Copyright Infringement

May 12, 2015

Copyright Law: U.S. Copyright Office Publishes Index of Fair Use Decisions

Washington, D.C. – Register of Copyrights Maria A. Pallante yesterday announced the launch of the U.S. Copyright Office’s Fair Use Index, which is designed to provide the public with searchable summaries of major fair use decisions. The Index was undertaken in support of the 2013 Joint Strategic Plan on Intellectual Property Enforcement prepared by the U.S. Intellectual Property Enforcement Coordinator within the Executive Office of the President.

Although not a substitute for legal advice, the Index is searchable by court and subject matter and provides a helpful starting point for those wishing to better understand how the federal courts have applied the fair use doctrine to particular categories of works or types of use, for example, music, internet/digitization, or parody.

“The doctrine of fair use has been an essential aspect of our copyright law for nearly 175 years,” said Pallante, “but it has too often been a mystery to good-faith users who seek more detail about its application. It has been a pleasure coordinating this practical and important resource with the U.S. Intellectual Property Coordinator’s office.”

April 28, 2015

Indiana Copyright Litigation: Magistrate Rejects Malibu Media’s Request for Fees and Sanctions

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Magistrate Judge Mark J. Dinsmore recommended that Judge William T. Lawrence deny Malibu Media’s motion for fees and sanctions against two Defendants and copyright lawyer Jonathan Phillips.

This Indiana federal lawsuit involves allegations of the use of BitTorrent to illegally download copyrighted adult films. Plaintiff Malibu Media, LLC of Malibu, California initiated copyright litigation in the Southern District of Indiana alleging that Charles and Kelley Tashiro, husband and wife, violated its intellectual property rights by downloading copyrighted videos without authorization.

On the morning of a scheduled evidentiary hearing in the matter, attorney Phillips, who at the time represented both husband and wife, learned of Mr. Tashiro’s intent to invoke his Fifth Amendment rights to avoid testifying about certain matters. The defense attorney for the Tashiros advised the court that, as a result, a conflict of interest between husband and wife had arisen and that he would be withdrawing as the defense attorney for Mr. Tashiro. As a result, the court postponed that day’s hearing.

Malibu Media subsequently filed a motion asking the court for sanctions, seeking to hold Mr. Tashiro and his copyright attorney jointly and severally liable for the costs and fees incurred in its preparations for the postponed hearing. Malibu Media contended that the defense lawyer’s failure to recognize the conflict of interest between the two Defendants in a timely manner had required Malibu Media to incur unnecessary expenses for the evidentiary hearing. More specifically, Malibu Media contended that it incurred several thousand dollars in unnecessary fees, travel expenses, and other costs. It sought to recover those fees, expenses, and costs 1) under Federal Rule of Civil Procedure 37; 2) under 28 U.S.C. § 1927; 3) through an exercise of the court’s inherent authority; and 4) under Federal Rule of Civil Procedure 16.

Magistrate Judge Dinsmore first concluded that FRCP 37 was inapplicable, as it was generally appropriate for “disputes or misconduct during discovery” and the delay of the evidentiary hearing had not resulted from discovery misconduct.

Plaintiff’s claim under 28 U.S.C. § 1927 was also rejected. That section provides that the court may order costs, expenses, and attorneys’ fees incurred as a result of an attorney’s unreasonable or vexatious expansion of the proceedings in litigation.

Malibu Media asserted that this section applied because the copyright attorney’s failure to timely recognize a conflict of interest between the husband-and-wife Defendants failed to meet the standard of care required of attorneys. The court disagreed, stating that the case had involved no incompatibility of the copyright Defendants’ positions, as both had steadfastly asserted that neither had infringed any of Malibu Media’s copyrighted material and that no evidence had been destroyed. Consequently, the defense attorney’s belief that he could provide concurrent representation to both Defendants was neither unreasonable nor vexatious and, thus, relief under 28 U.S.C. § 1927 was unavailable.

Moreover, the court explained, even had § 1927 applied, it provided recompense only for the excess costs and fees incurred – those that would not have been otherwise necessary. Because much of the material prepared by intellectual property counsel for Malibu Media would likely prove useful later in the litigation, those costs and fees had not been incurred unnecessarily.

Magistrate Judge Dinsmore also rejected Malibu Media’s argument that the court should sanction Mr. Tashiro and the defense attorney under the inherent authority that the court holds to manage its affairs through the sanctioning of a party that has abused the judicial process. The court had already determined during its analysis under § 1927 that the defense attorney had acted neither unreasonably nor vexatiously. Thus, a sanction against the defense attorney for abuse of process was similarly found to be improper. The court also declined to hold that Mr. Tashiro’s decision to invoke his Fifth Amendment rights was an abuse of judicial process.

The court then addressed Malibu Media’s contention that Federal Rule of Civil Procedure 16 authorized sanctions in this case. It concluded that, as the rule authorized the imposition of sanctions only in matters regarding scheduling conferences or other pre-trial conferences, it did not apply to the evidentiary hearing at issue in this request for sanctions.

Finally, Magistrate Judge Dinsmore recommended to Judge Lawrence that Malibu Media’s motion, which had been filed without the required statement showing that Plaintiff’s attorney made reasonable efforts to confer with opposing counsel prior to filing the motion for sanctions, be denied for failure to comply with Local Rule 7-1(g).

April 13, 2015

Indiana Copyright Litigation: Court Grants Plaintiff’s Motion to Dismiss Copyright Lawsuit

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana copyright attorneys for Redwall Live Corporation (“Redwall”) of Indianapolis, Indiana asked the Southern District of Indiana to dismiss Redwall’s own copyright litigation. Redwall’s complaint alleged that ESG Security, Inc. (“ESG”), also of Indianapolis, Indiana, infringed the logo that Redwall had designed for ESG. That logo has been registered by the U.S. Copyright Office. The court dismissed the complaint in its entirety. Redwall will be permitted to refile the non-copyright counts in Indiana state court but the copyright count was dismissed with prejudice.

Redwall is a consulting and design-services firm engaged in the business of strategic branding and advertising. Its services include developing a clear message and a unique visual image as well as developing brand value for its clients.

In its 2013 complaint against ESG, Redwall stated that it had been hired by ESG to reinvent ESG’s brand. As part of this project, it created a new logo design for ESG, which was copyrighted under Registration No. VA 1-874-872. Redwall asserted that ESG had failed to pay Redwall in full for the work done and that ESG nonetheless had continued to use Redwall’s copyrighted logo on a variety of items. Indiana copyright lawyers for Redwall sued for copyright infringement under federal law, as well as breach of contract and unjust enrichment under Indiana state law.

Redwall later decided that pursuing the copyright portion of the claim was not worth the expense. As the Judge Sarah Evans Barker put it, they concluded that “the game is not worth the candle.” Copyright attorneys for Redwall asked the court to dismiss the copyright complaint without prejudice. Attorneys for ESG asked the court instead to dismiss Redwall’s copyright claim with prejudice.

In evaluating Redwall’s motion to dismiss, the court cited its discretion to attach conditions to the dismissal of a lawsuit – “the quid for the quo of allowing the plaintiff to dismiss his suit without being prevented by the doctrine of res judicata from bringing the same suit again.” The court noted that Redwall seemed to have added a less-than-robust copyright claim as leverage to obtain its true goal of payment under its contract with ESG. Judge Barker concluded that to allow Redwall to withdraw that copyright claim without any res judicata consequences would reward that gamesmanship. The court determined that, as a proper exercise of its discretion, it would dismiss Redwall’s copyright claim with prejudice but permit Redwall’s remaining state-law claims to be refiled in state court.

Practice Tip: Filing a copyright lawsuit can be perilous, as the plaintiff may later be unable to dismiss that litigation without incurring liability for the defendant’s attorney fees. As the Seventh Circuit held in Riviera Distribs., Inc. v. Jones, a voluntary dismissal of a copyright claim by the plaintiff – if that claim is dismissed with prejudice – is sufficient to trigger the duty of the plaintiff to pay the attorney’s fees incurred defending against the allegations of copyright infringement: “[Defendant] Midwest obtained a favorable judgment. That this came about when [Plaintiff] Riviera threw in the towel does not make Midwest less the victor than it would have been had the judge granted summary judgment or a jury returned a verdict in its favor. Riviera sued; Midwest won; no more is required.” Similarly here, ESG qualifies as a “prevailing party” under the Copyright Act and is thus presumptively entitled to attorneys’ fees for the litigation of that claim under 17 U.S.C. § 505.

April 3, 2015

Copyright Law: Report on Technological Upgrades to Registration and Recordation Released

By Overhauser Law Offices, LLC

The Register of Copyrights has released a report from the Special Projects Team responsible for studying technology issues and business improvements related to the Copyright Office‘s services. The report was delivered to the Register by the Copyright Office Chief Information Officer Doug Ament, who chaired the multi-year analysis. The effort was one of 10 areas of focus publicly announced by the Office in Priorities and Special Projects of the United States Copyright Office: 2011-2013.

The Office’s technology infrastructure impacts all of the Office’s key services and is the single greatest factor in its ability to administer copyright registration, recordation services, and statutory licenses effectively. The report thus provides a number of recommendations that, if adopted, could significantly improve the Office’s operations and interactions with the public.

March 27, 2015

Indiana Trade Secret Litigation: Precision Drone Sues Channel Masters for Misappropriating Trade Secrets

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana intellectual property lawyers for Precision Drone, LLC of Hamilton County, Indiana (“Precision”) commenced trade secret litigation in Hamilton County Superior Court alleging that Channel Masters, LLC of Wisconsin (“Channel”) breached its contract with Precision by improperly misappropriating and revealing trade secrets belonging to Precision.

Precision designs, engineers, manufactures and sells drones for use by farmers to monitor crops. It also develops and sells related software. Defendant Channel connects companies offering products to dealers of those products.

According to the complaint, in September 2014, Precision engaged Channel to sell the PaceSetter™ Drone to dealers of such products. To assist in Channel’s sales efforts, Precision provided Channel with equipment and training, some of which Precision contends is protected by Indiana trade secret law. As part of the sales agreement that the parties entered into, Precision states that Channel was prohibited from disclosing any of Precision’s confidential information without written authorization. The agreement also prohibited Channel from adversely interfering with Precision’s customers and prospective customers.

Plaintiff Precision alleges that, while Channel was working for Precision, it was also promoting and selling crop-imaging drones offered by AgriImage, a company that competes with Precision. Plaintiff also contends that Channel used Plaintiff’s images and training manual to demonstrate the competing AgriImage drones.

Precision claims copyright protection for the website that it uses to promote and advertise its products, as well as contending that at least one of its images was improperly displayed at a trade show by Channel, but the complaint listed no overt assertion of copyright infringement. The complaint, filed by Indiana intellectual property attorneys for Precision, instead alleges the following:

• Count I: Breach of Contract

• Count II: Misappropriation of Trade Secrets

Precision seeks judgment in its favor including damages, attorneys’ fees and costs.

Indiana copyright lawyers for Channel have removed the case to the Southern District of Indiana, arguing that such a removal is proper based both on federal question jurisdiction and diversity of citizenship.

March 23, 2015

Copyright Law: Jury Finds “Blurred Lines” Infringes Copyright; Awards $7.3 Million

By Overhauser Law Offices, LLC

Los Angeles, California – The eight-person jury in the highly publicized trial over the song “Blurred Lines” concluded that Pharrell Williams and Robin Thicke had infringed the copyright of Marvin Gaye’s “Got to Give It Up” and awarded almost $7.4 million to Gaye’s family.

The 2013 smash hit “Blurred Lines” has been the subject of copyright infringement litigation for about a year and a half. The family of Gaye, who was known at the peak of his career as the Prince of Motown, privately approached Williams and Thicke with allegations of copyright infringement. Nona and Frankie Gaye, two of Gaye’s children, contended that “Blurred Lines” infringed Gaye’s 1977 hit “Got to Give It Up.” Copyright attorneys for Williams and Thicke responded by filing a lawsuit under the Declaratory Judgment Act, asking the U.S. District Court for the Central District of California to declare that they had not infringed. The Gaye family countersued, asking for more than $25 million for the copyright infringement that was alleged.

Over the eight-day trial, copyright lawyers for Thicke and Williams emphasized two points in particular. First, they argued, any protection under copyright law extended only to the compositional elements in the sheet music for “Got to Give It Up.” Other elements of “Blurred Lines,” such as the percussion and the singing, they contended, were not protected by the copyright issued by the U.S. Copyright Office.

March 18, 2015

Member Of Megaupload Conspiracy Pleads Guilty to Copyright Infringement Charges and is Sentenced to One Year in U.S. Prison

By Overhauser Law Offices, LLC

A computer programmer for the Mega copyright piracy conspiracy, Andrus Nomm, 36, of Estonia, pleaded guilty recently in connection with his involvement with Megaupload.com and associated piracy websites. He was sentenced to a year and a day in federal prison for conspiring to commit felony copyright infringement.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement. U.S. District Judge Liam O’Grady of the Eastern District of Virginia accepted the guilty plea and imposed the sentence.

“This conviction is a significant step forward in the largest criminal copyright case in U.S. history,” said Assistant Attorney General Caldwell. “The Mega conspirators are charged with massive worldwide online piracy of movies, music and other copyrighted U.S. works. We intend to see to it that all those responsible are held accountable for illegally enriching themselves by stealing the creative work of U.S. artists and creators.”

March 13, 2015

Intellectual Property: Patents, Trademarks, Copyrights and Trade Secrets

By Overhauser Law Offices, LLC

How should I protect my intellectual property?

Different types of intellectual property are protected by different means.

In the United States, patents may be available to any person who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Patent protection must be sought by application with the U.S. Patent and Trademark Office (“USPTO”). There are three types of patents:

March 11, 2015

Indiana Intellectual Property Law: Patent Infringement Allegations of Pro Se Plaintiff Dismissed

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Judge Sarah Evans Barker of the Southern District of Indiana dismissed the patent infringement claims asserted in the amended complaint of pro se Plaintiff Dennis Lee Maxberry against ITT Technical Institute (“ITT”). Also included in Maxberry’s amended complaint were claims for copyright infringement, deprivation of disabled veterans’ benefits, sabotage of Maxberry’s bachelor’s degree, stalking, sabotage of Maxberry’s employment opportunities, RICO liability against ITT and the State of Wisconsin, malicious prosecution of intellectual property actions against Maxberry, violations of various executive orders relating to Maxberry’s service in the military, violations of the Higher Education Act, and violations of a number of Maxberry’s constitutional rights.

The parties in this patent infringement litigation are Defendant ITT, an Indiana-based for-profit higher education company, and Maxberry of West Allis, Wisconsin, who had previously been enrolled in an M.B.A. graduate course at ITT. In April 2014, Maxberry, acting as his own patent attorney, sued Defendant ITT alleging multiple harms, which the court summarized as follows:

It appears that Plaintiff accuses Defendant of stealing his federal student loan money, failing to award him grades for the classes that he completed, and applying money from his educational loans towards tuition payments even after he withdrew from school. Plaintiff also accuses Defendant of “being unconscious to the plaintiff by arbitrating the contract,” searching his person or property “without a warrant and without probable cause,” using excessive force upon him, failing to provide him with “needed medical care,” “false credit testimony, mayhem on property, defamation, false imcriminalization [sic], malicious prosecution, conspiracy, and/or any other claim that may be supported by the allegations of this complaint.” Plaintiff’s Complaint makes reference to 28 U.S.C. § 1983, 1985, and 1986, “Title IX, and Section 504 of the 1973 Rehabilitation Act,” the “False claim act,” and avers that “[t]he criminal proceeding by the defendants … [is] still pending,” but that Plaintiff “was innocent.”

The court dismissed Maxberry’s initial complaint on two grounds. First, Judge Barker noted that the Plaintiff was asking the Southern District of Indiana, a federal court, to review the rulings of a Wisconsin state court. Such a review, which would in effect place the Indiana federal court in the position of acting as a Wisconsin appellate court, was impermissible under the Rooker-Feldman doctrine. The court further found that the assertions in the complaint were “cast in such an incoherent and confusing manner that they must be dismissed under [Federal Rule of Civil Procedure 8(a)] based on Plaintiff’s failure to give Defendant (as well as the Court) fair notice of what they actually are.”

The court allowed Maxberry to file an amended complaint, which ITT moved to dismiss. In this complaint, Maxberry again made multiple claims, including five claims involving patent 8,632,592, for an “expandable vertebral body replacement device and method.” Maxberry asserted that this patent encompassed a cure for cancer, an automotive window-locking device, as well as a type of computer display equipment.

The court dismissed these “facially implausible” patent infringement claims with prejudice. Judge Barker noted that, not only was it wildly improbable that a single patent covered all of the asserted functions, but the records of the U.S. Patent and Trademark Office showed that the patent-in-suit was not registered to Maxberry.

The court also dismissed Maxberry’s other claims but granted him leave to reformulate those claims in a more understandable form and resubmit them.

February 27, 2015

Copyright Law: Federal Circuit Upholds $540,000 in Royalties for USPS Copyright Infringement

By Overhauser Law Offices, LLC

Washington, D.C. – The United States Court of Appeals for the Federal Circuit affirmed a royalty award in Gaylord v. United States for copyright infringement committed by the United States Postal Service.

Frank Gaylord, a World War II veteran and renowned sculptor, created The Column, consisting of nineteen stainless steel statues depicting a squad of soldiers on patrol. This work, completed and dedicated in 1995, formed a central part of the Korean War Veterans Memorial located on the National Mall in Washington, D.C. For his efforts in creating the work, Gaylord was paid $775,000.

Shortly after the completion of the work, an amateur photographer named John Alli visited the Memorial during a heavy snowstorm and photographed The Column. In 2002, the United States Postal Service decided to issue a stamp to commemorate the upcoming fiftieth anniversary of the Korean War armistice. It settled on Alli’s photo of The Column for the stamp face and paid Alli a one-time fee for the right to use his photo. The Postal Service made no payment to Gaylord.

Gaylord sued for copyright infringement. The United States Court of Federal Claims acted as the trial court in the litigation. Twice prior to the instant appeal, an appeal was made to the Federal Circuit, first in 2010 and again in 2012. In Gaylord I, the Federal Circuit held that the government was liable to Gaylord for copyright infringement. Upon remand, the Court of Federal Claims awarded Gaylord a total of $5,000 to compensate for the infringement of his copyright. This award was vacated by the Federal Circuit in Gaylord II and the lawsuit remanded with instructions to “determine the fair market value of a license for Mr. Gaylord’s work based on a hypothetical negotiation with the government.”

Upon remand, the trial court split the calculations of damages for the infringement into three categories: (1) stamps used to send mail; (2) commercial merchandise featuring an image of the stamp; and (3) unused stamps purchased by collectors. The parties agreed that no damages would be paid for stamps used to send mail and that a royalty of 10% of revenues would be appropriate for commercial merchandise featuring the copyrighted work.

The only disputed issue was the appropriate measure of copyright infringement damages for the stamps purchased by collectors. The lower court determined that the Postal Service received $5.4 million in revenue, which was deemed “almost pure profit,” from these sales. It then found that an appropriate copyright royalty would be 10%, or $540,000.

At issue in this latest appeal, Gaylord III, is whether this royalty was appropriate. The Federal Circuit applied the “hypothetical negotiation” analysis in reviewing the Court of Federal Claims’ award to Gaylord, stating that “actual damages for copyright infringement may be based on a reasonable royalty representing the fair market value of a license covering the defendant’s use.” Determining that “fair market value,” in turn could be done employing a valuation tool used in the context of patent infringement litigation: a hypothetical negotiation that would determine “the reasonable license fee on which a willing buyer and a willing seller would have agreed for the use taken by the infringer.”

The Federal Circuit held that the lower court neither committed clear error nor abused its discretion in arriving at a 10% royalty rate affirmed the award of $540,000.