The IP Law Blog

Focusing on legal trends in data security, cloud computing, data privacy, and anything E

Federal Regulatory Authority and Power of the Press Release

Posted in Legal Info

Among the unstated powers of the federal (and sometimes state) government that few litigation targets think about is the power of the press release. Prosecutors, whether at the agency level or above (for example, at the state Attorney General’s office or at the Federal Department of Justice), have a hidden tool in their arsenal. It is so simple that many persons and corporations often fail to take it into account in their defense strategy.

Federal regulatory agencies such as the SEC, FCC and FTC, as well as state agencies, have engaged in large-scale public relations campaigns that often seem to undermine the innocent until proven guilty ethos under which they as governmental actors, in particular, labor.

For example, in a recent action by the FTC, the agency conducted a sweep of various infomercial producers which it deemed to be producing false or misleading advertisements. Before even the first court hearing and, in fact, on the same day the complaint was issued, the FTC conducted a carefully-orchestrated press conference to tout their latest “pro consumer” lawsuit. The regulatory agencies usually come up with a fancy “handle” by which they identify their work. These lawsuits often have military-style monikers such as “Operation Clean Sweep,” or “Operation Restore Trust.”

In many cases, a regulatory agency will sue a number of targets, be they advertisers, hedge funds, banks, etc. all at once in coordinated actions. The trouble with this strategy is that while there may be several bad actors in the group, everyone is tarred with the same devastating brush. This is trial by the court of public opinion. The “sweep” is now invariably accompanied by a high-profile press conference, website release and press releases. To even the casual observer, it should be obvious that this strategy is aimed more at making the reputation of the individual agency enforcer than in actually doing justice. While some private plaintiffs like to use press releases as a litigation strategy (usually a bad one), this issue is far worse when the government is a party-plaintiff. Continue Reading

The Duke and Duke Duke It Out In Trademark Rowe

Posted in Trademark Law

Clearly there is no love lost between John Wayne Enterprises, LLC (“JWE”), the entity owned by John Wayne’s heirs which controls the intellectual property related to of John Wayne, and Duke University.   Both have have been locked in battle over various trademarks incorporating the word DUKE.  The most recent skirmish involves a trademark application filed by John Wayne Enterprises, LLC (“JWE”)  for the following design mark for alcoholic beverages, excluding beer:

Duke University requested and was granted  an extension of time to potentially opposition to the registration of this mark.    Previously, Duke University opposed JWE’s’ application to register DUKE for restaurant services, claiming that the mark is likely to cause confusion with Duke University’s other DUKE trademarks and/or dilute Duke University’s famous trademarks. Specifically, Duke University alleged that:  “[JWE] seeks to register a mark that is substantially similar to [the University’s] famous mark DUKE, and that moreover is likely to be abbreviated simply as DUKE and expressed orally simply  as DUKE, for goods that are closely related to goods and services with which [the University’s] DUKE Marks are used…”

It appears that this time, JWE took John Wayne’s quote  “You tangle with me, I’ll have your hide.” literally and didn’t wait and see whether the University actually filed an opposition.  JEW filed a complaint for declaratory relief in the United States District Court for the Central District of California, requesting the court to declare that the above mark does not infringe or dilute any of the DUKE trademarks owned by Duke University.  In its complaint it alleges that “Duke University believes that products bearing John Wayne’s world renowned image and signature…will somehow be confused with being associated with Duke University.” Further, JWE alleges that “in light of the multiple Oppositions and Cancellation proceedings Duke University has filed against JWE and the claims made therein, JEW believes Duke University contends that JEW’s [registration and use of its marks] or any other mark that includes the term DUKE are likely to cause confusion with [the marks owned by Duke University] and intends to sue JWE for trademark infringement, notwithstanding that JWE’s use is directly associated with and expressly linked to John Wayne.” Continue Reading

Funk, Copyrights, and Collecting Judgments

Posted in Copyright Law

Litigants know that obtaining a judgment against an adversary is only half the battle.  Sometimes the efforts a litigant must expend to collect on that judgment are just as significant, if not more so, than obtaining the judgment.  In looking for assets to satisfy a judgment, litigants are reminded that a defendant’s intellectual property, including any copyrights, may be subject to execution to satisfy an unpaid judgment. This issue was recently explored in a Ninth Circuit case titled, Hendricks & Lewis PLLC v. George Clinton (the funk music superstar).

Clinton was a pioneer in funk music starring in bands such as Funkadelic and Parliament.  During the last ten years, however, he racked up legal fees with Hendricks & Lewis in excess of $3 million.  Hendricks & Lewis obtained an arbitration award in excess of $1.6 million that was later confirmed as a judgment against Clinton.

After receiving only a portion of the outstanding judgment through various collection methods, Hendricks & Lewis asked a U.S. District Court to appoint a receiver who would then attempt to sell Clinton’s copyrights in his various music to help satisfy the judgment.  The District Court agreed and appointed a receiver to do so.  Clinton then appealed to the Ninth Circuit.

One additional set of facts that is crucial to the outcome of this case was the history of Clinton’s copyrights in his music.  In July 1975, Clinton, through his production company, Thang, Inc., entered into a recording contract with Warner Bros. Records in which he agreed to make master recordings of his performances with Funkadelic.  The agreement made clear that Warner Bros. was to own in perpetuity all rights in the recordings and that neither Thang nor Clinton would have any rights.  This included an acknowledgment that Warner Bros. owned the copyrights in the recordings.  Clinton signed a similar agreement again with Warner Bros. in 1979.  Later, Clinton and Warner Bros. had various disputes and in 1982 entered into a settlement agreement under which Warner Bros. agreed to relinquish its ownership, including its copyrights, in the recordings to Clinton. In 2005, a U.S. District Court in California recognized that Clinton was the sole owner of the copyrights for the recordings.

On appeal, Clinton argued that: (1) his copyrights were not subject to execution to satisfy a judgment; and (2) even if they were, he was entitled to protection under section 201(e) of the Copyright Act which forbids the “involuntary transfer” of a copyright.

The Ninth Circuit began by recognizing that judgment collection proceedings are governed under state law.  Washington law provides that: “All property, real and personal, of the judgment debtor that is not exempted by law is liable to execution.”  Although the Ninth Circuit could not find any cases that held that a copyright was subject to execution, the U.S. Supreme Court had long ago held that a judgment debtor’s interest in a patent could be assigned to satisfy a judgment.  The Ninth Circuit reasoned “that where copyright case law is lacking, ‘it is appropriate to look for guidance to patent law ‘because of the historic kinship between patent law and copyright right law.’’”  The Court also found it relevant that it had previously held in a case arising out of California, in Office Depot, Inc. v. Zuccarini, 596 F.3d 696, that a judgment debtor’s internet domain name could also be subject to execution. Continue Reading

Business Method Patents: Murkier Water

Posted in Patent Law

The long-awaited decision by the United States Supreme Court on business method patents was issued on June 19, 2014.  Unfortunately, the decision raised more questions than it answered.  The expectation was that the Supreme Court would clearly explain the difference between unpatentable abstract ideas and patentable software, including business methods.  Instead, the Court issued a very narrow decision with broad, but uncertain ramifications.  The Court applied a test it has previously relied upon, striking down all of the patents in the case and expressly stating that it was not opining on the patentability of software or business methods in general.

The case is Alice Corporation Pty. Ltd. v. CLS Bank International, 2014 U.S. Lexis 4303 (U.S. Supreme Court, June 19, 2014). Alice Corporation’s patents were directed to a computer-implemented process of minimizing “settlement risk” – the risk to a party in a financial transaction that the other party would not perform the transaction, by creating an intermediary using “shadow” financial records of both parties.  The claims covered the computer system to perform the process, the computerized method itself, and a computer-readable medium with the instructions to perform the method.

Alice Corporation had sued CLS Bank for patent infringement.  The district court had granted summary judgment for CLS Bank on the grounds that all of the claims were not eligible for patent protection as they were directed to an abstract idea.  A panel of the Federal Circuit Court of Appeals had reversed the district court, but then, in an en banc hearing, affirmed the district court in a set of multiple opinions.  A plurality of the Federal Circuit found all of Alice Corporation’s claims patent-ineligible, relying on the Supreme Court’s 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012).

Continue Reading

Google’s Android: Was It Truly The First Generation?

Posted in Copyright Law, Patent Law, Trademark Law

transparentWith the prevalence of smartphones in today’s society, one cannot help but to have at least heard of Google’s Android operating system.  This operating system came about with the intent of competing with the superpower known as Apple’s iPhone.  Of course, when Google released this platform for the first time in 2007, the Android operating system was perceived to be the first generation.  Recently, however, an Illinois man asserted that perhaps Google’s Android was not the first generation.  Well, not quite, but he did assert that Google infringed his federally registered trademark, “Android Data.”

During the Dot.com Boom of the late 1990s Erich Specht decided he wanted to get into the lucrative software business.  As such, in 1998, he founded a suite of e-commerce software that became known as Android Data Corporation (“ADC”).  Through his entity, he intended to license software to his would-be clients, and provided website hosting and computer consulting services.   Two years after the company’s inception, Mr. Specht applied to the United States Patent and Trademark Office for federal registration of the “Android Data” mark.  The mark was registered in 2002.

Unfortunately for Mr. Specht, by the end of 2002, his company had hit the end of the road.  It ceased all major operations, lost the bulk of its clients, and moved its headquarters into Mr. Specht’s home.  Mr. Specht then caused ADC to transfer the Android Data mark to his wholly-owned company, The Android’s Dungeon Incorporated (“ADI”).  For the remainder of the year, Mr. Specht attempted to sell ADC’s assets, including the mark, but was unable to find a willing buyer.  He kept the ADC website running for a short period thereafter, but eventually allowed the registration for the company URL to lapse. Continue Reading

Trademark Office Tackles Redskins

Posted in Trademark Law

The 2013 NFL season was not kind to the Washington Redskins, and after winning only 3 games and losing 13, there are many in the Washington Redskins organization who might have wanted to hide behind a new name.  Now they might have to.

The USPTO officially cancelled the Washington Redskins trademark registration stating that the team’s name is offensive to Native Americans.  Although it is unusual for the trademark office to take such action, this move is consistent with the Trademark Manual of Examining Procedure, Section 1203.01, as well as Section 2(a) of the Lanham Act, which provide that trademarks which disparage or belittle any group are not permitted to be registered under federal law.

Although the cancellation of a federal trademark registration does not mean that the Washington Redskins must stop using their name, cancellation of their trademark might significantly reduce the overall value of the team.  A significant source of revenue for most professional sports teams comes from the sale of a variety of licensed products bearing the team name and logo.  Ownership of a valid and enforceable trademark registration in connection with this name and logo helps a sports team to control this intellectual property, license it, and otherwise exclude other parties from profiting through unlicensed use of the marks.  Cancellation of the federal registration will remove a significant number of enforcement tools available to the Washington Redskins, rendering it potentially more difficult to exclude others from using their marks.

Periodically the Trademark Office receives applications for registration, or complaints about an already registered mark, which contain “immoral, deceptive or scandalous matter” or is disparaging to “people, institutions, beliefs, or national symbols.”  Although it is a somewhat rarely cited basis for the rejection or cancellation of a trademark, the Washington Redskins join a dubious list of marks that have run afoul of this provision.  For example, in 2012, the Court of Appeal for the Federal Circuit affirmed the Trademark Office’s rejection of a trademark application covering the rather graphic name of a rooster shaped lollipop product, on the grounds that the name affixed to this particular product was “immoral or scandalous.”

Yet in a different case, the Old Glory Condom Corporation was granted a federal trademark registration in connection with American flag-adorned condom packages.  The apparent discrepancy between this outcome and the Redskins or lollipops highlights the seemingly impossible task faced by the Trademark Office – to discern what type of mark might be “immoral or scandalous” or otherwise offensive to members of the public, while considering the fact that what is vulgar to one person often is not in the eyes of another.

In light of the significant number of protestations received from Native American communities across the country, and a growing public concern about the use of a racial slur such as “Redskins” for the name of a professional sports team, the Trademark Office’s decision in this case likely was easier than debating about lollipops or condoms.  Now that they have tackled the Redskins, perhaps the Trademark Office will knock Chief Wahoo of the Cleveland Indians out of the park.

“Buckyballs” and The Perils of Challenging Federal Powers Of Advertising Regulation

Posted in Legal Info

As someone who has litigated extensively against federal regulators on advertising issues, I have first-hand knowledge of how difficult it is to prevail in a case brought by the feds. For example, the FTC’s “win percentage” is astonishing; some have rated it over 99% of all cases brought. It is fair to say that the deck is stacked against the target of any such litigation.

Typically, in order to prevail against a case brought by a federal regulator, it takes deep pockets and patience. The deck is stacked. Not only does the federal government, including regulators such as the FTC, have the power to freeze assets on a pretrial basis – thereby potentially depriving their targets of the funds to right to counsel – but the legal standards limiting the FTC’s powers are significantly lower than the standards for other non-government civil litigants. For example, the standard for the FTC to obtain a civil preliminary injunction is lower than that used for other federal litigants. For a more detailed discussion of the history and background of the FTC’s powers and the lax injunction standards it enjoys, see http://anantitrust.wordpress.com/2014/04/09/the-ftc-at-100-now-doj-jr/.

Although the linked article, directly above, deals with the FTC’s considerable antitrust powers under section 13(b) of the FTC Act, its powers under Section 5 of the FTC Act (covering nebulous and elastically worded “unfair or deceptive acts or practices”) are no less. Additionally, government “enforcers” acting under Section 5 often trumpet the filing of a lawsuit in public PR releases, which alone is often enough to put a target out of business. The take-away is that advertisers and manufacturers need to be careful when making advertising claims because if the federal regulators decide to target you or your company, there is relatively little that can be done without deep pocketbooks and the will to take on a massive and powerful bureaucracy that has the legal power to inflict crippling litigation costs — win or lose. Continue Reading

Supreme Court Says Raging Bull Copyright Case To Go Another Round

Posted in Copyright Law

In one corner, Paula Petrella, the daughter of Frank Petrella, co-author of the 1963 Raging Bull screenplays and book.  In the other corner, MGM, the owner of the copyright in the critically acclaimed motion picture Raging Bull, based on the life of boxing champion Jake LaMotta.   At issue, a 2009 copyright infringement suit against MGM in which Petrella alleged that MGM violated and continued to violate her copyright in the 1963 screenplay by using, producing, and distributing the Raging Bull motion picture.  MGM, landed two very solid blows in both the District Court of the Central District of California and at the 9th Circuit;  MGM was able to have Petrella’s case dismissed on the equitable doctrine of laches.  However, the Supreme Court decided that Petrella could go another round.

After retiring from boxing, Jake LaMotta worked with Frank Petrella to tell his life story.  Their efforts resulted in two screenplays, one registered in 1963, the other in 1973, and a book, registered in 1970.  In 1976, Frank Petrella and LaMotta assigned their rights in the three works, including renewal rights, to Chartoff-Winkler Productions, Inc. Two years later, an MGM subsidiary, United Artists, acquired the motion picture rights to the book and both screenplays.  In 1980, MGM released the film Raging Bull.

 

A year after the release of the film, Frank Petrella died.  Works registered under the pre-1978 regime (such as the 1963 screenplay) enjoyed an initial 28-year period of protection followed by a renewal period of up to 67 years.  Congress provided that the author’s heirs inherit the renewal rights.  Since Frank’s death occurred during the initial terms of the copyrights in the screenplays and book, his renewal rights reverted to his daughter, who could renew the copyrights unburdened by Frank’s assignment of the renewal right to Chartoff-Winkler.  Paula Petrella renewed the copyright in the 1963 screenplay in 1991.  (The copyrights in the other screenplay and book were not timely renewed.)  In 1998, Petrella’s attorney informed MGM that Petrella was the owner of the copyright in the 1963 screenplay and that MGM’s exploitation of any derivative work, including the Raging Bull motion picture,  infringed her copyright.  For two years, Petrella and MGM took jabs at each other by exchanging letters in which MGM denied the validity of the infringement claims and Petrella repeatedly threatened to take legal action. Continue Reading

Best of Luck to California Chrome!

Posted in Patent Law, Trademark Law

Let me start with a disclaimer.  This column is not really about intellectual property.  It’s about the unexpected – what happens when people stick to their principles and challenge the way it’s always been done.  Actually, this column is about a horse.  (But I’ll say something about intellectual property along the way.)

I have a second disclaimer.  I do not like horseracing.  It is physically stressful on the horses (who are mostly two and three–year olds) and they frequently get injured.  It is also a sport that often treats horses as disposable commodities; many racehorses are sent to slaughter after failed careers, although that is changing.  But this is a story with so much goodness, it has to be told.

First, the horse.  He is California Chrome.  He’s a three-year-old thoroughbred racehorse.  He now has a large fan club of “chromies” on social media everywhere.  The press calls him the Cinderella horse and the Sacramento Bee’s cartoonist Tom Meyer even portrayed him as a commencement speaker in Tuesday’s paper.  The press didn’t call him anything until he won the Kentucky Derby, the first leg of the Triple Crown, on May 3.  He was definitely under the radar, born and raised in California and starting his racing career here, in a sport dominated by Kentucky-bred horses.  Then there were those who said he couldn’t win the Preakness Stakes, the second leg of the Triple Crown.  On May 17, he won that one too, against a field of mostly fresh horses (horses who had not raced in the Kentucky Derby two weeks earlier and had had longer times to recuperate).

California Chrome is a chestnut colt with a white blaze and four white stockings.  Chestnut is a color like a shiny new copper penny.  The white markings are called “chrome” in horseracing.  His name was picked by a waitress out of several choices provided by the owners.

California Chrome was born in 2011 in Coalinga, California.  California Chrome’s sire (father) was Lucky Pulpit, who won some races in California.  His dam (mother) was Love The Chase, who won one of the six races she ran.  California Chrome was her first foal.

Trainers of other horses have observed that California Chrome has an easy-going personality, doesn’t get overly anxious going into the starting gate, and knows how to control his speed.  I could go on and on about this horse (or any horse for that matter), but I’ll move on. Continue Reading

Raging Bull Revisited – Copyright Infringement and the Laches Defense

Posted in Copyright Law

This column addressed the Ninth Circuit’s decision in the case Petrella v. Metro-Goldwyn-Mayer, Inc., et al., approximately 18 months ago.  The Ninth Circuit held that the equitable defense of laches could be asserted to bar a claim for copyright infringement even if it was filed within the three-year statute of limitations.  As the column pointed out at that time, Justice Fletcher concurred in the opinion only because that it was consistent with prior Ninth Circuit precedent but pointed out that there had been a split among the various circuits as to whether this was a proper result.  Earlier this week, the U.S. Supreme Court considered this circuit split and found that the Ninth Circuit erred in allowing the defense of laches to bar a claim for infringement that was brought within the three year statute of limitations.

A short recap of the facts of the case are as follows:  Jake LaMotta retired from boxing and with his friend, Frank Petrella, worked together to write a book and two screen plays concerning LaMotta’s life.  The works were registered with the U.S. Copyright Office.  One screen play in 1963, a book in 1970 and another screen play in 1973.  In 1976, Frank Petrella and LaMotta assigned their rights in the three works to a production company, which subsequently assigned the motion picture rights to MGM in 1978.   MGM released “Raging Bull” in 1980.

Mr. Petrella passed away in 1981 and his copyright renewal rights passed to his daughter Paula.  (Note: When an author dies prior to the beginning of a copyright renewal period, his successors get his or her renewal rights even if the author previously assigned the rights.)  Ms. Petrella filed a renewal application for the 1963 screen play in 1991.  She later retained an attorney who contacted MGM and others between 1998-2000 to notify them of Ms. Petrella’s copyright interest in the 1963 screen play and claiming that their exploitation of derivative works, including the motion picture Raging Bull, constituted infringement of her rights.  MGM responded by denying that it infringed on any of Ms. Petrella’s rights.  Ms. Petrella then waited almost a decade before filing suit against MGM and others in 2009.  Prior to trial, the district court granted summary judgment in the defendant’s favor on the basis of the doctrine of laches.  This was despite the fact that plaintiff had alleged that MGM had continued to infringe on her rights within the three year statute of limitation set forth in section 17 U.S.C. §507(b).  The Ninth Circuit affirmed the judgment based on laches in 2012 and plaintiff appealed that decision to the U.S. Supreme Court. Continue Reading