Are a Principal's Tax Returns Relevant In a Vicarious Copyright and Trademark Case?

Yes.  Coach sued a flea market and its owner for trademark, trade dress, and copyright infringement related to alleged sales of counterfeit Coach products.  Coach seeks statutory damages under both the Copyright Act and Lanham Act.  The defendant flea market and its owner refused to provide their tax returns, arguing they were not relevant.  Coach responded that the defendants

are facilitating and contributing the promotion and sale of the counterfeit and infringing products ... and [they] have made substantial profits from the infringing activity they have allowed to occur.

In addressing Coach's motion to compel, the Court was initially concerned with a split in the Southern District of Florida's analysis of this issue, where some courts required a heightened level of protection because of public policy issues:

Using the procedure in Rule 34(a), parties can request the production of documents and other things within the scope of FED. R. CIV. P. 26(b). However, when a party asks for tax returns, most courts acknowledge that the request raises public policy concerns. Camp v. Correctional Medical Services, No. 2:08cv227-WKW(WO), 2009 WL 424723 * 2 (M.D. Ala. Feb. 17, 2009); Platypus Wear, Inc. v. Clarke Modet & Co., Inc., No. 06-20976-CIV, 2008 WL 728540 * 3 (S.D. Fla. Mar. 17, 2008). Federal courts are split on the question whether income tax returns are entitled to enhanced protection from discovery. United States v. Certain Real Property, 444 F. Supp. 2d 1258, 1262-64 (S.D. Fla. 2006) (collecting cases). For example, some courts in the Southern District of Florida hold that a party seeking the production of tax returns must show a compelling need, in addition to relevance, while other courts in the same district find that ordinary relevance is all that is required. Id. And, even courts which hold that relevancy is the sole issue have taken steps to protect the confidentiality of tax returns. See EEOC v. Dimare Ruskin, Inc., No. 2:11-cv-158-FtM-36SPC, 2011 WL 3715067 * 4 (M.D. Fla. Aug. 24, 2011); Platypus Wear, Inc. v. Clarke Modet & Co., Inc., 2008 WL 728540 at *3. The Eleventh Circuit has not explicitly addressed the issue or recognized a special privilege for tax records. But, in Maddow v. Proctor & Gamble Co., Inc., 107 F.3d 846, 853 (11th Cir. 1997), the court found that the district court did not abuse its discretion in compelling tax records because they were “arguably relevant to the case.” 

The Court followed Maddow, recognizing that a vicariously liable trademark and copyright defendant's finances are relevant for discovery purposes, particularly where the plaintiff seeks statutory damages.  [For instance, in the Copyright context, the plaintiff will be required to produce the defendant's gross revenues in order to satisfy its statutory obligations for receiving statutory damages.  To do so, the plaintiff must first gather evidence.]:

“A party infringes vicariously by ‘profiting from direct infringement while declining to exercise a right to stop or limit it.’” Pegasus Imaging Corp. v. Northrop Grumman Corp., 8:07-cv-1937-T-27EAJ, 2008 WL 5099691 * 2 (M.D. Fla. Nov. 25, 2008) (quoting Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005)). Coach alleges that Josephs and Visitors reaped profits from turning a blind eye to the sale of counterfeit and infringing merchandise at the flea market.  If true, then their tax returns may contain information relevant to prove that they benefitted financially from the flea market vendors activities.  

Coach has invoked its right to recover statutory damages. In at least three infringement cases courts have found that a defendant’s tax returns are relevant when the plaintiff asks for statutory damages. See, Coach, Inc. v. Swap Shop, Inc., No. 12-60400-CIV, 2013 WL 4407064 * 3 holding that “‘Defendant’s corporate federal income tax returns are relevant to the issue of statutory damages under section 504(c)(1) in a copyright infringement action.’” (quoting Quackenbush Music, Ltd. v. Alana, Inc., No. 92-10687-S, 1992 WL 439746 * 2 (D. Mass. Nov. 2, 1992)); Coach, Inc. v. Hubert Keller, Inc., Case No. CV411-285, 911 F.Supp.2d 1303, 1310 (S.D. Ga. 2012) (recognizing that if plaintiff had invoked its right to statutory damages it would be entitled to the defendant’s tax returns.).

Motion to Compel, granted.

Coach, Inc. v. Visitors Flea Market, LLC, Case No. 6:11-CV-1905 (M.D. Fla. Oct. 24, 2013) (Mag. Smith)

Court Won't "Rubber Stamp" Request for Injunction

Broadcast Music, Inc. sued a bar (Evie's Tavern Ellenton) and its owner for copyright infringement.  The bar played a number of songs without license, and BMI sought to enforce its rights.  The bar defended by arguing that BMI didn't have proper title to the copyrights at issue.  At summary judgment, BMI proved otherwise (documenting the chain of title sufficiently to convince the Court that it owned the licenses for five of the works at issue).

Defendants' argument was an attempt to rely on 17 U.S.C. 204(a), which provides:

(a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.

Defendants' argument was that, in the chain of transfers, there was a gap in an assignment, where the principal of one of the corporate owners of one of the copyrights drafted a letter assigning his rights, but that letter was not sufficient to transfer the interest his corporation had in the copyright.  [Notably, the Court was not persuaded with Defendant's evidence, and had this to say:

As an initial matter, and before reaching the merits of the dispute, the Court will pause to note that the documents submitted by the defendants that purport to be declarations are woefully inadequate.  The Court will, therefore strike all statements that are not facts based on Mr. Evanoff's personal knowledge.  In effect, that leaves only portions of [certain paragraphs of Defendants' motion and affidavit].  All other paragraphs are stricken, and the Court will consider the legal arguments contained within them to the extent they have merit.

] Ouch.  The Court did not spend much time addressing the 204(a) claim:

when (as in this case) there is no dispute between the copyright owner and the transferee about the status of the copyright, it would be unusual and unwarranted to permit a third-party infringer to invoke section 204(a) to avoid suit for copyright infringement.

Finding that the bar had infringed at least 5 works, the Court turned to BMI's request for an injunction.  No "rubber stamp" here:

There is no question that the entry of a permanent injunction seems entirely appropriate in this case.  In fact, it has been quite customary in these types of cases to permanently enjoin further acts of infringement simply as a matter of course.  But in light of the Supreme Court's admonition in eBay, that all four factors must be given thoughtful consideration prior to issuing permanent injunction, the Court is not willing to simply "rubber stamp" BMI's request.  See eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006).  ... A finding of liability of copyright infringement does not conclusively establish the remaining principles of equity that form the basis for injunctive relief.  

BMI's request for injunctive relief was denied without prejudice, so that the parties could meet and confer to determine if they could agree to appropriate relief.

Defendant's Motion for Summary Judgment, Denied; Plaintiff's Motion for Summary Judgment Granted in Part, Denied in Part.
Broadcast Music, Inc. v. Evie's Tavern Ellenton, Inc., Case No. 8:11-CV-2056 (Sept. 30, 2013) (J. Kovachevich)

Attorneys May Now Bring Cellphones, Laptops, and Tablets Into Middle District of Florida Courthouses

Lawyers have needed to stow their cellphones before bringing them into MDFLA courthouses and obtain Court order to bring in laptops.  As of September 26, 2013, that has now changed.  While the Court retains its general policy that no one may bring a personal electronic device past security, the following exception has been added:

2.4 Attorneys
Any attorney permitted to practice law in the Middle District of Florida may bring any personal electronic device beyond the courthouse's security checkpoint by presenting a valid Florida Bar identification card or pro hac vice order.  In addition to the restrictions set forth in paragraph 2, attorneys may not use personal electronic devices directly outside of any courtroom when court is in session.

"Personal electronic devices" are:

things like cellular telephones, "smart phones," laptop computers, and tablet computers.

So I can shelve my form motion for permission to bring in my computer.  Standard caveats still apply, which is to say they must be kept on silent, can't be shared with others, can't be used to disrupt any proceeding, and can't search for juror information.  And the security personnel may inspect them.  The full order is below.

13-Mc-94 Possession and Use of Personal Devices in All FLMD Courthouses

In re: Possession and Use of Personal Electronic Devices in Federal Courthouses in the Middle District of Florida, General Order 6:13-MC-94-ORL-22

Patent and Trademark Office Estimates It Can Run 4 Weeks During Shutdown

From the U.S. Patent and Trademark's website:

During the general government shutdown that began October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for approximately four weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we will be able to operate in this capacity during a general government shutdown. We will provide an update as more definitive information becomes available.

You can read the full post here.

Florida's Idea Statute of Frauds

Florida Statute § 501.972 is interesting, and to my knowledge has never before been cited by any court.  That has now changed.

Joseph Kaminski, an engineer whom I believe worked for Honeywell building technology for NASA (see here), wanted to help BP after the Deepwater explosion.  BP had set up a system for receiving proposed solutions for stopping the oil leak, and Kaminski submitted a couple of his ideas.  Included in one of his submissions was the following:

Please take this under advisement.  Especially when the new little top hat fails tomorrow for all the reasons I stated.  This will work and it is far easier than the 100 ton top hat.  It will also be great for your image in this whole thing.  When My son and I become paid hero's [sic] for the idea and helping you from here in tampabay [sic] florida.  I will say it was BP's willingness to work and find the right solution from anyone anywhere for this very unique problem.  You will also pay me and my son at least 2 million for the idea and my personal help to guarantee [sic] its succes [sic].

Kaminski believes BP used at least two of his ideas, so he sued for breach of an implied contract as well as unjust enrichment.  BP sought refuge under Florida's (unique?) Idea Protection Statute, which reads as follows:

501. 972   Actions based upon use of a creation that is not protected under federal copyright law.

(1) Except as provided in subsection (2), the use of an idea, procedure, process, system, method of operation, concept, principle, discovery, thought, or other creation that is not a work of authorship protected under federal copyright law does not give rise to a claim or cause of action, in law or in equity, unless the parties to the claim or cause of action have executed a writing sufficient to indicate that a contract has been made between them governing such use.

(2) Subsection (1) does not affect or limit:
     (a) Any cause of action based in copyright, trademark, patent, or trade secret; or
     (b) Any defense raised in connection with a cause of action described in paragraph (2).

Fla. Stat. § 501.972.  In other words, Florida has a statute of frauds for uses of ideas.  While this law was passed in 2006, it does not appear to have been used by a Court previously.

Here, the Court was convinced by BP's argument that this statute shielded BP from liability.  The Court analyzed the Copyright Act and noted the similarity in language between this statute's definition of what is not protected by Copyright and the Copyright Act's similar definitional language.  Recognizing that copyright does not protect ideas, but expressions of ideas, the Court found Kaminski's submissions to be ideas clearly governed by Florida's law:

Here, Plaintiff's ideas are not works of authorship and are expressly excluded from protection under the Copyright Act; Section 501.972 therefore applies to BP's use of Plaintiff's idea.

Because there was no writing between the parties executed by BP, Kaminski's claim fails.

Defendant's Motion for Summary Judgment, Granted.
Kaminski v. BP Exploration & Production, Inc., Case No. 8:12-cv-826 (M.D. Fla. Sept. 24, 2013) (J. Bucklew)

Can You Get Self-Help Relief Through A Default Judgment?

Not if you don't plead it in your complaint.   Sony sued Discount Cameras & Computers Inc. and Mauricio Martinez for trademark infringement and a handful of other causes related to Discount Camera's unauthorized usage of the SONY trademarks.  Defendants did not respond, so Sony sought and received a default.  After the Clerk entered Default, Sony moved for a Default Judgment, seeking an injunction.  So far, so good.  But the proposed judgment included the following language:

ORDERED and ADJUDGED that the Defendants ... shall, within fifteen (15) days of the date of entry of this Default Final Judgment and Permanent Injunction, remove [from their premises] all signage bearing one or more of the SONY Trademarks ...

ORDERED and ADJUDGED that, in the event that the Defendants ... fail to remove from the business premises ... all signage ... then the Court hereby authorizes the Plaintiffs and their representatives ... to enter the property ... and remove all signage...

(emphasis added).  The Court did not approve of this language, relying on Fed. R. Civ. P. 54(c) ("A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings."):

Plaintiffs are therefore entitled to default judgment on all of their claims, as well as a permanent injunction enjoining Defendants from further infringement and unlawful conduct -- but only as to the injunctive relief demanded in the Complaint (Doc. 1).  Plaintiffs are not entitled to self-help should Defendants continue to infringe Plaintiff's marks.  The Court declines to retain jurisdiction over this matter.

Motion for Default Judgment, Granted in Part, Denied in Part.
Sony Corp. v. Discount Cameras & Computers, Inc., Case No. 6:12-cv-1892 (M.D. Fla. Sept. 5, 2013) (J. Dalton) (adopting Report and Recommendation of Mag. Baker).

Agreeing To An Injunction Waives Personal Jurisdiction Challenge; But Alleging "Deliberate" Copyright Infringement Justifies Personal Jurisdiction?

Gainesville Coins operates a website for selling precious medals.  So does Vanguard Capital Group.  But Vanguard copied product descriptions and pictures off of Gainesville's website.  So Gainesville sued for copyright infringement.  First, Gainesville sought and obtained a temporary restraining order.  Next, the Court referred Gainesville's request for a preliminary injunction the Magistrate Judge, who extended the restraining order and set a hearing.   Three days before the hearing, Vanguard's attorney appeared, and the parties agreed to a stipulated preliminary injunction - presumably to obviate the need for the hearing.

Vanguard next moved the Court to dismiss the case for lack of personal jurisdiction, arguing that merely operating a website was insufficient contacts with Florida to justify a lawsuit here.  The Court was not persuaded:

As Gainesville Coins points out, Vanguard moved to dismiss the complaint for lack of personal jurisdiction after Vanguard stipulated to a preliminary injunction and participated in the case management conference.  Importantly, Vanguard did not reserve its right to contest the Court’s jurisdiction over it at any of these junctures. Under these facts, Vanguard waived the defense and its motion to dismiss is denied on this ground. See Aeration Solutions, Inc. v. Dickman, 85 Fed.Appx. 772, 774 (Fed. Cir. 2004) (finding defendants voluntarily acknowledged and acquiesced to the district court’s jurisdiction over them by stipulating to an injunction); Nat. Union Fire Ins. Co. of Pittsburgh, PA v. Beta Constr. LLC, 8:10-CV-1541-T-26TBM, 2010 WL 4316573, at *1 (M.D. Fla. Oct. 26, 2010) (finding defendant “waived his right to attack the personal jurisdiction of [the] Court by entering an appearance and participating in the case management conference without objecting to the Court’s personal jurisdiction”).

Turning next to the substance of Vanguard's argument, the Court also found personal jurisdiction proper under Florida's long-arm statute and the "effect's test."  As to Florida's long-arm statute:

Copyright infringement is a tortious act that satisfies Florida’s long-arm statute. See Smith v. Trans-Siberian Orchestra, 8:09-CV-1013-T-33EAJ, 2011 WL 824675, at *4 (M.D. Fla. Mar. 3, 2011); see also Cable/Home Commc’ns [v. Network Productions, Inc], 902 F.2d at 854 [(11th Cir. 1990)]. Also, the infringement occurred in Florida to the extent that Vanguard’s website is accessible in Florida and has been accessed by Florida residents.

The Court next turned to the "effects test" and relied on the Calder decision, which found personal jurisdiction appropriate for an intentional tort committed against a Florida resident.  Calder concerned a California plaintiff that sued a Florida newspapers for an alleged libelous article.  The Court held that such an intentional tort committed against a California resident justified jurisdiction over the Florida company in California.

But here, copyright infringement is a strict liability tort.  Intent is irrelevant for purposes of a direct infringement claim, although intent can increase a statutory damage award.  No matter.  The Court concluded because Gainseville alleged deliberate and willful infringement, the cause was akin to an intentional tort such as Calder justifying jurisdiction:

The Court concludes that Vanguard’s alleged actions of: deliberately and willfully infringing upon Gainesville Coins’ copyright by copying nearly the entire website for Gainesville Coins; and displaying the Work at its competing website, the Vanguard Website, for commercial gain because Vanguard is a competitor of Gainesville Coins, are sufficient to meet the “effects test”. In other words, Vanguard’s alleged acts purposefully availed itself of this forum. See Waterproof Gear, Inc. v. Leisure Pro, Ltd., 8:08-cv-2191-T-33MAP, 2009 WL 1066249, at *1 (M.D. Fla. Apr. 20, 2009) (finding that defendant purposefully availed itself of the forum when defendant copied and placed plaintiff’s copyrighted marketing materials on defendant’s website).

Motion to Dismiss for Lack of Personal Jurisdiction, Denied.
Gainesville Coins, LLC. v. VCG Ventures, Inc., Case No. 8:13-CV-1402 (M.D. Fla. Aug. 28, 2013) (J. Moody)

Your agreement to file under seal doesn't matter -- the public interest does

Parties regularly enter into protective orders or confidentiality agreements during litigation to be able to designate material confidential and/or attorneys-eyes-only.  This generally works well among litigants, but can be sticky when needing to file materials with the Court.  The Courts are public forums, theoretically open to all.

NXP, BV. has sued Research in Motion here in the Middle District for patent infringement.  (NOTE: GrayRobinson represents RIM as local counsel.)  The parties entered into such a confidentiality agreement, but a discovery dispute ensued.  To support their respective positions, each side needed to refer to information that had been designated confidential or attorneys-eyes-only.  So the parties filed redacted versions of their briefs, but jointly sought leave to file the confidential information under seal.

Generally, these motions are dispensed with quickly, which is why this decision caught my eye.  One of the first motions I ever filed was a motion to adopt the parties proposed protective order in a case here in the Middle District.  That joint motion was rejected by the Magistrate Judge because it did not specifically and explicitly follow the mandate of our Local Rule 1.09, which states that no document may be filed under seal without first seeking permission from the Court (unless there is some other law permitting such a filing).  (NOTE: In my defense, that joint motion that I filed years ago did indicate that filings under seal would only be done according to local rule, but we revised the motion when we refiled it to explicitly incorporate the provisions of L.R. 1.09.)

In the NXP decision, the Court wrote a detailed opinion explaining the reasoning behind this practice, and it's a short but worthwhile read:

In this Circuit, it is well settled that “[t]he operations of the courts and the judicial conduct of judges are matters of utmost public concern” and the integrity of the judiciary is maintained by the public's right of access to court proceedings. Romero v. Drummond Co., 480 F.3d 1234, 1245 (11th Cir.2007) (citing Landmark Commc'ns, Inc. v.Virginia, 435 U.S. 829, 839 (1978)). The public's right “includes the right to inspect and copy public records and documents.” Chicago Tribune, 263 F.3d at 1311. But, the public's right of access is not unfettered and does not apply to discovery. Romero, 480 F.3d at 1245. Indeed, “the need for public access to discovery is low because discovery is ‘essentially a private process ... the sole purpose [of which] is to assist trial preparation.’ “ Id. (quoting United States v. Anderson, 799 F.2d 1438, 1441 (11th cir.1986). And, “[t]he prospect of all discovery material being presumptively subject to the right of access would likely lead to an increased resistance to discovery requests.” Chicago Tribune, 263 F.3d at 1312 n. 10. 

Courts draw a distinction between documents filed with discovery motions and documents filed in connection with other types of motions. “ ‘[T]here is a presumptive right of public access to pretrial motions of a nondiscovery nature, whether preliminary or dispositive, and the material filed in connection therewith.’ “ Id. at 1246 (quoting Leucadia, Inc. v. Applied Extrusion Techs., Inc., 998 F.2d 157, 164 (3d Cir. 1993)). Material filed as part of a discovery motion is not subject to the common law right of access. Chicago Tribune, 263 F.3d at 1312. 

“The common law right of access may be overcome by a showing of good cause, which requires balancing the asserted right of access against the other party's interest in keeping the information confidential.” Romero, 480 F.3d at 1245 (quoting Chicago Tribune, 263 F.3d at 1313). In balancing these interests “courts consider, among other factors, whether allowing access would impair court functions or harm legitimate privacy interests, the degree of and likelihood of injury if made public, the reliability of the information, whether there will be an opportunity to respond to the information, whether the information concerns public officials or public concerns, and the availability of a less onerous alternative to sealing the documents.” Id. at 1246. “Good cause is established by the moving party when disclosure will cause the party to suffer a clearly defined and serious injury.” Vista India, Inc. v. Raaga, LLC, Case No. 07–1262, 2008 WL 834399 *2 (D.N.J. Mar. 27, 2009). The parties' agreement to seal court documents “is immaterial” to the public's right of access. Brown v. Advanatage Eng'g, 960 F.2d 1013, 1016 (11th Cir.1992).

The Court went on to explain that it needed the confidential information at issue to resolve the parties' discovery dispute, and that the confidential information indeed satisfied the tests described above.

Joint Motion to File Under Seal, Granted
NXP BV v. Research In Motion Ltd, Case No. 6:12-cv-498 (M.D. Fla. Aug. 15, 2013) (Mag. Smith)

11th Circuit Copyright and Trademark Jury Instructions

Thanks to Dineen Wasylik for pointing out the Eleventh Circuit's new pattern jury instructions to me.  As Dineen writes, these new instructions include forms for both Copyright and Trademark trials.   The instructions are available here.

On first blush, these instructions appear relatively comprehensive for copyright matters, with one noticeable omission.  Namely, how the jury should be instructed with regards to establishing a plaintiff's profits attributable to the defendant's infringement.  While the statute reads:

In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

17 USC 504(b), it appears left for future decisions how the Eleventh Circuit will apply this law.

Patent Obtained During Marriage Is Marital Asset in Florida

James Taylor (I believe no relation to the singer) was awarded U.S. Patent No. 5,806,566 in 1998.  At the same time, he was married to Mary Taylor.   In 2011, the Taylors obtained a final judgment of dissolution of their marriage.  The divorce settlement subjected the Taylors' marital assets to equitable distribution, and specified that a percentage of proceeds from the patents were to be divided 60% to Ms. Taylor with 40% to Mr. Taylor.

A year later, Mr. Taylor sued Taylor Made Plastics, Inc. for patent infringement.  Taylor Made sought dismissal, arguing that Mr. Taylor alone does not own the '566 Patent, and thus did not have standing to sue for its infringement.

While patent disputes are governed by federal law,  state law governs the question of shared ownership here.

Under Florida law, properties acquired during a marriage are presumably marital assets. Fla. Stat. § 61.075(6)(a)(l) (2012). Further, under Florida law "a patent is personal property that may be the subject of equitable distribution when the inventor and his or her spouse dissolve their marriage." Gulbrandsen v. Gulbrandsen, 22 So. 3d 640, 644 (Fla. Dist. Ct. App. 2009). Additionally, the Florida Supreme Court has definitively held that "a final judgment of dissolution settles all such matters as between the spouses ... and acts as a bar to any action thereafter to determine such rights and obligations." Davis v. Dieujuste, 496 So. 2d 806, 809-10 (Fla. 1986). Accordingly, since the Patent was issued to the Plaintiff while he was married to Ms. Taylor, Dkt. 1, the Patent was presumably a marital asset, under Florida law, prior to the issuance of the Divorce Settlement. The Divorce Settlement merely reinforced that presumption by subjecting the Patent to equitable distribution and awarding Ms. Taylor a 60% interest in any proceeds from the Patent.

The Court went on to conclude that the divorce settlement reinforced Ms. Taylor's ownership interest in the patent.  As such, the complaint needed to be dismissed for failure to join the co-owner of the '566 Patent.

Motion to dismiss granted.
Taylor v. Taylor Made Plastics, Inc., Case No. 8:12-cv-746 (M.D. Fla. Apr. 29, 2013) (J. Kovachevich)

Trademark Statute of Limitations - Governed by Laches

Roca Labs has sued Boogie Media, LLC and Slava Krasnov for unfair competition, cybersquatting, and trademark infringement concerning the trademarks NATURLA GASTRIC BYPASS, GASTRIC BYPASS NO SURGERY, ROCA LABS, and Gastric Bypass EffectTM.  Roca was able to serve the corporate defendant, but has not yet served the individual.

According to Fed. R. Civ. P. 4(m), a plaintiff is given 120 days to serve a defendant, lest the Court dismiss the claim without prejudice (or direct service be made within a certain time period).  Here, the 120 period expired on January 31, 2013.  Two months later, plaintiff asked for an extension of time to serve the individual defendant, arguing that it has made a number of attempts to serve the defendant, but has not succeeded.

The Court held that it could extend the deadline for "good cause," which has historically involved issues such as sudden illness, natural catastrophe, or evasion of service of process.  Problem for the plaintiff was that it did not submit any evidence (affidavit or the like) which demonstrated such good cause.

The Court also recognized its discretion in being able to extend the deadline in a circumstance where the applicable statute of limitations would bar relief to the plaintiff.   Here, the Court noted that the Florida state unfair competition claims had a 4 year statute of limitations, but noted that the federal  trademark and cybersquatting claims do not have an explicit statute of limitations:

The federal trademark and cybersquatting statutes do not contain a limitations period; rather laches principles apply. See Kason Indus. v. Component Hardware Group, Inc., 120 F.3d 1199, 1203 (11th Cir.1997) (“The Lanham Act does not contain a statute of limitations. However, in trademark cases, this circuit has followed the Sixth Circuit, which applies the period for analogous state law claims as the touchstone for laches.”); see Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365 (6th Cir.1985) (“The Lanham Act does not contain a statute of limitations. In determining when a plaintiff's suit should be barred under the Act, courts have consistently used principles of laches as developed by courts of equity.”); What–A–Burger of Va. v. Whataburger of Corpus Christi, 357 F.3d 441, 449 (4th Cir.2004) (“Courts use the doctrine of laches to address the inequities created by a trademark owner who, despite having a colorable claim, allows a competitor to develop its product around the mark and expand its business, only then to lower the litigation boom.”).

The Court then determined that the federal claims would be subjected to the same 4 year statute of limitation as the Florida unfair competition.  And this statute of limitation does not pose an immediate risk to plaintiff's claim.  

Motion for extension to effect service denied; Individual defendant dismissed without prejudice.

Roca Labs, Inc. v. Boogie Media, LLC, Case No. 8:12-cv-2231 (M.D. Fla. Apr. 19, 2013) (J. Covington) 

Back to State Court, Brother

Hulk Hogan (a/k/a Terry Bollea) sued a local radio host (you may have heard of him -- Bubba the Love Sponge) and his ex-wife in state court for releasing a vide of Hogan having sex with Bubba's ex-wife.  Hogan amended his complaint, dropping the radio host, and adding Gawker.  Gawker removed the case to federal court, under the guise that: (1) the radio host's ex-wife was fraudulently joined in the suit; and (2) the suit arose under the Copyright Act.

Fraudulent Joinder
Diversity juridiction requires a disputed amount exceeding $75k and parties being citizens of different states.   Recognizing that Hogan and the ex-wife are both Florida citizens, Gawker needed to establish that the ex-wife was fraudulently joined to the case to satisfy the diversity requirement.  First, Gawker argued that the statute of limitations had run against any claim Hogan could bring against the ex-wife.  The Court disagreed, noting that Hogan's complaint did not indicate a date on which the video was published (publication serving as the basis of Hogan's claims), and thus the Court could not determine from the pleadings alone whether the statute of limitations had run.

Gawker also argued that joining the ex-wife was "so egregious as to constitute fraudulent joinder."  Here, the Court applied the Eleventh Circuit's "logical relationship" test to determine if joinder of the ex-wife and Gawker was permissive under Fed. R. Civ. P. 20(a)(2).  See Republic Health Corp. v. Lifemark Hosps. of Fla., 755 F.2d 1453, 1455 (11th Cir. 1985).  Here, the claims of the ex-wife publishing the video without Hogan's permission are logically related to the claims against Gawker as they rest on the same operative facts (recording and publishing the video).  The Court also found common questions of law (i.e. the video's chain of custody, Florida's privacy laws, and certain defenses).

Federal Jurisdiction -- Copyright Preemption
Gawker's other avenue to keep the case in federal court was to present the case as a copyright dispute.  To remove a state court claim on the basis of a federal question, the federal question must present itself on the face of the complaint.  Here, the Court must address if the federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of federal court resolution without offending the federal-state balance.  See Gunn v. Minton, 133 S.Ct. 1059, 1065 (2013) (concluding that legal malpractice claims based on patent matters will "rarely, if ever, arise under federal patent law).

Here, Hogan's privacy claims arise under state law.  Gawker's argument was that Hogan claimed his rights of privacy "as recognized under the United States Constitution" were violated.  But when read as a whole, Hogan's complaint made only state law claims.

Hogan's claims also were not completely preempted by the Copyright Act.  The Court first acknowledged that the Eleventh Circuit has not decided whether the Copyright Act completely preempts related state law claims.   Those circuits that do find complete preemption ask: (1) whether the work is of the type protected by the Copyright Act; and (2) whether the claim seeks to vindicate rights equivalent to the bundle of rights protected by the Copyright Act.  The state law claim, to be preempted, must not have any extra elements making it different from a copyright infringement claim.

Hogan's claims are not completely preempted.  While he is seeking to regulate publication and distribution of a work that would fall under the Copyright Act, his claims for invasion of his privacy involve additional elements, such as proving "intrusion into one's private quarters." Thus, there is no complete preemption.

Motion for Remand granted.
Bollea v. Clem, Case No. 8:13-cv-00001 (M.D. Fla. Mar. 28, 2013) (J. Whittemore)

Hide & Seek Safari - Florida's Long Arm Statute

R&R Games makes a children's game called Hide & Seek Safari.  R&R owns the federal trademark registration for HIDE & SEEK SAFARI.  R&R has discovered a number of "Safari Hide & Seek" and "Hide & Seek Safari" puzzle games online.  R&R has thus sued a number of defendants for trademark infringement and conspiracy to commit trademark infringement.  R&R sued a number of defendants for this action as per below:

• Smart - Corporate defendant - principal place of business in Belgium.
• Vandoren - CEO of Smart, lives in Belgium, has not resided/worked in Florida.
• Smart Tangoes - Delaware corporation (which is a subsidiary of Smart) - principal place of business in California.
• Whitney - CEO of Smart Tangoes, resides in California
• Jumbo - subsidiary of a Dutch entity with principal place of business in the Netherlands and offices in Europe

These defendants sought dismissal for lack of personal jurisdiction.  The Court began with Florida's long-arm statute, which permits jurisdiction over a defendant who committed a tortious act within this state.  While Florida's Supreme Court has not decided whether injury alone satisfies this requirement, the Eleventh Circuit applies a broad construction of the long arm statute, allowing a court to exercise personal jurisdiction over a non-resident defendant if a tort committed outside Florida causes injury in Florida.  See Licciardello v. Lovelady, 544 F.3d 1280, 1283 (11th Cir. 2008).

Here, R&R's allegations are that the three corporate defendants above directly infringed the trademark, while the two officers contributed to the infringement.  As trademark infringement is an intentional tort, and R&R is located in Florida, the injury to R&R is here in Florida, and thus satisfies this part of the statute.  Defendants offered evidence that they hadn't targeted Florida in their advertising, and that their sales were not directed to Florida citizens (rather, they sold the items to Amazon.com, and Amazon.com then sold it to Florida citizens).  This argument, however, ignored that there was still a tort committed, and injury in Florida -- sufficient to satisfy the long arm statute.

Due Process 

Having met the statutory requirement, the Court next analyzed whether it was constitutionally proper to hail these defendants into court in Florida.  First, the defendant must have purposefully directed its activities at Florida.  An intentional tort may satisfy this purposeful direction requirement.  And courts "have consistently found the minimum contacts inquiry satisfied because trademark infringement is an intentional tort directed toward the state in which the plaintiff is domiciled." (citations omitted).

All that was left was analyzing whether it is fair to haul these defendants into court in Florida.   For the California defendants (Smart Tangoes and Whitney), "modern methods of transportation and communication" ameliorated any concern about forcing them to litigate in Florida.  For the Belgium defendants (Smart and Vandoren), their international domiciles did not present a "compelling case" sufficient to keep them out of court here.  This was in part because the entity (Smart) owned a subsidiary (Smart Tangoes) which was domiciled here in the U.S., and which the individual (Vandoren) was an officer of.  Additionally, the Belgium defendants have the same lawyer as the California defendants.  And the Belgium defendants travel to the U.S. for trade shows.

As for the last corporate defendant -- Jumbo -- the Court found it would be unfair to subject that entity to personal jurisdiction here in Florida.   It does not conduct business in the U.S., does not have a subsidiary here, and its activities were directed only at the U.K, not Florida.

Transfer 

Having found four of the five moving defendants were subject to jurisdiction in Florida, the Court quickly dispensed with a motion to transfer the matter to California.  Recognizing the numerous localities involved (Canada, Indiana, Belgium, Arkansas, Illinois, etc.), the court determined that Tampa was at least as convenient, and perhaps more so, than California (noting that flights from many of the locations will be shorter to Tampa than to California).  Thus, the Court denied the motion to transfer.

Shotgun Pleading

It was not a complete win for R&R.  R&R's amended complaint identifies 17 defendants.  The amended complaint appears to have only a single count entitled "Federal Trademark Infringement" but also appears to assert claims for direct and contributory trademark infringement, and conspiracy.  The Court found this to be the "hallmark of a 'shotgun' pleading."  R&R is given an opportunity to replead.  (And, indeed, has done so asserting federal trademark infringement, inducement of trademark infringement, contributory infringement, and trademark infringement conspiracy).

Motion to dismiss or transfer is granted in part, denied in part.  Defendant Jumbo is dismissed without prejudice.
R&R Games, Inc. v. Fundex Games, Ltd. et al., Case No. 8:12-cv-1957 (M.D. Fla. Mar. 1, 2013) (J. Whittemore)

First-to-file rule is alive and well

AAMP of Florida owns U.S. Patent 8,014,540 entitled "Remote Control Interface For Replacement Vehicle Stereos."  AAMP is currently asserting the '540 Patent (and another) against Metra Electronics Corporation here in the Middle District.  AAMP sent a cease and desist letter to another company -- Crux Interfacing Solutions -- located in California.  The risk of doing so, of course, is that the California company will respond to the letter by filing its own lawsuit for a declaratory judgment of noninfringement/invalidity in its jurisdiction.  That's exactly what happened here, with Crux filing suit first in California.

AAMP responded quickly, filing its own patent infringement lawsuit against CRUX in Tampa ten days later.  Expectedly, Crux asked to dismiss this second filed case, or transfer it over to California where Crux's declaratory judgment action had been pending for ten days longer.

AAMP asked the Court to recognize the exception to the first-to-file rule when a party files a declaratory judgment action in an attempt to preempt a soon-to-be-plaintiff's chosen forum.  While the Court agreed that such an activity is an equitable consideration that must be considered in figuring out which of the two forums should handle the dispute, the Court recognized that the decision was in the hands of the Court handling the first case filed:

But, whatever merit there may be in AAMP's contention that Crux's California action falls within this "anticipatory declaratory judgment" exception to the first filed rule -- an issue upon which this Court expresses no opinion -- this Court finds that such a determination should be reached by the United States District Court for the Central District of California.  [Marietta Drapery & Window Coverings Co., Inc. v. N. River Ins. Co., 486 F.Supp.2d 1366, 1369 (N.D. Ga. 2007).]
"The 'first to file' rule not only determines which court may decide the merits of substantially similar issues, but also establishes which court may decide whether the second suit filed must be dismissed, stayed or transferred and consolidated." (citation omitted)

Thus, the case has to go to California to let that Court determine which of the two cases will go forward.  Perhaps it will come back.  We'll wait and see.

Motion to Dismiss, or in the Alternative, Transfer, Granted in Part.

AAMP of Florida, Inc. v. Audionics System, Inc., Case No. 8:12-cv-2922 (M.D. Fla. Mar. 18, 2013) (J. Covington)

You Fit vs. Fit U - injunction entered against former franchisee

Plaintiffs are entities that own and operate the You Fit brand of health clubs.  They claim ownership of 3 federal trademark registrations: "YOUFIT," "Fit begins with You," and "It's where YOU FIT In."   They operate at least 38 gyms in Florida, Georgia, and Arizona under the You Fit name.

Defendants, made up of a number of entities including some former You Fit franchisees, opened a competing gym called "Fit U."  These gyms are in California.  This litigation followed.

Plaintiffs sought a preliminary injunction on the basis of trademark infringement and misappropriation of Plaintiffs' trade secrets.  Magistrate Judge Jenkins recommended granting the preliminary injunction.   Defendants objected to this decision on three grounds: (1) Plaintiffs' marks were merely descriptive and weak or invalid, and there was no likelihood of confusion; (2) there was no consideration as to whether the confusingly similar mark was used in the same trade area; and (3) Plaintiff had not properly identified any justiciable trade secrets.  The Court only addressed the trademark claims to resolve Defendants' objections.

Likelihood of Confusion

The Court analyzed the seven factors to address this concern:

1) the type of mark
      Here, the Court found the marks somewhere between descriptive and suggestive.  While "YOU" and "FIT" "bear a logical relationship to the health club services provided by Plaintiff," .... "a consumer would not automatically associate the marks 'YOUFIT,' 'It's Where YOU FIT In,' and 'Fit begins with You' with a health club.   Thus, Plaintiff's will likely be able to prove their marks are suggestive and entitled to a heightened level of protection.

2) the similarity of the marks
      "'YOUFIT' and 'FIT U' are plainly very similar marks."  Enough said.

3 & 4) the similarity of the services; similarity of the parties' service outlets and customers
     Services, service outlets, and customers were all similar.  This weighed in Plaintiff's favor.

5) nature and similarity of the parties' advertising
    Insufficient evidence for the Court to evaluate this factor.

6) Defendants' intent
    While there were text messages from a defendant suggesting intent to copy, there was also conflicting evidence.  This factor was neutral.

7) actual confusion
    Reviews on yelp demonstrated at least one consumer was confused.  "While these anonymous posts are not conclusive evidence of actual confusion, they are indicative of potential consumer confusion."  This factor favored Plaintiffs.

On balance, the Court agreed with the Magistrate Judge, and found the Plaintiff's likely to prevail on this claim.

Zone of Natural Expansion

Defendants also argued that Plaintiff's franchise business in Florida, Georgia, and Arizona was not likely to expand to Defendants' forum -- California.  The Court dispensed with this argument quickly on two grounds.

First, there was evidence that the franchise was expanding to California as demonstrated by the presence in Arizona.  Second, the federal registrations entitled Plaintiffs to exclusive use of their marks and Defendants could not use the common law zone of natural expansion doctrine to avoid liability.

Injunction entered; $50,000 bond.

You Fit, Inc. v. Pleasonton Fitness, LLC, Case No. 8:12-cv-1917 (M.D. Fla. Feb. 11, 2013) (J. Whittemore)

USF Young Innovator Competition

I am honored to be serving as a judge for the preliminary phase in this year's USF Young Innovator Competition.  Read more about it here.