008), cert. granted, — U.S. —-, 129 S.Ct. 2378 (2009), and Time Warner Entertainment Co. v. FCC, 93 F.3d 957 (D.C.Cir.1996), because here the plaintiff’s suit “is not independent of any administrative proceeding.” Id. Specifically, the defendants claim that, “among other things,” the plaintiff is seeking to have an order issued by the CR Board judges in the Webcasting III proceeding altered to extend a filing deadline imposed by that order. Id. Therefore, the defendants contend that jurisdiction rests exclusively with the District of Columbia Circuit. Id.

Live365 argued that the Court had jurisdiction via Section 1331, as a civil action that arises under the Constitution. The Plaintiff further argued that its claims were independent of the Webcaster III proceeding and that the remedy sought (a stay of the Webcaster III proceeding) didn’t change the fact that its challenge was independent of the proceeding.

The Court found that 17 U.S.C. § 803(d)(1) limited judicial review of determinations of the CRB judges to the District of Columbia Circuit, but not an attack on the legislation which established the CRB. The Court found that the action fell “squarely within the exception recognized by Time Warner and Free Enterprise, which authorize[d the] Court to exercise jurisdiction over a facial challenge to the constitutionality of a statute”:

The government’s argument that this case is distinguishable from Free Enterprise and Time Warner because the Complaint targets a specific ongoing proceeding is unpersuasive. In General Electric, the plaintiff’s due process challenge against the Environmental Protection Agency (“EPA”) pursued in this court was sanctioned by the Circuit despite there having been “ongoing interactions over remediation at several locations” between the parties, because “the lawsuit [did] not challenge any particular action or order by the EPA.” Id. at 191. Thus, although the plaintiff’s injunction request could have the effect of extending the September 29, 2009 deadline set by the CR Board judges and could inevitably impact the progression of the Webcasting III proceeding, their request for the injunction is derived from their constitutional facial challenge to the appointment of the CR Board judges, which is wholly independent of any action actually taken or expected to be taken in the future by the CR Board judges.

Appointments Clause challenge

To briefly review Appointments Clause structures at an oversimplified level, courts have interpreted the Appointments Clause as creating a four-pronged structure for evaluating members of the executive branch: Head of Departments, principal officers, inferior officers and employees. Head of Department and principal officers must be appointed by the President with the advice and consent of the Senate. Inferior Officers must be appointed by either the President or a Head of Departments. Lesser employees do not transgress the Appointments Clause regardless of their appointment method.

Live365 argued that the CRB judges were principal officers who may only be appointed by the President; or in the alternative, that they were inferior officers whose appointment was unconstitutional because the Librarian of Congress was not a Head of Department in the Executive Branch.

Whether the Librarian of Congress is a principal officer

The most interesting issue in App0ointments Clause challenges, for me at least, is how courts struggle with the majority opinion’s finding from Freytag v. Comm’r of Internal Revenue, 501 U.S. 868 (1991) that a Head of Department is confined to heads of “Cabinet-level departments,” which are “limited in number and easily identified.” The Court in Live365 sidestepped Freytag and instead looked to Eltra Corp. v. Ringer, 579 F.2d 294, 300 (4th Cir. 1978), which was issued thirteen years before Freytag, for the presumably intentionally circular proposition that if an officer is appointed by the President and invested with the power to appoint other officers, she is a principal officer:

The Register is appointed by the Librarian of Congress, who in turn is appointed by the president with the advice and consent of the Senate. By the nature of his appointment the Librarian is a[ ] [principal] [o]fficer of the United States, with the usual power of such officer to appoint ‘such inferior [o]fficers (i.e., the Register [and the CR Board judges] ), as (he) think(s) proper. 579 F.2d at 300 (internal citation and quotation marks omitted).

Accordingly, the Librarian is seemingly a principal officer that heads an Executive Department, and therefore, has the power to appoint inferior officers. Thus, given the manner in which the Librarian is appointed and considering many of the functions assigned to him, the plaintiff has not met its burden of showing that there is a substantial likelihood that it will succeed on the merits of its alternative Appointments Clause challenge.

Whether the Librarian is a member of the executive branch

The Court also looked to Eltra for precedence on the issue of whether the Librarian was a member of the executive branch. As the Court noted, the Librarian is appointed by the President with the advice and consent of the Senate; the President, not Congress, has the power to remove the Librarian at will; and while the Library is codified under Title 2 of the United States Code, which addresses specifically the Legislative Branch, “such code-grouping cannot determine whether a given function is executive or legislative.” Eltra at 579 F.2d at 301.

Whether the CRB judges are principal or inferior officers

Live365 argued that the CRB judges were principal officers and must be appointed by the President. The Court found that CRB Judges were “sufficiently subordinate to both the Librarian of Congress and the Register of Copyrights to qualify as inferior officers, and thus, their appointments by the Librarian do not offend the Appointments Clause.”

In both Edmond and Freytag, the judges were held to be inferior officers despite the fact that their duties included taking testimony, ruling on the admissibility of evidence, issuing protective orders, and issuing subpoenas, and the CR Board judges exercise many of those same responsibilities. Thus, the guiding precedent of the Supreme Court seemingly requires the conclusion that despite the level of autonomy the CR Board judges exercise, the degree of direction and supervision exercised over them by the Librarian and the Register renders them inferior rather than principal officers.

Previous posts on an Appointments Clause challenge to the Copyright Royalty Board:

TRO denied in dispute between developer and architectural firm

Shourin Sen - 10 February 2010 – 9:00 am

Filed under Architectural Design, Preliminary Injunction

Wereldhave USA-San Antonio, L.P. v. Peter Fillat Architects, Inc., 2010 WL 419388 (D. Md. 2009)

The owner and developer of a $400 million multiphase project, currently being constructed (or not constructed) in San Antonio, engaged an architectural firm to provide designs for a portion of the project. The firm provided a proposal for five different sections, each of which contained language that stated that the parties would, after approval, enter into the standard American Institute of Architect’s agreement. Of the five proposals, however, only two were executed. And the two proposals that were executed contained notations replacing the standard AIA agreement with a “mutually acceptable agreement.”

According to the plaintiff developer, it paid the architectural firm over 2.7 million dollars for its services. Things went sour. The developer claimed the architectural firm was late in submitting designs; the architecture firm claimed its tardiness was due to the late submission of essential documentation by the developer.

The architectural firm refused to provide the developer access to the designs, claiming that it was owed $491,000 for its services. The developer claimed that it offered to place the money for the counter-claim into escrow pending final decision by the Court — but that the offer was rejected by the architectural firm.

The developer filed a breach of contract action against the architectural firm seeking, among other things, $2 million in damages and a declaratory and injunctive relief that the the architectural firm must provide access to the designs, and that it had a license to build the development from its designs. The developer claimed that the entire construction project would be delayed, if not shut down, without the plans.

Non-exclusive implied license

The question of whether the architectural firm granted the developer a non-exclusive license to use its copyright in the architectural designs formed a backdrop to the case. Even if the developer were to obtain a copy of the designs, it would not be able to start building without committing copyright infringement unless the Court were to find that it was granted an implied non-exclusive license. The architectural firm argued that it did not intend to grant an implied license that would permit the developer to use the designs after it was no longer involved in the construction. The firm used Nelson-Salabes v. Morningside Dev., LLC, 284 F.3d 505, 516 (4th Cir.2002) as precedent:

(explaining that implied nonexclusive license exits where (1) the parties engaged “in a short-term discreet transaction as opposed to an ongoing relationship”; (2) the architect used a written contract, such as a standard AIA, which provides that the copyrighted materials could not be used without the architect’s involvement in project or without express permission; and (3) the parties conduct “during the creation or delivery of the copyrighted materials” shows that the parties permitted continued use of the materials after the architect was no longer involved and without his consent).

The TRO

The Court noted that both parties made compelling arguments about the breach of contract and implied license arguments, and that it did not have a developed record that would allow it to grant a TRO. The Court, however, made it clear that it’s denial of a TRO should not be read as predictive of a denial of a preliminary injunction.

On Salinger v. Colting

Shourin Sen - 3 February 2010 – 9:00 am

Filed under Parody, Preliminary Injunction

Tamera Bennett has posted an update on her blog on Salinger v. Colting. The case, currently on appeal in the Second Circuit, was being looked to as potentially providing a gloss on the test for parody, and the standard for obtaining a preliminary injunction in copyright cases. The plaintiff in the case, author J.D. Salinger, passed on January 27. My condolences go out to the family and friends of the late author. Ms. Bennett points to Federal Rules of Civil Procedure Rule 25 for what happens next in the case:

If a party dies and the claim is not extinguished, the court may order substitution of the proper party. A motion for substitution may be made by any party or by the decedent’s successor or representative. If the motion is not made within 90 days after service of a statement noting the death, the action by or against the decedent must be dismissed.

Ontario Federal Court rejects “automatic” presumption of irreperable harm in motion for preliminary injunction

Shourin Sen - 27 August 2009 – 9:00 am

Filed under Canada, Preliminary Injunction

Western Steel and Tube Ltd. v. Erickson Manufacturing Ltd. 2009 FC 791 (July 31, 2009)

There were a slew of copyright cases uploaded to the Canadian Federal Courts website today. Of note, the Honourable Madam Justice Snider of the Federal Court in Ontario addressed the question of whether a court may presume irreperable harm in a motion for an interlocutory injunction. An interlocutory injunction is referred to as a preliminary injunction in the United States.

Western Steel and Tube brought suit against two rival manufacturing companies alleging that the companies were selling “knock offs” of its utility ramps. Western Steel claimed that the rivals, among other things, infringed its copyright in its packaging and instructions. The Court applied the three-pronged test used by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311:

1.     Is there a serious question to be tried?

2.     Will the Plaintiff suffer irreparable harm if the injunctive relief is not granted?

3.     Does the balance of convenience favour the Plaintiff?

On the question of (1) whether there is a serious question to be tried, the Court found that the plaintiff’s claim met the “very low threshold” of not being “vexatious” or “frivolous.”

Irreperable Harm

The plaintiff in the action cited to a line of cases that it contended stood for the proposition that a plaintiff need not show irreperable harm to obtain an interlocutory injunction. See, e.g., Diamant Toys v. Jouets Bo-Jeux Toys, 2002 FCT 384, 218 F.T.R. 245 (“I agree with the plaintiffs that they need not establish that they will suffer irreparable harm in order to obtain an injunction. . . [I]n copyright infringement cases it seems to me, when the copying is blatant, it is appropriate to consider a less stringent test of potential damage, than would otherwise be the case.”); and Gianni Versace SPA v. 1154970 Ontario Ltd. 2003 FC 1015 (August 29, 2003) (“Turning to the issue of irreparable harm, I agree, based on the reasoning of Nadon, J. in Diamant, that the Plaintiffs need not establish that they will suffer irreparable harm in order to obtain an injunction.”)

The Court distinguished the line of cases on the grounds that in each of these cases the arbiter “made a specific finding that there was an infringement.” The Court concluded that “there is no automatic conclusion that irreparable harm exists merely because the foundation of an action is an infringement of copyright or trademark or the alleged tort of passing off.”

Adoption of the standard sometimes applied in the S.D.N.Y.?

The Court delved into the merits of the claim and found that while there were “clear similarities” between the two products there were also “significant differences.” The Court completed this analysis ostensibly on the grounds that Canadian precedent could be read as creating two tests for a preliminary injunction in infringement cases: the first, as outlined above, where a plaintiff must bring a non-frivolous claim and show irreperable harm; and the second, similar to the standard sometimes associated with the Southern District of New York (but currently up for appeal in Salinger v. Colting), where a plaintiff must show a likelihood of success on the merits, but irreperable harm is presumed.

[E]ven if there is precedent to support the proposition that irreparable harm is satisfied by a demonstration that the defendant’s product is substantially the same as that of the plaintiff, the evidence before me is inadequate to make that determination.

The Court ultimately denied the motion for an interlocutory injunction finding that the plaintiff had not presented any evidence beyond assertions to show irreperable harm or that damages were not an acceptable remedy.

RealNetworks preliminarily enjoined from distributing RealDVD software

Shourin Sen - 13 August 2009 – 10:00 pm

Filed under DMCA, License v. Contract, Preliminary Injunction

RealNetworks, Inc. v. DVD Copy Control Association, Inc., 08-04548 MHP (N.D. Cal. 2009)

The story

RealNetworks distributed the software RealDVD which, among other things, would play a DVD and store a copy of it to a hard drive to be played at a later time. RealNetworks obtained a license to use CSS, the industry standard DRM encryption technology, at the not inconsequential price of $30k. When RealDVD saved a DVD to a users hard drive, it saved the content along with CSS and its own proprietary DRM. The protection measures were set to limit the playback of ripped DVDs to five hard drives. RealNetworks also required an end-user agreement that made users verify that they would only rip copies of DVDs that they owned, not rented, and that they would limit their use of the saved copies to personal use.

Breach of the licensing agreement

The CSS licensing agreement required that “video content or keys initially encrypted using CSS not be carried on a user accessible bus.” RealNetworks argued that it was not in breach of the provision because its own DRM limited access to CSS and content saved on a user hard drive. The Court disagreed, noting that Real’s own layer of protection was “inconsequential” for interpreting the licensing agreement. The Court also found that RealNetworks had breached its covenant of good faith and fair dealing.

DMCA Violation under 17 U.S.C. 1201(a)

Section 1201(a) provides that “[n]o person shall . . . offer to the public . . . any technology . . . that (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access” to a work protected under copyright. RealNetworks argued that since CSS has been cracked, it did not “effectively” control access for purposes of the Section. The Court rejected the argument, citing 321 Studios v. Metro Goldwyn Mayer Studios, Inc., 307 F. Supp.2d 1085, 1095 (N.D. Cal. 2004) (Illston, J.) for the proposition that that CSS technology still effectively controls access to DVD content for the “ordinary customer.”

Fair Use

RealNetworks argued that it could not be held liable for a DMCA violation because the user copying made possible by its technology was shielded from liability as a non-infringing fair use. In making this argument, RealNetworks relied on 17 U.S.C. 1201(c) which states, in part, that nothing in the DMCA should be read to “limit defenses to copyright infringement, including fair-use.” The Court rejected this argument finding that “[f]air use is not a defense to trafficking in products used to circumvent effective technological measures that prevent unauthorized access to, or unauthorized copying of, a copyrighted work under sections 1201(a) or (b).” The Court noted that fair use only “enters into the picture in the context of the act of circumvention itself.”

The standard for a preliminary injunction

The Court applied the Ninth Circuit’s pre-Ebay v. MercExchange, pre-Winter v. Nat’l Res. Def. Concil, pre-American Trucking Ass’ns Inc. v. City of Los. Angeles test for obtaining injunction relief, stating that a preliminary injunction is available to “a party who demonstrates either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) that serious questions are raised and the balance of hardships tips in its favor.” On page 40 of the 58 page decision, however, outside of the section in which the Court outlined the standard it applied for determining whether to grant a preliminary injunction, the Court stated the following:

The court is nonetheless mindful that it “must consider the public interest as a factor in balancing the hardships when the public interest may be affected.” Caribbean Marine Servs. Co., Inc. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988). Whether the public interest would best be served by continuing to enjoin Real from making its products available to consumers, and protect the Studios’ rights at the expense of the consumers’ rights, to engage in legal downstream use of the Studios’ copyrighted material is an excellent question. It is also one the court does not and will not reach, because the statutory structure of the DMCA leaves no room for ambiguity. By making it a DMCA violation to distribute products that enable consumers to override copyright owner preferences against unauthorized copying, Congress determined that the public interest is best served by outlawing such products. “Policy considerations cannot override our interpretation of the text and structure of [a statute], except to the extent that they may help to show that adherence to the text and structure would lead to a result so bizarre that Congress could not have intended it.” Central Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164, 188 (1994).

This interesting passage would seem to place the Court’s decision almost directly in opposition with eBay v. MercExchange and Winter v. Nat’l Res. Def. Council. The remedies provision of the DMCA, similarly to the remedies provision of the Patent Act and the Copyright Act’s infringement section, state that a court “may” grant temporary and permanent injunctions to prevent a transgression of the statute. See 17 U.S.C. 1203(b)(1); 17 U.S.C. 502(a); 35 U.S.C. 283. The Supreme Court in eBay v. MercExchange noted that courts can not automatically award injunctive relief under this operative language in the Copyright Act’s infringement section and the Patent Act. (“Like the Patent Act, the Copyright Act provides that courts “may” grant injunctive relief “on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U. S. C. §502(a). And as in our decision today, this Court has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed.”)

The Court in RealNetworks further presumed irreperable harm upon finding that DVD Copy Control was likely to succeed upon the merits of the case. This would seem to be at odds with the Supreme Court’s pronouncement in Winter v. Nat’l Res. Def. Council that a plaintiff is required to “demonstrate that irreparable injury is likely in the absence of an injunction.”

Spanish yellow pages publisher denied ex-parte TRO; no mention of Winter v. National Resources Defense Council

Shourin Sen - 2 April 2009 – 9:00 am

Filed under Preliminary Injunction

Momento, Inc. v. Seccion Amarilla USA, 2009 WL 799405 (N.D. Cal. 2009)

There was a decision in the Northern District of California on March 24 that shows how some district courts are either electing not to apply Winter v. National Resources Defense Council in copyright actions, or are just seeking to avoid reversible error in situations where it’s not necessary.

Momento published Spanish-language yellow pages in Northern California. The company created some of its own advertisements by preparing and translating text, designing layouts and taking photographs. Momento alleged that Seccion Amarilla, a rival Spanish-language phone book publisher, infringed its advertisements.

Memento filed a complaint seeking an ex-parte temporary restraining order. Judge Saundra Brown Armstrong of the Northern District of California denied the motion, but set an expedited briefing schedule for a temporary restraining order, giving Seccion a day to respond after service.

Legal Standard for a TRO

Judge Armstrong set forth the standard for issuing an ex-parte TRO as follows:

The court may issue a temporary restraining order without written or oral notice to the adverse party or its attorney only if: (A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and (B) the movant’s attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.

Denial

The Court rejected the TRO for two reasons. First, Judge Armstrong found that Memento had failed to allege that Seccion had a history of disposing of evidence or violating court orders:

[P]laintiffs must show that defendants would have disregarded a direct court order and disposed of the goods within the time it would take for a hearing … [and] must support such assertions by showing that the adverse party has a history of disposing of evidence or violating court orders or that persons similar to the adverse party have such a history. . . In an action for copyright infringement, irreparable harm may be presumed upon a copyright owner’s demonstration that it is likely to succeed on the merits of its copyright infringement claim. Here, even if Momento were to demonstrate both success on the merits and irreparable harm, it fails to demonstrate the immediacy of any such harm.

Secondly, the Court found that Momento had failed to explain the efforts it made to give notice and, why it shouldn’t be required.

Winter v. National Resources Defense Council

Judge Armstrong’s decision is somewhat interesting given that she didn’t address the June 2008 Supreme Court opinion in Winter v. National Resources Defense Council. Some district courts have read the recent opinion as eliminating the practice of granting a plaintiff in a copyright action moving for preliminary injunctive relief a presumption of irreparable harm, upon a showing of likelihood of success on the merits. See, e.g. Inspection Management Systems, Inc. v. Open Door Inspections, Inc., 2009 WL 805813 (E.D.Cal. 2009); Jacobsen v. Katzer et al, 2009 WL 29881 (N.D. Cal. 2009); Scentsy, Inc. v. Performance Mfg., Inc., 2009 WL 320334(D.Idaho 2009).

Phish files for TRO in preparation for reunion tour

Shourin Sen - 5 March 2009 – 8:45 am

Filed under Preliminary Injunction

Phish, Inc. v. John Does 1-100 et al, 09 cv 00022 RAJ FBS (E.D. V.A. Feb 25, 2009).

The iconic rock band Phish filed a complaint seeking a temporary restraining order in preparation for their upcoming reunion tour. The restraining order would prohibit people from, among other things, selling merchandise that infringed their trademarks in the vicinity of their March 6-8 Hampton, Virginia concerts. The band also requested that the federal district court in Newport, Virgina order a United States Marshal and the local and state police to seize and impound any infringing merchandise being sold.

The complaint contains a couple of (perhaps unintentionally) funny snipits:

Plaintiff has regularly received financially lucrative offers to license Plaintiffs Marks for use on a variety of products, such as the manufacturers of the PHISH FOOD ice cream, Ben & Jerry’s. However, Plaintiff is careful to limit such merchandising activities only to products of the highest quality and pursuant to arrangements by which it maintains complete control over the manner in which its name and likenesses are represented, in line with the high regard in which the Phish name is considered in the popular music industry.

And:

Because they are generally nomadic individuals without a business premises or other connection to the area, Bootleggers often flee the area permanently once they have sold Bootleg Merchandise [ED: or get a bad case of the munchies]. Thus, Phish has been unable to determine their identity.

Phish will offer free MP3s of the concerts at its website. The band last toured in December 2005.

Documents:

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

Shourin Sen - 11 January 2009 – 9:35 pm

Filed under License v. Contract, Preliminary Injunction

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: