In Lexmark International, Inc. v. Impression Products,Jo Dale Carothers 015_web Inc., No. 14-1617 (Fed. Cir. 2016), the U.S. Court of Appeals for the Federal Circuit decided en banc that a U.S. patent owner’s “first sale” of items in a foreign country does not exhaust the patent owner’s right to sue for patent infringement when those items are later imported into the U.S. In contrast, the Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013) came to a different conclusion under copyright law, finding that the “first sale,” or exhaustion, doctrine allows the owner of a copy of a copyrighted work, which was lawfully made in a foreign country, to import and sell that copy in the United States without further permission from the copyright owner. But, as the Federal Circuit recognized, patent law and copyright law are not always aligned.

The Lexmark dispute arose in conjunction with Lexmark’s toner cartridges for its printers. Lexmark offers its customers the choice of buying a “Regular Cartridge” at full price with no restrictions on its re-use/resale or a discounted cartridge, subject to a single-use/no-resale restriction. Lexmark sold some of the cartridges in the United States and some abroad. Some of the foreign-sold cartridges and all of the U.S.-sold cartridges at issue were sold subject to an express single-use/no-resale restriction.

Continue Reading The Federal Circuit Finds Foreign Sales Do Not Exhaust Patent Rights

If you’ve ever applied for, or Josh Escovedo 02_finalresearched copyright law, you likely learned one thing above all else: it’s not a perpetual right. So, how, you might wonder, have companies like The Walt Disney Company managed to maintain copyrights on certain creations for almost 100 years? In the case of the Walt Disney Company, the answer is simple. It is powerful enough that it actually changed United States copyright law before its rights were going to expire.

When copyright law was first codified in the United States pursuant to the United States Copyright Act, the copyright duration was limited to 14 years. Today, copyrights can last over 100 years. That’s a huge change, and there are an overwhelming number of copyright experts that will tell you that it is all because of a mouse.

Now that may be a slight overstatement. The copyright duration changed some prior to the creation of Mickey Mouse. The Copyright Act of 1790 included a provision that provided for an additional 14-year term if the creator was alive. Of course, at that point, copyright protection only applied to select creations such as maps and books. But 41 years later, in 1831, the Act was amended to allow for an initial 28-year term, with eligibility for a 14-year extension. Thereafter, in 1909, the Act was changed again to allow for a 28-year renewal instead.

Continue Reading Disney’s Influence on United States Copyright Law

Two weeks ago, the Federal Circuit Court of Appeals Audrey-Millemann-03_weblimited the factors a district court may consider in determining the amount of attorneys’ fees to award in an “exceptional” patent infringement case. Lumen View Tech., LLC v. Findthebest.com, Inc. (January 22, 2016) 2016 U.S. App. LEXIS 1087.

Lumen was the exclusive licensee of a patent covering a method for facilitating bilateral and multilateral decisionmaking. The method required analyses of preference data from two groups of people. Findthebest.com (FTB) offered a website with a search feature called “AssistMe” that gave the user information on products and services related to the user’s specific input.

Lumen sued FTB in the Southern District of New York for patent infringement. FTB’s counsel told Lumen on several occasions that FTB’s search method did not use a bilateral or multilateral process. Lumen ignored FTB’s statements, and filed its infringement contentions before obtaining any discovery. FTB then filed a motion for judgment on the pleadings on the grounds that the patent was invalid under 35 U.S.C. §101 as directed to an unpatentable abstract idea. The district court ruled in favor of FTB and dismissed the case. FTB then filed a motion seeking a determination that the case was “exceptional” under 35 U.S.C. §285 and for recovery of its attorneys’ fees on that grounds.

The district court ruled that the case was exceptional and that FTB was entitled to fees. The court awarded FTB the lodestar amount with a multiplier of two, for a total of about $300,000. The court found that the multiplier was justified in order to deter Lumen from filing similar frivolous lawsuits in the future. The court said that the lodestar amount was too small, because the case had been resolved at an early stage, to be an effective deterrent, and so chose to use the multiplier of two.

Continue Reading Federal Circuit Limits Attorneys’ Fees in Exceptional Cases

The Ninth Circuit’s recent decision inJames-Kachmar-08_web the case of Dolby Systems, Inc. v. Christenson, focuses primarily on the issue of which party bears the initial burden of proof with regard to a “first sale” defense in a copyright infringement action. As the reader will see, however, this case really provides a cautionary tale as to the consequences a party may face when it plays games during discovery.

Adobe, a software publisher and the copyright holder for titles such as the “Photoshop” series sued Christenson in October 2009 alleging copyright and trademark infringement. (This column will not address the trademark issues.) Christenson ran a website on which he “re-sells” Adobe software, which he purchases from third party distributors apparently without Adobe’s authorization. Adobe claimed that it does not sell its software, but merely licenses them and that Christenson infringed on its copyrights when he “re-sold” its titles. Christenson claimed that his activities were protected under the First Sale Doctrine, claiming that he lawfully purchased the software from third parties, who had also “purchased” the software from Adobe.

Adobe’s lawsuit against Christenson was apparently quite contentious. The Ninth Circuit observed that the lower court proceedings were “punctuated by discovery disputes, sanctions and multiple rulings on the admissibility and exclusion of evidence.” Both parties filed cross-motions for summary judgment. The District Court, after excluding certain evidence offered by Adobe because it had not been produced during discovery, granted summary judgment in Christenson’s favor as to the copyright infringement claim after recognizing that the First Sale Defense applied. Adobe appealed this finding to the Ninth Circuit.

Continue Reading Copyright Infringement and the First Sale Defense

In business, there are numerous Scott-Hervey-10-webopportunities for pitfalls, mistakes and errors and they come up in all different legal areas – from basic formation issues to labor and employment to intellectual property. Mistakes and missteps involving intellectual property can be particularly problematic because IP is a company asset; it constitutes a part of (often a significant part of) a company’s valuation. In my 20 years working with start-up companies – and even fully grown-up companies, I have seen mistakes involving company intellectual property prove to be disastrous. With careful planning and good counsel, these mistakes are completely avoidable.

#1. Failure To Transfer the IP From The Founder Into the Company. It is a foundational item for any company – if the company is being formed around a piece of IP or if a piece of IP is intended for use by a company, the company should make sure the founder that owns the IP must contribute it to the company. While a very basic issue, this problem plagues more start-ups than you can imagine. Most often it happens during the informal, pre-formation time frame when founders are kicking around an idea and developing code and no one has consulted a lawyer. Conflict between the founders develop and there is a divergence of opinion on the value brought to the table by the non-developer founders; the developers decide to split with the IP and form a new company. While this will likely generate lawsuits just as soon as the developer’s company is in a financing round, the non-developer founders will very likely not receive as much as they would have had the IP been properly assigned to the company.

Continue Reading Five IP Pitfalls That Start-Up (and Grown Up) Companies Can Easily Avoid