Friday, December 19, 2014

Illegal Downloads - Is an IP Address Enough Information?

The adult film industry has been accused of trying to coerce settlements in matters relating to alleged illegal downloading of adult films by shaming the accused infringer through publicity.  I write below about Magistrate Judge Wilson crafting a solution to protect a purported infringer from a similar shame -- that of illegally downloading (and watching??) a Steven Seagal movie!

I've written before about issues of tracking down purported illegal downloads of copyrighted materials.  A typical fact pattern is the owner of the copyright tracks down an IP address where the copyrighted materials were apparently downloaded and/or copied without permission.  The copyright owner files suit in district court against John/Jane Doe, and asks the Court for leave to serve early discovery, namely a subpoena to the ISP trying to determine the identity associated with the IP address on the day(s) of the purported infringement.

A theme developing in defense of these attempts at discovery is that the identity of the subscriber may not be the actual infringer, and thus the attempt to obtain such discovery may be overbroad and improper.  See e.g. Malibu Media v. Doe, Case No. 1:14-CV-20213 (S.D. Fla. Mar. 5, 2014) (J. Ungaro).  Defendants extend the argument to explain that, in some instances, the copyright holder may attempt to coerce a settlement by publicly naming the purported infringer.

Imagine, for instance, the IP address is associated with a coffee shop on the day of the purported infringement.  Does that mean the coffee shop or its employees necessarily engaged in the infringing activity?  No.  But does it mean that that shop may be in a better position to inform the copyright owner who the purported infringer may be?  Or perhaps the coffee shop will have records from which that information may be derived.

Good Man Productions claims ownership of the copyright to the Steven Seagal film "A Good Man" and claims illegal downloading of the film occurred in the Middle District of Florida.  GMP sought leave to issue a subpoena to determine the identity associated with the IP address in question.  The Court allowed the subpoena, but with the following conditions:
To address potential issues relating to the identity of the defendant, the parties shall adhere to the following procedures:
a. The plaintiff shall immediately inform the defendant who contacts the plaintiff or whom the plaintiff contacts that said defendant has the right to obtain legal counsel to represent him or her in this matter and that anything said or provided by the defendant can and likely will be used against him or her in this proceeding.
b. If the defendant does not wish to be contacted by the plaintiff, the defendant may at any time inform the plaintiff by phone or send the plaintiff's counsel a letter or e-mail addressed to [plaintiff's counsel] that states: “Please do not contact me (again) prior to serving me in this matter.”
c. The plaintiff must notify the defendant, or his or her counsel if represented, of the plaintiff's intent to name and serve the defendant at least 14 calendar days prior to seeking issuance of a summons from the Clerk for the identified defendant.
d. The plaintiff shall inform the defendant of the potential for sanctions under Rule 11, Fed.R.Civ.P., if the defendant is incorrectly identified.
e. The plaintiff shall provide a copy of this Order to the defendant.
f. The plaintiff must notify the defendant that he or she may submit a written or electronic objection to the plaintiff's counsel. If the defendant asserts that he or she did not personally commit the infringing act, the defendant must identify the individual responsible for the infringement, or, if the identity of the infringing individual is unknown, provide exculpatory evidence regarding the defendant's innocence. The plaintiff's counsel shall file, or attempt to file, that objection, under seal, with this court, along with any response the plaintiff has to the objection. See Local Rule 1.09. Thereafter, the court will consider the defendant's objection and the response, and determine if the case shall proceed against the identified defendant. Until the court makes such a determination, the plaintiff may not identify the defendant by name in this lawsuit. If, however, the defendant does not object in writing or electronically, the plaintiff may proceed by naming the defendant in this case
This approach appears to strike a balance between a plaintiff's need to gain discovery and a potentially mis-identified defendant's rights.  We'll see if other courts are inclined to follow such an approach.

Motion for Leave to Serve Subpoena, granted.
Good Man Productions, Inc. v. Doe, Case No. 8:14-CV-3007 (M.D. Fla. Dec. 15, 2014) (Mag. Wilson)

Thursday, November 6, 2014

Attorneys Fees Under the Copyright Act? (Good Idea To Have A Contractual Right Also)

I've previously written about the litigation brought by Yellow Pages Photos ("YPP") against Ziplocal and Yellow Pages Group ("YPG").  YPP proceeded to trial against Ziplocal and YPG.  YPP next sought an award of its attorneys fees against Ziplocal.

At trial, the jury found that Ziplocal breached the End User License Agreement ("EULA") between Ziplocal and YPP.  That agreement provided:
In the event of legal action to enforce this agreement or in conjunction with the use of the product the prevailing party shall be entitled to recover its attorney's fees and costs, in addition to any other legal and equitable relief granted.
The jury also found that Ziplocal willfully infringed 123 copyrights belonging to YPP.  The jury awarded $100,000 as damages for Ziplocal's contributory copyright infringement and $1 in actual damages for copyright infringement.  The jury suggested zero dollars in statutory damages.

YPP requested its fees be awarded under both the EULA and the Copyright Act.  Concerning the EULA, the Court had no discretion to avoid an award:
Florida law considers attorney’s fee provisions contracts of indemnification. Lashkajani v. Lashkajani, 911 So.2d 1154, 1158 (Fla. 2005) (explaining purpose of provision is to “protect and indemnify” the interests of the parties, not to enrich prevailing party). A trial court may not exercise discretion to decline to enforce the provision. See North Am. Clearing, Inc. v. Brokerage Computer Sys., Inc., 395 F.App’x 563, 567 (11th  Cir. 2010) (unpublished opinion) (citing Lashkajani). 
Because the jury found against Ziplocal on all three claims submitted to it, YPP was the prevailing party, notwithstanding Ziplocal's success in warding off a significantly larger damage theory, including Ziplocal's ability to fend off any damages under the breach of EULA theory:
Ziplocal cites no persuasive authority for this proposition, and the Court finds no compelling circumstances that would warrant deeming Ziplocal the prevailing party. Florida courts have held that the party against whom a contract has been breached may be the prevailing party even though the jury awarded “$0” damages. See Khodam v. Escondido Homeowner’s Ass’n, 87 So.3d 65 (Fla.Dist.Ct.App. 2012); The Green Companies, Inc. v. Kendall Racquetball Investment, Ltd., 658 So. 2d 1119 (Fla.Dist.Ct.App. 1995). Accordingly, Yellow Pages Photos is entitled to attorney’s fees and costs pursuant to the EULA
Concerning the Copyright Act, the Court does have discretion to determine an award.  See 17 U.S.C. § 505. And the Court exercised its discretion:
Assuming that Plaintiff is the prevailing party, the Court declines to award attorney’s fees pursuant to the statute. Using the nonexclusive factors noted in Fogerty, as tempered by the purposes of the Copyright Act, an award of fees to either side would run afoul of any perceived even-handed approach. The jury’s verdict speaks for itself that Ziplocal committed both willful infringement and willful contributory infringement.  Nevertheless, the jury did not award a great amount of damages. While the Plaintiff vigorously and successfully defended its copyright, the damages sought based on the number of works at 10,200 far exceeded those actually recovered for the less than 200 works.  The disconnect between the damages sought and the damages awarded weigh heavily against an award of fees. The Court exercises its discretion to deny attorney’s fees under the Copyright Act in this very contentious case.
Motion to award fees granted in part, denied in part.

Yellow Pages Photos, Inc. v. Ziplocal, LP, Case No. 8:12-CV-755 (M.D. Fla. Oct. 31, 2014) (J. Lazzara)

Tuesday, October 7, 2014

Attorney Fees Upheld For Prevailing Defendant

InDyne, Inc. sued Abacus Technology Corp. for copyright infringement relating to Abacus's setting up of a NASA website.  InDyne's allegations were that Abacus used InDyne's software for setting up the NASA website and such usage infringed InDyne's copyright.

The trial court granted summary judgment of non-infringement to Abacus, finding that InDyne did not have sufficient evidence to show that the copied elements of software were original, and thus worthy of copyright protection.  Abacus sought and was awarded its fees as a prevailing party under 17 U.S.C. § 505.  InDyne appealed this fee award.

InDyne argued on appeal that Abacus was "a bad actor" and had essentially gotten away with copyright infringement.  The Eleventh Circuit was not persuaded.  InDyne had failed to put forth adequate evidence of copyright infringement (a decision the Eleventh Circuit had previously upheld), thus, by definition, Abacus was not a copyright infringer (and therefore didn't "get away with it.")

InDyne also argued that it had sufficient witness testimony to support its claim (thus militating against a finding that its claim was objectively unreasonable).  Again, the Eleventh Circuit was not persuaded.  InDyne failed to the court the revision history for its "chameleon-like" "constantly morphing" software.

Fee award upheld.
InDyne, Inc. v. Abacus Technology Corp, Case No. 14-11058 (11th Cir. Sept. 24, 2014)

Monday, August 25, 2014

Where To Litigate "Disposable Living-Grass Pet Toilets?"

Fresh Patch, LLC owns U.S. Patent 8,522,719 directed to a pet toilet continuous delivery and replacement method.  Fresh Patch ("Real Dogs Use REAL Grass") offers a subscription service where they send you a patch of grass each week for your pet to use as a toilet.  DoggieLawn ("Your Dog's Backyard In A Box") offers a competing service.  Fresh Patch sued DoggieLawn and its owner for patent infringement.  DoggieLawn moved to transfer the case from the Middle District of Florida to DoggieLawn's home in the Central District of California.  The Court addressed the typical 1404 factors:

Section 1404 factors include (1) the convenience of the witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances.
quoting Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n.1 (11th Cir. 2005).   

Concerning witness convenience, both parties identified non-party witnesses.  Plaintiff's non-party witnesses, however, were not in Florida, so keeping the dispute in Florida was of no great benefit.  Defendant identified witnesses from a number of competitors (Pooch Potty, PetaPotty, and Porch Potty), and each of those witnesses were in California.  [Ed. Note: Who knew the subscription pet toilet service industry had so many players?]

The Court next noted that the Defendant was a small startup, while Plaintiff's revenues were in excess of $1m.  The Court also appeared persuaded (to a small degree) by the fact that Plaintiff's law firm also had an office in California.  [Ed. Note: Is this really relevant?]

Generally, a plaintiff's choice of forum will be given deference.  But here, the Court appears to have not believed Plaintiff's claim that the Middle District of Florida was its home forum.  For instance, Plaintiff could not identify any employees or offices in the Middle District and did not quantify any of its business here.

Motion to transfer, granted.
Fresh Patch, LLC v. Youn, Case No. 8:13-CV-2602 (M.D. Fla. July 25, 2014) (J. Merryday)

Monday, August 18, 2014

Different Standards For Deciding Whether To Stay?

You may recall that Judge Covington denied a defendant's request to stay litigation, rejecting that defendant's argument that it was merely a "peripheral" defendant since it had only bought the accused product from another defendant.  While the Court noted in that decision that cases are generally stayed against peripheral defendants, that general rule does not apply where the peripheral defendant and the plaintiff are competitors.  In denying the peripheral defendant's request for stay, the Court required that defendant to put forward "an undue hardship or inequity."  Because that defendant couldn't, a stay was not appropriate.

The other defendants in that case separately moved to stay the litigation in favor of the inter partes reviews of the three patents-in-suit those defendants had instituted.  Here, for the primary defendant who had instituted inter partes reviews, the standard for granting a stay is different, relying on a "liberal policy" in favor of granting them:

“Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO” proceeding.  Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). The party moving for a stay bears the burden of demonstrating that a stay is appropriate. See Landis v. N. Am. Co., 299 U.S. 248, 255 (1936). As acknowledged in Automatic Manufacturing Systems, Inc. v. Primera Technology, Inc., No. 6:12-cv-1727-RBD-DAB, 2013 WL 1969247, at *1 (M.D. Fla. May 13, 2013), “In patent cases, a number of courts reason that such stays should be liberally granted when there is a pending administrative proceeding pending before the USPTO.” (citing Sabert Corp. v. Waldington N. Am., No. 06-5423, 2007 WL 2705157, at *5 (D.N.J. Sept. 14, 2007)(highlighting the “liberal policy in favor of granting motions to stay proceedings” because review by the USPTO “might assist the court in making a validity determination or [] eliminate the need to make an infringement determination.”); WABCO Holdings, Inc. v. Bendix Commercial Vehicle Sys., LLC, No. 09-3179, 2010 WL 2628335, at *2 n.2 (D.N.J. June 28, 2010)(“the liberal policy towards stays . . . arises due to the potential waste in using a court’s time and energy when a USPTO decision could drastically alter the nature of the case.”))
The Court then addressed the typical factors: (1) whether the stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether the stay will simplify the issues in question and trial of the case; and (3) whether a stay will reduce the burden of litigation on the participants or the court.   Here, the Court appeared persuaded in part because of the "highly technical component" of the case.  Importantly, while the Court previously rejected the peripheral defendant's request to stay because the peripheral defendant was a competitor, that same logic did not carry the day here:
The Andersons, Inc. also opposes the requested stay on the grounds that it is in direct competition with Defendants, and any stay of the proceedings will allow Defendants to continue their allegedly infringing activities unabated.  Defendants correctly counter that The Andersons, Inc. has not sought a preliminary injunction and that any damages The Andersons, Inc. incurs may be remedied with money damages.  See Tomco Equip. Co. v. SE Agri-Sys., Inc., 542 F. Supp. 2d 1303, 1308 (N.D. Ga. 2008)(rejecting the argument that plaintiff's damages "will intensify during a stay" because "the availability of money damages is sufficient to protect plaintiff from prejudice.").
Motion for stay, granted.  Case administratively closed and parties obligated to file a status report every 90 days.

The Andersons, Inc. v. Enviro Granulation, LLC., Case No. 8:13-CV-3004 (M.D. Fla. Aug. 14, 2014) (J. Covington)

Wednesday, August 6, 2014

Who Do You Sue For Copyright Infringement, Father or Son?

When last we checked in with Malibu Media (owner of a library of adult films and associated copyrights), Malibu had filed suit against John Doe and then used the Court's subpoena power to take an IP address which identified an alleged infringer's network connection and force the ISP to identify which subscriber belonged to that IP address.  (The Electronic Frontier Foundation has written about Malibu Media here.)

In another case, a little further down the enforcement timeline, Malibu Media had received from the ISP the subscriber's identity.  But instead of suing the subscriber, Malibu Media sued the subscriber's son:
The ISP, Bright House Networks Online Service, identified [Father] as the internet subscriber...Upon investigation, Plaintiff learned that [Father] lives with his son...
At the time this case was originally filled, Plaintiff knew only that the infringer was using the internet subscriber's IP address.  Usually, the subscriber is the infringer.  But, as is the case here, sometimes the infringer is another person residing with the the subscriber, who the subscriber has authorized to use the subscriber's internet.
Time timespan of infringing activity precludes the possibility that the infringer was a short term guest or other interloper.
Plaintiff's Amended Complaint [Dkt. 8] at 5.  Malibu then goes on to explain that it found other video files downloaded by the IP address (for tv shows like Breaking Bad, Lost, Weeds, and Futurama) and that the Son had "liked" these tv shows on Facebook.  Thus:
...[Son] is the most likely person to have used BitTorrent in the house from where the infringement emanated.  Consequently, Defendant is the most likely person to have infringed Plaintiff's copyrighted works through the use of BitTorrent.
Plaintiff's Amended Complaint [Dkt. 8] at 6-7.

So, after being served, [Son] sought dismissal, explaining that [Son] did not reside in the home during the time of alleged infringement and attacked Malibu's infringement evidence as stemming from an unlicensed investigator on a contingency pay arrangement.

[Son] also explained a decision by Judge Ungaro in the Southern District that [Son] described as a "game changer" for thwarting Malibu's activities:
Plaintiff has not shown how this geolocation software can establish the identity of the Defendant.  There is nothing that links the IP address location to the identity of the person actually downloading and viewing Plaintiff's videos, and establishing whether that person lives in this district..... 
Even if this IP address is located within a residence, the geolocation software cannot identify who has access to that residence's computer and who would actually be using it to infringe Plaintiff's copyright.
Malibu Media v. Doe, Case No. 1:14-CV-20213 (S.D. Fla. Mar. 5, 2014) (J. Ungaro).

Returning to the present case, Judge Moody was not persuaded by the Southern District's reasoning:
While it may be true that the IP subscriber, or the son of an IP subscriber as it is in this instance, is not undoubtedly the infringing individual, the Plaintiff's burden at this stage is only to demonstrate plausibility.  See [Ashcroft v.] Iqbal, 556 U.S. 662, 678-79 (2009); cf., Malibu Media LLC v. John Does 1-16, 902 F. Supp. 2d 690, 698 (E.D. Pa. 2012) ("The Court acknowledges, however, that the information provided by the ISPs in response to the subpoenas will not necessarily reveal the identities of the actual infringers, but may, with other discovery, lead to the infringer's identities.")  To that end, Plaintiff has alleged a plausible link between the subscriber assigned to [the IP address], Defendant, and the copyright infringement, and any factual disputes are inappropriate at this stage.
As to the charge that the investigator's technique's were inappropriate, the Court found those allegations premature.

Motion to dismiss, denied.
Malibu Media, LLC v. [Son], 8:13-cv-3007 (M.D. Fla. Aug. 1, 2014) (J. Moody)

Thursday, July 31, 2014

Super Sacking -- Does a Covenant Not To Sue Eliminate Subject Matter Jurisdiction on a Subsequent Infringement Claim?

Apparently not.  Foliar Nutrients sued Plaint Food Systems (PFS) in 2004 for infringing a number of its patents.  After PFS sought reexamination of some of those patents, the parties settled.  That settlement called for Foliar to pay PFS $50,000 over five years, and included a mutual covenant not to sue where Foliar agreed not to assert its previously asserted patents and PFS agreed not to challenge their validity.

The settlement didn't work.  After the first year's payment, the parties were unable to continue operating under the agreement.  PFS sued Foliar a couple of times, trying to collect the money that Foliar didn't pay, but those cases didn't last.  Eventually, PFS gave up on filing lawsuits against Foliar.  Foliar, however, filed suit for patent infringement, asserting a number of its patents against PFS.

PFS sought dismissal, arguing that there was no subject matter jurisdiction because of the covenant not to sue.  Specifically, PFS relied on Super Sack and its progeny.  See Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054 (Fed. Cir. 1995).  I have previously written about Super Sack a few times.

Super Sack

The typical circumstances are a patent owner asserts its patent and the defendant challenges validity of the patent.  For whatever reason, the patent owner decides it doesn't wish to pursue the patent infringement case, but it must also dispose of the counterclaim dealing with non-infringement and invalidity.  One solution to this issue is for the patent owner to covenant not to sue the defendant for infringement of the patent.  By doing this, the defendant's counterclaims for invalidity and non-infringement are no longer justiciable.  There is no longer a threat that the defendant can be sued for infringing the patent, so it can't ask the Court for a declaration that it does not infringe the patent and it has no basis to pursue a declaration that the patent is invalid.  Makes sense.

But what about when the patent owner changes its mind and wants to sue on the patent.  Does the covenant not to sue deprive the Court of subject matter jurisdiction to resolve that dispute?
"There is no authority for the proposition that a covenant not to sue stands as a jurisdictional bar to bringing a subsequent infringement claim."  Samsung Elecs. Co. v. Rambus, Inc., 440 F. Supp. 2d 495, 504 (E.D. Va. 2006).  PFS' argument to the contrary overextends the U.S. Court of Appeals for the Federal Circuit's precedent regarding invalidity claims, which are brought pursuant to the Declaratory Judgment Act and require the continuous presence of a real and immediate controversy between the litigants in order to remain justiciable.  See MedImmune v. Genentech, Inc., 549 U.S. 118, 127 (2007).  Under Super Sack and its progeny, where the case or controversy underlying a patent-invalidity action is the threat that the patentee will press an allegedly invalid patent against the invalidity claimant, the patentee can unilaterally divest the court of subject matter jurisdiction over the invalidity claim by extinguishing the immediacy and reality of that threat.  See Super Sack, 57 F.3d at 1058-60; Revolution Eyewear v. Aspex Eyewear, Inc., 556 F.3d 1294 (Fed. Cir. 2009).  One way to do so is by issuing a sufficiently broad covenant not to assert the patents-in-suit against the invalidity claimant.  Super Sack, 57 F.3d 1058.  Additionally, if the patentee has any infringement claims pending against the invalidity claimant at the time of the covenant's execution, the patentee must move to dismiss those claims under Federal Rule of Civil Procedure 41.  See Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1033 (Fed. Cir. 2006); cf. Already, LLC v. Nike, Inc., 133 S.Ct. 721, 726-28 (2013) (addressing this procedure in the trademark context).  If the combination of the covenant not to sue and the Rule 41 dismissal sufficiently diminishes the controversy underlying an invalidity claim, the invalidity claim is rendered nonjusticiable and the Court is divested of subject matter jurisdiction over it.
But that logic does not extent to a plaintiff's claim of patent infringement:
Significantly though, the holdings in the Super Sack line of cases do not extend to patent-infringement claims, which are not brought pursuant to the Declaratory Judgment Act and are therefore not subject to its unique justiciability requirements.  See 35 U.S.C. 271 (Providing an independent statutory basis for patent infringement claims).  To the contrary, the Federal Circuit has clarified that a patentee's covenant not to sue does not divest a district court of subject matter jurisdiction over infringement claims -- even those that remain pending at the time of the covenant's execution.  Highway Equip., 469 F.3d at 1033 n.1 (observing that, in situations where a patentee unilaterally secures a Super Sack dismissal, the patentee's "covenant does not deprive the district court of jurisdiction to determine the disposition of the patent infringement claims raised in the Complaint under Rule 41"); Cooper Notification, Inc. v. Twitter, Inc., 545 F. App'x 959, 966-67 (Fed. Cir. 2013) (same).
Thus, PFS's motion to dismiss Foliar's patent infringement claim, for lack of subject matter jurisdiction, was denied.
Foliar Nutrients, Inc. v. Plant Food Systems, Inc., Case No. 6:13-CV-748 (M.D. Fla. July 14, 2014) (J. Dalton)

[NOTE: GrayRobinson, PA is involved in the above-captioned matter]