In Lanard Toys Limited v. Toys “R” Us, Inc. et al, 3-15-cv-00849 (FLMD December 16, 2016, Order) (Barksdale, MJ), a patent infringement matter in Florida District Court, the court denied defendants’ motion to disqualify plaintiff’s new counsel for simultaneously representing defendant in an unrelated case.  Four months after lawyers with Gordon & Rees Scully Mansukhani LLP (“Gordon & Rees”) began representation of Lanard Toys Limited (“Lanard”) against Toys “R” Us-Delaware, Inc. (“TRU”), other lawyers with Gordon & Rees began representation of TRU in a California state case. Upon discovering the conflict of interest, Gordon Rees withdrew from representing TRU in the California matter.  However, Gordon Rees refused to withdraw from the Florida case, so TRU filed a motion seeking disqualification.01-Caliguri-Er-15EX-web

Gordon Rees asserted the dual representation was a result of an “inadvertent input error,” wherein the names of some of the parties where inadvertently omitted from the conflict tracking software during the conflicts check, and not because Gordon & Rees deliberately disregarded the duty of loyalty to a client.  Gordon Rees was only acting as local counsel to TRU in the California matter.  The only activity in which Gordon & Rees participated on behalf of TRU in the California Case was the finalization and filing of TRU’s answer to the complaint at the direction of the Palter Firm, who was TRU’s primary counsel in the California matter. According to the attorneys, Gordon & Rees and TRU never spoke with each other prior to TRU raising the conflict issue; there was no retention agreement entered into between the parties and no confidential information relevant to the Florida case was exchanged, nor was any confidential information relating to TRU’s strategic approach for defending against cases, in general, exchanged.  Gordon & Rees’s sole tasks with respect to TRU in the California Case during the time of the representation, according to them, were to propose edits to a draft Answer for TRU that was prepared by lead counsel, the Palter Firm, and to inform the Palter Firm that a TRU officer had to verify it.

In contrast, in the Florida matter, Gordon Rees is Lanard’s primary counsel, has spent hundreds of hours reviewing documents, has taken depositions in two states, and has represented Lanard in numerous prior cases.  Therefore, according to Lanard and Gordon Rees, it would take substantial effort and cost to bring new counsel up to speed on the Florida case.

In analyzing the issue and ruling on TRU’s disqualification motion, the Court first noted that because a litigant is presumptively entitled to counsel of its choosing, only a compelling reason will justify disqualification.  Disqualification is a “harsh sanction, often working substantial hardship on the client,” so it “should be resorted to sparingly.” And, because a disqualification motion may be used to harass or for tactical advantage, it should be viewed with caution. The Florida Court further noted disqualification is not mandatory, even if a court finds a lawyer is violating a conflict-of-interest rule.  Instead, a “court should be conscious of its responsibility to preserve a reasonable balance between the need to ensure ethical conduct on the part of lawyers appearing before it and other social interests, which include the litigant’s right to freely chosen counsel.”  In undertaking the balancing, pertinent factors may include the nature of the ethical violation, the age of the case, the prejudice to the parties, the effectiveness of counsel in light of the violation, the public’s perception of the profession, whether the attempt to disqualify is a tactical device or a means of harassment, and whether any screening measures have been implemented.

The Florida Court then found that by undertaking representation of TRU in the California case while simultaneously undertaking representation against TRU in the Florida case, Gordon & Rees did violate Florida’s conflict of interest laws.  However, it was an inadvertent input error—not a deliberate disregard of the duty of loyalty—that caused that violation.  In addition, the Florida Court also found Lanard would suffer a substantial hardship by having to retain new counsel to repeat or review work.  As to the California matter, the Florida Court found the Gordon & Rees lawyers did not directly communicate with TRU or, as stated in the declarations, receive any TRU confidences. With no sharing of TRU confidences and able counsel on both sides, the violation will not diminish counsel’s effectiveness.  And Gordon & Rees’s active representation of TRU lasted less than a month, during which it was not TRU’s primary counsel.  Thus, the Florida Court concluded “[b]alancing the interests and mindful that Lanard is presumptively entitled to counsel of its choosing and disqualification is a harsh sanction to be resorted to sparingly, disqualification is unwarranted.”

Although the court denied the disqualification motion, this case is still a strong cautionary warning to consider potential conflict issues when selecting counsel.  Otherwise, at best, a costly disqualification motion can result, and at worst, new counsel may need to be hired in the middle of litigation at substantial additional cost and effort.

With last weekend’s release of Rogue One: A Star Wars Story, Star Wars is once again living and thriving. Rogue One opened with a most impressive $155 million opening in North America, and $290 million worldwide, making it the 12th largest opening in United States History. Now, this isn’t really related to intellectual property, but in light of this opening,  we thought it would be appropriate to provide an article dealing with Star Wars intellectual property. Luckily for us, just one week ago, some very interesting Star Wars news surfaced.

If you’re an avid Star Wars fan, you are patiently, or not so patiently, awaiting the release of Episode VIII, the next installment in the Star Wars saga, which is due out in December 2017. And if you are awaiting the release of Episode VIII, you likely know that the film still lacks an official title. But a recent trademark filing in the European Union may have provided us with a pretty solid transparentindication of what that title may be. On December 8, 2016, Lucasfilm applied for a European Union trademark for the term “STAR WARS FORCES OF DESTINY.” In the past, Lucasfilm took similar actions with regard to movies such as “Indiana Jones and the Kingdom of the Crystal Skull,” “Revenge of the Sith,” and “The Force Awakens.” So, if the past is any indication of the future, there is a strong argument that Star Wars Episode VIII will be entitled FORCES OF DESTINY.

However, although the trademark filing may be indicative of Episode VIII’s title, it is without certainty. Lucasfilm has taken similar actions in connection with trademarks that were not ultimately related to a feature film. For example, in 2002, Lucasfilm trademarked INDIANA JONES AND THE EMPEROR’S TOMB, which was not a working title for Indiana Jones and the Kingdom of the Crystal Skull, but rather, a videogame. So, Lucasfilm’s filing of a trademark application for FORCES OF DESTINY is not dispositive.

A closer examination of the trademark filing gives additional support to the argument that FORCES OF DESTINY will be Episode VIII’s title. The application contains multiple Nice classifications – an international classification of goods and services established by the 1957 Nice Agreement. These classifications indicate which types of products Lucasfilm will sell in conjunction with the mark. Here, Lucasfilm applied in the International Classes associated with various items, including without limitation, CDs, DVDs, clothing, leather goods, video games, and literary materials. So, it is clear that whatever Star Wars: Forces of Destiny turns out to be, Lucasfilm plans on distributing a wide range of related merchandise. Again, this is not a dispositive indication that FORCES OF DESTINY is the title for Episode VIII, but it seems to be strong evidence. Of course, with the movie just less than a year away, even if the FORCES OF DESTINY is the current working title for Episode VIII, there is plenty of time for Lucasfilm to change its mind. In the words of Master Yoda, “Always in motion is the future.” So for now, “Patience you must have my young padawan.”

The last time I checked (which was a couple of years ago), I found over 900 U.S. patents in the U.S. Patent and Trademark Office’s database that had the word “Christmas” in the title.  Every year at this time, I look at a few of the most interesting ones.

Here’s one I really like:  U.S. patent no. 5,523,741 for a “Santa Claus Detector.”  This patent covers a Christmas stocking that contains a light bulb or LED, a battery to power the light, and a hidden switch that turns on the light.  The switch is connected to a pull cord.  When the stocking is hung on the fireplace, the pull cord is positioned across the opening of the fireplace, forming a barrier across the fireplace opening.  After the stocking’s owner has gone to sleep on Christmas Eve, Santa Claus comes down the chimney with his bag of toys and triggers the cord, which turns on the light.  The next morning, the child will see the light on and know that Santa was there! (Or, as the patent describes, the parent can secretly pull the cord and turn on the light.)  The purpose of this invention, according to the inventors, is to reassure children that their good behavior was rewarded by Santa.

Another fun Christmas patent is the “Santa Claus Visit Kit,” U.S. patent no. 7,258,592.  This kit is for parents to use to prove to their doubting children that Santa Claus has actually visited.  The kit includes a stencil to leave boot prints on the floor, a letter from Santa, and a snack item for Santa.  The kit is intended to alleviate children’s fears that Santa Claus might not leave them any presents.

Some very practical inventors have patents for fire extinguishers incorporated into Christmas decorations.  One patent covers a fire extinguisher hidden inside the trunk of a synthetic Christmas tree that is activated by a heat sensor.  Another patent is for a Christmas tree ornament that contains a fire-retardant powder.  The ornament pops open when the temperature reaches a certain point, releasing the fire retardant powder and, hopefully, putting out the fire.

Have a wonderful holiday season!

Fan films and fan fiction ordinarily don’t end up being the subject of a federal court lawsuit.  Most fan fiction are creative expressions reflecting adoration of a series, film or character and the majority of copyright owners take a permissive view of fan fiction.  However, Paramount Pictures, the owner of the Star Trek franchise, which in the past has not taken action against other fan fiction projects, is opposing the production of a full length film, Axanar, which has a production budget of over $1 million and has a professional crew and professional actors.Scott-Hervey-10-web

The Axanar project is the creative brain child of writer/producer and entrepreneur Alec Peters.  Peters wanted to tell the story of Garth of Izar, a Starfleet captain and Captain Kirk’s hero, who fought in the Battle of Axanar, a major clash between the Federation and the Klingons, which took place 21 years before the events of the first episode of the original Star Trek television show.  In 2014 Peters raised over $100,000 on kickstarter and produced a “proof of concept” thirty-minute film entitled “Prelude to Axanar.”  Prelude purports to be a documentary recounting the events surrounding the Battle of Axanar.   Prelude was well received and as a result, Peters raised over $1 million through Kickstarter and Indegogo in order to produce a full length, studio quality motion picture about the Garth of Izard and the battle of Axanar.  In addition to releasing Prelude on YouTube, Peters released on YouTube a short clip entitled “Vulcan Scene” (which features Ambassador Soval, a minor character from “Star Trek: Enterprise” and a new Vulcan character) and drafts of the script for the full length movie.

Paramount sued Peters and his production company Axanar Productions for copyright infringement, and last week Paramount and Axanar Productions traded shots in Federal Court last week over a motion to dismiss Paramount’s Complaint.  According to the Complaint, Peters and his production company infringed Star Trek’s copyright by utilizing various Star Trek elements including the concept of the Battle of Axanar, the Klingons, the Starfleet and characters, costumes and props that are unique to Star Trek.  According to Paramount, Axanar  is substantially similar to Star Trek precisely because it copied characters, settings, plot points, dialogue, themes, pace, mood, races, species, ships, and weapons in order to create an unlicensed, independent Star Trek film.

In its motion to dismiss, Peters contends that his works – Prelude to Axanar, the Vulcan Scene and drafts of the Axanar script – are transformative and therefore protected under fair use.  While Peters presents other arguments in support of his claim of non-infringement, the question of whether these works are transformative will be largely determinative of this issue.

A work is transformative when it adds something new to the work allegedly infringed, with a further purpose or different character, altering the original work with new expression, meaning, or message. A work is transformative if it does something more than repackage or republish the original copyrighted work. A transformative work is one that serves a new and different function from the original work and is not a substitute for it. As the Supreme Court noted in Campbell v. Acuff-Rose Music, Inc., “the more transformative the new work, the less will be the significance of other factors, … that may weigh against a finding of fair use.”

Peters claims that his works are transformative.  Although Prelude features Federation officers, Klingons and Starfleet ships, Peters argues that it does so in a first person narrative style, never before used by Paramount, featuring new characters and other elements, with its subject matter being a storyline that was only a footnote in the first episode of the original Star Trek television series.  This, Peters contends, makes Prelude transformative.  Peters claims that the Vulcan Scene is transformative because it incorporates original dialogue, new characters and is a continuation of the original story told in Prelude.

In its opposition to the motion to dismiss, Paramount takes the position that its copyright interest in Star Trek extends far beyond Captain Kirk and Spock.  While a small number of Vulcans and Federation Officers in Prelude and the Vulcan Scene were previously featured in previous Star Trek episodes or films, Paramount contends that what causes Prelude, the Vulcan Scene and the current draft of the Axanar script to be an infringement is the fact that they are populated with Klingons, Vulcans, Federation Officers, Starfleet ships in the shape of the Enterprise and Klingon battlecruisers and littered with references to warp drives, dilithium crystals, stardates and transporters.  All of these elements are protected by Paramount’s copyright interests and cause Peters’ works to be infringements.

Paramount argues that Prelude, the Vulcan Scene and the draft of the Axanar script are not transformative as they “were created to function as another Star Trek work, with a slightly different plot.”  Paramount argues that using copyrighted characters and elements and then placing those elements into a new story or timeline does not create a transformative work but rather an infringing derivative work.  And while that was the case for Catcher in the Rye protagonist Holden Caulfield as portrayed 60 years later in 60 Years  (see Salinger v. Colting), it was not the case for the story of Cynara, a slave owned by Scarlett O’Hara, as told in The Wind Done Gone  (see Suntrust v. Houghton Mifflin).  In Suntrust, the 11th Circuit found The Wind Done Gone was not an infringement of Gone with the Wind  and was protected under fair use.  The court found persuasive the fact that the The Wind Done Gone was told using a different format, featured new characters, elements and plot settings not found in Gone with the Wind. 

The determination of fair use is a balancing test that requires the Court to weigh numerous factors. While Peters’ works feature numerous factors the 11th Circuit found persuasive in the case of The Wind Done Gone, there are other factors that may weigh – possibly heavily – in the opposite direction.

 

 

 

On December 1, 2016, amendments to the Federal Rules of Civil Procedure (“FRCP”) and Federal Rules of Appellate Procedure (FRAP) took effect.  While at first glance, the changes may not seem dramatic, but changes such as shortening the time to respond and cutting word counts for briefs have a direct impact on our practices.  For example, this year’s changes include the following:

  1. Eliminating the 3-day rule; and
  2. Reducing word counts for certain appellate filings.

Under the previous 3-day rule, parties receiving a document by means other than personal delivery, which was considered immediate service, could add three days to the response time calculated from the date of service.  This included adding three days when served electronically, including service by email and the electronic case filing (ECF) notice system.  In other words, items served electronically were not treated as received immediately even though they often were received virtually instantaneously.  In the past, concerns related to reliability, transmission delay and incompatibility of systems led to the perception of a need for maintaining the 3-day rule for electronic service, but times have changed.  In addition, other rules have been changed in an attempt to simplify time computations by adopting periods that are multiples of 7 to allow for “day-of-the-week” counting.  The 3-day extension re-complicated the intended simplification and caused more dates to fall on weekends and holidays thus requiring further adjustments.Jo-Dale-Carothers-015_web

With advances in technology and skills of computer users and the desire to further simplify time computation, the 3-day rule has been eliminated for responses triggered by electronic service of a document.  This was accomplished by amending FRCP 6(d) and FRAP 26(c) to exclude electronic service from the modes of service that allow for three additional days to act or respond. It is important to note, however, that some courts have promulgated local rules that retain the 3-day extension.  For example, the Ninth Circuit will continue to provide three additional days for electronic service for deadlines based on service of another document.

The Committee Notes regarding the change to Rule 6 recognize that this amendment can effectively shorten the time to respond relative to current practice, particularly when documents are served late at night or just prior to, or during, a weekend or holiday.  Therefore, they noted that extensions may be warranted to prevent prejudice.  In practice, however, one cannot afford to take such extensions for granted, particularly if opposing counsel objects.

The Supreme Court ordered that the amendments to FRCP 6(d) and FRAP 26(c) govern in all federal civil and appellate cases, respectively, commenced after December 1, 2016 and “insofar as just and practicable, all proceedings then pending.”  But, it is not clear how courts will apply these amendments to pending cases.  For example, will amended Rule 6(d) apply to all papers served after December 1, 2016, even in cases pending prior to that date or will courts continue to apply the prior rule for service of papers in such cases?  Similar questions arise in the appellate context.  It will be critical to consult the specific rules applicable for each case to avoid missing deadlines!

In another amendment to the FRAP, word-count limits have been reduced for certain appellate filings and implemented in place of page limits for other filings.  For some time, parties did not have to comply with page limits for appellate briefs if they complied with certain word-count limits.  Page limits, however, were still imposed on other papers, such as motions and petitions.  In the most recent amendment to the FRAP, word-count limits have been instituted for, among other filings, motions, amicus briefs, and petitions for rehearing en banc.  Further, word counts for opening, response, and cross-appeal response and reply briefs have been reduced from 14,000 to 13,000 words.  For cross-appeal opening and response briefs, the word count was reduced from 16,500 to 15,300, and for reply briefs, the word count was reduced from 7000 to 6500.  You just thought the prior word counts were tight!  Now they are tighter.

These word-count changes took effect on December 1, 2016, but some circuits have opted out in favor of their own local rules.  For example, the Ninth Circuit has adopted a local rule that will maintain the current word count limits for briefs and will maintain the current page limits, rather than word counts, for motions and petitions.

In summary, while the new rules are now in effect, courts are varying in whether they are applying the new rules at all and, if so, how they are applying them to pending cases.  Therefore, it is more important than ever to compare the local rules with the federal rules to determine whether your cases are subject to these amendments.  If so, then be prepared to respond sooner and, in appellate cases, more concisely!