Thursday, February 4, 2016

Does a Patent Plaintiff's Unsuccessful Belief That It Can Enforce A Patent Render A Case Exception?

No.

Sweepstakes Patent Company ("SPC") acquired a license to use U.S. Patent 5,569,082 in certain fields.  SPC later sued a number of defendants for infringement.  But the license agreement provided:
[Patent Owner - not SPC the licensee] shall, in its absolute discretion, instittute or not institute proceedings or defend or not defend proceedings ... as [it] shall deem fit, provided, however, where [Patent Owner] decides not to institute or defend any proceedings, it shall advise [SPC] of same and in such circumstance, [SPC] shall have the right at its own cost and expense, to institute or defend such proceeding. ...
* * * 
Subject to the foregoing, neither the Licensee nor any sublicensee shall under any circumstances whatsoever, institute or respond to ay claim or legal proceeding of any third party relating to the Inventions or any of the Patents without first obtaining the prior written consent of the [Patent Owner] 
SPC did not receive Patent Owner's written permission to file the lawsuit, and thus did not have standing to assert a patent infringement claim.  The Court dismissed the claim on that ground.  Defendants also pursued a motion to sanction SPC on this theory.  That sanction motion was denied, as the Court found that SPC made "colorable arguments" on the issue.

Defendants (after appellate confirmation of the dismissal) attempted to recover their fees by asking the Court to find the case exceptional pursuant to 35 U.S.C. § 285.  The Court presented the law:

A district court may award attorney’s fees pursuant to § 285 of the Patent Act. 35 U.S.C. § 285; Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct 1749, 1753 (2014). According to that provision, “[t]he court in exceptional cases may award reasonable attorney’s fees to the prevailing party.” Id. The Supreme Court’s holding in Octane Fitness makes clear that § 285 imposes only one restriction on the imposition of attorney’s fees: “that the power is reserved for exceptional cases.” Octane Fitness, 134 S.Ct at 1756. The Supreme Court clarified that “exceptional” is defined according to its ordinary meaning, as one that “stands out from others with respect to the substantive strength of a party’s litigating position . . . , or the unreasonable manner in which the case was litigated.” Id. The court may, in the exercise of its discretion, consider the totality of the circumstances and make a case-by-case determination. Id. District courts may look to a “nonexclusive” set of factors, including “frivolousness, motivation, objective unreasonableness . . . or the unreasonable manner in which the case was litigated. NXP B.V. v. Blackberry, Ltd., 58 F. Supp. 3d 1313, 1317 (M.D. Fla. 2014). The party moving for an award of attorney’s fees must demonstrate by a preponderance of the evidence that the case is “exceptional.” Id. A case is not exceptional merely because a party has a good faith belief that there is standing to sue but is ultimately incorrect. Clouding IP, LLC v. EMC Corp., No. 13-1355-LPS, 2015 WL 5766872, at *2 (D. Del. Sept. 30, 2015). The focus is the “substantive strength of the party’s litigating position . . . , not the correctness or eventual success of that position.” See SFA Sys., LLC v. Newegg, Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015)
The Court then analyzed (and rejected) Defendants' arguments that SPC's claims were so weak as to warrant an exceptional case finding:
The undersigned Judge agrees with the Magistrate Judge that Clouding IP stands for the proposition that an ultimately unsuccessful belief as to standing that is brought in good faith does not render a case exceptional.  In the present case, the Court has not found that SPC had any improper motivations other than a good faith, but ultimately incorrect, argument that it had standing based on its interpretation of the License Agreement.
Renewed Motion for Attorneys' Fees, denied.

Sweepstakes Patent Co. v. Chase Burns, Case No. 6:14-cv-151 (M.D. Fla. Feb. 2, 2016) (J. Conway)

Monday, January 11, 2016

Must A Copyright Holder Attach The Deposit Copy To Its Complaint?

No.  Rule 8 (i.e. notice pleading) is alive and well in the copyright context.

PK Studios, Inc. provided architectural drawings for homes to Stock Development, LLC in connection with development in two communities.  PK provided a release to Stock allowing it to use the architectural drawings for the two communities and for any other projects developed solely by Stock.

Ten years later (in 2014), PK discovered another community being developed by other parties which PK claims are "exact duplicates" of the drawings it had provided to Stock a decade earlier.  PK notified the developers of this new community, who responded that they received a license from Stock.  But PK states that Stock was not authorized to provide such a license.  So PK sued all sets of developers.

The developers of the new community sought dismissal on the pleadings, arguing that PK did not sufficiently identify the work because it did not attach the copy of the drawings it had submitted to the Copyright Office.  According to the defendants, this did not provide sufficient notice to them in order to frame a response.  The Court did not agree:

While the Court agrees with Defendants that PK Studios cannot ultimately prevail on this count without providing the specific materials alleged to have been copied so that they can be compared to the Eagles Landing designs, PK Studios was under no obligation to do so at the pleading stage, In re Southeast Banking Corp., 69 F.3d 1539, 1551 (11th Cir.1995) (Rule 8 does not “impose upon plaintiffs the burden to plead with the greatest specificity they can”), and Defendants will be able to obtain this information during discovery
Motion to dismiss (or for a more definite statement), denied.

PK Studios, Inc. v. R.L.R. Investments, LLC, Case No. 2:15-cv-389 (M.D. Fla. Jan. 4, 2016) (J. Steele)

Monday, January 4, 2016

Is Making a Song Available Via the Internet An Act of Copyright Infringement?

No, not really.  But it can survive the pleadings.

A number of Record Companies asserted their rights against a number of Accused Infringers.  The rights at issue relate to a number of sound recordings, 25 of which were recorded before 1972, and 600 or so recorded afterwards.  In late 2012 the Record Companies notified the Accused Infringers that "there were hundreds of links to Internet videos posted" by the Accused Infringers which allegedly contained material protected by the Record Companies' copyrights.

The attempts to resolve the disputes prior to litigation did not work, so the Accused Infringers sued the Record Companies.  The Record Companies asserted counterclaims for copyright infringement.  The Accused Infringers sought dismissal on a number of grounds:

Public Performance
The Accused Infringers argued that there could not be any violation of a right to "public performance" because the "public performance" limitation only applied to musical works, not the audiovisual works that were at issue.  The Court was not persuaded:
Initially, the Court is not persuaded that the definition of “digital audio transmission” definition set forth in § 114(j) (5) is applicable to an infringement analysis under § 106(6) because the Act cautions that the terms the § 114(j) definitions are only for use in § 114.  See 17 U.S.C. § 114(j) ("As used in this section, the following terms have the following meanings....”); see also, Creative Non-Violence v. Reid, 490 U.S. 730, 748 n. 14 (1989) (noting that courts must strictly adhere to the language and structure of the Copyright Act); Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 432 (1984) (requiring circumspection when construing the Copyright Act and adherence to the Act's concern for the general public good).
Further, applying the § 114(j)(5) definition in the manner urged by Amway is contrary to the admonition in § 103(a) that “copyright protection in preexisting material is not affected by use of such material in a “work that is based upon one or more preexisting work” such as a sound recording. See id. § 101 (defining “derivative works”). Indeed, copyrights in a preexisting work are “completely independent of” an audiovisual work that incorporates the preexisting work.” See Traicoff v. Digital Media, Inc., 439 F. Supp. 2d 872, 883 (S.D. Ind. 2006) (noting that “the copyright of an independent and preexisting sound recording” cannot be invalidated by “incorporating” the sound recording “into an audiovisual work”). 
Here, the Registered Recordings are “preexisting material” that must be distinguished from any audiovisual works in which they are incorporated—including the Accused Videos.  Stewart, 495 U.S. at 216–17 (rejecting argument that Court should “read into the Copyright Act a limitation on the statutorily created rights of the owner of an underlying work”). Accordingly, the Court rejects Amways' argument that—based on § 114(j)(5)—the Record Companies' “public performance” claim under § 106(6) fails as a matter of law.

Making the Work Available
Is "making the work available" a violation under the Copyright Act?  Technically, no.  But the Court did not need to dismiss this portion of the claim on pleading grounds, as there is still liability under the vicarious liability theories:
Although the Court agrees that the Act does not confer a “making available” copyright under § 106, the Court does not agree that relief is warranted under Rule 12(b)(6). Notably, the act of making a copyrighted work available for the use of a direct infringer is relevant to the Record Companies' indirect infringement claims against Amway. See Atlantic Recording Corp. v. Howell, 554 F.Supp.2d 976, 983 (D. Az. 2008); Capitol Records, Inc. v. Thomas, 579 F. Supp. 2d 1210, 1225 (D. Minn. 2008) (stating that although dissemination needs to be proven to meet the distribution standard in the act, the proof need not be direct and can come from circumstantial evidence). Thus, the Motion is due to be denied with respect to Amway's “making available” argument. See Warner Bros. Records, Inc. v. Payne, 2006 WL 2844415, *2 (W.D. Tx. 2006) (declining, at the pleading stage, to reject “making available” theory a possible ground for imposing liability).
Public Performance Under Florida Common Law
Like the "making available" issue above, the Court noted that Florida common law did not recognize a cause of action for public performance right with respect to a sound recording, but determined it was not necessary to dismiss such claim on the pleadings.

Unidentified Parties - Does 1-20
The Accused Infringers last sought dismissal of the 20 parties identified only as Does 1-20.  The Court did not find this necessary:
In a footnote, the Amway Interests argue that the Court should dismiss Does 1 through 20 because fictitious party pleading is disallowed in federal courts. (See Doc. 113, p. 1 n.1.) Federal Rule of Civil Procedure 10(a) requires that the title of a complaint include the names of “all the parties,” and the U.S. Court of Appeals for the Eleventh Circuit discourages fictitious party pleading as a practice that is contrary to the public's right in open judicial proceedings. See Roe v. Aware Woman Center for Choice, Inc., 253 F.3d 678, 684–85 (11th Cir. 2001). Nonetheless, reference to a fictitious party may be permitted if it is mere “surplusage” (see Richardson v. Johnson, 598 F.3d 734, 738 (11th Cir. 2010)), or the fictitious party will be identified through discovery (see Tracfone Wireless, Inc. v. Access Telecom, Inc., 642 F. Supp. 2d 1354 (S.D. Fla. 2009)). 
Here, the Does 1 through 20 are effectively identified for pleading purposes based on the Record Companies' identification in Tables 1 through 4 of specific creators and uploaders of the Accused Videos. Identification of the Doe Defendants is further discerned based on the IBOs named as Defendants in the 2045, 1511, and 776 Actions. Thus, under the unique circumstances presented here, the Court does not find it necessary to strike Does 1 through 20 under Rule 12(f) or to dismiss any claims based on Rule 10(a). See Weiland v. Palm Beach County Sheriff's Office, 792 F.3d 1313, 1318, n.4 (11th Cir. 2015) (noting that the court had simply ignored the improperly named fictitious parties).

Motion to dismiss counterclaims, denied.
Alticor, Inc. v. UMG Recordings, Inc., Case No. 6:14-CV-542 (M.D. Fla. Dec. 11, 2015) (J. Dalton)


Wednesday, December 30, 2015

Where Does Trademark Infringement Tort Occur For Venue Purposes?

Where the trademark owner resides, at least under Florida's long-arm statute:
Under Florida's long-arm statute, Defendant is subject to personal jurisdiction where it commits a “tortious act within th[e district].” § 48.193(1)(a)(2), Fla. Stat. Trademark infringement is considered a tortious act under Florida's long-arm statute, Mighty Men of God, Inc. v. World Outreach Church of Murfreesboro Tenn., Inc., 6:14-cv-947-Orl-41TBS, 2015 WL 1534446, at 3 (M.D. Fla. Apr. 6, 2015), and is deemed to take place where the trademark owner resides, Nida Corp. v. Nida, 118 F. Supp. 2d 1223, 1228 (M.D. Fla. 2000).  Because the true owner of the trademark and trade dress at issue is disputed among the parties, Plaintiff is credited as the trademark holder for the purposes of determining venue.  Because Plaintiff resides in the Middle District, the tortious act of trademark infringement is deemed to have occurred here.   Thus the Middle District has personal jurisdiction over Defendant under Florida’s long-arm statute.
Motion to dismiss or transfer, denied.
Tile World Corp. v. Miavana & Family, Inc., Case No. 6:15-CV-919 (M.D. Fla. Dec. 2, 2015) (J. Antoon)



Monday, December 28, 2015

Does Re-Registering a Domain Name Constitute "Registering" a Domain Name for Anticybersquatting Purposes?

Yes.

Jysk Bed'N Linen operates furniture stores in Georgia, New Jersey, and North Carolina.  In early 1999, it had a website developed for it and hosted that website at http://www.bydesignfurniture.com.  It had asked the website developer to register the domain name and assign the domain to Jsyk.  The domain name was registered, but it was never listed in the name of Jsyk.

In 2012, the domain name registration expired, and the website went down.  Jsyk asked the web developer to re-register the domain name and transfer it to Jsyk.  The web developer did re-register the domain, but did not transfer it.  Instead, the web developer registered a handful of other domains (bydesignfurniture.org, bydesignfurnitures.com, etc...) and demanded that he be compensated for his thousands of hours of work.  Jsyk sued, claiming violation of the Anticybersquatting Consumer Protection Act.

ACPA

The ACPA makes it unlawful to register, traffic in, or use a domain name that uses another's distinctive mark (where the accused cybersquatter has a bad faith intent to profit off of this usage).  Here, the web developer argued that "re-registration" does not constitute "registration" and thus did not violate the ACPA.  The Eleventh Circuit was not persuaded:
Including re-registrations under the registration hook comports with the purpose of Congress in enacting the ACPA—to prevent cybersquatting. See S. Grouts & Mortars, Inc., 575 F.3d 1235, 1246–47 (11th Cir. 2009) (“Registering a famous trademark as a domain name and then offering it for sale to the trademark owner is exactly the wrong Congress intended to remedy when it passed the ACPA.”(quotation marks omitted) (quoting Ford Motor Co. v. Catalanotte, 342 F.3d 543, 549 (6th Cir.2003))). It would be nonsensical to exempt the bad-faith re-registration of a domain name simply because the bad-faith behavior occurred during a noninitial registration, thereby allowing the exact behavior that Congress sought to prevent. We accordingly will not read additional words into the statute such as initial or creation. The plain meaning of register includes a re-registration. 
Thus, here in the Eleventh Circuit, re-registration constitutes registration for purposes of the ACPA.  This comports with the Third Circuit.  See Schmidheiny v. Weber, 319 F.3d 581 (3d Cir.2003).  Notably, the Ninth Circuit has reached a different conclusion.  See GoPets Ltd. .v. Hise, 657 F.3d 1024 (9thCir.2011) (determining that "re-registration" was not "registration" for concern that it would limit the transferability of rights associated with domain names).


The Court went on to confirm the web developer's activities demonstrated a bad faith intent to profit off of Jsyk's trademark rights.

Issuance of preliminary injunction, affirmed.
Jysk Bed'N Linen v. Dutta-Roy, Case No. 13-15309, (11th Cir. Dec. 16, 2015)




Monday, November 9, 2015

Are Shotgun Patent Infringement Pleadings Allowed?

No.

The Eleventh Circuit is not a big fan of shotgun pleadings, and neither is the Middle District of Florida.  Christ Tavantzis and Christrikes Custom Motorcycles filed a complaint asserting at least 10 counts against 29 defendants for allegations including alleged patent infringement of U.S. Patent 7,419,024 directed to a wheelchair accessible motorcycle:

It appears the reality show American Chopper built such a bike and the plaintiffs' claims concern allegations that the show stole the idea from the inventor and conspired to profit off of this invention.  TMZ wrote a brief story about the lawsuit here.

The complaint is not without colorful language:
This metaphorical "shoving of the disabled inventor into the darkness of a closet" to bring the light upon themselves is disheartening, pathetic, appalling, distressing, disparaging, offensive, atrocious and utterly intolerable to the reasonable decency of humankind everywhere.
It goes on to allege the following actions violate the plaintiffs' rights:
  1. Building the Bike on National Television to increase [defendants'] public image and sales
  2. Offering the bike for sale on the company website for approximately $45,000, plus customaization fees for additional requests.
  3. Publicly and falsely holding the bike out to be theirs by distributing the images and production concepts through distribution channels "TLC", "Discovery," "CMT" and their parent corporations, partnerships and mass media distribution companies.
  4. Creating an infringing copy that is a dangerous instrumentality and life threatening to the Disabled and the public
It then goes on to allege Counts I through X.  But each count incorporates all allegations previously pleaded.  A number of defendants sought dismissal.  The Court explained the law in the Eleventh Circuit:

The most common type—by a long shot—is a complaint containing multiple counts where each count adopts the allegations of all preceding counts, causing each successive count to carry all that came before and the last count to be a combination of the entire complaint. The next most common type . . . is a complaint . . . replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action. The third type of shotgun pleading is one that commits the sin of not separating into a different count each cause of action or claim for relief. Fourth, and finally, there is the relatively rare sin of asserting multiple claims against multiple defendants without specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against.
quoting Weiland v. Palm Beach Cnty. Sheriff's Office, 792 F.3d 1313, 1321-23 (11th Cir. 2015) (footnotes omitted).  These shotgun pleadings fail to put the defending parties on adequate notice and must be amended.  Aside from each count incorporating all prior allegations, the Court was also troubled by another issue:

Finally, and what causes the most confusion in this case, Plaintiffs do not identify which counts and factual allegations are alleged against which defendants or which plaintiff brings each count. For example, Plaintiffs’ patent infringement claim references “Defendant” in some paragraphs and “Defendants” in other paragraphs. (Id. ¶¶ 70–75). However, Plaintiffs never name a particular defendant and the Court is left to guess whether Plaintiffs intend to sue one defendant, some of the defendants, or all thirty-one defendants for patent infringement. Further, Plaintiffs never identify which of them brings each count, which can be especially confusing where, as here, one plaintiff is an individual and the other plaintiff is a corporation. For example, as the Complaint currently reads, both Plaintiffs allege claims for ADA discrimination, ADA exclusion, and intentional infliction of emotional distress. However, without an explanation from Plaintiffs, the Court is left to guess whether these counts are brought by the individual plaintiff, the corporate plaintiff, or both, despite the fact that one would presume a corporation could neither be disabled within the meaning of the ADA nor suffer emotional distress. Plaintiffs further exacerbate this confusion by referring to the individual plaintiff and the corporate plaintiff both collectively and interchangeably throughout the Complaint.
As such, plaintiffs must amend their complaint.

Motion to dismiss, granted.
Tavantzis v. American Choppers, Case No. 6:14-CV-1519 (M.D. Fla. Nov. 4, 2015) (J. Byron)



Tuesday, October 20, 2015

Is Using an Unflattering Candid Photo in Blog Posts To Criticize the Subject of the Photo Fair Use?

Yes.

Irina Chevaldina was a tenant in commercial property owned by one of Raanan Katz's corporate entitles.  Chevaldina was unhappy with Katz and posted a number of blog entries criticizing him.  Some of those posts included a candid photo of Katz that Katz deemed unflattering:

Katz acquired the copyright to the photo from the photographer, and then sued Chevaldina (and Google) for infringement.  Katz apparently dropped his vicarious infringement claim against Google but pursued the direct infringement claim against Chevaldina.  Chevaldina argued that fair use protected her usage.  The district court agreed, granting summary judgment in her favor.  Katz appealed.

The Eleventh Circuit explained the test for fair use:
In deciding whether a defendant's use of a work constitutes fair use, courts must weigh the following four factors: (1) the purpose and character of the allegedly infringing use; (2) the nature of the copyrighted work; (3) the amount of the copyrighted work used; (4) and the effect of the use on the potential market or value of the copyrighted work. Id. These four statutory factors are not to be treated in isolation from one another. See Campbell v. Acuff–Rose Music, Inc., 510 U.S. 569, 578, 114 S.Ct.1164, 1170–71, 127 L.Ed.2d 500 (1994)
Purpose and Character
Katz argue that the purpose and character of usage was commercial in nature because one of the blog posts indicated a desire to write a book in the future about the experience.  The Court was not persuaded:
Chevaldina's reference to her intention to write a book about her experiences with Katz does not alone, however, transform the blog post into a commercial venture. Overall, the blog post retains her educational purpose of lambasting Katz and deterring others from conducting business with him. See March 4, 2012 Blog Post (“I hope my book will help ambitious people in their dream to be successful without selling the[ir] soul to the [d]evil.”). Moreover, the link between Chevaldina's commercial gain and her copying of the Photo was attenuated given that Chevaldina never wrote a book nor made any profits whatsoever. See Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P., 756F.3d 73, 83 (2d Cir.2014) (discounting commercial nature of use where “the link between the defendant's commercial gain and its copying is attenuated such that it would be misleading to characterize the use as commercial exploitation” (quotations and alterations omitted)).
The Court also explained that, even though the photo was not altered, the usage was still transformative:
Chevaldina's use of the Photo was also transformative. A use is transformative when it “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” See Campbell, 510 U.S. at 579, 114 S.Ct. at 1171. Chevaldina's use of the Photo was transformative because, in the context of the blog post's surrounding commentary, she used Katz's purportedly “ugly” and “compromising” appearance to ridicule and satirize his character. See Swatch,756 F.3d at 84 (“Courts often find such uses [of faithfully reproduced works] transformative by emphasizing the altered purpose or context of the work, as evidenced by the surrounding commentary or criticism.”); A.V. ex el Vanderhyev. iParadigms, LLC, 562 F.3d 630, 639 (4th Cir.2009) (“The use of a copyrighted work need not alter or augment the work to be transformative in nature.”); Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257, 1270 (11th Cir.2001) (finding transformative use where work was “principally and purposefully a critical statement”).
Nature of the Copyrighted Work
The Court stated that the law recognized a greater need to disseminate factual works than works of fantasy or fiction and went on to find this work to be factual as it was a mere candid photo.

Amount of Work Used
This factor garnered little attention as it is less relevant in analyzing alleged infringements of photographs.

Effect of the Use on the Potential Market for the Work
By Katz's own activities, it appears there is no market for the work, thus no market to destroy:
The district court did not err in finding Chevaldina's use of the Photo would not materially impair Katz's incentive to publish the work. Katz took the highly unusual step of obtaining the copyright to the Photo and initiating this lawsuit specifically to prevent its publication. Katz profoundly distastes the Photo and seeks to extinguish, for all time, the dissemination of his “embarrassing” countenance. Due to Katz's attempt to utilize copyright as an instrument of censorship against unwanted criticism, there is no potential market for his work. While we recognize that even an author who disavows any intention to publish his work “has the right to change his mind,” see Monge v. Maya Magazines, Inc., 688 F.3d 1164, 1181 (9thCir.2012) (quotation omitted), the likelihood of Katz changing his mind about the Photo is, based on the undisputed evidence in the record, incredibly remote.
Summary judgment decision affirmed.
Katz v. Google, Inc., Case No. 14-14525 (11th Cir. Sept. 17, 2015)