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

Posted on September 30, 2011 by Kenneth Tanji, Jr.

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.

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Patent Law – Business method software patents undermined by Cybersource case

Posted on September 4, 2011 by Kenneth Tanji, Jr.

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.

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

Posted on August 21, 2011 by Kenneth Tanji, Jr.

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.

Posted in Fashion Law, Trademark Law | Comments Off

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

Posted on August 14, 2011 by Kenneth Tanji, Jr.

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.

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Right of Publicity – Kim Kardashian accuses Old Navy of stealing her persona

Posted on July 31, 2011 by Kenneth Tanji, Jr.

The LT Pacific Law Group blog knows what its readers want, so we have to report on Kim Kardashian’s recently-filed lawsuit against Old Navy (click here for a pdf copy of the lawsuit).

Earlier this year, Old Navy released a commercial featuring a Kim Kardashian-lookalike. Kardashian sued Old Navy and its parent company, The Gap, for breach of her right of publicity. The claimed damage is taking advantage of Kardashian’s fame, which has resulted in a hit TV show and many endorsement deals (a cynical person would say Kardashian’s motivation could have more to do with the fact the Kardashian-lookalike is dating Kardashian’s ex-boyfriend, football player Reggie Bush, a less cynical person would say Kardashian’s simply maintaining her right to endorse cost-conscious retailers besides Old Navy).

California recognizes a right of publicity of a person’s identity, name or likeness from the unauthorized commercial use of such by another. However, a key limitation on this right is if the accused use is protected by the First Amendment. The First Amendment protects uses such as parodies or uses that have “transformative elements” (this gets complicated but it basically means the more a use adds something new or different to just using the subject’s literal persona, the more likely the use will have First Amendment protection).

The merits of Kardashian’s case will depend on whether Old Navy can successfully argue that the commercial was just a parody of Kardashian or a Kardashian-like character and that viewers reasonably could not believe that the real Kim Kardashian was endorsing Old Navy.

Posted in Misc. Intellectual Property | Comments Off

Employment Law – Court rules a man telling another man he wants to have sex with him is not sexual harassment

Posted on July 10, 2011 by Kenneth Tanji, Jr.

As a firm that has handled female-on-male sexual harassment cases and male-on-male sexual harassment cases, the recent case of Kelley v. The Conco Companies was of great interest to us.

In the Kelley matter, a male apprentice employee said a male supervisor made many rude and vulgar comments to him, including comments describing how the supervisor wanted to have sex with the apprentice and would have sex with the apprentice. Besides those comments, there was no evidence the supervisor was homosexual.

The court ruled on summary judgment that it was so clear that the supervisor was not sexually interested in the apprentice that the supervisor’s conduct could not be sexual harassment and there was no need for a trial on this issue. Given the explicit nature of the supervisor’s comments, one wonders why a jury should not have been given a chance to decide whether the supervisor meant what he said.

Since at least one other case has held that actual sexual desire does not necessarily need to be proven to sue for male-on-male sexual harassment, future developments in same-gender sexual harassment should prove interesting.

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Patent Law – Proving an inventor’s inequitable conduct gets harder

Posted on June 12, 2011 by Kenneth Tanji, Jr.

When an inventor applies for a patent, the inventor is supposed to inform the Patent and Trademark Office (PTO) of all material prior art. What that means, in very simple terms, is that the inventor has a duty to inform the PTO of all information that has some bearing on whether the patent should be issued.

If the inventor fails to disclose prior art and the failure to disclose was with the intent to deceive the PTO into issuing the patent, a court might not enforce the patent against an alleged infringer on the grounds the patentee engaged in inequitable conduct.

Lately, it has been common for defendants of patent infringement lawsuits to assert an inequitable conduct defense (perhaps in as many as 80% of patent infringement cases according to some studies), resulting in what is often a substantial amount of work to prove and rebut the defense. The added time and expense has been described by some courts as a “plague.”

The US Court of Appeals for the Federal Circuit recently raised the bar for proving an inequitable conduct defense in the case of Therasense, Inc. v. Beckton, Dickinson and Company. Most notably, 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.

This is in contrast to prior cases which held the intent to deceive could be proven with circumstantial evidence from which a general intent to deceive could be inferred versus the specific intent to deceive that now must be shown; and that the materiality of the undisclosed prior art could be determined from vague standards such as what a reasonable examiner would consider or whether the information is inconsistent with the position the patent applicant had taken.

Based on this case as well as other recent cases requiring strict pleading standards for asserting an inequitable conduct defense, prevailing on an inequitable conduct defense will now be very difficult. However, since inequitable conduct regarding any single claim renders an entire patent unenforceable and can render unenforceable other related patents, there is a good chance patent infringement defendants will not be deterred from continuing to assert an inequitable conduct defense.

For more on this case, see this Bloomberg article.

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Asia-Pacific News – China is transitioning away from the land of cheap products

Posted on May 16, 2011 by Kenneth Tanji, Jr.

In one of our recent cases, we heard very interesting off-the-cuff commentary from one of the parties, who essentially said the following. Chinese companies up until now were satisfied to handle manufacturing for their customers in foreign countries, and their customers would take care of “front office” functions such as sales and marketing for their products. However, due to the maturation of the Chinese companies, and inevitable changes in the Chinese economy, Chinese companies are getting more and more interested in getting involved in front office functions. Soon it will be common for Chinese companies to set up US operations and handle both the manufacturing and the sales and marketing. What this will mean for US manufacturing operations remains to be seen but it can’t be good.

A recent Financial Times article weighs in on changes in the Chinese economy that will accelerate the above.

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Trademark Law, Business Law – Will Chris Bosh’s tougher matchup be Carlos Boozer or Basketball Wives?

Posted on May 14, 2011 by Kenneth Tanji, Jr.

As Chris Bosh of the Miami Heat prepares to take on the Chicago Bulls and we find out which underachieving star power forward (Bosh or the Bulls’ Carlos Boozer) can break through to the NBA Finals, we find that Bosh is able to multi-task enough to recently file a very fascinating lawsuit against his former girlfriend and the producer of the VH1 reality show, Basketball Wives.

The former girlfriend, Allison Mathis, reportedly signed to appear on the next season of Basketball Wives. For those who have not had the privilege of watching Basketball Wives, the show focuses on several past and present wives and girlfriends of past and present NBA players. Bosh contends Mathis will be falsely bad-mouthing Bosh’s parenting skills (Mathis is the mother of Bosh’s child) and imply that she has special insight into Bosh’s life as a “Basketball Wife.”

As a result, Bosh says this will damage his trademark as a role model for children; damage Bosh’s “life rights;” and deceive viewers into thinking Mathis is married to Bosh, has special insight into Bosh’s current life, and that Bosh approved of Mathis’ involvement with the show.

This lawsuit raises a lot of novel issues and the LT Pacific Law blog will watch this case with great interest (that is, if the case continues since now it appears Mathis may not appear on the show after all). For more on this case, click here.

Posted in Business Law, Trademark Law | Comments Off

Business Law – Facebook settlement with Winklevoss twins still stands

Posted on April 17, 2011 by Kenneth Tanji, Jr.

As more cases settle before trial with the assistance of a mediator, two things are important to remember. One is that once the parties sign a written agreement settling the case, it is probably enforceable, even if the agreement is just an interim agreement with the “fine print” to be worked out later. Another is that communications during a mediation really are confidential.

These principles led to the recent 9th Circuit Court of Appeals ruling that the settlement agreement between Facebook and the Winklevoss twins (famous from the Social Network movie: by the way, did you know one actor played the twins in the movie?) was enforceable. As detailed here, the Winklevoss twins claimed to have been had by Facebook because they were paid off in stock in a manner that was not satisfactory to the twins.

Unfortunately for them, they signed off on an interim settlement agreement that gave Facebook broad discretion on the valuation of the shares to be transferred to the twins. Furthermore, the twins had very competent representation and had conducted a thorough investigation on Facebook before the settlement. Finally, evidence that supposedly proved Facebook duped the twins into the settlement was largely based on what Facebook said or didn’t say during the mediation, and this evidence was excluded because as is typical the parties agreed that communications during the mediation are inadmissible in a subsequent proceeding.

Also, what clinched this was the fact that Facebook’s value has skyrocketed since the settlement agreement, so even if the twins were misled, they haven’t been harmed by it as their share is now worth about $150 million instead of the $45 million the twins originally thought they were getting.

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