Source: http://scottbrenner.com/category/law/
Timestamp: 2019-04-24 12:07:27+00:00

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Professor Marianna Bettman of the University of Cincinnati College of Law just posted a preview of four upcoming Ohio Supreme Court Cases–State v. Craig, State v. Hardin, State v. Estrada-Lopez, and State v. Hardin.
–provides a concise summary of recent confrontation clause jurisprudence and a clear explanation of the unique facts of the cases. All four cases involve homicides and the right to confront the State’s medical experts.
Parallel Trade in Copyrighted Materials: What Has Been Happening in the Lower Courts since Quality King v. L’Anza, 523 U.S. 135 (1998)?
Quality King is the Supreme Court’s most recent opinion to circumscribe these efforts. Specifically it limits the right of copyright holders to bar parallel imports of U.S.-manufactured copyright materials.
This paper reviews lower court decisions related to parallel trade in copyrighted materials since Quality King.10 Part II briefly defines parallel imports and price discrimination. Part III gives the facts, procedural history, and reasoning of Quality King. Part IV expands the discussion to include the copyright related parallel import cases decided since Quality King. Part V summarizes the state of copyright law with respect to parallel imports and the future of parallel imports.
To understand the interests at issue in parallel trade, a brief discussion of price discrimination is warranted. Price discrimination is where a seller charges different prices to different buyers when the price difference cannot be explained by a difference in cost.11 Common examples include coupons, ladies nights, and last-minute airfares. In each of these examples the seller is able to charge a different price for the same goods or services.
Producers seek to sell their goods at the most profitable price. Transnational producers traditionally seek higher prices in developed nations like the United States or in European countries and offer their products at a lower price in developing countries such as Mexico or India.
Producers dislike parallel imports because they undermine their ability to maintain higher domestic prices and exclusive marketing programs. The parallel imports typically compete against the non-imported goods at lower prices and through different channels of trade. Producers may rely on contract law13 to limit parallel imports but when contract law fails14 to prevent parallel imports producers often turn to trademark and copyright law.
With respect to copyrighted material there are two basic parallel import scenarios: The first is when the materials are produced in the U.S, exported and re-imported. This round-trip is the scenario at issue in Quality King.15 The second scenario is when the materials are produced abroad. This scenario was expressly not addressed in Quality King. Several species of the second scenario are relevant. First, a market allocation agreement. In this variation the copyrighted materials are manufactured in the U.S. and abroad. The copyright owner licenses the U.S. copyright to a U.S. distributor and the foreign copyright to second distributor with the understanding that each distributor may only distribute within their domestic market. If the foreign distributor begins distributing in the U.S., the materials are parallel imports.16 This is the hypothetical scenario discussed in Quality King and the actual facts of Pearson Educ., Inc. v. Jun Liao.17 In the second species, the U.S. copyright owner produces copyrighted materials outside the U.S. and bars the import of the materials. This is the scenario in Omega S.A. v. Costco Wholesale Corp.18 and the legality of which was left ambiguous in Quality King.
L’Anza sold hair care products to U.S. distributors similar to the castor oil for hair growth.19 These distributors, per a distribution agreement, sold the L’Anza products exclusively to barber shops and salons.20 L’Anza promoted these products in trade magazines and at salons.21 It also sold these U.S.-produced products in foreign markets for prices 35%-40% lower than the U.S. prices.22 L’Anza’s distribution agreements prevented distributors from reselling the products to unauthorized resellers. But through a chain of unknown events a shipment of L’Anza products found it way back to the U.S.
Quality King, a U.S. distributor, purchased this gray-market shipment of Lanza products from a distributor in Malta.23 Quality King then sold the L’Anza products at lower prices to retailer unauthorized by L’Anza.24 These sales undermined L’Anza’s pricing and exclusive marketing program.
Justice Ginsburg joined the majority opinion and filed a two sentence concurrence: “This case involves a ’round trip’ journey, travel of the copies in question from the United States to places abroad, then back again. I join the Court’s opinion recognizing that we do not today resolve cases in which the allegedly infringing imports were manufactured abroad.”36 Her concurrence presaged or precipitated the next legal frontier for producers seeking to curtail parallel imports.
Few round-trip parallel import cases have been brought in the decade since Quality King was decided. Most cases citing to Quality King rely on it for its explanation of the first sale doctrine.37 Cases raising Justice Ginsburg’s question have been primary decided on summary judgment at the district court level. Only one case, Omega v. Costco.,38 has been heard on appeal. The post-Quality King cases include plaintiffs seeking to protect the value of their copyrighted works and plaintiffs using copyright law to protect pricing and exclusive distribution programs. Most of these turn on questions of law so the factual records are often less than full.
The following summaries illustrate the parallel import scenarios, legal reasoning, and outcome of the relevant cases decided since Quality King.
Pearson owns copyrights in textbooks in both the U.S. and foreign jurisdictions. The U.S. editions are manufactured in the U.S. and the foreign editions are manufactured outside of the United States. The foreign manufactured editions are intended by Pearson for sale exclusively outside the U.S. Liao purchased foreign editions of the textbooks and resold them in the U.S. This is not a round-trip parallel import. It is analogous to the hypothetical market allocation agreement postulated in Quality King.
Omega, a Swatch brand, manufactures watches in Switzerland and sells them through authorized dealers.43 Costco was not authorized to deal in Omega watches.44 Omega sold a shipment of Swiss-made watches to a foreign distributor. Through third-party sales, the shipment made its way to a U.S. distributor. This distributor sold the shipment to Costco, who sold the watches in its retail stores. Because the watcher were manufactured in Switzerland they are not a round-trip parallel imports.
Omega sued Costco alleging infringement under §§ 106(3) and 602(a). Both parties moved for summary judgment. Costco claimed the first sale doctrine barred any claim of infringement. The district court accepted this defense and ruled in favor of Costco.
O’Well, a Taiwanese exporter, hired a Chinese artist to create sculptures of lighthouses. O’Well directed a Taiwanese manufacturer, Chiu Yi, to produce the sculptures.62 O’Well owned part of Chiu Yi.63 O’Well sold the sculptures to Offenbacher. When O’Well could not keep up with demand. Offenbacher began buying virtually identical sculptures from Taiwan Novelty Co., who was buying them from Chiu Yi. This too is not a round-trip scenario.
O’Well, to prevent the sales by Taiwan Novelty to Offenbacher, registered copyrights in the sculptures and sued, claiming Offenbacher violated O’Well’s § 106 distribution right and § 602(a) importation right.64 O’Well moved for summary judgment.
The court analyzed whether the first sale doctrine applied by asking whether the sale of the sculptures by Chiu Yi to Taiwan Novelty was authorized by the copyright owner—O’Well.65 “[I]f the [statues] were legitimately acquired, Taiwan Novelty is free to sell [them] to any party it wishes and those parties are free to distribute them further.”66 The ultimate of this case is unknown. Questions of fact remained so the court did not grant the motion for summary judgment, but the the court’s interpretation of § 109 is clear—as long as the first sale was authorized, without respect to where it occurred, then the first sale doctrine applies.67 This only case to be decided not on the location of manufacture but instead on whether the copyright holder authorized the sale.
But the Supreme Court has a history of circumscribing intellectual property rights with respect to parallel imports. And the court is not the only entity that may answer the question. Congress may settle the question by amending the statutes. Or the question may be answered on the international stage. Tensions caused by the disparity in prices charged in developed and developing nations could prompt changes in exhaustion policies.
Under the Wipo Copyright Treaty, signatory nations are free to establish their own exhaustion regimes. If consumer concern over disparate pricing grows, so to will support for regional or international exhaustion.
Factors, likely outcomes, and relevant case law.
Materials Manufactured in U.S. First sales doctrine applies. See Bobbs-Merril. Note: there is no importation. First sales doctrine applies. See Quality King.
1 Quality King Distribs. v. L’Anza Research Int’l, 523 U.S. 135 (1998).
2 Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908). Bobbs-Merrill, a book publisher, sought to control the resale price of its books by including a notice in the books proscribing sale of the book for less than $1. Macy’s (Straus) sold the book for $.89 and Bobbs-Merrill sued.
3 Quality King, 523 U.S. at 140-42.
4 “Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” 17 U.S.C. § 109(a).
5 Novell, Inc. v Unicom Sales Inc., 2004 U.S. Dist. LEXIS 16861 at *13 (N.D. Cal. 2004).
9 See generally the Miller-Tydings Act of 1937, 15 U.S.C. § 1 (legalized retail price maintenance, allowing manufacturers to maintain minimum prices for the sale of their goods); the McGuire Act of 1952, 15 U.S.C. § 45(a) (provides that contracts prescribing minimum or stipulated prices for the resale of a trademarked commodity shall be exempted from the operation of the Federal Anti-Trust Laws). Both were repealed by the Consumer Goods Pricing Act of 1975.
10 523 U.S. 135 (1998).
12 The terms gray-market and parallel imports are also used to describe trademark or patented goods.
13 2-8 Nimmer on Copyright § 8.11. “Contract law has proven inadequate to redress this situation, given that relief is available only against parties with actual knowledge of territorial limitations in the contract between the original grantor and grantee.” Citing Johnson & Johnson Prods., Inc. v. Dal Int’l Trading Co., 798 F.2d 100 (3rd Cir. 1986).
15 Quality King, 523 U.S. at 154.
16 This is a scenario described by Report of the Register of Copyrights quoted in Quality King. 523 U.S. 135, 147-148 (U.S. 1998).
17 2008 U.S. Dist. LEXIS 39222 (S.D.N.Y. May 13, 2008).
18 541 F.3d 982, (9th Cir. 2008).
19 Quality King, 523 U.S. at 138.
33 Quality King, 523 U.S. at 144.
35 Id. at 138, 152.
37 For an amusing read on pro se copyright litigation consider Kettenburg v. Univ. of Louisville, 2005 U.S. Dist. LEXIS 12170 (W.D. Ky. June 16, 2005). The opinion cites to a Quality King footnote, explaining the VARA.
45 Appellee’s Answer at 5, 2007 WL 4985835, December 17, 2007.
47 Appellee’s Answer, 2007 WL 4985835 (C.A.9) (2007).
49 Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. Cal. 2008).
53 Appellee’s Answer, 2007 WL 4985835 (C.A.9) (2007).
69 See Bobbs-Merrill, 210 U.S. 339.
70 See Appendix A for a table of illustrating the likely outcomes and relevant case law.
Posted on May 6, 2009 September 3, 2018 Author sebrennerCategories Law, Law SchoolTags Copyright, Intellectual property, Law, Trademark, United StatesLeave a comment on Parallel Trade in Copyrighted Materials: What Has Been Happening in the Lower Courts since Quality King v. L’Anza, 523 U.S. 135 (1998)?
The Ohio Rules of Professional Conduct should be amended to emphasize that disclosure and informed consent do not cure all conflicts of interest.
The Ohio Rules of Professional Conduct should be amended to emphasize that disclosure and informed consent do not cure all conflicts of interest. The current rules allow conflicts of interest to be waived by providing full disclosure and obtaining informed consent. Likewise, the Supreme Court of Ohio’s opinions hold that attorneys can avoid sanctions by simply disclosing their conflicts of interest. But two arguments militate against disclosure as a cure-all. First, the underlying assumption that clients are capable of evaluating the disclosed risks and adjust their behavior accordingly is only warranted when clients are sophisticated. Second, empirical evidence suggests that disclosure may exacerbate the bias created by conflicts of interest.
(2) there is a substantial risk that the lawyer’s ability to consider, recommend, or carry out an appropriate course of action for that client will be materially limited by the lawyer’s responsibilities to another client, a for a third person or by the lawyer’s own personal interests.
The comments to Rule 1.7 begin by asserting “[t]he principles of loyalty and independent judgment are fundamental to the attorney-client relationship and underlie the conflict of interests provisions of these rules.” These principles should guide and inform the drafting and interpretation of the rules governing conflicts of interest. But Rules 1.7, 1.8, and 1.9 each allow attorney’s to accept or continue representation despite a conflict of interests. If the conflict is fully disclosed and the affected client provides written informed consent. These exceptions are not consistent with the principles asserted in the comments. They undermine the principles by allowing clients, perhaps unwittingly, to waive the loyalty and independent judgment which they expect from an attorney.
Investing the client with the power to waive the conflict of interests is predicated on the assumption that the client “is capable of weighing the risk of the conflict against the value of the representation.” ((Id.)) But this assumption is likely unfounded except when attorneys are working with the most sophisticated and least vulnerable clients.
Consider Disciplinary Counsel v. Rafidi. ((Disciplinary Counsel v. Rafidi, 114 Ohio St. 3d 336 (Ohio 2007).)) An attorney agreed to represent two suspects in a drug cartel investigation. The attorney agreed to represent the first for a $200 flat fee. From this first client the attorney learned that a second suspect in the same matter also needed representation. The attorney offered his services to this second suspect, who agreed to a $20,000 retainer. This created an obvious conflict of interest: one suspect might choose to implicate the other.
Both clients made their decisions to hire the attorney while in police custody with no readily apparent alternatives.
The Supreme Court of Ohio suspended the attorney for six months based on this and other related ethical violations. The court stated the attorney “had an obligation under DR 5-105(A) ((The Supreme Court of Ohio Task Force on Rules of Professional Conduct indicates that Ohio Code of Professional Responsibility DR 5-105(A) was replaced by Ohio Rules ofprofessional Conduct Rule 1.7. http://www.sconet.state.oh.us/Atty-Svcs/ProfConduct/proposal/rule_updates_102805/appendix_c.pdf (last visited Dec. 7, 2007).)) to fully disclose to [his potential clients] his dual representation and to obtain the consent of both clients.” ((Rafidi, 114 Ohio St. 3d at 336.)) This holding indicates that the potential conflict of interest could have been cured by a disclosure.
To illustrate the effect of the conflict the Court noted the attorney focused his attention on the higher paying client. The original client had to call the attorney to find out that he was still a suspect.
The full disclosure may have saved the attorney’s disciplinary record but it is unlikely that disclosure would have changed the behavior of the clients or the attorney. It is unlikely that the disclosure would have compelled the attorney to call his $200 client any sooner. The Court’s opinion notes that the $200 client had previously retained the attorney for another unrelated matter and that the client contacted the attorney for advice in the criminal matter because “he was the only attorney [he] knew”. ((Id.)) This statement reveals that the $200 client was not a sophisticated client and that the full disclosure of the conflict would probably not have inspired the $200 client to seek alternative representation.
In Disciplinary Counsel v. Jacob ((Disciplinary Counsel v. Jacob, 109 Ohio St. 3d 252 (Ohio 2006).)) the Supreme Court of Ohio again implied that disclosure could cure a conflict of interest. In Jacob the attorney represented husband and wife clients. After the husband and wife separated, the attorney helped the husband remove the wife as a beneficiary from a trust and advised the husband to protect some of the husband’s assets from the wife. Subsequently, the attorney accepted representation of the wife. He removed the husband from her will. The attorney did not disclose to the wife his representation of her husband on similar matters. Consequently he did not secure informed consent. For this failure the Court sanctioned the offending attorney.
As in Rafidi the attorney could have saved his good name by disclosing the conflict but it is not clear the wife’s interests would have been any better served. Considering her existing relationship with the attorney, an attorney she trusted, the disclosure of the conflict may not have inspired the wife to seek alternative counsel.
Scholars expert in the effects of disclosure suggest that disclosure often has then effect of building trust instead of encouraging the client discount honesty an loyalty of the relationship. ((Daylian M. Cain, George Loewenstein, and Don A. Moore, The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest, 34 J. Legal Stud. 1, 6 (2005).)) The disclosure by the conflicted party is often viewed as an act of honesty. This act engenders trust and reduces the likelihood that biased advice will be appropriately discounted.
The Rafidi opinion illustrates this effect. The Court cited the attorney’s full disclosure of the offense to the Board as a mitigating factor. In other words the disclosure increased the attorney’s esteem in the eyes of the Court.
Besides engendering misplaced trust or esteem, disclosure may exacerbate the bias inherent to conflicts of interest. In a recent empirical study of the effects of conflicts of interest researchers concluded that disclosure benefited the disclosing party and harmed the party seeking advice. This conclusion was reached by testing three scenarios involving “advisors” and “estimators.” The advisors, analogous to attorneys, provided advice to the estimators, analogous to clients, regarding the value of a jar of money. The estimator was afforded only a glance at the jar, but the advisor had time to thoughtfully inspect the jar.
In the first scenario both the advisor and the estimator earned money based on the accuracy of the estimator’s estimate of he value of the money in the jar. The advisor was rewarded for giving helpful advice. The more accurate the estimate, the more money both parties earned. There was no conflict of interest in this scenario.
In the second scenario the estimator was compensated the same way but the advisor was rewarded for misleading the estimator. The less accurate the estimate, the more money the advisor received and the less the estimator received. In this scenario the estimator was not aware that the advisor had a conflict of interests. Not surprisingly the advisor’s advice was misleading and the estimator’s estimates were less accurate. In this scenario the estimators earned less money than they did in the first scenario.
In the third scenario the incentives remained the same as in the second, but in this scenario there was full disclosure. The estimator knew that the advisor had a conflict of interest; that the advisor had an incentive to mislead the estimator. Again not surprisingly the estimator received misleading information. But what is surprising and significantly undermines the belief that disclosure cures conflicts is that the estimators faired worse when the conflict was disclosed.
Based on a statistical analysis of the data the researcher offer two explanations. First, that it is difficult to properly discount advice tainted by a conflict of interests. This difficulty was not abated by repeated experiences. ((“the results provided no grounds for concluding that either experience with the task or feedback lessened the biasing effects of disclosure.” The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest, supra note 13.)) Second, that advisors were more willing to give self serving “advice” when the estimator was on notice of the conflict. The disclosure shifted responsibility from the advisor to the estimator.
In short the researchers found that estimators (clients) faired the best when there were no conflicts of interest and that they faired the worst when conflicts were disclosed. Advisors faired the best when their conflicts were disclosed.
This research combined with the holding by the Supreme Court of Ohio that disclosure can cure conflicts of interest shows that the Ohio Rules of Professional Conduct should be amended to reduce the questionable perception that disclosure can cure a conflict of interests. Attorneys have only their good name. Similarly, the profession has only its reputation. The Rules are one way that this reputation is upheld. By reducing reliance on disclosure to cure conflicts of interest the Rules can protect and enhance the reputation of the profession.
No doubt that each lawyer values his reputation. Premier family law attorneys behind Hoyer Law are working to defend your rights and protect your financial wellbeing. Do not hesitate to contact if you are looking for the experienced attorneys in family law and criminal defense.
Posted on February 4, 2009 April 1, 2019 Author sebrennerCategories Commentary, Law, Law School, PersonalTags conflict of interest, disclosure, ethics, Law, ohioLeave a comment on The Ohio Rules of Professional Conduct should be amended to emphasize that disclosure and informed consent do not cure all conflicts of interest.
Larry Lessig explains how the U.S. democracy, dependent on “corrupt” campaign contributions, is deteriorating.
He quotes President Reagan describing how democracies fail—by voting themselves into bankruptcy.
This expression did not originate with Reagan, it provenance is unclear.
The authors propose several steps to help judges avoid erroneous intuitions—checklists and more time to deliberate.
The full article: BLINKING ON THE BENCH, Blinking on the Bench: How Judges Decide Cases, Chris Guthrie, Jeffrey Rachlinski, and Andrew J. Wistrich is available from the the ABA. The title appears to be an allusion to Blink by Malcolm Gladwell.
The Constitutional Convention was called to amend the Articles of Confederation.
The Articles of Confederation required a unanimous vote of all member states.
The current US Constitution was adopted by the state without a vote on the Articles of Confederation.
This syllogism is tempting but the ratification of the Constitution by each state that was party to the Articles of Confederation is in implicit unanimous amendment to the Articles replacing them with the Constitution.
This is not to say that the facts on the ground need not be acknowledged. In general the longer a situation persists the more acceptable it becomes—eventually to the point that it becomes accepted.
TED, an annual conference that brings together people from technology, entertainment, and design, just posted a video of a March 2007 talk by the patron saint of progressive copyright thinkers—Lawrence Lessig. Like all TED talks it is less than twenty minutes.
For those familiar with Lessig’s talks or recent books the first 1/3-1/2 of talk is the same stories he frequently uses to illustrate the history and evolution of technology, law and copyright—i.e., John Sousa’s congressional testimony, airplanes, and BMI vs. ASCAP.
Lessig next provides a primer on remixing media, showing the “old people” how “young people” enjoy/use their media. He analogize it to the singing of songs in the time of Sousa.
In the last part of the talk Lessig offers something new, at least to me—a more refined vision of and justifications for content that is more free of restriction on its use. He connects the current prohibitions on the use of content and the stigmas created by the prohibitions to the mental and social health of young people. It is an argument that I have made to my friends and family— a legal framework that 40+ million Americans violate everyday is not viable nor democratic.
As a bonus TED has bookmarked the chapters of the talk. UPDATE: the chapters are only available if you watch the video on TED’s site.
In this six minute clip film maker Brian De Palma, who directed Scarface and Mission: Impossible, debates fair use with Eamonn Bowles—the president of Magnolia Pictures.
Despite the heated debate Magnolia is distributing De Palma’s new film Redacted. Ironically clips from the film are redacted out of fear that use of the clips is not protected by fair use. De Palma thinks they are protected. Bowles and more importantly the owner of the Dallas Mavericks and Magnolia, Mark Cuban, thinks they are not protected by fair use.
A couple minutes into the clip the producer of the film gets on stage and gives an evenhanded, though sad description of how unclear fair use laws and fear of litigation chill the work of artists like De Palma.
I hope use of this clip is protected by fair use.
Gilbert- (Torts, Contracts, Constitutional Law) I like the Gilbert books because they really help me test my knowledge and fill in any holes in my understanding. These books are not great for learning a topic from scratch.
These guides are organized in four sections- Casebook map, short outline (~60 pages), long outline, and practice questions. The first section is a table that shows which pages in the guide correspond specific pages in the case books. This table is very helpful in determining what portions of the outlines correspond to what the professor assigned.
Obviously, the short outline is an abbreviated version of the long outline. The short outline is where I start reviewing. When I come across a section that is not clear to me I refer to the longer outline. Both the long and short outlines use the same numbering making it very easy to find the expanded explanation in the longer outline.
The last section of the book contains practice questions with answers. The first 100+ questions present simple, short, two or three sentence hypotheticals and one or two direct questions. The issue is clearly identified and the answer is also short and clear. I like reviewing these when I only have a short period of time to spend studying. Since there no need to “spot the issue” they work almost like flash cards.
After the short answer questions there about five traditional issue spotter essay questions with model answers.

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