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Copyright Law – The One Satisfaction Rule’s Use in Copyright Cases May Get a Test

admin — Tue, 31 Jan 2012 18:30:14 +0000

Karaoke hardware and software distributor, KTS Karaoke, is in a legal rumble with Sony/ATV Music Publishing about whether KTS’ distribution of karaoke recordings constitutes copyright infringement and the extent of such infringement, as described in this Hollywood Reporter article (click here and here for copies of the lawsuits KTS and Sony/ATV have filed against each other).

Sony claims KTS sold unlicensed karaoke recordings. KTS apparently did not manufacturing any of these recordings. One issue that may be determined in these lawsuits is KTS’ contention that Sony should not be entitled to damages from KTS if Sony has already received damages for the distribution of the same unlicensed recordings from someone else, such as KTS’ suppliers (to be more precise, if Sony is entitled to damages from KTS, KTS contends the damages it owes should be reduced by the amount of damages paid by other companies that have paid damages for the same infringement).

The “one satisfaction rule” is a general legal principle wherein an injured party is entitled to one payment for a single injury. The one satisfaction rule has been applied in at least one copyright case (detailed here in a blogpost from renown copyright commentator, William Patry).

Sony contends the one satisfaction rule does not apply as they consider the upstream manufacturer (KTS’ suppliers) to be unrelated to and not jointly and severally liable with distributors such as KTS. To the extent both parties infringe, Sony considers this to be separate infringements and therefore Sony should be able to recover damages from both parties. It will be interesting to see if the court rules on whether the one satisfaction rule applies to this case.

Patent Law, Trademark Law – Updates on Christian Louboutin, inequitable conduct, and Chris Bosh

admin — Sat, 31 Dec 2011 09:13:12 +0000

With 2011 coming to an end, this is a good time to check in on updates on some of our favorite blogposts of the past: Christian Louboutin’s quest to trademark the color of his shoe soles, pleading inequitable conduct in patent cases post-Therasense, and Chris Bosh’s efforts to stop his former girlfriend from appearing on Basketball Wives.

Christian Louboutin: Louboutin’s appeal of the denial of his request for an injunction to stop YSL from selling shoes with red soles is still pending. Louboutin’s case is being aided by Tiffany, which filed a brief supporting Louboutin’s position that he can trademark a color.

Inequitable conduct in patent cases: The Therasense court ruled that proving intent to deceive now requires evidence that the applicant knew of material prior art and made a “deliberate decision” to deceive the PTO by withholding a reference to such prior art and that the materiality of the undisclosed prior art must be so important that “but-for” the deception, the PTO would not have allowed the patent claim(s) covered by the undisclosed prior art. As noted in the Docket Report blog, two recent cases have held that in pleading an inequitable conduct claim, it is only necessary to show that an intent to deceive the PTO was plausible, not that it was the most likely inference.

Chris Bosh: Bosh’s lawsuit likely contributed to discouraging Basketball Wives from using his ex-girlfriend Allison Mathis, on the latest season of the show. However, Bosh’s lawsuit, which was filed in Los Angeles, was thrown out because of the procedural problem of the California court not having jurisdiction over Mathis, a Florida resident. Mathis has since sued Bosh in Florida for interfering with her chance to be on Basketball Wives. It is not clear what the status of Mathis’ lawsuit is.

Real Estate Law – What was that rule against perpetuities in the film The Descendants?

admin — Mon, 28 Nov 2011 05:22:15 +0000

If you were paying close attention while watching the excellent new film, The Descendants, with George Clooney, you may have wondered what the rule against perpetuities was and why it was important to a certain piece of real property in the movie.

The rule against perpetuities is a long-standing rule in US common law which discourages a person from controlling real estate long after that person dies. The rule basically prohibits interests in land that vests more than 21 years after the death of an identifiable individual living at the time the interest was created. For those who really want to know how the rule works (god help you), see the Wikipedia entry on the rule against perpetuities for examples on when the rule applies or doesn’t apply.

As this article describes, The Descendants’ situation is based on some real-life Hawaiian family trusts. Spoiler alert: for what might happen in the story after the movie ends, see this article.

Insurance Law – Accident victims can’t recover more than the amount of their medical bills paid by their health insurer

admin — Wed, 09 Nov 2011 07:40:20 +0000

Insurance companies scored a big victory with the California Supreme Court’s recent decision in the case of Howell v. Hamilton Meats & Provisions (click here for the Google Scholar version of the decision). In personal injury/accident cases the accident victims are allowed to recover, among other things, the reasonable cost of medical expenses for treatment related to the accident. For those with health insurance, as you probably know, the health insurers negotiate reduced rates with hospitals and doctors so that the hospitals and doctors accept discounts, often times substantial discounts, from their normal billed rate.

In the Howell case, Howell was seriously injured in an auto accident and received substantial medical treatment. The billed amount of her treatment was about $190,000. However, since Howell had health insurance, the hospital and doctors ended up accepting only about $60,000 for Howell’s treatment.

Therefore, the California Supreme Court held that regarding the amount of medical expenses recoverable by Howell, she could only recover the amount actually paid for her treatment, $60,000, even though the reasonable value or market value of her treatment arguably exceeds $60,000.

There are 2 big side-effects of this ruling. The first side effect is that it causes a situation where an uninsured person has a better case than an insured person because the uninsured person with Howell’s injuries can claim $190,000 in medical expenses while Howell can only claim $60,000. A general legal principle called the “collateral source rule” says that if an injured person is compensated for his injuries from someone besides the tortfeasor, that payment shouldn’t be taken into account in figuring out the amount of the injured person’s damages. The California Supreme Court decided the collateral source rule did not apply to health insurance and limited the recoverable amount to the actual amount paid, even though the majority of other states allow the injured person to recover the reasonable value of the medical treatment, even if that exceeds the actual amount paid.

The second side effect is that as a practical matter, the amount of money awarded for pain and suffering is often based on the amount of medical bills (in general, in personal injury cases you can recover the amount of medical bills, property damage, lost earnings and earning capacity, and pain and suffering: it is common for pain and suffering to have the most value out of these damage categories). Therefore, the value of many personal injury cases will be substantially reduced because, as seen in Howell, if there is health insurance the amount of medical bills will probably be less than 50% what they would have been if there was no insurance: for Howell, the pain and suffering is based on $60,000 in medical bills instead of $190,000. Also, the Howell case was silent on how the difference in the billed rate and the amount paid makes a difference in figuring out the amount to award for pain and suffering: arguably plaintiffs will now not be able to even refer to the billed medical expenses to explain the extent of their injuries (meaning, if the jury is barred from hearing that the billed medical expenses were $190,000 and only hears the medical expenses were $60,000, a pain and suffering award is likely.to be smaller).

For more on this case, see this Sacramento Bee blogpost on the case, an interview with the appellate lawyer representing Howell, and a pro-insurer view of this case.

ADA Lawsuits – Updates in the defense of disabled access cases – fall 2011

admin — Sat, 22 Oct 2011 22:21:52 +0000

ADA cases continue to be a problem for California businesses, as shown by a number of recent articles cited below. Until the government takes away more of the profit incentive for these types of cases, more and more ADA lawsuits will be filed. In the meantime, businesses that can afford it should get ADA certified, see this from the California Department of General Services.

Representative Duncan Hunter from San Diego County introduces legislation to require businesses to be given 90 days to fix ADA violations before a lawsuit can be filed:

San Francisco supervisor David Chiu proposes a law to require commercial landlords to make their properties comply with the ADA:

Serial ADA plaintiff caught on tape hiking in the mountains!

Fresno businesses targeted with ADA lawsuits:

Stockton businesses targeted with ADA lawsuits:

And finally, this is from 2010 but it’s an interesting feature from the NPR show This American Life, scroll down to Act 3 regarding ADA plaintiff Tom Mundy:

Employment Law – Law clerk exempt from overtime pay because he was classified as a professional employee

admin — Sat, 08 Oct 2011 22:18:07 +0000

Matthew Zelasko-Barrett sued a Northern California law firm, Brayton-Purcell LLP, for not paying him overtime for his work for them as a law clerk after he graduated from law school and before he passed the bar exam. The California Court of Appeals recently ruled Zelasko-Barrett was not entitled to overtime pay because he was considered to be a professional employee (click here for the Google Scholar version of the ruling).

Here’s a quick explainer on being eligible for overtime pay in California: employees are generally eligible for overtime pay unless they are exempt. Exempt employees are those who are deemed to be executive, administrative, or professional employees.

A professional employee is one who is licensed or certified in certain named professions (including law, medicine, teaching, and accounting) OR one who primarily works in a learned or artistic profession. A learned profession means the job requires advanced knowledge of a field or science that usually requires prolonged study, and the work is intellectual and is not standardized in nature. A professional employee must also exercise discretion and independent judgment in performing the job duties and earn at least 2 times the minimum wage for full-time employment.

Zelasko-Barrett had not passed the bar yet, so he was not licensed or certified as a lawyer at that time. Zelasko-Barrett’s job duties as a law clerk included drafting pleadings, preparing and managing discovery, legal research, exercising discretion and judgment to choose the documents and arguments to be used in depositions and hearings, speaking with opposing counsel, clients, and witnesses, and supervising clerical staff. Zelasko-Barrett had a supervising attorney and he was not able to sign any pleadings or appear in court because he had not yet passed the bar exam.

Based on the above, the court found Zelasko-Barrett’s job duties required a “significant level of discretion” in the actions taken by him, even if Zelasko-Barrett’s recommendations were not always used by his supervising attorney in the final version of his work. Therefore, the court ruled Zelasko-Barrett met the requirements to be considered an exempt professional employee and was exempt from overtime pay.

It is important to remember this court’s ruling was based on Zelasko-Barrett’s specific job duties. Another law clerk with more menial duties could still be entitled to overtime pay.

For more on this story, see this San Francisco Chronicle article, and for more information on the rules of overtime pay in California, see this from the California Department of Industrial Relations. Zelasko-Barrett has passed the bar exam and is apparently now self-employed in San Francisco.

Copyright Law – RIAA’s $675,000 statutory damage verdict against music downloading student Joel Tenenbaum reinstated

admin — Fri, 30 Sep 2011 08:03:32 +0000

In the latest round of the Recording Industry Association of America (RIAA)’s quest against college student (now grad student) Joel Tenenbaum for being a prolific unauthorized music downloader, the 1st Circuit Court of Appeals recently reinstated a $675,000 verdict in favor of the RIAA vs. Tenenbaum (click here for the Google Scholar version of the ruling).

Previously, the trial court judge reduced the verdict of $675,000 for willfully infringing the copyrights to 30 songs (that’s $22,500 per song) to $67,500. The Court of Appeals reinstated the $675,000 verdict because the trial court judge improperly ruled the verdict was unconstitutional without first ordering a remittitur (an obscure procedure wherein the judge can reduce a verdict, after which the plaintiff can either accept the reduced verdict or seek a new trial).

The remittitur ruling is not too exciting, but it is a good excuse to discuss the larger issue of the merits of the system of calculating statutory damages in copyright infringement cases. Even the Court of Appeal noted “this case raises concerns about application of the Copyright Act which Congress may wish to examine.”

The US Copyright Act entitles damages of anywhere from $750 to $30,000 per act of infringement (i.e. downloading a song without authorization), or up to $150,000 per act of infringement if the infringment is deemed to be willful (as was the case with Tenenbaum). Although an infringer’s profits or revenue lost by the copyright holder can be considered in determining the amount of statutory damages, there is no requirement that the amount of statutory damages be related to the amount of lost profits or revenue. In this case, there is no indication Tenenbaum earned any money from his music downloading and it is unclear how much revenue the affected music publishers lost from the 30 songs at issue.

The debate on the copyright statutory damage ranges comes down to the apparent unfairness of the size of certain verdicts versus the need to provide incentive to discourage the unauthorized use of copyrighted works and the common difficulty in calculating actual damages. Despite the Court of Appeal’s suggestion, don’t hold your breath waiting for Congress to do anything on this.

For a more personal perspective, here’s Joel Tenenbaum’s personal website on this case.

Patent Law – Business method software patents undermined by Cybersource case

admin — Sun, 04 Sep 2011 22:52:57 +0000

The recent court ruling in the Cybersource Corporation v. Retail Decisions, Inc., case is a warning that those seeking to patent software-related inventions need to explain how the invention incorporates the use of a machine such that it is patent-eligible (click here for a Google Scholar version of the ruling).

To obtain a patent an invention must involve a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The patent at issue in the Cybersource case was a system for detecting credit card fraud on the internet. This type of patent is considered to be a “business method” patent. Business method patents have been issued in the US for over 200 years but in the internet age the number of business method patents have mushroomed (click here for a history of business method patents). Many have criticized the issuance of software patents since software is eligible for copyright protection as well as patent protection.

In the Cybersource case, the court ruled this particular business method should not have been granted a patent because the method at its core compares a list of prior credit card transactions from a particular internet address and the credit card numbers used in those transactions. This system, as stated in the patent claims, only describes the collection of data and does not state that the internet or any specific machine is necessary to collect or compare the data. Although one of the claims referred to a “computer readable medium,” the court looked to the underlying invention to determine if the method is patent-eligible, and the court ruled the underlying invention was a method for detecting credit card fraud, not a manufacture for storing computer-readable information.

Many of the recent patent infringement lawsuits filed by so-called “patent trolls” concern patents that are vaguely-written (and often never marketed or licensed) and used to later claim that other companies’ existing products and systems infringe their patents. The attorney for Retail Decisions hoped this court decision would limit such “troll litigation.” (see his comment in this law.com story).

For more on this case, also see this commentary from the former Retail Decisions Chief Technological Officer, under whom Retail Decisions developed the credit card fraud detection system that was accused of infringing the subject patent.

Fashion Law, Trademark Law – Christian Louboutin’s trademark of red shoe soles runs into a stop sign

admin — Mon, 22 Aug 2011 06:13:05 +0000

Fashion designer Christian Louboutin is well-known for designing shoes with red soles. When YSL started selling shoes with red soles, Louboutin filed a lawsuit for trademark infringement and asked for an injunction (a court order preventing YSL from selling their red sole shoes).

On August 10, 2011, the court denied Louboutin’s injunction request and furthermore stated that it had “serious doubts that Louboutin possesses a protectable mark.” (click here for a pdf copy of the injunction order). This is because the court felt that in the fashion industry, color serves ornamental and aesthetic functions (“functional” being the key word) vital to promote competition and innovation. Therefore, the court did not want to recognize a “trademark for the use of a single color for fashion items.”

Louboutin may have had a better chance if the trademark registration was less broad (lacquered red sole on women’s high fashion designer footwear), although the court expressed doubts on allowing a trademark for even a particular range of shades of red and noted that defining “women’s high fashion” has its own problems.

This ruling is interesting because many people identify a red shoe sole as a Louboutin shoe, which run as much as $1000 a pair or more and has a healthy celebrity clientele that includes Jennifer Lopez. Usually trademark law protects a name or feature of a product that is distinct to a particular company. However, the court ruled that trademarking a color would hinder competition in the fashion industry, unlike trademarks for colors that have been granted in industries such as Owens-Corning’s trademark of pink for fibrous glass insulation.

Louboutin has already said he would appeal.

Employment Law – Employees fired for Facebook or social media post fight back

admin — Sun, 14 Aug 2011 23:12:04 +0000

With Facebook passing the 750 million member mark and other social media such as Google + gaining members at a rapid pace, it is becoming common for employees to be “friends” or connected with co-workers and even their supervisors. Therefore, it should be no surprise that more and more employees are being fired over their social media posts.

As reported by the Huffington Post, some of these fired workers are fighting back as over 100 claims have been filed with the National Labor Relations Board.

The rules of when companies can discipline or terminate employees for social media posts are still being developed. However, general principles of employment law indicate the more the offending post talks about employee rights protected by law (i.e. discrimination or wage and break requirements or complaining about the employer’s illegal activities) and the more the terminated worker has discussed the issue-at-hand with co-workers, the more likely the fired employee has a valid case. Also, if the employee is covered by a contract or company policy, that could limit the company’s ability to terminate over a social media posting. In addition, some companies may have crossed the line in violating an employee’s right of privacy in its review of the employee’s social media posts.