Source: http://ipblog.abv.com/2013/
Timestamp: 2019-04-26 12:56:54+00:00

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In a November 25, 2013 ruling, Judge Shira A. Scheindlin dismissed as moot the patent invalidity counterclaims of TNS Media Research LLC and other defendants in plaintiff TRA Global, Inc.'s patent infringement action. After granting summary judgment of non-infringement, the Court noted that the defendants "raised their patent invalidity contentions as affirmative defenses to TRA's patent infringement claims, and the only affirmative relief they seek is a declaratory judgment of non-infringement." Thus, Judge Scheindlin ruled that the "motion for summary judgment of invalidity is moot."
In a November 14, 2013 decision, Judge Denny Chin (continuing a case in which he presided before joining the Second Circuit) granted summary judgment in favor of Google, Inc in the long-running case by The Authors Guild, Inc. based on the fair use defense to copyright infringement. As part of its Google Books program, Google "has scanned more than twenty million books," "has delivered digital copies to participating libraries, created an electronic database of books, and made text available for online searching through the use of 'snippets.'" Since many of the scanned books are still under copyright, The Authors Guild, and three named plaintiffs brought a class action copyright infringement action. The parties cross-moved for summary judgment on Google's fair use defense.
At the outset, Judge Chin assumed that the plaintiffs had made out a prima facie case of infringement, and that the sole issue for decision "is whether Google's use of the copyrighted works is 'fair use' under the copyright laws." The defense, which the defendant has the burden of proving, is codified at 17 U.S.C. § 107, and requires the consideration of four non-exclusive factors: "(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work." The Court considered each of these factors in turn.
In a November 12, 2013 ruling, Judge Richard J. Sullivan denied plaintiff Roche Diagnostics GMBH's motion to supplement its invalidity contentions in its patent infringement action against Enzo Biochem, Inc. The Court noted that the dates for the service of infringement and invalidity contentions were originally proposed by Roche because, as Roche urged, early contentions streamline discovery and simplify patent cases. In denying the motion to supplement, Judge Sullivan noted that the Court had previously denied Enzo's motion to supplement its infringement contentions, and that although the parties jointly sought discovery extensions, they did not seek to extend either of the contention deadlines. Thus, the Court concluded: "If Roche needed more time to research or respond to Enzo's accusations, then it should have sought an extension before the may 17, 2013 deadline -- an interim deadline Roche emphatically advocated -- or at the very least before now, nearly half a year later."
In an October 25, 2013 ruling, Judge Katherine B. Forrest granted summary judgment in favor of plaintiff Complex Systems, Inc. on its copyright infringement claims against defendant ABN Ambro Bank N.V. over a software application known as BankTrade 8.0. Complex Systems holds the copyright registration for BankTrade 8.0, and alleged ABN Ambro's willful infringement arising from its continued use of the software. ABN Ambro asserted as defenses that it had rights to use BankTrade 8.0 because of its subsidiary's prior licensed use, or joint authorship and ownership. Judge Forrest had previously rejected ABN Ambro's argument that its subsidiary had assigned the license to BankTrade 8.0 before the subsidiary was divested.
The Court, plainly annoyed with ABN Ambro's shifting positions and theories throughout the litigation, first rejected ABN Ambro's contention that its former subsidiary could belatedly assert some ownership rights in the software, and transfer those rights to ABN Ambro. Judge Forrest noted that the registration was first filed in 2008, and thus ruled that whether the subsidiary "could have once, long ago, asserted ownership rights to BankTrade 8.0 (by virtue of its position as an 'author' of some code), is now an irrelevant detour: it did not."
The Court further rejected on the merits the claim that ABN Ambro's former subsidiary was a joint author or co-owner of BankTrade 8.0. Quoting the Copyright Act, Judge Forrest wrote that a "joint work of authorship is 'a work prepared by two or more authors with the intention that their contributions be merged into an inseparable or interdependent parts of a unitary whole.'" Judge Forrest then found that, even if the facts established joint authorship, the former subsidiary had failed to timely assert those facts and to assert ownership as a result of that authorship. The Court, applying a three year statute of limitations, noted that neither ABN Ambro nor its former subsidiary asserted any ownership right in BankTrade 8.0 in the limitations period. Finally, Judge Forrest rejected ABN Ambro's standing to assert its former subsidiary's ownership rights, even if they existed, ruling that the "law is clear that a party accused of infringement cannot defeat that claim by pointing to rights that another may have to the work in question."
In a September 30, 2013 ruling, Judge Richard J. Sullivan granted summary judgment and attorneys' fees to plaintiff 16 Casa Duse, LLC in its copyright declaratory judgment action against defendant Alex Merkin over the ownership of the copyright in the short film entitled "Heads Up." The plaintiff purchased all rights to the screenplay for the film, and then assembled a cast and crew. Every member of the cast and crew, except Merkin, the director, signed agreements specifically assigning all intellectual property rights to the plaintiff. After a director's cut of the film had been completed, a dispute about copyright ownership developed between the plaintiff and Merkin. When the parties' relationship completely broke down, Merkin obtained a copyright registration in the director's cut of the film, listing his authorship as "direction/director." Plaintiff commenced this action, and its amended complaint asserted, among other claims, declaratory judgments that the plaintiff is not liable for copyright infringement and that Merkin has no ownership in any copyright to the film, and to invalidate Merkin's registration. Merkin counterclaimed with various declaratory judgment claims relating to the copyright issues. Both parties moved for summary judgment.
Judge Sullivan easily disposed of the plaintiff's claim of non-liability for copyright infringement, ruling that the plaintiff was -- at the very least -- a joint author of the work, so the plaintiff could not "be liable for copyright infringement because co-authors each own an undivided interest in the work."
The Court next considered whether the plaintiff was the sole or co-author of the work under the Second Circuit's two-pronged test which looks at whether "'each of the putative co-authors (1) made independently copyrightable contributions to the work; and (2) fully intended to be co-authors.'" Regarding the first prong, Judge Sullivan found that the plaintiff did "not contest that Merkin made independently copyrightable contributions to the Film." Judge Sullivan, however, strongly found against Merkin on the second prong, finding that "the record uniformly establishes that Plaintiff, through its principal, . . . never intended to share authorship of the film with Merkin or anyone else."
The Court concluded the plaintiff "is entitled to a declaratory judgment that Merkin holds no copyright ownership interest in the Film." Judge Sullivan rejected Merkin's counterclaims based largely on the conclusion that Merkin has no copyright interest in the film, and likewise invalidated Merkin's registration in the director's cut to the film that Merkin had obtained.
In a September 26, 2013 ruling, Judge Cathy Seibel denied the parties' cross-motions for summary judgment in Firesabre Consulting LLC's copyright infringement claim against educator Peggy Sheehy and the board of the Ramapo Central School District. The "copyright case arises from a dispute over payment for computer programming and digital design services rendered in connection with the virtual world Second Life. Second Life is an internet-based simulation in which users appear via digital characters called 'avatars' and interact with a computer-generated environment." Sheehy and others in the school district created three "islands" in Second Life for educational use with her students. After meeting the principal of Firesabre Consulting, Frederick Fuchs, at a conference, Sheey had him to do some development work on the islands. Fuchs also later developed three additional islands for Sheey's Second Life project. There was never any written contract between Firesabre Consulting and the school district, but the district did pay Firesabre Consulting $5,000 for some of the work. After a falling out, Firesabre Consulting demanded that the school district stop using its work. Also after that, the school district migrated its "islands" from the Second Lfe platform to SIMS, copying some of plaintiff's work in the process.
Firesabre Consulting sued for copyright infringement, alleging that the defendants' continued to use his work after the relationship soured (and thus ended any license to the work), and that the migration from Second Life to SIMS involved unauthorized copying. Defendants defended by arguing that the plaintiff's work was ineligible for copyright protection because it was not "fixed," and that the plaintiff's copyright deposit was insufficient to bring defendants' copying within its scope. Judge Seibel rejected both these defenses, ruling that "[d]igital images in a video game are 'fixed' within the meaning of the Act" when they are stored in memory, and that although plaintiff's deposit could have been more complete, the overall design of Firesabre Consulting's work was sufficiently visible in the deposit. The Court denied plaintiff's motion for summary judgment, though, finding issues of disputed fact about whether the defendants' work was substantially similar to the copyrighted work, and about the scope of defendants' authority to use plaintiff's work.
In a September 23, 2013 ruling, Judge Andrew L. Carter denied plaintiff Expressway Music, Inc.'s motion to dismiss defendant Slep-Tone Entertainment Corp.'s trademark infringement and unfair competition counterclaims. Slep-Tone alleged that Expressway "acquired or made unauthorized duplicates of Slep-Tone's karoke accompaniment tracks. These unauthorized media- and format-shifted duplicates were marked with Slep-Tone's 'SoundChoice' trademark and distinctive trade dress." The Court found that these allegations were sufficient to meet the Iqbal standard and state trademark and unfair competition claims.
Expressway argued that the real thrust of Slep-Tone's complaint was to challenge the copying of the media- and format-shifted recordings, which is in the nature of copyright infringement, not trademark infringement. Judge Carter noted that the "case may toe the line between a trademark claim attempting an 'end run around the copyright laws' and a viable trademark claim," but that "regardless of the copyright status of these videos, Slep-Tone alleges facts about the misuse of its trademark on products it did not create, namely because Slep-Tone's registered trade dress and trademark appear on Expressway's media- and format-shifted tracks. These are cognizable claims under the Lanham Act."
In a September 10, 2013 ruling, Judge Paul G. Gardephe granted defendant Hilton Worldwide, Inc.'s motion for attorneys' fees after it secured summary judgment against plaintiff Aqua Creations USA, Inc.'s copyright infringement claims. Aqua Creations had sought copyright registrations on its lighting designs. The Copyright Office denied registration, finding that the lighting designs were useful articles that did not contain any creative authorship separable from the articles themselves. After the Copyright Office denied reconsideration, Aqua Creations started the action against Hilton, alleging copyright infringement of its unregistered lighting designs. Hilton sought a pre-motion conference to dismiss the complaint because it failed "'to identify any separable, non-functional, artistic elements of the designs.'" At the conference, the Court gave Aqua Creations leave to file another amended complaint. That amended complaint, however, suffered from the same defect, and Judge Gardephe granted Hilton's motion to dismiss. Aqua Creations appealed, and the Second Circuit affirmed, relying on the same cases and adopting the same reasoning as Judge Gardephe had in dismissing the amended complaint.
Hilton then sought attorneys' fees, for the cost of the appeal only, under the Copyright Act provision giving the Court discretion to award fees to the prevailing party, 17 U.S.C. § 505. Judge Gardephe found that "[b]y the time Aqua filed its appeal, it had been alerted on at least five separate occasions that its copyright claims were defective, because it had not demonstrated that the designs in its light fixtures were separable from the utilitarian and functional aspects of these lamps" -- twice by the Copyright Office, once by Hilton in its letter asking for a pre-motion conference, and twice by the Court in considering the adequacy of Aqua Creations' complaints. The Court thus ruled that "[u]nder these circumstances, this Court cannot find that Aqua's actions in prosecuting the appeal were objectively reasonable." Judge Gardephe awarded fees, but in a reduced amount from that sought by Hilton.
In a September 10, 2013 ruling, Judge Alison J. Nathan granted in part defendants' motion to dismiss plaintiff TufAmerica, Inc.'s copyright infringement action. TufAmerica, which is "the putative exclusive administrator and copyright licensee of a number of copyrights to the compositions and sound recordings of the musical group Trouble Funk," sued the individual members of the Beastie Boys and others, alleging that the group "unlawfully sampled a number of Trouble Funk's songs on the Beastie Boys' hit albums Licensed to Ill and Paul's Boutique." TufAmerica's amended complaint asserted copyright infringment claims for six acts of unlawful sampling in Beastie Boys songs, and in particular that the samples "infringed both the musical composition and the sound recording of the sampled Trouble Funk songs."
In analyzing whether the accused songs were substantially similar to the sampled songs for copyright infringement purposes, Judge Nathan applied the "fragmented literal similarity" test under which the Court examines whether there is "'localized' rather than 'global' similarity between the two pieces." Applying this test, the Court noted that "'the question of substantial similarity is determined by an analysis of "whether the copying goes to trivial or substantial elements' of the original work.'" Further, Judge Nathan wrote that the "real question" at the motion to dismiss "stage -- more so than the question of how to label the relevant test -- is whether (as to each sample) Plaintiff has plausibly alleged that the sample is quantitatively and qualitatively important to the original work such that the fragment similarity becomes sufficiently substantial for the use to become an infringement."
In an August 30, 2013 ruling, Judge Alvin K. Hellerstein denied plaintiff Alcorn Communications, LLC's motion to strike defendant Marketwire, Inc.'s patent infringement affirmative defenses of prosecution history estoppel and/or prior art finding that "these allegations are too important, and too conclusory, to be answered, but no answer to an affirmative defense is required." The Court, however, cautioned that "without greater specificity, no discovery will be allowed with respect to this defense, and the defense is likely to be stricken before trial."
In an August 27, 2013 ruling, Judge Alison J. Nathan denied defendant T-Mobile USA, Inc.'s motion for reconsideration of the Court's earlier claim construction ruling. Judge Nathan noted that "Defendant has failed to meet the motion for reconsideration standard," but the Court nevertheless considered T-Mobile's arguments and found them meritless. One of T-Mobile's contentions, presented in the motion for reconsideration for the first time was that the preamble of the claim at issue "should be read to limit claim scope because the claim does not make sense without any preamble." The Court rejected this argument, writing that "most claims would not make sense without any preamble, yet the Federal Circuit has instructed that 'generally' preambles do not limit claim scope." Judge Nathan also concluded "that the claim is understandable without considering the preamble as a limitation, and that the claim body independently and fully describes a coherent device without any limitation imposed by the preamble." The Court considered and rejected T-Mobile's remaining three arguments, and denied reconsideration.
In an August 26, 2013 ruling, Judge Deborah A. Batts denied reconsideration of the Court's ruling dismissing plaintiff Edwin Lyda's patent infringement claim against Fremantlemedia North America, Inc. Lyda argued that the Federal Circuit's decision in Akami Techs, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012), which overruled in part BMC Resouces Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) relied on in the Court's original ruling, warranted reconsideration. Akamai and BMC, however, both deal with induced infringement, and Lyda's claim was based on direct infringement. Judge Batts ruled that Akamai did not overrule the portion of BMC on which she relied in her earlier decision, and that the Akamai decision "consciously avoided ruling on direct infringement." Thus, Judge Batts found that "Akamai did not change the law of direct infringement, and it is, therefore, not relevant to the Court's prior decisions."
In an August 12, 2013 ruling, Judge Colleen McMahon denied defendant Conduit Limited's post-trial motions for judgment as a matter of law and plaintiff MyPlaycity, Inc.'s ("MPC") motion for attorneys' fees in what the Court characterized as a "long, tortuous" litigation. Before trial, Judge McMahon had entered summary judgment of liability in favor of MPC on its Lanham Act claims, common law trademark infringement and unfair competition claims, and unjust enrichment claim. The Court "also concluded that Conduit had acted in bad faith as a matter of law." After a damages trial, the jury awarded $500,000 in disgorgement of Conduit's profits. Despite the clear wording of 15 U.S.C. § 1117(a) that the plaintiff need only prove the defendant's sales in seeking an award of profits and the burden is on the defendant to prove any offsets, Conduit argued that "MPC bore the burden of distinguishing between Conduit's profits flowing from its infringing activity and from its non-infringing uses of MPC's trademark." The defendant's argument was based principally on Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767 (2d Cir. 1984). Judge McMahon considered that case and the cases discussing it, and concluded that "Conduit is wrong to assert that Burndy (or any other of the cases it cites) required MPC to do more than demonstrate the gross amount of Conduit's . . . profits from activity related to" MPC's use of the mark. It then became Conduit's burden under Section 35(a) of the Lanham Act to prove that this entire amount was to unjust enrichment." The Court considered, and rejected, a variety of other attacks on the damages award, and ultimately upheld it in its entirety.
In an August 12, 2013 ruling, Judge Laura Taylor Swain, applying the Northern District of California patent rules, denied plaintiff Richard A. Williamson's motion to amend its infringement contentions in its patent infringement action against AT&T Operations, Inc. The plaintiff sought to amend his contentions supposedly in response to information learned from AT&T's Rule 30(b)(6) deposition and 1.8 million page document production. AT&T contended, and the Court agreed, that the information that Williamson supposedly learned through discovery was publicly available before he filed his infringement contentions. Williamson nevertheless contended "that publicly available information at the time he served his infringement contentions was less reliable than non-public information that became available during discovery." Judge Swain rejected this argument, writing that "[a]llowing a Plaintiff to delay serving infringement contentions because publicly available information might not be as reputable as yet-undisclosed information would run contrary to the purpose of the" infringement contention disclosure rules of focusing discovery and the remainder of an infringement case. The Court thus found that the plaintiff lacked diligence in seeking to amend his contentions, and denied the motion without having to reach whether AT&T was prejudiced by the delay.

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