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On February 27, 2013, Congress proposed the “Saving High Tech Innovators from Egregious Legal Disputes (SHIELD) Act.” This bill is designed to stem the tide of patent litigation initiated by non-practicing entities, also known as “patent trolls.” A non-practicing entity (“NPE”) generally operates by forming a shell corporation to acquire and hold patents, then litigating against anyone who uses the covered technology without a license. The NPE’s goal is to monetize its patent portfolio through license revenues obtained in connection with patent infringement settlement agreements. According to President Obama, the NPE business model is designed to “leverage and hijack somebody else’s idea and see if [the NPEs] can extort some money out of them.”

Business is booming. Numerous NPEs have come into existence in recent years, initiating hundreds of patent infringement lawsuits. Estimates from 2011 show that NPEs received as much as $29 billion from U.S. companies. At the heart of the NPE business model is the stark reality that defending a patent infringement lawsuit costs hundreds of thousands, and often millions of dollars. Some patent trolls therefore assert dubious claims against accused infringers knowing that most defendants will settle by executing a patent license rather than risk the costs and uncertainty of patent litigation. The SHIELD Act is designed to address this issue by shifting risk back to the NPEs. Its authors hope that shifting enough risk to NPEs who instigate frivolous patent infringement lawsuits will discourage and reduce such meritless lawsuits.Continue Reading The SHIELD Act – Death of the Patent Troll, or Incentive to Infringe?

By Lisa Y. Wang

One usually thinks of a librarian as a calm and lawsuit-free job. However, a librarian in Canada is facing a $3.5-million lawsuit over a personal blog post he wrote three years ago. Dale Askey, an associate librarian at McMaster University, is being sued by Edwin Mellen Press Ltd., an international academic publishing company, who filed two lawsuits last June.

Mellen Press alleges that Askey accused them of “accepting second class authors” and urging “university libraries not to buy (their) titles because they are of poor quality and poor scholarship.” While this lawsuit will be heard in Canadian court under Canadian law, bloggers have been threatened with lawsuits in the US for articles they’ve written and opinions they’ve expressed. This brings up a whole slew of First Amendment issues and the SLAPP statute. 

If this lawsuit were filed in the United States, it might be considered a “SLAPP” (Strategic Lawsuit Against Public Participation) lawsuit. SLAPP refers to a lawsuit or legal threat intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition. Typically SLAPP lawsuits target ordinary citizens who cannot afford to pay the hefty legal fees it takes to defend such a lawsuit. They are a method used to intimate others from participating in debate and free speech and can be a strong method of silencing critics. SLAPP lawsuits often come in the form of a lawsuit claiming defamation or libel. The defining characteristic of a SLAPP lawsuit is that the plaintiff usually loses the case. However, a typical SLAPP lawsuit does not get to the trial phase as it is method used to chill the speech of citizens.Continue Reading Bloggers’ Rights and anti-SLAPP

By Scott Hervey

This isn’t the first time a songwriter has used a celebrity’s name in a song, but it may be the first time a celebrity sued over such use. Musical writer and performer Armando Perez, well known by his rap name Pitbull, wrote and recorded the song “Give me Everything.” Approximately one third of the way through the song, Lohan’s name is used as follows: “So, I’m tiptoen’, to keep floin’ / I got it locked up like Lindsay Lohan”. Lohan, who did not grant consent to the use of her name in the song, sued Pitbull and his record label, Sony Music Entertainment, for violating Sections 50 and 51 of the New York Civil Rights Law, for unjust enrichment and for intentional infliction of emotional distress. The court dismissed Lohan’s complaint on the grounds that it fails to state a claim. While most are chalking this up as another legal loss for the challenged Lindsay Lohan, this case is an interesting commentary on the reach of New York’s right of publicity statutes.

Although New York does not recognize a common-law right of privacy, the State sought to provide a limited statutory right of privacy when it enacted Sections 50 and 51 of the New York Civil rights Law. Section 50 makes it a misdemeanor for any person to “use… for advertising purposes, or for the purposes of trade, the name, portrait or picture of any living person without first having obtained the written consent of such person.” Section 50 provides:

Any person whose name, portrait, picture or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained as provided [in Section 50] may maintain an equitable action in the supreme court of this state against the person, firm or corporation so using his name, portrait, picture or voice, to prevent and restrain the use thereof; and may also sue and recover damages for any injuries sustained by reason of such use and if the defendant shall have knowingly used such person’s name, portrait, picture or voice in such manner as is forbidden or declared to be unlawful by section fifty of this article, the jury, in its discretion, may award exemplary damages.Continue Reading Lindsay Lohan Finds Herself on the Wrong Side of New York’s Right Of Publicity Statute

By James Kachmar

Under the California trade secret statute, the court may award attorneys’ fees where there has been a willful and malicious misappropriation of plaintiff’s trade secrets or when a trade secret misappropriation claim is brought in bad faith.  (See Civil Code §3426.4.)  In Weco Supply Company, Inc. v. Sherwin-Williams Company, 2013 U.S. Dist. LEXIS 1572 (January 3, 2013), a district court in the Eastern District of California, revisited the issue of what constitutes “bad faith” for purposes of awarding attorneys’ fees in trade secret cases.

Weco and Sherwin-Williams had entered into a “jobber” agreement by which Weco would distribute Sherwin-Williams paint products.  Weco alleged that Sherwin-Williams breached the jobber agreement by discontinuing certain of its product lines and then dealt directly with some of Weco’s end customers.  In addition to breach of contract claims, Weco asserted a claim for trade secret misappropriation against Sherwin-Williams.  Weco argued that its pricing arrangements with its end users were trade secret and were misappropriated by Sherwin-Williams to deal directly with these customers.  The court eventually granted Sherwin-Williams summary judgment against Weco as to its trade secret misappropriation claim and found that “the undisputed facts showed that Weco’s pricing to end users and cost of acquisition were not trade secrets” under California law.  Thus, the court found there was no misappropriation and dismissed Weco’s trade secret misappropriation claim.

Continue Reading “Animosity” Is Not Bad Faith For Attorneys’ Fees In Trade Secret Cases

By Audrey A. Millemann

There is an inherent conflict between the antitrust laws and the patent laws.  The antitrust laws protect competition and benefit consumers, in part, by prohibiting monopolies.  The patent laws promote innovation and reward inventors, in part, by awarding the patent owner a limited monopoly which inhibits competition.

Sometimes the antitrust laws and the patent laws intersect.  A defendant in a patent infringement suit may assert an antitrust claim as an affirmative defense or as a counterclaim.  One particular type of antitrust claim asserted by a patent owner’s competitors is a “Walker Process claim.”  This is a claim for monopolization under §2 of the Sherman Act based on the patent owner’s fraudulent procurement of a patent.  The claim arises from the Supreme Court’s decision in Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), in which the Court held that a plaintiff could state a claim for antitrust liability if the plaintiff could show that: (1) the defendant procured a patent by knowing and willful fraud on the United States Patent and Trademark Office (or by maintaining and enforcing a patent knowing of the fraudulent manner in which it was obtained); and (2) the elements required for a claim under §2 of the Sherman Act were met.

Continue Reading Antitrust and Patent Laws: Separate Standing