Copyright Case Summaries Q4 2010
Supreme Court
Costco Wholesale Corp. v. Omega, S.A., 131 S. Ct. 565; 178 L. Ed. 2D 470 (2010).
Per Curiam decision in which Justice Kagan took no part.
Before the Supreme Court was an appeal of the Ninth Circuit’s decision holding that a
defendant cannot avail itself of the “first sale doctrine” defense where the distributed
copies of the copyrighted work were made or previously sold outside the United States.
Costco Wholesale Corp. (“Costco”) purchased Omega watches that were bought abroad
from authorized distributors, but then brought into the U.S. without Omega’s
authorization by third parties. Costco sold the watches, which bore a copyrighted design,
well below Omega’s suggested retail price. The Ninth Circuit reversed and remanded the
lower court’s summary judgment ruling in favor of Costco. The Circuit Court held that
“lawfully made under this title” in § 109 (codifying the first sale doctrine) was limited by
Circuit precedent to include goods made in the U.S. only. As the Omega watches were
made outside the U.S., Omega retained control over the distribution rights afforded it by
§ 106, which Costco violated by selling without Omega’s authorization.
Without opinion, the Supreme Court affirmed the Ninth Circuit’s decision in a 4-4
decision.
First Circuit Courts
Zamoyski v. Fifty-Six Hope Road Music Ltd., Inc., 2011 WL 442106 (D.Mass. 2011)
Plaintiff Zamoyski commenced the suit for copyright infringement of designs he created,
“Rasta Dreads,” “Lion Zion,” and “Kaya Man”. Defendants, Fifty Six Hope Road Music,
Ltd., Zion Rootswear, LLC, and Bob Marley Music, Inc. (hereinafter “Marley Parties”),
filed counterclaims for a declaratory judgment declaring them owners of the copyrights,
breach of contract and violation of Mass. Gen. L. ch. 93A.
The jury’s verdict resulted in the entry of a declaratory judgment in favor of the Marley
Parties for copyright ownership and for their breach of contract counterclaim but awarded
no damages. The court entered a judgment in favor of Zamoyski's for the Marley Parties'
chapter 93A counterclaim.
Marley Parties now claim that since they prevailed on Zamoyski's copyright infringement
claim and their own counterclaim for a declaration of copyright ownership, they are owed
$160,228.30.Zamoyski argues against fees being awarded to the Marley Parties, and that
in the alternative, the requested amounts should be reduced.
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The court reduced the Marley Parties' fee by ten percent because even though Zamoyski’s
argument was objectively unreasonable it was not frivolous. The court reduced the
Marley Parties' fee by another ten percent because the court felt that Zamoyski did not
need that much deterrence from violating the copyrights at issue. Finally, the court
reduced the Marley Parties' fee another twenty-five percent to fairly apportion the
copyright vs. non-copyright claims as well as the successful vs. unsuccessful claims.
Thus, the court awarded the Marley Parties $84,892.50 in attorney's fees ($157,150 less
the courtesy discount of $2,800 less forty-five percent) plus $5,878.30 in costs, for a total
award of $90,770.80.
Second Circuit Courts
Allen v. Scholastic Inc., 739 F.Supp.2d 642 (S.D.N.Y. 2011).
Plaintiff is the trustee of the estate of Adrian Jacobs. He brought suit against Scholastic
for publishing Harry Potter and the Goblet of Fire, alleging that it unlawfully used
protected expression from Jacobs’ “The Adventures of Willy the Wizard – No 1 Livid
Land”. Defendants moved to dismiss, and the court granted the motion.
After presenting an overview of both cases, the court turned to the law. After noting that
it must accept all the factual allegations of the complaint as true and draw all reasonable
inferences in favor of the complainant, the court concluded that defendant was entitled to
dismissal. The court recited the typical copyright infringement rules (i.e., the plaintiff
must prove ownership and infringement, that infringement means actual copying and
illegal copying, and that actual copying can be inferred from access and substantial
similarity).
Defendant conceded that Plaintiff had a valid copyright and that actual copying occurred.
The analysis therefore turned on substantial similarity between protectable elements of
the works. The court determined that the total concept and feel was important because the
works were created for children. The court concludes that there is no viable claim to
similarity.
WPIX, Inc. v. ivi, Inc., 2011 WL 607111 (S.D.N.Y. 2011)
Plaintiffs include several broadcast networks, distributors, sports leagues, and motion
picture studios. ivi captures over-the-air broadcasts and simultaneously streams them
online. After a short period where the copyrighted materials are stored, they are deleted.
Defendants claim that they are entitled to a compulsory license under 17 U.S.C. § 111,
which allows “cable systems” to perform works so long as they may payments to the
Copyright Office.
After reviewing the statutory language, the court turned to ivi. The court examined not
only § 111, but other cable legislation. The court concluded that ivi’s system is not like a
cable system, and that ivi is therefore not entitled to the compulsory license of § 111.
Therefore, Plaintiffs were entitled to injunction.
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Kwan v. Schlein, 2011 WL 206192 (2d Cir. 2011).
On appeal from the United States District Court for the Southern District of New York,
the second circuit affirmed the district court’s dismissal of appellant’s claim for copyright
infringement on the basis that the claim was time-barred.
Civil actions under the Copyright Act must be brought within three years after the claim
accrued. 17 U.S.C. §507(b). More specifically, an ownership claim accrues only when “a
reasonably diligent plaintiff would have been put on inquiry as to the existence of a
right.” Stone v. Williams, 970 F.2d 1043, 1048 (2d Cir. 1992). In this case, appellant’s
claim accrued in 1998, yet she did not file suit until 2004, more than three years after the
publication. Appellant argued that she had two timely causes of action for copyright
infringement relating to the third and fourth editions of the book. The second circuit
disagreed, and reasoned that when claims of infringement and ownership are alleged, the
infringement claim is only timely if the ownership claim is also timely. Zuill v.
Shanahan, 80 F.3d 1366, 1371 (9th Cir. 1996). Since ownership is the critical issue and
appellant’s ownership claim is time-barred, the second circuit held that the copyright
infringement claim must fail.
Realsongs v. 3A North Park Ave. Rest Corp., 749 F. Supp. 2d 81 (E.D.N.Y. 2010)
Defendants are the owner of a restaurant and the corporation that runs it. Plaintiffs own
the copyrights to, and have granted ASCAP a license to authorize public performances
of, five songs that an ASCAP investigator discovered the restaurant playing without
authorization. Plaintiffs sued for copyright infringement and won a default judgment
before a magistrate.
The court first rules that defendants should be held jointly and severally liable because
they jointly controlled and operated the restaurant and are hence jointly responsible for
the infringement here.
Next the court considers what damages to award. Plaintiffs elected to seek statutory
damages instead of actual damages per section 504(c) of the Copyright Act. The Second
Circuit has identified several factors in determining statutory damages, including profit to
defendant, cost to plaintiff, and defendant’s state of mind, and has stated that statutory
damages should be large enough to discourage wrongful conduct in others. Taking this
into account, the court here orders that $15,000 in statutory damages be awarded.
The court then examines what costs and attorney’s fees should be awarded. Plaintiffs
seek $5900 in fees. The court, however, says that plaintiffs’ attorneys’ fees were much
higher than those previously approved in the district in IP cases, and that they are only
entitled to costs that are in line with what a reasonable, paying client would pay in the
district, given the field and complexity of the case. The court orders $4795 in attorneys’
fees.
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Finally, plaintiffs requested a permanent injunction, per section 502(a) of the Copyright
Act, ordering defendant not to publically perform any copyright-protected songs without
authorization. The standard test for whether to grant a permanent injunction is that the
moving party must establish (1) that it will suffer irreparable harm absent an injunction,
(2) success on the merits, and (3) a substantial likelihood of future infringements. The
Second Circuit has ruled that the first element applies prima facie in copyrightinfringement cases; and the court here finds that plaintiffs meet the other elements as
well. It thus orders a permanent injunction.
R.F.M.A.S., Inc. v. So, 271 F.R.D. 55 (S.D.N.Y. 2010)
RFMAS brought this suit for infringement of jewelry. The present motion is brought for
sanctions due to spoliation of evidence and other violations of discovery obligations. The
Magistrate Judge’s order found that So’s actions constituted sanctionable spoliation. The
Order recommended allowing witnesses to testify at trial that So failed to preserve
samples; to allow testimony of So’s false statements, both to demonstrate why RFMAS
could not produce evidence and for impeachment purposes; and it awarded RFMAS
compensation for the expenses accrued while pursuing discovery.
The only legal standard discussed in this opinion is the standard of review for a district
judge to review a magistrate judge’s findings. Because the factual and legal bases of the
Magistrate’s opinions are not clearly erroneous or contrary to law, the district judge
upheld the Order.
Cameron Industries, Inc. v. Larose, Inc., No. 09 Civ. 2522, 2010 WL 4242323
(S.D.N.Y. Oct. 7, 2010)
In this very brief order, the District Court examined the damages claim of
Cameron Industries related to a default judgment for copyright infringement that
had been obtained against Larose for the sale of a garment pattern for which
Cameron had obtained copyright registration. The Court noted that Cameron’s
belated registration of the pattern had barred it from obtaining statutory damages
or attorney’s fees. As to actual damages, while Larose had responded to postdefault discovery and revealed its gross profits, it had not disclosed its deductible
costs. The Court therefore ordered damages in the amount of Larose’s gross
profits from sale of infringing materials containing Cameron’s copyrighted design.
Third Circuit Courts
Scholz Design, Inc. v. Costa, 2011 WL 635277 (W.D.Pa. 2011)
Opinion by: TERRENCE F. McVERRY
Defendant’s motion to set aside a default judgment is granted.
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Facts: Plaintiff is a corporation that researches, develops, and sales architectural home
designs and drawings. Plaintiff alleges copyright infringement of one of these designs.
No responsive pleading was filed within 21 days of service and Plaintiff requested a
default judgment on January 10, 2011. Default was entered for the plaintiff on January
12. On January 13, defendant filed a pro se motion requesting an extension of time to file
an answer and obtain legal representation. On January 19, plaintiff opposed the motion
noting that default had already been entered. On January 20, counsel for the Defendant
entered his appearance and, on the same day, the court denied the Defendant’s pro se
motion, noting that, given the procedural posture, the defendant must move to set the
default aside. On January 24, the defendants moved to set aside the default.
Discussion: The Third Circuit prefers to allow cases to be heard on their merits. Court
must first decide if service was sufficient to establish jurisdiction. Defendants assert they
“were not served” but offer no factual support. Court is satisfied that service was proper.
Next, the court considers whether to set aside the default judgment under F.R.C.P. 55(c)
for “good cause.” Three factors are considered in the Third Circuit: (1) prejudice to the
plaintiff, (2) whether defendant has a meritorious defense, and (3) whether the
defendant’s delay is due to culpable conduct.
Plaintiff Prejudice – plaintiff doesn’t argue it will be prejudiced. Here, the expeditious
pursuit of this action by plaintiff has diminished any possible prejudicial effects caused
by the defendant’s delay.
Meritorious defense – requires the defendant to “allege specific facts beyond simple
denials or conclusory statements.” Defendants have three defenses: two are simple
denials, but the third defense is based on the statute of limitations. There are a number of
key events that make this a factual issue that could preclude judgment at trial.
Culpable conduct – this is any conduct that willful or in bad faith. Court finds no culpable
conduct.
Fourth Circuit Courts
Sater Design Collection, Inc. v. Waccamaw Const., Inc., 2011 WL 666146 (D.S.C.
2011)
Sater brought suit for copyright infringement of an architectural work. Sater designed a
floor plan (apparently for use by Qwest Home Design). Qwest made modifications to the
Sater plan, and it was intended that Alexander Construction would build the home. The
purchaser’s lender did not approve of Alexander, so the home purchasers had Waccamaw
build the Qwest design. Waccamaw was unaware of Sater’s claim of copyright. This
decision is the result of Sater’s motion for summary judgment.
After finding ownership, the court turns to the question of whether the Qwest design
(which Waccamaw copied) had copied sufficient protectable elements from the Sater
work to find that the Qwest design was a derivative of Sater’s. The court finds that Sater
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has not established direct infringement, and therefore denies its motion for summary
judgment on the issues of liability and damages. Sater’s motion for summary judgment
was granted on all counts relating to Waccamaw’s defenses.
Softech Worldwide, LLC v. Internet Technology Broadcasting Corp., 2011 WL
223594
The court denied plaintiff Softech’s motion for preliminary injunction. Softech brought
suit for copyright infringement in certain software. Softech was ITBC’s subcontractor for
a contract with the United States Department of Veterans Affairs. ITBC argues that
Softech did little development of software, effectively only piecing together the VA’s
already-existing software into an unusable product. The works at issue are called CDN,
CDN.NET, DMA, EDR, PLC, LMS, and VSAT.
The court observed the four factors necessary for preliminary injunction – namely, that a
plaintiff “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 finds that
Softech is unlikely to succeed on the merits with respect to the EDR, LMS, and VSAT
works, as Softech presented no evidence rebutting ITBC’s evidence that it had never
maintained or copied. Nor did Softech provide evidence that CDN.NET and DMA had
actually been copied, but instead had shown only that ITBC had seen the programs.
With respect to the remaining programs, CDN and LC, ITBC admits copying, but
asserted the “essential step” defense under 17 U.S.C. § 117(a)(1). There are three
elements to this defense: ITBC must show that its work (i) was authorized by the owner
of a copy of the computer program, (ii) was created as an essential step in using that
program in conjunction with a machine, and (iii) was used in no other manner. As to the
first element, the court notes that ITBC (and the VA) had paid Softech and were thus
legal owners of the copy of the software. The modifications to the programs were
“essential to CDN and LC remaining useful,” so the court found the second element
favored ITBC as well. Finally, the court notes that the programs were used to their
intended purpose, so the third element is satisfied.
Finally, it should be noted that Softech asserts a claim of vicarious liability against
Fedstore. The court rejects this claim because Softech has failed to demonstrate ITBC’s
direct liability. It therefore denies Softech’s motion for preliminary injunction.
Wondie v. Mekuria, 742 F.Supp.2d 118, 2010 WL 3893587 (D.D.C. 2010).
The plaintiff, Ethiopian artist, creates paintings that focus on his Ethiopian
heritage. In particular, he owns a registered copyright for his original painting titled
“Meskelathe Beza” (“the Painting”). The defendant, owner of a store that sells Ethiopian
food, clothing, music and art, purchased a set of poster prints of the Painting to resell at
her store. Upon visiting defendant’s store, plaintiff saw at least fifteen unauthorized
copies of the Painting on sale. Plaintiff filed a copyright infringement claim against
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defendant, personally serving the defendant by leaving a copy of the summons and
complaint with defendant’s husband at her residence. Defendant failed to appear or
defend herself and thus the Clerk of Court entered a default against defendant. The
plaintiff subsequently requested that the court permanently enjoin the defendant from
engaging in future infringement of the plaintiff's copyright in the Painting, arguing that,
without the injunction, his right and ability to exclusively market and sell his original
works is at risk of continued infringement.
The court held that defendant’s unauthorized copies of the Painting, removal of the
plaintiff's copyright notice and selling of the unauthorized copies for profit without the
plaintiff's authorization, coupled with the defendant's default, established the defendant's
liability for willfully infringing on the plaintiff's copyright in the Painting thus granted
the plaintiff's motion and entered default judgment against the defendant. The court
further held that, because plaintiff has succeeded on the merits, defendant’s invasion of
plaintiff’s right to the exclusive use of his Painting constitutes irreparable harm, an
injunction wouldn’t harm or hinder the defendant in his business and the public interest
favors protection of plaintiff’s copyright, the court granted plaintiff’s request for a
permanent injunction.
Fifth Circuit Courts
Aillet, Fenner, Jolly & McClelland, Inc. v. U. L. Coleman Co., Ltd., 2011 WL
777930 (W.D.La. 2011)
Plaintiff is a professional engineering firm that made drawings for Defendant. Defendant
gave the drawings to Neel-Schaffer, Inc. (“NSI”) to modify Plaintiff’s drawings for
Defendant to determine whether they could be value engineered to reduce the cost of the
construction of the project. Even though Defendant directed Plaintiff to continue revising
its plans, Defendant had already retained NSI. NSI subsequently gave Defendant its final
designs which were similar to, if not exact copies, of Plaintiff’s designs. Defendant fired
Plaintiff and are currently involved in a separate litigation as to the amount Defendant
may owe Plaintiff. Plaintiff filed this action against Defendant, NSI and others for
copyright infringement of Plaintiff’s drawings. Defendant and NSI argue that Plaintiff’s
claim is barred because Plaintiff granted Defendant an implied license, challenge the
sufficiency of complaint for all elements and challenge Plaintiff’s right to recover
statutory damages and attorneys fees.
A finding of an implied license turns on the evidence of intent. Plaintiff’s complaint does
not contain sufficient facts for a finding that an implied license in favor of Defendants
was created or granted. Because plaintiff is not required to anticipate an affirmative
defense when pleading its complaint, a definitive ruling could not be made here with
respect to the implied license affirmative defense raised by Defendants.
In terms of the contributory infringement claim, Plaintiff’s complaint alleges that
Defendant provided Plaintiff’s designs to NSI and directed NSI to alter them. That
provides enough for an inference of specific intent to induce infringement. Thus, the
court recommended that Defendant’s motion to dismiss be denied but that Plaintiff be
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ordered to amend its complaint to allege that Defendant knew that Plaintiff had claimed a
copyright in its plans and that they had restricted Defendant from allowing another
engineer to use them.
In terms of vicarious infringement, sufficient facts were alleged to show that Defendant
failed to stop NSI from infringing the copyright and profited directly from the
infringement and thus the motion to dismiss that claim should also be denied.
Finally, the court did find that the complaint lacked sufficient facts that would permit an
award of damages or fees for Plaintiff. However, Plaintiff was allowed to file a
supplemental pleading if sufficient facts were later found.
In Re Idearc, Inc., 2011 WL 203859 (Bkrtcy. N.D.Tex. 2011)
This case is related to a claim for $374,250,000.00 asserting a claim of copyright
infringement filed by Lisa McConnell, Inc. d/b/a Image One ("Image") against Idearc. In
response, Idearc filed a motion for summary judgment. This case had a number of
preceding cases where the parties-in-suit were Image and Idearc's predecessors-ininterest. Settlements were reached in each of the preceding cases, and it was not disputed
that Idearc, as successor-in-interest of the previous parties, was bound by the terms of the
settlements. In January 2009, Image filed a lawsuit against Idearc in the Southern
District of California seeking damages for (1) copyright infringement, (2) vicarious
copyright infringement, (3) contributory copyright infringement, (4) false designation of
origin under 15 U.S.C. § 1125(a), and (5) unfair competition under § 17200 of
California's Business & Professions Code. Soon after filing the lawsuit, Idearc declared
bankruptcy, and Image filed the above claims in bankruptcy court. Image alleged that
Idearc's predecessors took a temporary license from Image, allowing Idearc the
opportunity to remove Image's images from Idearc's directories. Image also allege that
the license expired more than four years prior to the filing the complaint, but Idearc
continued to infringe, or at leased resumed infringement by copying Image's copyright
protected work. In response, Idearc alleged that the copyright works are divided into pre2001 and post-2001 works, which should be treated differently. Idearc also argued that
the pre-2001 works were subject to a perpetual license without an expiration date, and
that Image had not sufficiently included a claim for infringement of the post-2001 works.
Idearc also claimed recovery of attorney fees under the settlement agreement as well as
the Copyright Act.
To grant a motion for summary judgment, the court must find there is no genuine issue of
material fact and that the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). Idearc's first defense was Image's claims are barred by the terms of
the settlement agreement. The court found that the terms of the settlement were
ambiguous as to whether the works were covered by a perpetual license, as well as which
works were included in the license. Additionally, with regard to Idearc's claims that
Image's complaint fails to allege infringement of the post-2001 works, the court found
that the complaint, while not perfect, sufficiently alleges infringement of both the preand post-2001 protected works when read in light most favorable to Image.
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Regarding Image's claim under the Lanham Act, Idearc contends that both of claims as
set forth in the complaint, i.e., "trade dress" and "passing of" - are barred under the terms
of the settlement agreements. Ideard alleges that the terms of the settlement grants an
unqualified license to, among other things, create derivative works, in any form
(including electronic and digital form) and perform any and all acts, which in the absence
of this license would be an infringement. In this case, the court agrees with Idearc that
Image failed adequately describe its trade dress in the complaint and aise a genuine issue
of material fact that its claimed “trade dress” was protectable under the Lanham Act.
Specifically, the court points out that Image cataloged several components of its website,
but did not clearly articulate which of them constituted its purported trade dress. The
court also notes that Image employed language that suggested that Image possibly
intended to define the component at a later stage of litigation, but without properly
defining the intended "trade dress," the complaint did not provide adequate notice. The
court also concluded that Image had failed to adequately allege and raise a genuine issue
of disputed material fact with respect to the non-functionality of its claimed trade dress.
Regarding Idearc's assertion that Image's complaint included a "passing of" claim, the
court denied Idearc's motion, because the court could not decipher whether the items that
the complaint alleged were passed of as tangible goods.
Regarding the claims under § 17200 of the California's Business & Professional Code,
the court found that Idearc's assertion that Image had not included a proper claim in its
pleading was not supported by any case law.
Idearc also pointed out that Image's conspiracy claim is not an independent claim, but
rather a basis for spreading liability for some other wrong. While the court agrees with
Idearc's basic premise, the court finds that Idearc's motion for summary judgment is
denied with respect to most of the substantive counts, and therefore the conspiracy claim
also fails.
With regard to Idearc's request for attorney fees, the court found that since the court
denied Idearc's motion for summary judgment, Idearc was not the prevailing party, and
thus, an award for attorney fees would be premature.
MedioStream, Inc. v. Microsoft Corp., 749 F.Supp.2d. 507 (E.D. Texas 2010)
MedioStream sued Nero’s subsidiary and added Nero to additional litigation,
seeking damages and an injunction for infringement of U.S. Patent Nos. 7009,655
and 7,283,172. Nero filed its answer alleging four counterclaims for declaratory
judgment of non-infringement and invalidity of the two asserted patents. Nero
amended its answer to allege breach of contract, fraudulent inducement,
misappropriation of trade secrets, copyright infringement, and inequitable
conduct counterclaims. Mediostream filed a motion to dismiss Nero’s
counterclaims.
The first question, involves the counterclaim for the breach of the Software
Evaluation Agreement. The courts determined that the statute of limitation was
four years, and the cause of action accrued at the time of the breach of contract,
and the statute of limitations began regardless of whether the injured party was
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aware of the right to sue. An exception occurs, under the California discovery rule,
which states the cause of action accrues when the plaintiff discovers or could have
discovered, through the exercise of reasonable diligence, all of the facts essential to
his cause of action. The plaintiff provided a list of actions that demonstrated the
violation of the SEA, but explained that they were unaware of the violation because
the defendant’s actions were internal. The court granted the motion to dismiss for
the defendant for the initial claims but denied the additional motions to dismiss
because the plaintiff pled facts showing that California’s discovery rule could
plausibly apply, and therefore the court could not conclude beyond doubt and as a
matter of law that the other alleged breaches of the SEA were time barred.
The next question investigates the counterclaim for fraudulent inducement. The
court determined that the plaintiff must satisfy the requirement of Rule 9(b),
which requires the pleader to state with particularity the circumstances
constituting fraud or mistake. The court concluded that Plaintiff pled its
fraudulent inducement counterclaims with particularity to comply with Rule 9(b),
and also determined that the court could not conclude beyond doubt that the
plaintiff’s fraudulent inducement was barred by the statute of limitations, as a
result denied the defendant’s motion to dismiss.
The next question is in regards to the counterclaim for misappropriation of trade
secrets. The court had to determine if the plaintiff satisfied the requirements for
Rule 8, the statute of limitations, and California’s procedure requirements. The
court established that under California UTSA the plaintiff had to demonstrate the
existence of a trade secret and misappropriation of the trade secret. The plaintiff
demonstrated that this requirement was met by showing that the software that
was provided to the defendant was not knowledge readily available to the public
and in addition to that the software was misappropriated when it was provided to
the subsidiary of the defendant.
The UTSA also states that the statute of limitations runs from the date the plaintiff
discovers or should have discovered, in the exercise of reasonable care and
diligence, the nature of the injury. Although the defendant believed the statute of
limitation had run out because the initial infringement occurred more than three
years ago, the Plaintiff is able to convince the court, that due to the covert actions
of the defendant they were unable to discover the misappropriation when it
initially occurred.
California procedures also require that the misappropriated trade secret be
identified before commencing discovery related to trade secret. The defendant did
not make any showing that discovery related to the plaintiff’s alleged trade secret
began prior to its disclosure of the trade secret in its answer.
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The court concluded that the plaintiff sufficiently pled that under Rule 8(a); the
answer does not show beyond doubt that the misappropriation claim is barred by
the statute of limitations; and the California Civil Procedures does not bar the
misappropriation counterclaim, as a result the court denies the defendant’s motion
to dismiss.
The next question focuses on the counterclaim for breach of the license
agreement. Initially there is a question, as to which law should govern the laws of
the contract since the contract has a provision that states that German law governs
it, but since the facts of the case are not fully developed in California, California
law was used since that is where the contract was requested, reviewed, and
accepted. Under California law, in order to prevail under breach of contract claim,
the plaintiff must show, the existence of a contract; proof of the plaintiff’s
performance; evidence of the defendant’s breach; and damages. Plaintiff provided
evidence of all actions of both parties and in addition to that the terms of the
license. The court determined that the plaintiff’s response satisfied Rule 8’s
pleading requirements because they were able to address specific circumstances
under which the contract was formed, performed, and breached, so as a result the
defendant’s motion to dismiss was denied.
The next question involves determining whether or not there was a breach of the
General Public License (GNU). In this instance the court follows California law,
which states the plaintiff must show the existence of a contract; proof of the
plaintiff’s performance; evidence of the defendant’s breach; and damage. Plaintiff
is able to prove that they satisfied these requirements by referencing the actions
taken by themselves as well as the defendant, and stated how the defendant
breached the terms of the contract. It was determined by the court that the
plaintiff was not required to provide all of its evidence in support of each factual
allegation, but must only allege factual allegations, which, if accepted as true,
demonstrated that it has a plausible breach of contract, as a result the motion to
dismiss was denied.
The next question focuses on the counterclaim of copyright infringement. The
court established that in order for copyright infringement to occur, an individual
must have ownership of a valid copyright and copying of constituent elements of
the work that are original. Plaintiff pled and provided significant facts to
demonstrate that they had applied for and received certificates of registration for
the software provided to the defendant. The defendant’s responses were mere
conclusory allegations about Plaintiffs ownership, as a result the court denied the
motion to dismiss because conclusory allegations cannot overcome the
presumption of truth that the court must afford the plaintiff’s factual allegations.
The final question focuses on the counterclaim on the violation of Digital
Millennium Copyright Act (DMCA). The court has determined that a claimant
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alleging a violation of DMCA is entitled to relief upon showing that circumvention
of a technological measure either infringes or facilitates infringement of a right by
the Copyright Act. Plaintiff provided facts regarding the technical measures and
restrictions of the digital media and how the defendant violated them in addition
to the DMCA. It was determined by the court that Plaintiff provided sufficient
factual matter and accepted it as true, so as a result it denied the defendant’s
motion to dismiss.
In conclusion the Court grants Plaintiff’s motion to dismiss with regard to
Defendant’s fifth counterclaim alleging breach of contract due to the defendant’s
failure to destroy or return its copy of the embedded API. The court however
denies Defendant’s motion to dismiss for the additional counterclaims.
Looney Ricks Kiss Architects, Inc. v. Bryan, 2010 WL 4068885 (W.D.La. 2010)
(Hicks, J.)
Plaintiff moved for partial summary judgment on the issue of the validity of its copyright
registrations of the architectural designs for two apartment complexes allegedly infringed
by Defendants’ building and operating other apartment complexes based on Plaintiff’s
designs.
Pursuant to the Architectural Works Copyright Protection Act of 1990, copyright
protection is available for both architectural plans and constructed buildings. Ownership
of a valid copyright is established by proving the originality and copyrightability of the
work and compliance with statutory formalities. A certificate of copyright registration is
prima facie evidence of the validity of the copyrights and the facts stated in the
certificate; however, the presumption is nonetheless rebuttable. Here, because Plaintiff
submitted copyright certificates, the Court had to accept as prima facie evidence the
validity, including originality, copyrightability, and compliance with statutory
formalities, of those copyrights.
In order to rebut this prima facie evidence, the Defendants must show that the designs
were copied from prior sources and were not original; this may be shown by proving both
access and probative similarity. To this end, Defendants submitted the affidavit of a
registered architect testifying that a lack of originality could be inferred based on the
similarities and fact of access to prior designs. Finding that such an inferential attack on
originality was, in fact, competent summary judgment evidence sufficient to create a
genuine issue of fact regarding originality, the Court denied Plaintiff’s motion for
summary judgment.
Defendants also argue that the architectural designs lack copyrightability because the
Plaintiff did not author and does not own the works. Specifically Defendants attempt to
argue that the designs were the work of another individual with whom Plaintiff had no
formal agreement regarding the ownership of the copyrights. Adopting the Second
Circuit’s approach, the Court determined that an agreement regarding the ownership of a
12
work for hire may be satisfied by a writing executed before or after completion of the
work as long as it confirms a prior agreement made before the creation of the work.
Therefore, on the facts of this case, Plaintiff was the owner of the registered works which
were, in fact, copyrightable.
Haydell Industries, LLC v. Petrucci, 2010 WL 4736606 (W.D. La. 2010)
Defendants, Grady Olson, Cindy Olson, Gherardini, and Bonnegent, operate a
website, “n2spraysolutions.com,” through N2 Spray Solutions on which they have
republished verbatim copies of copyrighted information obtained from the website
of plaintiffs, Haydell Industries, and Advanced Equipment, without the consent of
plaintiffs. Plaintiffs own various copyrights on original works of authorship. Some
of these various original works have been registered with the U.S. Copyright
Office, namely, Spray Painting with Nitrogen, authored by Haydell. Plaintiffs have
alleged they are owners of at least one registered copyright to the work entitled
Spray Painting with Nitrogen, which defendants have copied and republished.
The issue at hand is whether Count 1 (formerly Claim 13) for Copyright
Infringement was adequately amended to specifically allege who owns which
copyright to which materials and which copyrighted materials the defendants are
wrongfully using?
According to the court, plaintiffs' amended Count 1 for copyright infringement is
the basis of subject matter jurisdiction for the entire litigation and therefore,
requires careful examination. The Court ordered plaintiffs to amend Count 1 “to
specifically allege who owns which copyright to which materials and which
copyrighted materials defendants are wrongfully using.”
The court found that plaintiffs adequately plead factual allegations of copyright
infringement that plausibly give rise to an entitlement to relief and recommends
defendants' motion to dismiss this claim be denied. Consequently, the court found
that subject matter jurisdiction over all of the claims and parties exists in this
matter.
The court notes that 17 U.S.C. § 411(a) provides “... no action for infringement of
the copyright in any U.S. work shall be instituted until preregistration or
registration of the copyright claim has been made in accordance with this title.”
Further, the Fifth Circuit has held that “registration with the copyright office is a
jurisdictional prerequisite to filing a copyright infringement suit.” Creations
Unlimited, Inc. v. McCain, 112 F.3d 814, 816 (5th Cir.1997).
Interplan Architects, Inc. v. C.L. Thomas, Inc., 2010 WL 4065465 (S.D. Tex. 2010)
This opinion deals with Daubert motions. Defendant sought to strike testimony one
expert; Plaintiff sought to strike testimony of six experts. Interplan produced architectural
designs, and the documents related to these exams were the basis for the copyright
claims. Thomas hired Interplan to design nine retail locations. Interplan provided Thomas
13
its architectural plans, pursuant to a confidentiality agreement. Thomas then hired two
consultants to help with more of the retail stores. Thomas shared the architectural plans in
violation of the agreement. Upon learning of this violation, Interplan registered its
copyrights and filed suit for infringement and violation of the DMCA.
After reiterating the standard Rule 702 and Daubert rules, the court turned to the specific
experts at issue. With respect to Defendant’s motion, the expert’s testimony with respect
to the expert’s calculation of gross revenue was excluded due to its basis in faulty
methodology. Certain other expert testimony, specifically, with relation to authorship,
ownership, and derivation, was excluded as improper legal opinions. The court barred
testimony as to originality and substantial similarity. The exact details of these exclusions
were different for each of the experts offered.
Sixth Circuit Courts
Gnat Booty Music v. Creative Catering of Wadhams, LLC, 2011 WL 43427
(E.D.Mich. 2011).
Complaint alleges that, through its use of disc jockey, defendant has “publicly published
or played” musical works. Plaintiffs sought summary judgment, injunction, statutory
damages, costs and reasonable attorney’s fees, and they sought judgment that
Defendant’s liquor license is an asset available for execution.
The court applied the standard summary judgment test, that is, judgment is appropriate
where (1) submitted evidence is so one-sided that the movant must prevail as a matter of
law; or (2) the opponent fails to produce evidence sufficient to establish the existence of
an essential element of its claim on which it bears the burden of proof. The court found
that Plaintiffs were entitled to summary judgment because they proved “(1) the
originality and authorship of the compositions involved; (2) compliance with the
formalities of the Copyright Act; (3) ownership of the copyright; (4) performance of
compositions for profit; and (5) unauthorized performance."
Turning to remedies, the court found it likely that Defendant would continue its
infringing use, so the court granted the injunction. It also found that statutory damages on
the order of $3,000 per song ($12,000 total) was appropriate. It found that costs and fees
were appropriate as well.
Warner/Chappell Music, Inc. v. Blue Moon Ventures, 2011 WL 662691 (M.D.Tenn.
2011)
Plaintiffs moved for preliminary injunction against manufacturing, distributing, or
otherwise exploiting their copyrighted works. The court found that Plaintiffs have
demonstrated likelihood of irreparable injury, that harm to Plaintiffs outweighed harm to
Defendants, that injunction would not be adverse to public interest, and that (if Plaintiffs
have standing), there is a substantial likelihood that they will succeed on the merits. The
14
question is standing – specifically, whether Plaintiffs had adequate copyright interests in
the works at issue.
There are four types of documents that Plaintiffs rely on to prove ownership: (1)
copyright certificates; (2) Exclusive Songwriter and Co-Publishing Agreement; (3) an
Exclusive Co-Publishing Agreement; and (4) an Exclusive Administration Agreement.
The court examined the question of ownership, and found that documents (1)-(3) clearly
established Plaintiff’s ownership of copyrights.
With respect to (4), the court noted that a copyright owner has the right to do or to
authorize any of the enumerated rights under 17 U.S.C. § 106. The language of the
Exclusive Administration Agreement clearly grant Plaintiffs rights to “administer and
exploit” the copyrights and to “grant non-exclusive … licenses.” Overall, the court
determined that the language of the Administration Agreement gave Plaintiffs standing to
bring suit.
Seventh Circuit Courts
Graphic Design Marketing, Inc. v. Xtreme Enterprises, Inc., --- F.Supp.2d ---, 2011
WL 744643 (E.D. Wis. 2011).
Plaintiff filed action that included, inter alia, a claim for copyright infringement. Along
with the complaint, Plaintiff filed a motion for preliminary injunction.
Nielsen Co. (US), LLC v. Truck Ads, LLC, 2011 WL 221838 (N.D.Ill. 2011)
The materials at issue in this case are a series of maps created by Plaintiff that divides the
United States into geographically distinct marketing regions (also referred to as
"designated marketing areas" or DMAs). Plaintiff alleged that the DMA maps were
designed by utilizing “a set of proprietary criteria and testing devices, as well as the
experience and judgment of its analysts, to partition regions of the United States into
geographically-distinct marketing regions, or designated marketing areas (the ‘DMA
Regions')....” and that the DMA Maps were original creations that “graphically depict”
Nielsen's proprietary DMA Regions, and were are the product of a creative selection,
arrangement and expression of variables and data sets.” Plaintiff's also alleged that
Defendant violated copyright by reproducing the DMA maps on Defendant's website.
In response, Defendant filed a counterclaim seeking declaratory judgment alleging that
the DMA maps were not copyrightable, and accusing Plaintiff of engaging in copyright
misuse. Plaintiff moved to dismiss the counterclaim regarding non-copyrightable matter,
and filed a motion for summary judgment on the copyright misuse claim.
The court points out that since Defendant seeks a declaratory judgment, the court must
determine whether a genuine controversy exists. To support the court's involvement, “the
controversy must be of sufficient ‘immediacy and reality to warrant the issuance of a
declaratory judgment,’ such that a declaration would not simply amount to ‘an opinion
advising what the law would be upon a hypothetical state of facts.’ “ Geisha, LLC v.
Tuccillo, 525 F.Supp.2d 1002, 1013 (N.D.Ill.2007) (quoting MedImmune, Inc. v.
15
Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (citations
omitted)). The court further points out that in deciding a motion to dismiss for lack of
jurisdiction, the court may look beyond the complaint. Thus, “if the complaint is
formally sufficient but the contention is that there is in fact no subject matter jurisdiction,
the movant may use affidavits and other material to support the motion. The burden of
proof on a 12(b)(1) issue is on the party asserting jurisdiction.” United Phosphorous,
Ltd. v. Angus Chemical Co., 322 F.3d 942, 946 (7th Cir.2003).
Plaintiff argued that since the only claim for infringement related to the Defendant's use
of the DMA maps, there was no case or controversy regarding whether the DMA maps
were copyrightable. In response Defendant's argued that there existed a case or
controversy, because the maps on its websites included demographic and ranking data,
which would continue to be displayed. The Plaintiff's response was that Defendant did
not independently use publicly available demographic data, but relied on Plaintiff's
original compilation of such data. It should be noted that the court specified that only the
maps were at issue here, which are copyrightable, but the data underlying the maps were
based on facts, which were not copyrightable.
The court finds that there is no basis for the conclusion that Defendant actually possesses
Plaintiff's DMA maps, and therefore, there is possibly no controversy to support
jurisdiction over the declaratory judgment counterclaim. However, the court grants
Plaintiff's motion for dismissal on a separate ground. The court states that in order to
sustain its claim of infringement, Plaintiff would be required to establish that the DMA
maps are original compilations, selection, and arrangement of facts, and to allow
Defendant's counterclaim for declaratory judgment to proceed on the same issues would
be redundant, and might complicate resolution of the copyright infringement claim.
Plaintiff moved for summary judgment on Defendant's counterclaim regarding alleged
copyright misuse on three grounds - (1) copyright misuse does not constitute an
independent claim for relief, (2) Defendant's allegations do not establish that Plaintiff
tried to use its copyright to obtain rights beyond those granted by copyright protection,
and (3) Defendant suffered no damages resulting from the alleged misuse, because the
deal Defendant relies on fell through before the third party became aware of the instant
lawsuit.
As to (1), the court points out that Defendant alleges copyright misuse not as a defense,
but as a claim for affirmative declaratory relief. The court also points out the discrepancy
among various courts regarding whether copyright misuse can be a separate claim. Some
courts have found that copyright misuse may not be affirmatively asserted as a separate
claim generally on the ground that to plead an affirmative defense as an independent
claim seeks an illegitimate litigation advantage. See, e.g., Arista Records, Inc. v. Flea
World, Inc., 356 F.Supp.2d 411, 428 (D.N.J.2005); Metro-Goldwyn-Mayer Studios, Inc.
v. Grokster, Ltd., 269 F.Supp.2d 1213, 1226 (C.D.Cal.2003); Broadcast Music, Inc. v.
Hearst/ABC Viacom Entertainment Services, 746 F.Supp. 320, 328 (S.D.N.Y.1990);
Maverick Recording Co. v. Chowdhury, Nos. CV-07cv200(DGT), CV-07-640(DGT),
2008 WL 3884350 (E.D.N.Y. Aug. 19, 2008); Interscope Records v. Kimmel, No. 3:07cv-0108, 2007 WL 1756383, at *5 (N.D.N.Y. June 18, 2007). Other courts have
recognized copyright misuse as a counterclaim, based on the analogous doctrine of patent
misuse, recognizing that Defendants may have reasons for seeking a declaration of their
16
rights aside from the infringement claim they are defending. See, e.g., Apple Inc. v.
PsyStar Corp., No. C 08-3251 WHA, 2009 WL 303046, at * 2-3 (N.D.Cal. Feb.6, 2009);
Midwest Tape, LL v. Recorded Books, LLC, No. 3:09 CV 2176, 2010 WL 1258101, at *1
(N.D.Ohio March 26, 2010); Electronic Data Systems Corp. v. Computer Associates Int'l,
Inc., 802 F.Supp. 1463, 1465-66 (N.D.Tex.1992). The court in this case declined to
decide whether the copyright misuse doctrine may be asserted as a counterclaim for
declaratory relief, but denies the claim on the basis of Plaintiff's grounds (2) and (3).
As to (2), the court states that since the Defendant asserted misuse, the Defendant was
required to show that the infringement claim was without merit. Further, the Defendant
counters that the designated regions in the DMA maps are not Plaintiff's proprietary
information, because neither the regions nor the data included in the maps, nor the DMA
Maps themselves are subject to copyright protection. Thus, Defendant's allegation of
misuse lies in the fact that Plaintiff knew or should have known that the DMA maps do
not have any independent purpose or function, except to display “serve no independent
purpose or function except to display known and existing data. Defendant relies on the
merger doctrine, which states that when there is only one feasible way of expressing an
idea, the idea would not be copyrightable. See Bucklew v. Hawkins, Ash, Baptie & Co.,
329 F.3d 923, 928 (7th Cir.2003). However, the court clarifies that the merger doctrine is
not applicable to the DMA maps, because the designated market areas are not a fixed idea
that can be expressed in only one form. The court also disagrees with Defendant's
argument that the DMA maps cannot be copyrighted, because they are based on facts
within the public domain. The court points out that the law is to the contrary, where
courts have held on various occasions that the exact representation of a map is
copyrightable despite the underlying facts being in the public domain. Thus, the court
finds in favor of the Plaintiff on this point.
Regarding final point (3), the court found that there was ample evidence to show that the
deal between Defendant and third-party fell through prior to the instant lawsuit, and thus,
Defendant did not suffer any damages as a result of the lawsuit. Accordingly, the court
sided with Plaintiff.
Two Palms Software, Inc. v. Worldwide Freight Management, LLC, 2011 WL
689648 (E.D. Mo. 2011)
Opinion by: CAROL E. JACKSON
Defendants move to dismiss a copyright infringement suit as being barred under the
three-year statute of limitations and preempted by section 301(a) of the Copyright Act.
Facts: Plaintiffs designed a computer software system called “Management Software.”
From 2001 to 2004, plaintiffs had agreements with defendants to use the software for a
subscription. In February 2007, plaintiffs discovered defendants copied the software and
sold a modified copy to a third party. Plaintiffs filed suit on June 8, 2010.
Discussion: Plaintiffs filed suit more than 3 years after the initial discovery. However,
claim is not barred because plaintiffs allege that infringing activity continued after
17
February 2007. Defendants argue the plaintiff’s complaint fails to plead particular facts,
but the court finds that’s not necessary to survive a motion to dismiss.
Next, defendant argues Count III, IV, V, VI, and X are derivatives of the copyright
infringement claim and, thus, barred by section 301(a) of the Copyright Act. State causes
of action are barred if (1) the work at issue is within the subject matter of copyright and
(2) the state law right is equivalent to any of the exclusive rights within the general scope
of copyright. (National Car Rental System, Inc. v. Computer Associates International,
991 F.2d 436, 428 (8th Cir. 1992))
Parties agree the software is within the subject matter of copyright; the issue is whether
the rights at issue in the state law are “equivalent” to the exclusive rights in the Copyright
Act. The Court must consider whether “there is an ‘extra element’ that changes the nature
of the state law action so that it is qualitatively different from a copyright infringement
claim. The court then analyzes each allegedly derivative claim:
Conversion – conversion claims are preempted when a plaintiff is seeking damages from
the reproduction of a work, rather than the return of a physical piece of property. Since
the plaintiffs are seeking damages for wrongful production, this claim is preempted.
Conspiracy to Convert Plaintiff’s Property – A claim of civil conspiracy requires “a
meeting of the minds,” and plaintiffs argue that this is an extra element. While true, this
extra element does not qualitatively change the nature of the claim and is, therefore,
preempted. The court notes, however, that some other courts have found the “agreement
element” makes a conspiracy claim not preempted. This court rejects those decisions.
Tortious Interference with Business Expectancy – A tortuous interference claim is
preempted when it is based on the creation of infringing material. Plaintiffs say it’s not
preempted based on allegations that the defendant caused a third-party to breach a
contract with a plaintiff. Here, plaintiffs allege that “defendants…interfered with
plaintiffs’ exclusive right to use, modify and direct [distribution].” Because the claim is
based on the creation of infringing material, it preempted.
Unjust Enrichment – generally preempted by Copyright Act. Plaintiffs argue it is
different because it is based on the breach of contract claim. Although this is alleged, the
‘gist’ of the unjust enrichment claim is the unauthorized use of the software. Thus, it is
preempted.
Missouri Computer Tampering Act – This law creates a remedy for unauthorized
modification or destruction of computer programs. Plaintiffs allege the act was violated
because the defendants made security changes to the software. This claim requires an
extra element and will not be barred.
Zimnicki v. General Foam Plastics Corp., 2010 WL 3941869 (N.D. Ill. 2010).
18
Zimnicki sued for copyright infringement, and defendant Nixan moved for summary
judgment because any infringing activity took place in Hong Kong. Nixan made lighted
reindeer in China, and claims that it delivered the products to General Foam “free on
board” in Yantian, China. The facts appear to support the proposition that Nixan never
did anything in the U.S.
The first question raised is whether the court even had jurisdiction over Nixan. The court
applied the Federal Circuit’s patent rule in N.A. Phillips Corp. v. American Vending
Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994) in concluding that a “sale” occurs where
the buyer is located, even if the physical transfer did not necessarily occur there.
As to contributory infringement, the court observed that Zimnicki first needed to amend
her complaint, as she had not properly alleged contributory infringement.
Eighth Circuit Courts
Osment Models, Inc. v. Mike's Train House, Inc., 2010 WL 4721228 (W.D. Mo.
2010) – Laughrey, Nanette USDJ.
In this decision, the Court excluded expert testimony by Ralph Oman, former Register of
Copyrights, and Bernard Dietz, former head of the Visual Arts Section of the
examination group at the Office.
The Court found that Mr. Oman’s Expert Report discusses different copyright doctrines
and how the law ought to apply to the instant facts and concludes with his opinion as to
whether certain aspects of Osment's models are entitled to copyright protection.
The Court began its analysis by noting that “[a]s a general rule, ‘questions of law are the
subject of the court's instructions and not the subject of expert testimony.’ “ United States
v. Klaphake, 64 F.3d 435, 438-39 (8th Cir.1995) (quoting United States v. Vreeken, 803
F.2d 1085, 1091 (10th Cir.1986)). The Court held that even though Mr. Oman is expert
in copyright law, such testimony had to be excluded, because it is tantamount to
instructing the jury on the law, which is for the Court to do, not a party's expert. The
Court then noted that Mr. Oman was neither a modeling expert, nor historian, and
excluded his opinions on 1930's architecture and customs in the modeling industry.
Osment contests the admission of Mr. Oman's testimony because the subject of which he
is an expert-copyright law-is a matter for the Court to decide. Moreover, Osment argues
that any application of the law to the facts of the case is within the jury's domain, not an
expert's. Finally, Osment states that what remains of Mr. Oman's testimony-a visual
comparison of Osment's and Mike's' models, a discussion of 1930's architecture, and the
customs in the modeling industry-should be excluded under the standards of Federal Rule
of Evidence 702 and Daubert because he is not a qualified expert in those topics.
Business Audio Plus, L.L.C. v. Commerce Bank, NA, 2011 WL 250670
19
This case arose from contracts that existed between the Defendant and the Plaintiff's
predecessors. Under the terms of the existing contracts, Defendants were entitled to use
Plaintiff's "literary works" in 22 of its approximately 250 locations. Plaintiff alleged that
on or prior to August 22, 2007, Defendant started using the works in 200 or more
locations. Plaintiff's position was that this expanded use by Defendant without Plaintiff's
permission amounted to violation of the Copyright Act and state law.
This case was originally filed in the Circuit Court of St. Louis County, Missouri, but was
eventually moved to the Eastern District of Missouri based on the court's exclusive
jurisdiction to hear claims under the Federal Copyright Act. Plaintiff's Complaint
included four claims - (1) copyright infringement under 17 U.S.C. § 101- § 505; (2)
breach of implied covenant of good faith and fair dealing; (3) unjust enrichment; and (4)
fraud by concealment.
In response Defendant filed Motion to Dismiss, alleging Plaintiff's failure to register, or
apply for registration, of the "literary works" at issue under 17 U.S.C. § 411, and
preemption of the state claims by the Copyright Act.
The court dismisses Plaintiff's claim (1) based on Plaintiff's own admission of failure to
apply for registration the material at issue under 17 U.S.C. § 411, thereby failing to meet
§ 411(a)'s statutory requirement that a civil suit for copyright infringement cannot be file
unless there is preregistration or registration of copyright for the works at issue.
The court also dismisses Plaintiff's claims (2)-(4) because the state claims are pre-empted
by the federal Copyright Act. In reaching it's decision, the court employs the two-part
test established in Warren Sign Co., Inc. v.. Piros Signs, Inc., 2010 WL 3034637 at *2
(E.D.Mo. Aug. 3, 2010). See also National Car Rental System, Inc. v. Computer
Associates Intern., Inc., 991 F.2d 426, 428 (8th Cir.1993). First, it must be determined
whether the work at issue is within the subject matter of copyright as defined in §§ 102
and 103 of the Copyright Act, and second, whether the state law created right is
equivalent to any of the exclusive rights within the general scope of copyright as
specified in § 106. If both these elements are met, the state claim is pre-empted.
The court assumes that the "literary works" at issue in this case fall within the subject
matter of copyright as defined by §§ 102 and 103 of the Copyright Act. Therefore, the
only question at issue is whether the rights at issue in claims (2)-(4) are equivalent to the
rights guaranteed under the Copyright Act. The court finds that the rights in claims (2)(4) are not in fact equivalent to the rights guaranteed under the Copyright Act. However,
the court points to the Eighth Circuit decision in Willman v. Heartland Hosp. East, 34
F.3d 605, 613 (8th Cir.1994), cert. denied, 514 U.S. 1018 (1995) that district courts have
“broad discretion” in deciding whether to exercise supplemental jurisdiction over state
law claims. See also Innovative Home Health Care, Inc. v. P.T.-O.T. Associates of the
Black Hills, 141 F.3d 1284, 1287-88 (8th Cir.1998).
Upon consideration, the court exercised its discretion under 28 U.S.C. § 1367(c) to
decline jurisdiction, and remanded counts (2)-(4) to the Circuit Court of St. Louis
County, Missouri.
Capitol Records, Inc. v. Jamie Thomas-Rasset, 2010 WL 4236632 (D. Minn)
20
The plaintiffs in this case appeal a prior remittitur order by this Court. During pretrial motions, both parties requested the Court to consider proposed jury
instructions. The defendant requested that the jury be instructed about the
standard for determining the constitutionality of statutory damages, while
plaintiffs requested that the jury be instructed about the elements of copyright
infringement.
Specifically, defendant requested that the jury be instructed that the "award of
statutory damages must bear a reasonable relationship to the harm suffered by
each plaintiff as a result of the defendant's actions." Plaintiffs and the government
opposed defendant's request.
The Court denied defendant's request, finding that there is no authority for the
proposed jury instruction. Additionally, the Court clarified that the standard for
reviewing a statutory damages verdict for constitutionality was a standard for
review employed by the Court, and not open to debate by the jury.
Defendant also objected to plaintiffs' proposed jury instructions, alleging that the
instructions reiterated the liability instructions given to the jury during the
previous trial, and that the instructions were not related to the case at issue,
because the case at issue only dealt with the issue of damages.
The Court overruled defendant's objection, and stated that in order for the jury to
understand the meaning of the previous binding verdict of willful infringement
and the context of the current damages decision, the instructions were necessary.
Ninth Circuit Courts
Design Furnishings, Inc. v. Zen Path LLC, 2010 WL 4321568 (E.D. Cal. 2010) –
SCHUBB, William, USDJ.
This case presents interesting state law claims based on filing copyright registration
applications for wicker furniture. Plaintiff and defendant imported wicker furniture from
the same source in China, which they sold at retail in the U.S. on eBay.
Defendant sent plaintiff a cease and desist demand, stating that plaintiff's sale of the
furniture violated copyright or patent law and its photos of the furniture violated
copyright law. Defendant took down the photos, but wouldn’t stop selling the goods
without proof of plaintiff’s IP rights. Defendant then applied to register copyrights for
(1) a round sectional wicker furniture collection, (2) a U-shaped sectional wicker
furniture collection, (3) a modern boxy sectional wicker furniture collection, and (4) a
Capri sectional wicker furniture collection. The applications identified the works as
“sculpture/3-D artwork, Ornamental Design” and attached pictures of the furniture.
Defendant next notified eBay that plaintiff was selling furniture within the scope of the
copyrights. The Court indicated that the notice causes eBay to temporarily or
permanently suspend another seller's account.
21
Plaintiff responded to defendant’s numerous eBay notices by filing suit asserting claims
for (1) misrepresentation of intellectual property infringement in violation of the Digital
Millennium Copyright Act, (2) tortious interference with a contract, (3) tortious
interference with prospective economic advantage, (4) a violation of California's Unfair
Competition Law and (5) declaratory and injunctive relief.
In support of its motion for a TRO to stop any additional eBay IP violation notices,
plaintiff’s president stated: If Defendant is not stopped from submitting repeated notices
of claimed infringement when there is absolutely no basis to claim that defendant's
auctions are infringing on Defendant's intellectual property rights, then eBay could very
well permanently suspend defendant's accounts. If that occurs, then my entire business
will cease to exist since I rely on eBay for 95% of the company's revenues. I will be out
of work and I will be forced to lay off DFI's employees.
The decision appears to have been rendered before the Copyright Office took any action
on the application. In its analysis, the court noted the rebuttable validity presumption
from registration, and that utilitarian works such as furniture are not protected, unless
they contain sufficient Pictorial, Graphic or Sculptural work(s). The court also noted
Universal Furniture Int'l, Inc. v. Collezione Europa USA, Inc., Nos. 07-2180, 09-1437,
2010 WL 3278404, at *7 (4th Cir. Aug.20, 2010), which found works of ornamental
design on furniture to be original and conceptually distinct from the utilitarian aspects,
despite the earlier upholding of the denial of a preliminary injunction.
It is not clear from the decision who filed defendant’s copyright applications – defendant
itself or experienced copyright counsel. Nonetheless, the court then indicated: Here,
defendant's applications for copyright protection claimed the works were sculptures or 3D artwork or ornamental designs, indicating that defendant knew the limits of copyright
protection. The pictures of the furniture, though, suggest that defendant impermissibly
sought protection of the “industrial design” of the furniture. Moreover, the internal
contradiction in the applications raises a strong inference that defendant subjectively
knew it did not have a copyright infringement claim when it notified eBay. The court
therefor entered a TRO against further eBay notices, pending a hearing on a preliminary
injunction.
B2B CFO Partners, LLC v. Kaufman, 2011 WL 587165 (D.Ariz. 2011)
Plaintiff moved for partial summary judgment and Defendant cross-moved for same.
Plaintiffs are a CFO business (“the largest and most successful … in the United States.”).
They rent CFOs to small- to medium-sized businesses. Mills (founder of B2B) wrote
several iterations of his training manual. He made partners in his company sign a
confidentiality agreement. Defendant worked for approximately one year as a partner for
Plaintiff. After Defendant left B2B, he started his own CFO business, including drafting
training manuals. Plaintiffs claim that Defendant’s training manual infringes their
copyright in their training manual. They moved for summary judgment on the issue of
infringement; Defendants moved on the issues of statutory damages and attorneys’ fees.
22
Having established that Plaintiff’s manual was entitled to copyright protection, the court
next turned to substantial similarity. Because the court did not wish to substitute its
impression for that of the jury with respect to the “total concept and feel” of the work, it
denied Plaintiff’s motion. The court granted Defendant’s cross-motion on the issue of
damages, but denied the motion to strike.
Buggs v. Dreamworks, Inc., 2010 WL 5790251 (C.D. Cal. 2010).
Opinion by United States District Judge S. James Otero.
The court granted defendant Dreamworks’ motion for summary judgment, finding its
film “Flushed Away” not substantially similar to plaintiff Buggs’ screenplay “Critter
Island.”
The court applied an “extrinsic test” for determining substantial similarity. As an
objective comparison of specific expressive elements, the extrinsic test is appropriate in
the summary judgment context. The court compared side-by-side the constituent
elements of the works, including plot, characters, themes, setting, pace, mood, dialogue,
and sequence of events. In each comparison, the court found that Buggs failed to provide
concrete elements demonstrating substantial similarities, instead pointing to
nonprotectable general plot ideas.
Buggs’ asserted that Dreamworks had a high degree of access to the “Critter Island”
screenplay thus lessening the level of proof required to establish copying. The court
refuted this argument stating that no amount of access could demonstrate copying where
there are no similarities between the works. The court thus found that there was no
copying and granted Dreamworks’ motion for summary judgment.
Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 2011 WL 631449 (9th Cir. 2011)
Opinion by United States Senior Circuit Judge J. Clifford Wallace.
On appeal by Fleischer Studios, Inc. (“Fleischer”) from the district court summary
judgment dismissing Fleischer’s copyright and trademark action against A.V.E.L.A., Inc.
(“Avela”).
Max Fleischer created the “Betty Boop” character and films but transferred the rights in
her to Paramount Pictures, Inc. in 1941. After a few decades and several further title
transfers, Fleischer’s family sought to repurchase the Betty Boop rights from various
parties and began licensing the Betty Boop character for merchandising. Avela, having
acquired its own copyright in restored vintage Betty Boop posters, also licensed Betty
Boop merchandise. Believing themselves to be the exclusive holders of the Betty Boop
character and trademark, Fleischer sued Avela.
23
The circuit court held that title to the copyright for the Betty Boop character never passed
from Paramount to the downstream parties from whom Fleischer later attempted to
purchase those rights. This conclusion, based on unambiguous language in the agreement,
was not clouded by the conduct of the parties or the doctrine of indivisibility. The chain
of title to the copyright thus never passed to Fleischer who could therefore not maintain
the infringement action.
The Circuit Court also disagreed that Avela infringed Fleischer’s asserted trademarks in
Betty Boop as a character. The court characterized Avela’s use of the character as a
functional asthetic component of the merchandise, and not as a source-identifying
trademark. Without trademark usage, Avela could not be liable for infringement.
Furthermore, Fleischer could not style its failed copyright claim as one for trademark
where the copyright had passed into the public domain. Fleischer’s trademark claim was
thus also barred.
UMG Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir. 2011)
On appeal from the United States District Court for the Central District of California, the
ninth circuit affirmed the district court’s dismissal of UMG’s copyright infringement
action under §501 of the Copyright Act.
In this case, the issue was whether UMG’s unsolicited initial distribution of CDs to a
large number of recipients represented a transfer of ownership of the discs, leaving the
discs subject to the first sale doctrine, 17 U.S.C. §109(a), or whether it merely granted a
license to each recipient. §106 of the Copyright Act grants copyright owners, such as
UMG, the exclusive right to distribute copies of the copyrighted work to the public by
sale or other transfer of ownership. In Quality King Distrib., Inc. v. L’Anza Res. Int’l Inc.,
523 U.S. 135, 152 (1998), the Supreme Court held that once a copyright owner places a
copyrighted item in the stream of commerce, the copyright owner gives up his exclusive
rights to control its distribution. Here, the ninth circuit reasoned that UMG failed to
create a license, and instead transferred ownership of the CDs, because UMG had no
control over the unsolicited CDs and UMG failed to establish that the recipients agreed to
a licensing agreement.
Thus, the ninth circuit held that under the first sale doctrine, the recipients of UMG’s
promotional CDs were entitled to sell or otherwise dispose of the copies.
Righthaven LLC v. Realty One Group, Inc., U.S.P.Q.2d 1516, 2010 WL 4115413
(D. Nev. 2010)
Defendant Michael Nelson posted the first eight sentences of a thirty-sentence
news article from the Las Vegas Review Journal on his real estate blog. Plaintiff,
Righthaven, obtained the rights to the story from the Review Journal, and sued
Defendant in the District Court of Nevada. In response, Defendant claimed fair use
and asked the court to dismiss the case.
24
The question here is whether Defendant’s act violates the Copyright Act. In its
discussion of the doctrine of fair use, the court emphasized that Defendant utilized
a brief, factual portion of the article, as opposed to the original author’s
commentary, and provided the hyperlink to the full article containing the original
author’s commentary.
Judge Hicks of the U.S. District Court of Nevada dismissed the complaint, ruling
that Defendant’s actions did not violate the Copyright Act because the use of the
eight sentences out of thirty constituted fair use.
The court laid out the traditional four-factor test regarding fair use. (17 U.S.C. §
107). The court found that the first factor, purpose and character of the use,
weighed against Defendant because he used his blog to promote his commercial
business. The second factor, nature of the work, weighed in Defendant’s favor
because the portion of the news article copied was factual in nature. The third
factor, amount and substantiality of the portion of the copyrighted work used,
weighed in favor of Defendant because he only copied eight sentences from a total
of thirty in the news story. The fourth factor, effect on the potential market,
weighed in Defendant’s favor as Defendant’s use of the copyrighted material “does
not dilute the market for the copyrighted work."
Glass v. Sue, 2010 WL 4274581 (C.D. Cal. Oct. 22, 2010)
Plaintiff is a psychologist who has written several popular books on psychology and
communication, including one called Toxic People, and conducted seminars on so-called
“toxic people.” Defendants are the author of a book and an iPhone app also called Toxic
People, on the same topic, and her publisher. Plaintiff has sued for copyright
infringement vis-à-vis a number of her books and for trademark infringement vis-à-vis
the phrase “toxic people.” Defendants have moved for summary judgment on each claim.
The court begins with the copyright infringement claims. A plaintiff must establish (1)
ownership of the copyright, (2) defendant’s access to the copyrighted work, and (3)
“substantial similarity” between the copyrighted work and the infringing work. In this
case the first two elements are not in question. The court notes that substantial similarity
ordinarily is tested using a bifurcated “extrinsic/intrinsic test,” of which the former half is
objective, based on whether the work contains protectable elements that exist in
substantially similar form in the infringing work, and the latter half is subjective, based
on the perception of the reasonable observer. In the summary judgment context, however,
the court considers only the extrinsic test. The court summarizes the relevant doctrines of
merger, under which an idea and its expression are considered one, and scenes a faire,
under which elements that are standard in the treatment of a given idea are not protected.
The court holds prelimarily that, because plaintiff’s books are nonfictional accounts of a
purportedly real phenomenon that can only be explicated in a small number of ways, the
facts within are awarded little protection. Applying this standard to plaintiff’s four
allegedly infringed books, the court grants summary judgment on three counts; regarding
25
the fourth book, the court notes that the work in question, though its content receives
minimal protection, is sufficiently “creative” to enjoy protection as to its “sequence of
thoughts, choice of words, emphasis and arrangement.”
Next the court considers plaintiff’s trademark infringement claims. To prove trademark
infringement a plaintiff must have a valid trademark and show that the defendant’s “use
of the phrase is likely to cause confusion among consumers as to the source.” Here,
plaintiff did not register a trademark for “Toxic People;” so to show validity she must
prove either that the mark is “inherently distinctive” or that is has acquired “secondary
meaning.” The court finds that the phrase at issue is “descriptive,” for it “describes the
qualities or characteristics of a good or service.” Descriptive marks are not inherently
distinctive. Further, defendant has not shown a general public recognition that she is the
source of the phrase. The court thus grants summary judgment on this count.
Datel Holdings, Ltd. v. Microsoft Corp., 2010 WL 3910344 (N.D. Cal. 2010)
Suit arose under the Sherman and Clayton Acts, with Datel claiming that Microsoft had
illegally monopolized the relevant markets for the Microsoft Xbox 360 system. Microsoft
filed counterclaims, including allegations that Datel’s memory card, as well as other
accessories, bypass security features of the Xbox 360, in violation of the DMCA.
Microsoft sought to bifurcate, as proving the DMCA claims would be dispositive on the
anticompetition claims.
The Xbox has three kinds of memory slot: USB, Memory card, and HDD. The Memory
Card slot is encrypted. The court examined Datel’s memory card to determine whether it
violated the DMCA. It also looked to whether the Xbox’s security mechanism
“effectively protect[ed]” against unauthorized access. The court observed that, in the 9th
Circuit, a defendant’s illegal acts do not insulate the defendant from a plaintiff’s claims
of anticompetitive conduct. See Memorex Corp. v. IBM, 555 F.2d 1379, 1380 (9th Cir.
1977). Yet it held that Memorex was distinguishable:
[H]ere, Defendant is not arguing that Plaintiffs' claims are barred because it
engaged in some wrongful conduct in developing its memory card; instead,
Defendant argues that if it prevails on the DMCA claim, then the memory card
itself should not have been sold as in RealNetworks. Thus, to the extent that
litigation of Defendant's DMCA claim reveals that Plaintiffs' memory cards are
unlawful circumvention devices, Modesto and RealNetworks may bar Plaintiffs'
antitrust claims at least as to the memory cards.
However, the court’s decision not to bifurcate turned on one simple fact: Datel’s claims
of anticompetitive conduct went beyond the Memory Card. For example, Microsoft
released updates that disabled Datel’s controllers and also told retailers not to purchase
Datel’s products since Microsoft was planning on disabling future products made by
Datel.
Bobosky v. Adidas AG, No. CV 10-630-PK, 2010 WL 4853295 (D. Or. Oct. 8, 2010)
26
Bobosky is an attorney who created the motivational phrase “We Not Me” in 1999. He
distributed materials with the terms and subsequently obtained both copyright and
trademark registration on various formulations of the phrase in 2005 and 2006. After
obtaining registrations, he attempted to market the phrase nationally. In October 2007,
Adidas started an ad campaign on both television and the internet which contained the
phrase. Bobosky contacted Adidas regarding the use, but Adidas refused to negotiate a
license. Bobosky then brought suit for copyright and trademark infringement, among
other causes of action, in Texas federal district court. Subsequently, Adidas successfully
moved to change the venue to Oregon.
In this decision, the U.S. District Court for the District of Oregon analyzes various
motions to dismiss filed by both the plaintiff and defendant. The plaintiff’s motion to
dismiss was denied as an improper attempt to avoid the Texas district court’s transfer
order. Analyzing defendant’s claim that “We Not Me” is a short phrase, incapable of
copyright protection, the Oregon court examined the registration, which was for a short
poem and graphic containing the phrase. The Court found that Bobosky had successfully
pleaded both registration of the copyright and infringement, and deferred ruling on
Adidas’s substantive arguments until summary judgment. The Court similarly held that
Adidas’s arguments for dismissal of the trademark claims were premature.
Ryan v. Editions Limited West, Inc., 2010 WL 3987829 (N.D. Cal.)
There was a contract between plaintiff and defendant, whereby the defendant was
authorized to sell plaintiff's paintings as posters. There was no clause in the
contract regarding sale of posters derived from canvas transfers, canvas prints, and
wall murals created by plaintiff. The contract also included a provision regarding
court costs, whereby
[i]n the event that litigation is instituted with regard to this
Agreement, the prevailing party shall be entitled to its costs of
the suit, including reasonable attorney's fees.
Plaintiff alleged that defendant provided an art retailer with a list of artworks that
could be made into canvas prints and canvas transfers, including plaintiff's art
works. Subsequently, plaintiff informed defendant that she disapproved of any
canvas prints and transfers of her works. Accordingly, defendant informed the art
retailer of the same, and the retailer removed plaintiff's works from its canvas
lines. The art retailer never sold any of plaintiff's original work, but sold one piece
of canvas transfer prior to being removing plaintiff's work from its canvas lines.
The total profit from that sale was $1.72.
Subsequently, plaintiff sent defendant a letter demanding that defendant (1) cease
and desist from allowing derivative works; (2) produce documents relating to sales
of plaintiff's artworks; and (3) produce documents relating to permission for
derivative works of any of defendant's artist. In response, defendant responded to
plaintiff's letter stating that defendant “[did] not manufacture, sell or condone the
27
manufacture and sale of canvas transfers.” Defendant further stated that it “denies
that it in any way induces, causes or materially contributes to” any canvas
transfers, and the it had no duty to investigate what uses purchasers made of
posters. However, defendant also stated that it “[would] certainly put any
purchaser on notice of Ms. Ryan's concern, if and when, it determines that canvas
transfers are, in fact, being manufactured.” Plaintiff also sent cease and desist
letter to a number of retailers, including the art retailer that had been provided
with plaintiff's works by defendant. The art retailer responded stating that it had
never sold any canvas transfers of plaintiff's artworks.
Plaintiff filed a slew of complaints against both defendant and the art retailer,
including claims of copyright infringement, contributory infringement, unfair
competition, slander, etc. The court granted summary judgment in favor of
defendant and art retailer in all claims, and found that there was only one instance
of copyright infringement, with total damages, if proven, to be in the amount of
$1.72.
Defendant then moved for an award of attorneys' fess under the terms of the
original contract between plaintiff and defendant, and pursuant to 17 U.S.C. § 505.
Plaintiff opposed the motion on the grounds that defendant acted unlawfully, that
her own actions resulted in defendant avoiding liability, and the defendant failed
to meet and confer in an attempt to resolve the issues, pursuant to Civ. L.R. 545(b)(1).
The Court found that in the case at issue, although "prevailing party" was not
defined in the agreement, under the California code, defendant was the prevailing
party because it had prevailed on the contract claim. The Court also found that
defendant had obtained judgment on all the claims alleged against it, and
therefore an award of attorneys' fees was warranted. Additionally, the Court
reviewed all the papers submitted by defendant and found the defendant had met
its burden to show that the hours worked were reasonable and that the requested
rates were similar to prevailing attorney fees for comparable cases. The Court also
noted that defendant had made a good faith attempt to reduce some of the fees
associated with the case. Accordingly, the Court granted defendant's motion for
award of attorneys' fess.
Righthaven, LLC v, Majorwager.com, Inc, --- 2010 WL 4386499 (D.Nev)
Righthaven, LLC, a Nevada corporation, was assigned by Stephens Media LLC.,
ownership of an article titled “March to Book Begins,” an opinion piece discussing
the NCAA Men’s Basketball Tournament. Majorwager.com Inc., posted this same
article on their internet domain, majorwager.com, a website that facilitates online
conversation on sports betting, on the same day that it was published in the Las
Vegas Review Journal. In addition to the “March to Book Begins” article being
posted, Righthaven discovered that at least fourteen additional Righthaven literary
works had been published on the Majorwager website between September 2009
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and March 2010, as a result Righthaven decided to file suit. The defendant’s
response to the suit was a Motion to Dismiss, for the following reasons: Subject
Matter Jurisdiction, Personal Jurisdiction, and Failure to State a Claim.
The first question is does the court have subject matter jurisdiction? The court
establishes that the criteria for district courts to have subject matter jurisdiction
includes original jurisdiction over claims arising under federal laws relating to
copyrights. The defendant did not dispute whether or not an unauthorized copy of
the article was displayed on their website, but claimed that the plaintiff lacked
standing because they did not own the copyright during the time of infringement.
It was a fact that the plaintiff did not own the copyright at the time of the
infringement, however the copyright assignment that was between Plaintiff and
Stephens Media, assigned all exclusive ownership rights to the article which was
expressly inclusive of all previously accrued causes of action related to that article.
As a result the assignment was sufficient to provide Plaintiff standing to sue for
past infringement.
The next question is does the court have personal jurisdiction? The court
determines that in order for personal jurisdiction to apply that first, there must be
personal jurisdiction under the laws of the state where it is asserted and second,
the exercise of jurisdiction must satisfy due process. The ninth circuit employed a
three part test to determine whether the exercise of specific jurisdiction satisfied
the requirements of due process: the defendant had to purposefully avail
themselves of the privilege of conducting activities in the forum; the plaintiff’s
claim had to arise out of that activity; and the exercise of jurisdiction had to be
reasonable. The courts determined that these criteria were met based on the
following: the defendant willfully infringed on the on the copyrights owned by the
plaintiff; the Las Vegas Review Journal was published and distributed in Nevada, as
a result creating standing; and the defendant was unable to satisfy the five factors
that would determine if the exercise of jurisdiction was unreasonable, as a result it
was determined that the court had personal jurisdiction.
Finally the question must be determined did Plaintiff state a claim? The court
establishes that only a short and plain statement of the claim showing that the
pleader is entitled to relief and to give the defendant fair notice of what the claim
is and the grounds upon which it rests.” The complaint sufficiently pleads factual
allegations to sustain a claim, because Plaintiff has sufficiently demonstrated that
they own the copyrights, and the defendant infringed on the copyright by
duplicating Plaintiff’s article and placing it on the defendant’s website.
The Court finds that Plaintiff has pled facts sufficient to sustain a cause of action
and denies the defendant’s motion to dismiss.
Morris v. Atchity, 2010 WL 4181452 (C.D. Cal. Oct. 15, 2010) (Lew, J.).
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In an action for copyright infringement, Defendants moved for summary judgment
as to all claims asserted against Defendant Reid for lack of personal jurisdiction
and for summary judgment or, in the alternative, partial summary judgment as to
all defendants on seven asserted grounds, including: (1) lack of substantial
similarity between Plaintiff’s work and Defendants’ derivative work; (2)
preemption of a breach of implied contract by the Copyright Act; (3) lack of
fraudulent intent or damage resulting from Defendants’ misrepresentation; (4)
lack of evidence supporting Plaintiff’s claim for interference with prospective
Economic Advantage; (5) lack of basis for Plaintiff’s claim for accounting; (6) no
genuine issue of material fact as to copyright ownership of the derivative work;
and (7) no genuine issues of material fact regarding Defendants’ counterclaims for
fraud on the Copyright Office, Declaratory Judgment for non-infringement, and
Defamation.
Granting Defendants’ motion for summary judgment as to all claims against
Defendant Reid, the Court determined there was no genuine issue of material fact
regarding the Court’s personal jurisdiction over Defendant Reid. To exercise
personal jurisdiction over a nonresident, the forum state’s laws must provide such
a basis (i.e., through a state long-arm statute), and such basis must comply with
due process, meaning that the defendant must have sufficient minimum contacts
with the forum state. Specifically, the Court determined that Plaintiff failed to
provide sufficient evidence that Reid, a lifelong resident and domiciliary of the
United Kingdom, had any substantial contacts with California such that he could
reasonably expect to be haled into Court in California. Furthermore, Plaintiff
failed to establish the alternate alleged basis for personal jurisdiction: that Reid
was an alter-ego of the Defendant company Sonic Age.
Addressing each of the seven grounds stated above, the Court found the following:
(1) Reasonable minds might differ as to whether substantial
similarities exist between Defendants’ derivative work and Plaintiff’s
original work with respect to the protectable material within
Plaintiff’s original work. Therefore the Court denied Defendants’
motion for summary judgment as to Plaintiff’s cause of action for
Copyright Infringement.
(2) Genuine issues of material fact remain as to whether Plaintiff’s
state law claim for breach of implied contract is preempted by the
Copyright Act, 17 U.S.C. §301. Specifically, the Court determined
that genuine issues of material fact remain as to whether Plaintiff’s
claim falls within the subject matter of copyright or if, instead, the
claim is based on the submission of an idea to Defendants, which is
not protected by copyright. Further, issues remain regarding
whether Plaintiff’s claim alleges an extra element beyond those
exclusive rights within the general scope of the Copyright Act.
30
(3) Plaintiff failed to provide affirmative evidence to support a
finding that Defendants made certain statements with the intent to
defraud Plaintiff at the time the statements were made. Because the
mere nonperformance of a promise is insufficient to establish intent
to defraud, the Court granted Defendants’ motion for summary
judgment as to Plaintiff’s cause of action for Fraud.
(4) Plaintiff failed to present facts to raise a triable issue of fact
regarding a prospective economic relationship that was intentionally
interfered with by Defendants. Specifically, there was no evidence
that Plaintiff had existing contracts or an existing or probable future
economic relationship with certain third parties. Additionally, the
Court found no evidence that the Defendants intentionally engaged
in actions which interfered with Plaintiff’s alleged economic
relationships. Because no genuine issue of material fact existed, the
Court granted Defendants’ motion for summary judgment on this
cause of action.
(5) Because the right to an accounting depends on the validity of
underlying claims, and because the Court determined that at least
two of Plaintiff’s causes of actions were sufficient to survive summary
judgment, the Court denied Defendants’ motion for summary
judgment on this cause of action.
(6) The remaining grounds for summary judgment and
counterclaims were denied because Defendants did not satisfy their
burden of showing that no genuine issue of material fact existed.
Tenth Circuit Courts
Hermeris, Inc. v. Brandenburg, 2011 WL 231463 (D.Kan. 2011)
Opinion by: JULIE A. ROBINSON
Facts: Plaintiff owns and operates an online document preparation business located at
www.SimpleFilings.com. Defendant ThePlanet.com Internet Services, Inc. hosts, and
profits from, at least three other defendant websites. Plaintiff alleges that ThePlanet had
notice that the defendant websites were infringing and refused to take down the
defendant’s websites.
Discussion: Claim for direct liability is dismissed. There is no factual allegation
supporting a claim for direct liability.
There is a plausible claim for contributory infringement. The complaint alleges that
plaintiffs provided notice to ThePlanet that infringement was occurring and failed to
31
purge the material from the system, thus materially contributing to the websites direct
infringement. If true, this supports the claim.
There is also a plausible claim for vicarious infringement. As the websites host, viewing
the factual inferences in favor of the plaintiff, ThePlanet had the right and ability to take
down the infringing websites.
Shannon's Rainbow LLC. v. Supernova Media, Inc., 2011 WL 320905 (D.Utah 2011)
This case revolves around the parties’ controversy regarding location and timing of
distribution of a jointly created motion picture “Shannon's Rainbow” (hereinafter, the
“Film”). Because an agreement could not be reached, the parties filed these respective
suits in federal court.
Defendants argue that Plaintiffs' claims under RICO fail to state a claim for relief because
Plaintiffs doesn’t allege a “pattern of racketeering activity,” continuity of criminal
activity, or a RICO enterprise. In order to satisfy a RICO claim, a “pattern of
racketeering activity” must be shown by two predicate that amount to a “continuity” of
racketeering activity. The court here found that even though Plaintiffs tried to dissect
one instance of extortion into separate divisible parts in order to meet ‘two predicate
acts’, those acts only constituted a single scheme instead of a continuity of activity and
thus they have failed to establish the requisite continuity to establish a RICO violation.
The court also held that the Plaintiffs did not state any specific facts for which they have
based their allegation of unauthorized copying and thus dismissed that claim.
The court further held because a violation of the exclusive right of distribution requires
an actual dissemination of a copy of the work, Plaintiffs’ claim of the Defendants failing
at their attempt to market the film is insufficient to constitute a violation.
Finally, the court ruled on Defendant’s lack of diversity claim. An LLC is a citizen of
every state in which its members reside. Here, for diversity purposes, Plaintiff Shannon’s
Rainbow Delaware is a citizen of Nevada and New York because of members Di Palma
and Rahr. Defendant Supernova Media, Inc’s Engle and Michelle are related to and live
with Di Palma and thus Shannon’s Rainbow Delaware shared the same citizenship as
Defendant. Thus, the court found that, because diversity jurisdiction requires complete
diversity as to all plaintiffs and defendants, then diversity is lacking.
Eleventh Circuit Courts
TIFFANY (NJ), LLC, v. Liu DONGPING and Does 1-10, 2010 WL 4450451
(U.S.D.C. S.D.Fl. 2010) -- Seitz, Patricia, USDJ.
In this case, Judge Seitz entered a default judgment against a counterfeiter of Tiffany
jewelry designs, who also registered the domain names besttifany.com, joytiffany.com,
32
myetiffany.com, tiffany4sale.org, tiffanybetter.com, tiffanyjewellerybuy.com,
tiffanylike.com and tiffanywooer.com in bad faith.
The counterfeiter did not appear or defend, and the Court allowed service by email and
publication at the website: tiffanytrademarkenforcement.com/dongping.
With a willfulness finding, the Court awarded copyright statutory damages of $30,000
per work for six works, noting its wide discretion in determining the amount of statutory
damages within the given statutory range.
In awarding statutory damages for use of counterfeit trademarks, the Court cited the
copyright case Cable/Home Commc'n Corp. v. Network Prod., Inc., 902 F.2d 829, 852
(11th Cir.1990) for its wide discretion, bounded only by the statutory maxima and
minima. The Court noted Congress’ intent to protect against trademark counterfeiter
who don’t appear or participate via statutory damages, because evidence of a defendant's
profits in such cases is almost impossible to ascertain. The same rational should apply
wherever statutory damages are available, including copyright. The court awarded
statutory damages of (i) $513,000 for trademark counterfeiting and (ii) $80,000 for the
eight domain names, and also entered a permanent injunction.
Dream Custom Homes, Inc. v. Modern Day Const., Inc., 2011 WL 976420 (M.D. Fla.
2011)
This decision was on defendant’s motion for summary judgment. Plaintiff owned
copyright in home floor plans and elevations. They alleged that defendants copied,
distributed or reproduced their copyrighted works. Plaintiff sought injunction, damages
for infringement, and attorney’s fees.
The court begins by noting that summary judgment is appropriate in copyright cases
where: 1) because access has been established, the crucial issue is substantial similarity;
2) there may be substantial similarity with respect to the non-copyrightable elements of
the two works compared; and 3) as to the protectable elements, there is substantial
dissimilarity. Because the work at issue is an architectural work, it is treated as a
compilation of common design ideas, and must be viewed through the lens of
compilation analysis.
In analyzing the motion, the court first notes that the claimed copyright is valid despite
defendant’s assertion that plaintiff has failed to conform to registration formalities. After
rejecting this argument, the court turned to the question of copying. It found that
defendant had access and, because dealing with defendant’s motion, assumed that
plaintiffs could establish substantial similarity. However, the court found that any
similarities were in non-copyrightable elements, so it granted defendant’s motion.
Fodere v. Lorenzo, 2011 WL 465468 (S.D.Fla. 2011)
Opinion by: JAMES L. KING
33
Cross-motion for Summary Judgment in Copyright Infringement based on an
unauthorized use of a photograph taken for marketing purposes. Summary Judgment
granted for the Defendant.
Facts: Plaintiff is a professional photographer and is the sole agent and owner of Omega
Eye Photography, LLC. Defendant, Compacstone USA, Inc., sells marble and quartz for
home installation. Co-Defendant, Lorenzo, was employed as a salesman by
Compacstone.
Plaintiff claims defendant used the photograph in advertising without authorization.
Defendant hired plaintiff to photograph a kitchen featuring defendant’s marble. Plaintiff
and defendant orally agreed that the photos would be used “para publicidad.” Defendant
alleges this translates to “for advertising.” Plaintiff sent Defendants an invoice for the
photographs purchased. Under “Rights Licensed” the invoice states “For Public
Relations, Collateral and Website Usage for Unlimited Times. All photographs are
Copyrights 2009 of Omega Eye, LLC.” Plaintiff saw the photo appear in an
advertisement in a magazine and, via a second invoice, demanded additional payment in
exchange for permission to use the photograph for “Advertising.”
Discussion: There are two issues on summary judgment:
Standing – Plaintiff registered the photograph under her personal name. The license states
that the photograph is the property of Omega Eye, LLC. Defendant argues registration
was improper, and thus there is no standing to bring suit. Court rejects this argument;
there is no legal support for this contention. Additionally, it is not necessary that the
owner’s true name be used at all so long as no innocent persons are misled. There was no
allegation of being mislead.
Copyright Infringement – Issue is whether the use was within the scope of the license. All
parties agree this was an oral contract, which are permissible for non-exclusive licenses.
Defendant’s deposition made it clear plaintiff knew the photographs would be used in
magazines. Plaintiff argues the two invoices are proof that there was no intent to use the
photographs in advertisements. Any modification to an oral contract requires a meeting
of the minds, and there’s no evidence that happened with these invoices.
Home Design Services, Inc. v. Stewart, 2011 WL 7967741 (N.D. Fla. 2011)
Opinion by: RODGERS, M. CASEY
Plaintiff, Home Design Services (HDS), moves for summary judgment on a copyright
infringement suit. Summary judgment is denied because there are still unresolved issues
of material facts.
Facts: HDS is a residential design firm claiming copyright ownership to a house plan
known as HDS-2089. The plan is a split-floor design. President of the plaintiff’s
34
company admits that “the individual components of that plan” are not unique or original,
but plaintiff is claiming the particular arrangement of the floor plan as a whole a
copyrightable architectural work. A copyright registration was obtained in 2000.
Prior to 1995, HDS published artist concepts of the plan in various magazines and
catalogues. In 1995, defendants, the Stewarts, compiled several ideas for a new home and
hired a draftsman to sketch a basic floor plan. Based on that floor plan, defendants built
two homes, one in 1995 and another larger home in 1998. HDS’ president discovered
defendant’s home in 2006 and HDS filed suit on April 1, 2009, claiming one count of
copyright infringement.
Discussion: Several issues of material facts preclude plaintiff’s motion for summary
judgment.
First, there is an issue of copyrightability. Plaintiff’s president admits that not all
elements of the plan are original or unique, including the concept of a split-floor plan.
Second, there is an issue as to proof of factual copying. HDS argues that there was a
reasonable opportunity to infer the defendants viewed the plan through magazines that
were distributed where the defendants reside. Additionally, a house based on the actual
plan was built near where the defendants live. Furthermore, defendants admitted they
looked at magazines and other houses. However, this is not enough, viewing facts most
favorably for the defendants, to prove access as a matter of law. There is no direct
evidence they viewed the plan, and access cannot be inferred based on speculation or
conjecture. (Herzog v. Castle Rock Entm’t, 193 F.3d 1241, 1249 (11th Cir. 1999))
Third, even if access was inferred, the court cannot say they are substantially similar as a
matter of law. HDS lists a host of similarities between the two plans, while defendants
list several small differences. Since there are dissimilarities, how the plaintiff’s plan and
the defendant’s home compare should be left to the jury.
Defendant also claims twelve affirmative defenses. Court goes through each and grants
summary judgment for plaintiff on each, except the third one. Defendant argues that the
statute of limitations bars the plaintiff’s suit. A copyright cause of action accrues “when a
plaintiff knows or, in the exercise of reasonable diligence, should have known about an
infringement.” (Calhoun v. Lillenas Publ’g., 298 F.3d 1228, 1236 (11th Cir. 2002)
Defendants argue, based on deposition testimony of the president, they should have
known more than 3 years before suit was brought because he was travelling in the area.
Vergara Hermosilla v. Coca-Cola Co., 2011 WL 744098 (S.D.Fl. 2011)
Vergara was hired by Coca-Cola to adapt K’naan’s “Wavin’ Flag” to include a Spanish
verse for the World Cup. The song was eventually recorded, including some literal
translation, some new Spanish lyrics, and some original English lyrics. After Vergara did
not get the money he desired, he threatened suit. After a discussion, Vergara sent an
email expressing his concern only that he receive credit as producer and adapter of the
35
Spanish version. Suit was filed, requesting actual and statutory damages, Coca-Cola’s
profits, and permanent injunction.
Coke argues that Vergara assigned his copyright interest to Coke. The Court agrees. The
decision turns on the fact that Vergara’s email expressed only a desire to receive credit,
and that Coke’s responsive email constitutes an acceptance of the essential terms of
Vergara’s offer.
National Association of Boards of Pharmacy v. Board of Regents of the University
System of Georgia, 2011 WL 649951 (11th Cir. 2011)
Opinion by United States Circuit Judge Tjoflat.
On appeal by National Association of Boards of Pharmacy (“NABP”) from the district
court ruling denying its claims for damages and injunctive relief against Board of
Regents of the University System of Georgia (“UGA”). The Circuit Court affirms in part
and vacates and remands in part.
NABP owned the copyright in various standardized examinations, which faculty of UGA
copied for its own review courses. NABP sued UGA seeking an injunction and damages,
but during the pendency of the suit UGA cancelled the review courses and the faculty
member teaching the review course retired. Because the district court thus saw no
continuing violation of federal law it denied NABP’s request for injunctive relief. The
Circuit Court, however, characterized UGA behavior as “voluntary cessation” and
therefore held that NABP’s claim was not moot.
The Circuit Court upheld, however, the lower court’s ruling that UGA, as a state actor,
was immune from NABP’s damages claim. The Copyright and Patent Clause does not
abrogate a State’s sovereign immunity, even under a claim of the Copyright Remedies
Clarification Act. Further, UGA’s “taking” of NABP’s intellectual property rights did
not rise to a due process violation. Thus, UGA did not violate NABP’s Fourteenth
Amendment rights so as to forfeit UGA’s sovereign immunity from the damages claim.
Miller's Ale House, Inc. v. Boynton Carolina Ale House, LLC, 745 F.Supp.2d 1359,
2010 WL 3943550 (S.D. Fla. 2010)
The plaintiff, Miller's Ale House, Inc. (“Miller's”), operated a chain of restaurants in
Florida for over 20 years. The defendant, Boynton Carolina Ale House, LLC (“BCAH”),
opened a restaurant named “Carolina Ale House” in Boynton Beach, Florida. The
“Carolina Ale House” brand is licensed to 13 restaurants across North Carolina, South
Carolina, and Florida. Among other similarities between the two restaurants, BCAH used
floor plans that were similar to Miller’s. As a result, there was confusion amongst
customers regarding the two restaurants.
Plaintiff filed suit alleging copyright infringement of the floor plans, as well as trademark
infringement, trade dress infringement, unfair competition and trademark dilution.
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Miller's argues that BCAH's floor plan is substantially similar to Miller's. Although,
when viewed generally, the two floor plans are similar, a copyright infringement analysis
includes a determination that BCAH's arrangement of the common elements bears a
substantial similarity to Miller's floor plan. In particular, when comparing two
architectural floor plans, minor dissimilarities are more significant than when viewed in
other types of art since there are a limited number of ways to divide up a rectangle into
rooms.
Upon examination of the two plans, the court determined that there were several
differences between each arrangement of design elements, such as the location of the bar
in relation to the entrance, interior seating, bathroom entrances, arrangement of pool
tables and video games, and the outdoor areas.
The court found that, because architectural works are only accorded “thin” protection for
overall arrangement of common elements, the differences between the two plans were
distinct enough to overwhelm the similarities. The court further found that Miller's does
not have a copyright on the idea of a centrally located bar, booth seating on the side of a
restaurant, or restrooms located in the rear. The court thus held that because Miller's
cannot show substantial similarity, copyright infringement cannot be proven.
Law Student Contributors: Sean Flaim, Deb Sengupta, Megan
Wantland, Misty Mirpuri, Rob Weaver and Josh Miller, the
student coordinator
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