While a U.S. patent provides the patent owner with a monopoly to prevent others from “making, using, offering for sale, or selling the invention throughout the United States,” there are significant limits to the extraterritorial application of U.S. Patent law.  The U.S. Supreme Court, however, just found that damages for one form of patent infringement extend not only to lost U.S. profits, but also to lost foreign profits.  In what is seen as a big win for patent owners, the Court, in a 7-2 decision in WesternGeco v. Ion Geophysical, ruled patent owners may recover lost foreign profits for patent infringement under 35 U.S.C. §271(f)(2).

Section 271(f) addresses U.S. patent infringement resulting from exporting components of an invention for assembly abroad.   The subsection at issue in WesternGeco, 35 U.S.C. §271(f)(2), specifically “addresses the act of exporting components that are specially adapted for an invention,” stating “[w]hoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”

When patent infringement is proven, 35 U.S.C. §284 provides for damages “adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer.”   The question in WesternGeco was whether those damages for infringement of a U.S. patent (not a foreign patent) extend to lost foreign profits arising from assembled foreign products that are used abroad when the infringement claim arises merely from exporting specially-adapted components of the invention.  Even though the foreign uses of the invention cannot infringe a U.S. patent, the Supreme Court found that lost foreign profits are recoverable for infringement under §271(f)(2).

In reaching its decision, the Court looked to whether extraterritorial application of the relevant statutes is permissible.  While there is a presumption against extraterritorial application of U.S. statutes, there is a two-step framework for deciding whether extraterritorial application is permissible.  “The first step asks ‘whether the presumption against extraterritoriality has been rebutted,’” which requires a “clear indication of an extraterritorial application.”  The second step asks “whether the case involves a domestic application of the statute,” which requires courts to identify the statute’s focus and whether “the conduct relevant to that focus occurred in the United States territory.”  Further, when “the statutory provision works in tandem with other provisions, it must be assessed in concert with those other provisions.  Otherwise, it would be impossible to accurately determine whether the application of the statue in the case is a ‘domestic application.’”

The court exercised its discretion to begin with step two of this framework, and in this case, that required assessment of both 35 U.S.C. §284 and §271(f)(2) because they work in tandem.  The Court found the focus of the damages statute, 35 U.S.C. §284, is “the infringement” and the “overriding purpose” of the statute is to “affor[d] patent owners complete compensation for infringements.”  The Court then turned to §271(f)(2) and found it “focuses on domestic conduct”—“the domestic act of ‘suppl[ying] in or from the United States.”  Therefore, the Court determined the relevant conduct in this case was domestic, and  that awarding lost foreign profits as damages was a permissible domestic application of §284.

In dissent, Justice Gorsuch, joined by Justice Breyer, raised the point that the majority “does not explain why ‘damages adequate to compensate for the infringement should include damages for harm from noninfringing [foreign] uses.’”  Justice Gorsuch also warns that by permitting damages of this sort, it effectively allows U.S. patent owners to extend their monopolies to foreign markets, which “in turn, would invite other countries to use their own patent laws and courts to assert control over our economy.” Finally, he pointed out that WesternGeco was seeking lost profits for uses of its invention beyond the U.S. borders, which rather than just completely compensating for infringement “puts the patent owner in a better position than it was before by allowing it to demand monopoly rents outside the United States as well as within.”

While the Court indicated it was limiting its holding to damages under 35 U.S.C. §271(f)(2), it remains to be seen how far it will ultimately reach.  In a footnote, the Court did note it was not addressing “the extent to which other doctrines, such as proximate cause, could limit or preclude damages in particular cases.”

Often writers base characters on complete fiction, drawing from their imagination to build a character’s various facets.  However, on certain occasions a writer may base a character on a living person.  Sometimes such a portrayal is factual and other times it may be a combination of fact and fiction.  Such was the case, claimed legendary actress Olivia de Havilland, in her lawsuit against FX Networks over her portrayal in the FX docudrama Feud: Bette and Joan.

Feud told the tale of the infamous silver screen ongoing battle between Bette Davis and Joan Crawford.  De Havilland claimed that Catherine Zeta-Jones’s portrayal of her in the show (which lasted all of 17 minutes) violated her right of publicity because she did not give the creators of Feud permission to use her name or identity.  Additionally, de Havilland also claimed that FX portrayed her in a false light by taking certain creative liberties with the story (namely, the inclusion of a fictitious interview and the de Havilland character’s reference to her sister as a “bitch” when in fact the term she actually used was “dragon lady”).

At the trial court, FX filed a motion to strike the complaint based on California’s anti-SLAPP statute.  The trial court denied FX’s motion.  The trial court’s ruling presented a Catch-22 for those choosing to portray real persons in creative works.  If the portrayal is done accurately and realistically (and without permission) this is grounds for a right of publicity lawsuit; if the portrayal is more creative or entirely fictitious, this could be grounds for a false light claim if the person portrayed doesn’t like the portrayal.

FX appealed to the California Court of Appeals.  In a lengthy opinion, the court reverses the trial court’s decision and dismissed de Havilland’s case.  By all means, the opinion is a clear endorsement of the First Amendment rights of television producers (and other creatives).

The First Amendment Trumps de Havilland’s Right of Publicity.

The court doesn’t answer the question whether a docudrama is a product or merchandise within the meaning of Civil Code section 3344.  Rather, the court assumes “for argument’s sake that a television program is a ‘product, merchandise, or good’ and that Zeta-Jones’s portrayal of de Havilland constitutes a ‘use’ of de Havilland’s name or likeness within the scope of both the right of publicity statute and the misappropriation tort.”  Feud, the court notes, “is speech that is fully protected by the First Amendment, which safeguards the storytellers and artists who take the raw materials of life — including the stories of real individuals, ordinary or extraordinary — and transform them into art, be it articles, books, movies, or plays.”  The fact that FX did not purchase or otherwise procure de Havilland’s “rights” to her name or likeness did not change the court’s analysis.  The court stated that film and television producers may enter into rights agreements with individuals for a variety of reasons, however, “the First Amendment simply does not require such acquisition agreements.”

De Havilland Did Not Show That She Would Likely Prevail on Her False Light Claim.

A false light claim is a type of invasion of privacy, based on publicity that places a person in the public eye in a false light that would be highly offensive to a reasonable person, and where the defendant knew or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the aggrieved person would be placed.  A false light claim is equivalent to a libel claim, and its requirements are the same as a libel claim, including proof of malice.  In order to prevail on her claim, de Havilland had to demonstrate that FX broadcast statements that were (1) assertions of fact, (2) actually false or create a false impression about her, (3) highly offensive to a reasonable person or defamatory, and (4) made with actual malice.

First, the court questioned whether a reasonable viewer would interpret Feud as entirely factual. The court noted that “[v]iewers are generally familiar with dramatized, fact-based movies and miniseries in which scenes, conversations, and even characters are fictionalized and imagined.”  Next, the court concluded that Feud’s depiction of de Havilland is not defamatory nor would it highly offend a reasonable person.  Granting an interview at the Academy Awards, the court noted, is not conduct that would cause offense to reasonable persons.  Further, the court found the producer’s substitution of the word “bitch” for “dragon lady” in a statement actually made by de Havilland was an un-actionable substantial truth – a statement that would not have a different effect on the mind of the reader from that which the truth would have produced.

Lastly, because de Havilland is a public figure, she had to show that the statements made by FX were made with actual malice.  This means more than showing that the statements were not true.  Fiction is by definition untrue and “[p]ublishing a fictitious work about a real person cannot mean the author, by virtue of writing fiction, has acted with actual malice.”  Rather, the court said, “de Havilland must demonstrate that FX either deliberately cast her statements in an equivocal fashion in the hope of insinuating a defamatory import to the [viewer], or that [FX] knew or acted in reckless disregard of whether its words would be interpreted by the average [viewer] as defamatory statements of fact.”  The court concluded that de Havilland would be unable to meet this burden.

In dismissing de Havilland’s case, the Appeals court acknowledged the Catch-22 the trial court’s decision created for producers and other creatives and found it inconsistent with the First Amendment.  The right of publicity does not give celebrities the “right to control the [their] image by censoring disagreeable portrayals.”

But the show isn’t over yet.  De Havilland filed a petition with the California Supreme Court to reverse the decision by the Appeals Court and allow her case to proceed to trial.  De Havilland claimed that the Court of Appeals misapplied the balancing test between the First Amendment and the right of publicity formulated by the Supreme Court in the 2001 case of Comedy III Prods., Inc. v. Gary Saderup, Inc.  While it’s uncertain whether the Supreme Court will agree to hear the matter, if it does, a ruling in de Havilland’s favor could be very disruptive for producers who wish to create a work of fiction based on true events and portraying real persons.

Today’s real estate industry relies heavily on the use of websites displaying photographs of properties for sale to entice buyers.  Many of the photographs on these sites are taken by professional photographers who license the use of their photos and retain the copyrights to them.  In Stevens v. CoreLogic, Inc. (decided June 20, 2018), the Ninth Circuit was faced with the question of whether these photographers can maintain an action for copyright infringement against a company whose software apparently “scrubbed” metadata identifying the copyright holders of photographs on various real estate websites.

The plaintiffs in the CoreLogic case were photographers who were hired by various real estate agents to take digital photos of homes for sale.  These photos would then be shown on the real estate agent’s websites and other sites to attract potential buyers for these properties.  The digital photographs would contain metadata, which although invisible to the average user, contained information that could help identify the author of the photograph as well as potential copyright ownership information.  Copyright law, specifically 17 U.S.C. § 1202(b) ,restricts “the removal or alteration of copyright management information (“CMI”) – information,” such as the title, the author, the copyright owner and other identifying information, from a copyrighted work.

CoreLogic develops and provides software to the real estate industry, primarily multiple listing services also known as MLSs.  Because digital photos can entail large file sizes, CoreLogic’s software programs would “downsize” photos, which would include removing metadata from particular images.  In May 2014, the Plaintiffs sued CoreLogic claiming that its software, by removing this metadata, constituted copyright infringement.  (It appears that shortly after the lawsuit was filed, CoreLogic modified its software to allow at least one form of metadata to remain attached to images displayed on the MLS websites.)

After discovery was nearly complete, CoreLogic moved for summary judgment arguing that there was no evidence that it intended to allow infringement of Plaintiffs’ copyrights.  The trial court agreed with CoreLogic and granted judgment in its favor, which judgment the photographers appealed to the Ninth Circuit.  (This article does not address other issues raised on appeal by the Plaintiff photographers.)

In essence, the Ninth Circuit considered whether Plaintiffs could state prevail on a claim against CoreLogic that its software unlawfully removed CMI metadata in violation of 17 USC §  1202(b)(1) and that CoreLogic violated 17 U.S.C. § 1202(b)(3) by distributing images knowing that CMI had been removed.  After reviewing the text of both of these statutes, the Ninth Circuit recognized that “[b]oth provisions … require the defendant to possess the mental state of knowing, or having a reasonable basis to know, that his actions `will induce, enable, facilitate or conceal’ infringement.”  The Ninth Circuit agreed with the trial court that the Plaintiff- Photographers had not produced admissible evidence to satisfy this required mental state.

The Plaintiff-Photographers’ main argument was that by removing metadata, CoreLogic was impairing the ability of copyright owners to detect whether someone might be using their photographs in violation of their copyrights.  The Ninth Circuit reasoned that this argument was not based on any affirmative evidence, but rather, “it simply identifies a general possibility that exists whenever CMI is removed.”  The Ninth Circuit held that this “general possibility” was not sufficient to establish copyright infringement.

First, in reviewing the statutory language, the Ninth Circuit found it important to “give effect, if possible, to every clause and word of a statute.”  Thus, in order not to make sure that the mental state requirement set forth in these provisions was not a “superfluity,” there must be a more specific application “than the universal possibility of encouraging infringement.”  While the Plaintiff-Photographers were not required to show that any specific infringement had already occurred, the Ninth Circuit held that a plaintiff “must make an affirmative showing, such as by demonstrating a past `pattern of conduct’ or `modus operandi,’ that the defendant was aware of the probable future impact of its actions.”  The Ninth Circuit continued by recognizing that the statutory intent is further evidenced by the fact that it was enacted in response to similar concerns addressed in the WIPO Copyright Treaty and the WIPO Performance and Phonograms Treaty. In sum, the Ninth Circuit concluded that in order to satisfy the knowledge requirement of section 1202(b), “a plaintiff … must offer more than a bare assertion that `when CMI metadata is removed, copyright infringement plaintiffs … lose an important method of identifying a photo as infringing.’”

The Ninth Circuit then concluded that the Plaintiff-Photographers had failed to offer any specific evidence that the removal of the CMI metadata impaired their ability of policing possible infringement.  First, the Plaintiff-Photographers had not produced any evidence that they ever relied on the use of CMI metadata to prevent or detect copyright infringement of their works.  In fact, at least one of the plaintiffs apparently testified that he had never looked at metadata information on any MLS system.  Furthermore, on two occasions when one of the plaintiffs became aware that his photographs were being infringement upon, this discovery came through a notice provided by the real estate agent who had commissioned the photos later discovering them on another website.

Furthermore, the Plaintiff-Photographers had not offered any evidence that CoreLogic’s distribution of real estate photographs to other sites had ever resulted in an infringing use of photographs by third parties.  Importantly, the Ninth Circuit recognized that if a third party was intent on infringing the copyrights of one of the photographers, that party could always remove any CMI metadata, which would also preclude the detection of infringement through the search of metadata.  The Ninth Circuit concluded that “because the photographers have not put forward any evidence that CoreLogic knew its software carried even a substantial risk of inducing, enabling, facilitating or concealing infringement, let alone a pattern or probability of such a connection to an infringement, CoreLogic is not liable for violating 17 U.S.C. §  1202(b).”

The CoreLogic decision is a reminder to copyright infringement plaintiffs that in order to prevail on a copyright infringement claim, they must come forward with admissible evidence to meet each of their burdens of proof to establish their claim.  The Ninth Circuit has made clear that relying on a “general possibility” of infringement theory will not suffice to meet this burden and risk dismissal of such claims.

James Kachmar is a shareholder in Weintraub Tobin Chediak Coleman Grodin’s litigation section.  He represents corporate and individual clients in both state and federal courts in various business litigation matters, including trade secret misappropriation, unfair business competition, stockholder disputes, and intellectual property disputes.  For additional articles on intellectual property issues, please visit Weintraub’s law blog at www.theiplawblog.com. 

Does anyone think that a monkey has standing to bring a copyright infringement lawsuit? In Naruto v. Slater, 888 F.3d 418 (9th Cir. 2018), the Ninth Circuit Court of Appeals said no, but not without carefully considering the issue.

Animals have many legal rights based on federal and state laws. Most of those rights are enforceable by humans or legal entities suing under the statutes on behalf of the animals. However, should animals have the right to sue under their own names in court?

The Ninth Circuit Court of Appeals has addressed this question in The Cetacean Community v. George W. Bush and Donald H. Rumsfeld, 386 F.3d 1169 (9th Cir. 2004). In that case, the court had to decide whether cetaceans (whales, porpoises, and dolphins) had standing to sue in their own names under several federal statues, including the Endangered Species Act and the Marine Mammal Protection Act. The world’s cetaceans, identified as The Cetacean Community, represented by an attorney in Hawaii, sued the United States Government to stop the Navy’s use of a type of sonar that causes injury to cetaceans. This sonar emits low frequency pings that are heard underwater over hundreds of miles.  The pings cause the cetaceans tissue damage and hearing loss, and disrupt their feeding and mating behavior by masking the sounds of other cetaceans and the environment. The damage caused by this type of sonar was undisputed. The use of the sonar during peacetime had been successfully challenged in a separate case filed by the Natural Resource Defense Council. In this case, the cetaceans sued to cause the President and the Secretary of Defense to conduct a regulatory review and to prepare an environmental impact report on the use of this sonar during threat situations and wartime.

The district court for Hawaii granted the defendants’ motion to dismiss the case on the grounds that the cetaceans did not have standing under the federal statutes to bring suit.

The Ninth Circuit affirmed. The court explained that standing to sue under federal statues requires both Article III standing and specific standing under the statute. Article III standing exists if there is a “case or controversy,” meaning that the plaintiff must have suffered an injury traceable to the defendant for which a court can provide a remedy.

According to the court, nothing in Article III prohibits animals from having a “case or controversy.” Cetacean Community, 386 F.3d 1175. Congress can grant animals the right to sue in their own names by statute, just as Congress has enacted statutes that provide for suits in the names of entities such as corporations or trusts, cities, ships, and incompetent persons such as infants or mentally incapacitated individuals. Id. at 1176.

The court then analyzed whether The Environmental Protection Act, The Marine Mammal Protection Act, and the other statutes under which the cetaceans sued provided standing to the cetaceans. The court held that these statutes did not provide standing to any animals, but rather provided standing to persons or entities to sue to protect the animals. Id. at 1179.

In Naruto v. Slater, supra, 888 F.3d 418, the Ninth Circuit was faced with a copyright infringement claim brought by an animal. The animal was a Crested Macaque, a type of monkey, named Naruto. Naruto lived in a wildlife reserve in Indonesia. In 2011, Naruto found a camera that had been left in the reserve by a photographer, defendant David Slater. Naruto took photos of himself. In 2014, presumably after finding the camera with Naruto’s selfies, Slater and the other defendants published a book containing the selfies. The defendants listed themselves as the copyright owner of the selfies, although they admitted that Naruto had taken the pictures.

In 2005, People for the Ethical Treatment of Animals (PETA) and a scientist who had studied Naruto sued the defendants for copyright infringement, as “Next Friends” on behalf of Naruto. The defendants moved to dismiss. The district court for the Northern District of California granted the motion on the grounds that the Copyright Act did not provide statutory standing to animals.

The Ninth Circuit affirmed. The court held that it was bound by the holding of Cetacean Community, supra, that animals could show Article III standing. Naruto, supra, 888 F.3d at 421. The court found that PETA was not a proper Next Friend to sue on behalf of Naruto, but held that this was not determinative because a Next Friend was not necessary to establish Article III standing. The court held that because the “case or controversy” requirement was met, Naruto had Article III standing. Id. at 424. However, the court held that the Copyright Act did not provide statutory standing to animals other than humans.

So, at least for now, animals who take pictures don’t own the copyrights to those pictures. You can leave your camera somewhere and claim ownership of any photos taken by an animal without the risk of liability for copyright infringement! In the future, however, it’s possible that the animals just might win.

On April 24, 2018, the Supreme Court issued its ruling in SAS Institute, Inc. v. Iancu, which held that the Patent Trial and Appeal Board (“PTAB”) arm of the United States Patent and Trademark Office (“USPTO”) must issue a final written decision addressing each and every patent claim challenged in an Inter Partes Review (“IPR”) petition if review is granted.  In other words, if the PTAB is going to institute a review, it must address all the claims that are being challenged by the petition.  In the six weeks or so since the SAS Institute decision, the ruling has had repercussions not only for the PTAB, but also for federal courts.

For example, in Wi-LAN, Inc. et al v. LG Electronics, Inc. et al, the Southern District of California recently decided to issue a stay in a patent infringement case brought by WiLan, Inc. against LG Electronics, Inc. pending a decision on whether to institute an IPR proceeding against the at-issue patents.  While not dispositive, the Court did consider the SAS Insitute ruling in making its decision, reasoning “[w]hile review is not guaranteed … in light of the Supreme Court’s mandate to review all contested claims upon grant of [an IPR] and the complexity of this case, the court finds [the simplification of issues] weighs in favor of a limited stay of proceedings until the [PTAB] issues its decisions on whether to institute IPR.”

Next, in DermaFocus LLC v. Ulthera, Inc., the District of Delaware had to decide whether to lift an already issued stay when some but not all challenged claims had already been ruled on by the PTAB.  The Delaware District Court decided not to lift the stay because the circumstances warranting the entry of a stay in the first instance still persisted in light of SAS Institute.  Specifically, the Court reasoned that the “parties stipulated to stay the litigation ‘pending resolution by the PTAB of the patentability of all challenged claims in the pending IPR.’”  Although the PTAB denied institution of IPR proceedings with respect to some claims, and issued a final written decision on all remaining claims, the Supreme Court recently ruled that the PTAB must issue a final written decision “with respect to the patentability of any patent claim challenged,” and “in this context, as in so many others, ‘any’ means ‘every.’”  For this reason, the Federal Circuit remanded Ulthera’s appeal to the PTAB for issuance of a final decision regarding the patentability of all claims.  Consequently, the PTAB has yet to resolve the patentability of all challenged claims in the pending IPR proceeding, and the terms of the parties’ stipulation have not been satisfied.

Finally, in PGS Geophysical AS v. Iancu, the Federal Circuit held that it has jurisdiction to address appeals without first requiring the PTAB address the claims and grounds included in petitions for review but not previously included in final written decisions, i.e. the “non-instituted” claims and grounds.  In other words, the Federal Circuit held “that the existence of non-instituted claims and grounds does not deprive [it] of jurisdiction to decide appeals from final written decisions.”  The Federal Circuit reasoned that while the PTAB having only partially instituted review is now improper under SAS Institute, the PTAB’s final decisions on the validity of individual claims are nonetheless still final because the PTAB made a patentability determination.

Although there are still numerous issues and questions the PTAB and federal courts need to decide in implementing the SAS Institute ruling, the answers to some of these issues and questions are slowly taking shape.  However, there are many more that will require resolution in both the short and long term.