Gone Fishing

IP Legal Watch is on hiatus while I update our copyright treatise, Substantial Similarity in Copyright Law.    I look forward to seeing those of you who will be there at this evening's meeting of the New England Chapter of the Copyright Society in Boston.

12 FOR 2012

Here is a link to the materials from last night's IP presentation at the Brewhouse.

Thanks to all those who came, and especially to those who helped close it down.

Upcoming IP Seminar in Norwalk, CT

I will be hosting a seminar at The Brewhouse Restaurant - 13 Marshall Street, Norwalk, CT, Thursday, February 2, 2012, 6:00 PM – 7:30 PM

The program is entitled:

12 for 2012: 12 Things Every Business Needs To Know About IP This Year -

12 key factors to consider in your IP strategy for 2012. Summarized in 12 slides within 48 minutes, with a 12 minute Q&A.

Complimentary cocktails and hors d'oeuvres.

Topics will include:

The impact of the America Invents Act on IP Strategy;

The advantages and disadvantages of IP licenses and sales;

How to adapt to 2011 case law hostile to rights owners;

The powerful branding trick used by the world’s most successful brand owners;

The real reason copyright registration is important; and

What to expect now that SOPA is dead.

If you are interested, please register at :www.foxrothschild.com/events/eventDetail.aspx

I look forward to seeing everyone there.

 

 

POST-LICENSE USE OF TRADEMARK IS COUNTERFEITING

A former trademark licensee’s continued use of a trademark after termination of the license constitutes trademark counterfeiting. That is the holding in a recent District of Indiana default judgment case, Century 21 v. Destiny Real Estate. The court explained:

If an unrelated entity had created an identical trademark and provided authorized goods or services (or the kind provided by the owner of the mark) under that mark, there would be no question that there was counterfeiting. The Court can conceive of no reason why an ex-franchisee should escape liability for counterfeiting simply because that person had access to a franchisor’s original marks because of the former relationship and therefore did not need to reproduce an identical or substantially similar mark.

Other courts have come to differing conclusions on this issues, in various contexts. In a 1997 case, the 6th Circuit held that a franchisee’s holdover use of a trademark was not counterfeiting. The 9th Circuit held that the licensee’s holdover was counterfeiting in a 2005 case involving continuing use of the Idaho potato certification mark.

The significance is that pursuant to 15 U.S.C. § 1117(b), if he is found to be a counterfeiter, the former licensee can be liable for statutory damages(up to $2 million in cases of willful counterfeiting), and will be liable for three times profits or damages, whichever amount is greater, together with a reasonable attorney’s fee unless the court finds “extenuating circumstances.” If he is merely an infringer, statutory damages are not available and treble damages and attorneys’ fees are less certain to be awarded. They may be awarded “subject to the principles of equity.”

The Century 21 court’s damage, injunction and individual liability analyses also are noteworthy. Century 21 sought its actual damages plus treble damages. The court held that such an amount would be quadruple, rather than treble damages, one multiple too many. The court further reduced the award to two times damages, on the ground that the liquidated damages provided for in the license agreement and awarded by the Court coincided with the actual damages, and therefore to awarded treble damages in addition would again result in quadruple recovery.

On a cheerful note for trademark owners, the Court granted a permanent injunction, finding that “the injury especially justifying injunctive relief is the loss of control over and harm to its valuable name and trademark, in which it has invested substantial effort and money over time to develop goodwill.” If that is going to suffice under Ebay, trademark owners may not need to be as concerned that injunctions against infringers will be harder to come by.

The court declined to impose liability on Destiny Real Estate’s principal. After surveying the law on individual liability for corporate trademark infringement, the Court found that Century 21’s allegations that the individual was President of the company and authorized or approved of the misconduct were not sufficient bases to hold the individual liable for the corporation’s infringement.
 

FROSTY THE PATENT? FUN HOLIDAY READING FOR PATENT GEEKS

If you’re looking for a fun patent to read this holiday season (and who isn’t?), here’s one for “Apparatus for Facilitating the Construction of a Snow Man/Woman.”  I’m disappointed not to have seen the invention in any of the hundreds of holiday catalogs I’ve received, but its nice to see a patent that involves snow men and includes a bit of humor. Besides it includes a few tips on making snow men the old fashioned way.

Merry Christmas.
 

Tags:

The Death of False Marking

Good post by Paul Morgan on PatentlyO concerning the death of false marking litigation and ongoing importance of patent marking.

COPYRIGHT (AND PATENT) MISUSE - IT'S NARROWER THAN YOU THINK

The copyright misuse doctrine does not prohibit a copyright owner from requiring that licensees use the copyrighted work only on it own products. It only prohibits the copyright owner from imposing conditions that prohibit the licensee from making competing products. That is one of the rulings in the recent Ninth Circuit case of Apple v. Pystar. Other discussions of interest in that case concern the validity of software developers issuing “licenses” rather than engaging in “sales” to avoid application of the first sale doctrine, and application of injunction standards in the absence of a presumption of irreparable harm. (See my post of July 13, 2011 for a discussion of the elimination of the presumption of irreparable injury in copyright cases.)

The doctrine of copyright misuse derives from the similar doctrine of patent misuse. Basically, it prohibits a copyright owner from using his copyright to inhibit competition in either products that compete with the copyrighted work or “tied” products. So, for example, in the patent context, once cannot require a licensee of a salt shaker patent to buy salt only from the licensor. One might think, then, that it could be copyright misuse to require that a user of copyrighted software use it only on the licensor’s hardware.

Not so, says the Ninth Circuit. In the Ninth Circuit, copyright misuse occurs only when the copyright owner seeks to prevent a licensee from using a competing product. In the Apple case, the court held that although Apple prohibited use of its software on non-Apple hardware, it did not commit copyright misuse because it did prevent the licensee from developing or using competing software or hardware.

With respect to the license/sale distinction, the court endorsed the principle that so long as the copyright owner restricts the uses that can be made of his product, he can call it a license and avoid the first sale doctrine (the principle that once there has been an authorized sale, the buyer can resell or use the product without restriction).

Notwithstanding the absence of a presumption of irreparable harm, the court found irreparable harm sufficient to impose an injunction, based on the facts that liability had been determined against the defendant, there was a history of infringement, and a significant (albeit unexplained in the court’s opinion) threat of future infringement remains. Hopefully that means that the demolition of the presumption of irreparable harm will not, as a practical matter, curtail the issuance of injunctions in many infringement cases, and infringers will not be able to successfully adopt the “infringe now, pay later” model.
 

REAL WORLD EFFECTS OF THE ABSENCE OF PRESUMED IRREPARABLE HARM

If you want to see the effect of recent cases abolishing the presumption of irreparable harm following automatically from a likelihood of success, consider the recent decision in the Apple v. Samsung case. Apple sued Samsung for infringements of three design patents and one method patent, each of which pertained to the IPad or IPhone.  Apple sought a preliminary injunction prohibiting sale of three Samsung phones and one tablet.  The court denied Apple a preliminary injunction with respect to all four Samsung products, despite finding that Apple had demonstrated a likelihood of success with respect to three of its patents, in whole or in part because Apple was unable to demonstrate irreparable harm.  

If irreparable harm had been presumed, perhaps Apple would have gotten its injunction against one or more of the Samsung products.
 

NO PRESUMPTION OF IRREPARABLE HARM IN FALSE ADVERTISING CASES EITHER

Irreparable injury cannot be presumed in Lanham Act false advertising cases. That was the ruling in Leatherman Tool v. Coast Cutlery, a case decided in October in the District of Oregon. In that case the court found that Leatherman made a preliminary showing that its competitor, Coast Cutlery, deliberately included in advertising literally false statements concerning the sharpness of its knife blades. The court did not issue a preliminary injunction, however, because it found Leatherman’s affidavits avowing concern that sales would be diverted were speculative, and insufficient to prove that Leatherman would be irreparably harmed by its competitor’s literally false advertising.

On the heels of cases within the past five years expressly ruling a presumption of irreparable harm does not apply in patent and copyright cases,  a recent decision from the First Circuit in a trademark case and a one from the District of Arizona concerning another Lanham Act case, it is now seems likely, to the extent it was not after the Supreme Court's decision in Ebay, that  the days in which plaintiffs can count on a presumption of irreparable harm in an IP case of any type may be numbered.

The challenge now, for intellectual property owners, scrupulous advertisers and courts, is to prevent us from sliding into a culture of infringe now, pay later. Infringers will no doubt in every case assert that irreparable harm cannot be proven because the wrongdoing can be remedied by payment of damages, in the form of a license fee or, in the case of false advertisers and trademark infringers, payments for proven diverted sales. That leaves the plaintiff with a difficult task to prove otherwise, the danger the presumption of irreparable harm was designed to prevent. And so the battle lines are re-drawn. 

TAMING THE E-DISCOVERY BEAST

The Federal Circuit’s proposed Model Order on E-Discovery offers a number of good suggestions that should help reduce the burden of electronic discovery in patent cases, and some that merit further consideration and debate. Among the best ideas are the following three:

1. Requiring separate requests for email, rather than permitting email to be included in requests such as “all documents and electronic information” (¶6). This will sharpen the focus on just what types of email communications are relevant. We should consider whether all types of electronic information should be requested separately, and indeed whether to require that specific types of “documents” (correspondence, memoranda, drawings, etc.) should be specifically requested rather than encompassed with omnibus terms.

2. Limiting the metadata parties are required to produce to that revealing times of sending and receipt and the distribution list (¶5). There are times when creation and edit dates are important, so perhaps that also should be included. Most other metadata is typically irrelevant.

3. Presumptive limits of 5 custodians and 5 search terms (¶¶ 10-11). Those limits obviously will not be suitable in all cases, but at least we have a low-number starting point. The suggestions about how to treat conjunctive and disjunctive combinations of terms, and encouragement of the use of narrowing search criteria, are excellent.

Three ideas that merit more careful thought are:

1. The blanket exemption of disclosures of privileged esi from the usual rules concerning waiver, and prohibition on use of allegedly privileged material to challenge the privilege (¶¶ 12-14). One might consider whether we should go that far. Exclusion of material based on privilege is an obstacle to the discovery of truth, and examination of the privileged material itself is the best way to see if it should be privileged. Particularly since the model rules require that requests specify custodians and search terms and limit data to senders and recipients, it should be easier to identify privileged materials and therefore we may not need to be so tolerant of inadvertent disclosures.

2. The extent to which the proposed rules rely on cooperation among counsel (¶¶ 2, 9-11). Not all patent litigants and litigators are particularly cooperative, and one might argue that we are better off just ringing the bell and allowing the parties to come out fighting rather than asking them to make nice first. The idea that parties will jointly agree to modify presumptive limits strikes me as fantastic. One side or another will always think it is in its interest to have less discovery rather than more and vice versa.

3. The decision not mandate initial disclosure of basic documentation about the patents, prior art, accused products and relevant finances (¶ 8). Why not?

The premise and impetus for the proposed model rules cannot be disputed. Far reaching electronic discovery can be tangential to the real issues in a patent case, and collecting volumes of electronic data with the idea that one will run key searches later is expensive and inefficient. The proposed model rules for patent litigation offer possible ways to address those concerns that merit serious examination, not just for patent cases, but for all intellectual property cases.
 

THE CASE FOR SOFTWARE VERSIONS, REGISTRATIONS AND RECORD-KEEPING

A recent case from the First Circuit underlines the utility, from a copyright perspective, of delineating versions of software, registering each version, and keeping copies. That is not always so easily done, because unlike other copyrightable works, such as a novel, software is never “done.” There is always another bug to fix, feature to add or compatibility issue to address. But to effectively employ copyright protection, it is a necessity.

The concern is proof. In order to prove infringement, the copyright owner must first prove what it is that is copyrighted, and that a copyrighted work was registered. That is generally simple enough, but with an evolving work, such as software, it becomes less so. That was the case in Airframe Systems v. L-3 Communications. In that case, Airframe accused L-3 of unauthorized copying of its software between 1997 and 2003.

The court’s opinion reports that Airframe had some pretty damning evidence, particularly a comment in the L-3 code that said “I do not know what this code is used for so I will leave it here anyway.” The problem was, Airframe did not have a copy of the software as it existed in those years and hadn’t registered a version during those years. Airframe attempted to prove infringement by comparing the L-3 code to an updated version of the Airframe software from 2009. The court held that without a copyright registration for the software as it existed during the years in question, and without a way of proving exactly which portions of the 2009 code were present in the version L-3 was accused of copying, Airframe could not prove infringement. The opinion reviews a number of cases in which copyright claims failed because of the plaintiff’s inability to prove the contents of the work allegedly infringed, and discuss the applicability of the best evidence rule in this context.

It seems that Airframe may not have registered any version of its software between 1988 and 2003. That is too long. Software developers and makers of other evolving works should anticipate the need to prove the state of their products at different times and take and register “snapshots” that will enable them to prevail when infringements come to light.
 

INTENT TO USE A TRADEMARK MUST BE SUPPORTED BY DOCUMENTARY EVIDENCE

Trademark applicants filing intent-to-use applications must possess documentary evidence of their “bona fide intention” to use the applied-for mark in connection with the claimed goods and services. Failure to do so may result in a successful opposition of the application or cancellation of a resulting registration, as a recent decision by the Trademark Trial and Appeal Board confirmed (Spirits Int'l B.V. v. S.S. Taris Zeytin Ve Zeytinyagi Tarim Satis Kooperatifleri Birligi, Opposition No. 91163779, 99 U.S.P.Q.2d 1545 (T.T.A.B. 2011)).

To meet the “bona fide intention” requirement, applicants should have reasonably concrete plans to commercialize all of the claimed goods and services under the mark, and applicants should be taking steps to implement those plans, such as by undertaking product research and development, market research, or development of promotional materials. A mere hope or desire that business will expand at some point in the future to encompass additional goods or services is not sufficient. When an applicant does have a bona fide intention to use a mark, the applicant should produce documentary evidence of that intention, such as photographs of product prototypes, draft promotional materials or product specifications, draft business plans, or records of meetings such as presentations to potential investors. This written record could be key in saving an application or registration.

Trademark owners and applicants should also be careful in selecting the goods and services for listing in an application. It is sometimes very tempting, especially with goods such as clothing, to list a broad array of goods that applicant hopes to sell at some point in the future (or does not want someone else selling under the same mark). But without a bona fide intention to use the mark for those goods, supported by documentary evidence, the entire application or registration could be in jeopardy. It is also important to keep in mind that applicants must continue to have a bona fide intention to use the mark on all listed goods and services throughout prosecution of the application, and upon filing of a statement of use, the applicant must submit a sworn statement that the mark is used with all listed goods and services. There are procedures to divide out goods and services not yet in use so applicants can obtain a registration on the active goods and services and maintain a pending application on the remainder.

 

The foregoing is a guest post authored by Chris Kinkade of Fox Rothschild's Princeton, NJ office.

 

 

Reverse Greenwashing

Good stuff on the Green Patent Blog reporting on a lawsuit between plastic bag makers and a reusable bag maker.  The plastic bag makers claimed that the reusable bag maker published false statements about the negative environmental impact of plastic bags.  GPB labels this type of claim "reverse greenwashing" because instead of allegedly falsely promoting the environmental benefits of its own products, the reusable bag maker was allegedly doing the opposite, making false statements about the detriments of the competitors' products.

I'm not sure that is actually reverse, or upside down or something else.  We won't find out in that case because it settled, but claims of that type are likely to help keep environmental claims near the vanguard of false advertising law for the near future.

DEFINITELY NO PRESUMPTION OF IRREPARABLE HARM FOR PATENT INFRINGEMENT

The Federal Circuit this week expressly confirmed that there is no presumption of irreparable harm for patent infringement, and injunctions should not be granted automatically in patent cases. That is consistent with the Supreme Court's decision in Ebay v. MercExchange and the rule in copyright cases as reported in the July 13, 2011 post on this blog.

The following is an excerpt of the relevant portion of the opinion in Robert Bosch LLC v. Pylon Mfg. Corp., No. 11-1096 (Fed. Cir. Oct. 12, 2011) (internal citations omitted):

Prior to the Supreme Court’s decision in eBay, this court followed the general rule that a permanent injunction will issue once infringement and validity have been adjudged, absent a sound reason to deny such relief. . . . In addition, at least in the context of preliminary injunctive relief, we applied an express presumption of irreparable harm upon finding that a plaintiff was likely to succeed on the merits of a patent infringement claim. In eBay, the Supreme Court made clear that "broad classifications" and "categorical rule[s]" have no place in this inquiry. Instead, courts are to exercise their discretion in accordance with traditional principles of equity. The Supreme Court, however, did not expressly address the presumption of irreparable harm, and our subsequent cases have not definitively clarified whether that presumption remains intact. . . . We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief. In so holding, we join at least two of our sister circuits that have reached the same conclusion as it relates to a similar presumption in copyright infringement matters. Although eBay abolishes our general rule that an in-junction normally will issue when a patent is found to have been valid and infringed, it does not swing the pendulum in the opposite direction. In other words, even though a successful patent infringement plaintiff can no longer rely on presumptions or other shortcuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude. . . . While the patentee’s right to exclude alone cannot justify an injunction, it should not be ignored either. 

The foregoing is a guest post authored by Chris Kinkade of Fox Rothschild's Princeton, NJ office.


 

YOU CAN'T COPYRIGHT A BOWL OF FOOD

You can’t copyright a bowl of food; and you can’t copyright a garden. For those who may be wondering just where the outer limits of copyrightability lie, two cases this year identified material that is beyond those limits. In Kim Seng Co. v. J & A Importers, Inc., the court in the Central District of California held that a bowl of food is not sufficiently fixed to qualify for copyright. The court reasoned that a bowl of food could never be static because the food will necessarily perish.

Earlier this year, the Seventh Circuit wrestled with the fixation requirement in Kelley v. Chicago Park District. The art at issue in that case was a garden. Chapman Kelley designed and planted a wildflower garden in Chicago’s Grant Park, carefully selecting and arranging the flowers to achieve a particular effect when they bloomed. When the Chicago Park District reduced the size of the garden, Kelley sued for violation of the Visual Artists Rights provision of the Copyright Law, 17 U.S.C. 106A, contending that the Parks District impermissibly modified his work. The court held that the garden was not a sculpture or a painting, and did not qualify in any way as a “writing” that could be protected by copyright. The court explained “Simply put, gardens are planted and cultivated, not authored. A garden’s constituent elements are alive and inherently changeable, not fixed.”

Food for thought as you watch the next episode of Cake Boss.