Copyright Infringement

August 21, 2013

Judgment of $151,425 Granted Against Defendant Who Failed to Answer Allegations of Illegal Downloading of Pornography

Indianapolis, Indiana — The Southern District of Indiana has granted a motion for default judgment by CP Productions, Inc. (“CP”) of Arizona, which had sued Gerald L. Glover, III (“Glover”) of Indianapolis, Indiana alleging infringement of the copyrighted work “GH Hustlers — Maryjane’s Second Visit” which has been registered by the U.S. Copyright Office.

CP produces adult-entertainment content. Copyright lawyers for CP filed suit in the Southern District of Indiana alleging that Glover and his joint tortfeasors, without Plaintiff’s authorization or license, downloaded CP’s copyrighted work via the Internet. Specifically, it was alleged that they had, knowingly and illegally, reproduced and distributed CP’s copyrighted creative work, and materially contributed to the infringing conduct of others by acting in concert via the BitTorrent file-sharing protocol. CP also alleged that Glover was a serial infringer of copyrights in adult content stating that agents for CP had observed him infringing on multiple copyrighted works involving adult content.

In the complaint, CP’s attorneys listed counts of copyright infringement, civil conspiracy and contributory infringement. CP sought statutory damages of $150,000 under the Copyright Act, 17 U.S.C. § 504 for Glover’s alleged willful infringement of CP’s copyright. CP also asked the court for attorneys’ fees and costs of $1,425 under 17 U.S.C. § 505, for a total judgment of $151,425. Glover did not respond to the complaint.

Because he had failed to plead or otherwise defend in this action, despite having been properly served with a summons and a complaint, Judge Jane Magnus-Stinson ordered an entry of default against Glover for $151,425, the full amount requested.

Practice Tip: When a defendant fails to appear to address assertions of wrongdoing made by a plaintiff, the court takes as true all of the plaintiff’s well-pled allegations. On Friday, we blogged about a default-judgment case wherein the defendant was ordered by the court to pay $20,000 for illegally downloading copyrighted material. As the Glover case shows, however, damages for illegally downloading copyrighted material can be much higher.

August 16, 2013

Default Judgment of $20,000 Granted in Copyright Infringement Case Involving BitTorrent

By Overhauser Law Offices, LLC

Indianapolis, Indiana —The Southern District of Indiana has granted a default judgment to Malibu Media, LLC of Los Angeles, California in its lawsuit against Robert Johnson of Indianapolis, Indiana for copyright infringement of the work “Pretty Back Door Baby.”

In its complaint, Malibu Media alleged that Johnson and others directly and contributorily infringed its copyrighted work when they downloaded and disseminated without authorization, all or a portion of a movie owned by Malibu Media entitled “Pretty Back Door Baby” using BitTorrent, a peer-to-peer file sharing protocol. The initial complaint was served upon eleven defendants but was later severed. Discussed in this opinion are the allegations, findings and judgments against Johnson only.

Malibu Media served Johnson with a summons and complaint on March 8, 2013. Johnson did not respond. On April 12, 2013, default was entered as to Johnson by Southern District of Indiana Judge William T. Lawrence. By virtue of this entry of default, it was established as a factual matter that Johnson had uploaded and downloaded all or a portion of the copyrighted work without authorization, and had also enabled countless unknown others to obtain the work in the process.

In the current default-judgment opinion, the court addressed requests by Malibu Media for an injunction, for damages, for attorney’s fees and for costs.

The injunction sought asked the court to prohibit Johnson “from directly, contributorily or indirectly infringing [Malibu Media’s] rights under federal or state law in the Work, including, without limitation, by using the internet, BitTorrent or any other online media distribution system to reproduce (e.g., download) or distribute the Works, or to make the Work available for distribution to the public, except pursuant to a lawful license or with the express authority of [Malibu Media].” The court held that such an injunction was simply a mandate that Johnson follow copyright laws and that the injunction was therefore unnecessary.

The court also denied Malibu Media’s request for attorneys’ fees and costs, noting that the fees submitted seemed to reflect legal work done not only in the furtherance of the lawsuit against Johnson, but also seemed to pertain to other related lawsuits involving the previously joined defendants. As a result of these ambiguities, the court denied Malibu Media’s request for costs and attorney’s fees but indicated that it would be willing to entertain such motions upon the entry of final judgment as to all defendants in related cases.

Finally, Malibu Media sought statutory damages in the amount of $20,000. The court cited “Congress’s recognition of the ‘disturbing trend’ of internet piracy” and found that amount to be just under the circumstances.

Practice Tip:

Deciding to simply ignore a complaint, as Robert Johnson apparently did, can be a costly error. Failing to present the defendant’s version of the facts and arguments results in the court considering only the plaintiff’s side of the story. Here, because the defendant chose to leave the complaint unanswered, the well-pled allegations of the plaintiff relating to liability were taken as true.

After the entry of default judgment, the court then conducted an inquiry to ascertain the amount of damages with “reasonable certainty.” Again, in such circumstances, it serves a defendant well to plead his case — to present the court with reasons that the plaintiff should not get 100% of what he requests.

Under 17 U.S.C. § 504(c)(1), a copyright owner may elect actual or statutory damages. Statutory damages range from a sum not less than $750 to not more than $30,000. The determination of the exact amount is left to the discretion of the court. In this case, Malibu Media asked the court for $20,000 and the court, having no arguments from the defendant to suggest that this was excessive, granted the entire amount.

Overhauser Law Offices, the publisher of this website, has represented several hundred persons and businesses regarding copyright infringement and similar matters.

August 15, 2013

Consumer Health Information Sues Amylin and Eli Lilly for Copyright Infringement of Patient Education Materials

By Overhauser Law Offices, LLC

Indianapolis, Indiana — Copyright lawyers for Consumer Health Information Corp. (“CHIC”) of Virginia sued Amylin Pharmaceuticals, Inc. and Amylin Pharmaceuticals, LLC (collectively, “Amylin”), both of Los Angeles, California and Eli Lilly & Co. (“Lilly”) of Indianapolis, Indiana (collectively, “Defendants”) alleging copyright infringement of works that CHIC created for Defendants’ use.

CHIC is an entity with expertise in patient engagement and patient-adherence strategies, health literacy and patient education program development for prescription drugs, over-the-counter products and medical devices.

Amylin and Lilly are primarily engaged in the research, development, manufacture, marketing and sale of pharmaceutical medicines and devices. In 2005, as part of a joint venture, they introduced the pharmaceutical drug Byetta to the marketplace. Byetta is an injectable prescription medicine that may improve blood-sugar control in adults with type 2 diabetes mellitus. As part of this joint venture, CHIC asserts that Amylin and Lilly agreed to share in the costs incurred and profits derived from Byetta.

In its copyright complaint, CHIC’s intellectual-property counsel states that, after the launch of Byetta, Defendants experienced poor sales as a result of poor patient compliance. CHIC asserts that patients had a difficult time understanding the materials that came with their medication and, thus, had a difficult time administering the drug properly. Many patients stopped taking Byetta because of these difficulties. As a result, patients stopped re-filling their Byetta prescriptions and sales of Byetta were poor.

CHIC contends that, in November 2005, Amylin and Lilly contacted CHIC to develop a strategy to improve the sales of Byetta by improving patients’ understanding of how to use the medication and by motivating patients to stay in treatment. A contract for the work was proposed by CHIC but not immediately approved by Defendants. Amylin and Lilly provided additional related projects to CHIC between December 2005 and mid-March 2006 and CHIC indicates in its complaint that it completed these projects.

CHIC asserts that, by mid-March 2006, it still had not been paid. It threatened to stop work until its proposal was approved and payment for all past work on the patient-education project was received. In response, Amylin and Lilly partially approved CHIC’s proposal. They, however, apparently demanded that a different version be signed and insisted that CHIC agree to Defendants’ terms, as outlined in their Master Service Agreement (“MSA”), regarding the assignment of copyrights.

The complaint states that, by this time, CHIC had expended significant time and expenses in furtherance of the Byetta project. CHIC claims that it was in jeopardy of imminent financial ruin if Amylin and Lilly did not pay for the services already rendered and that Defendants refused payment unless and until CHIC signed Defendants’ MSA. CHIC contends that it had little choice but to execute the MSA, which it did in March 2006.

In Section 4(a) of the MSA, the parties purported to designate CHIC’s creation of the patient-education materials as works made for hire under 17 U.S.C. § 101 and, in turn, CHIC purported to assign its interest in the work-for-hire copyrights to Defendants.

CHIC contends, however, that the patient education materials which it created did not qualify as works for hire, stating that the patient education materials were not “instructional texts” or “textbook materials.” Moreover, it states that the materials were not used and were not designed to be used in “systematic instructional activity” or as part of a “curriculum.” Finally, it asserts that the materials were not part of a teaching method established by an educational institution or the government. Rather, it claims that the materials were prepared for general readership for use in marketing a pharmaceutical product commercially, both nationally and internationally. It concludes that, because the patient education materials did not qualify as works for hire, CHIC did not transfer any copyright interests to Defendants through section 4 of the MSA.

CHIC continues its assertions by claiming that, throughout the last seven years, Defendants have copied and used CHIC’s works in an effort to derive profits from the marketing and sale of Byetta. Defendants have earned gross profits in excess of several billions of dollars from the allegedly unauthorized use, copying, and publication of CHIC’s works. As such, CHIC contents that Defendants’ profits gained from the use, copy, and publication of CHIC’s works rightfully belong to CHIC.

In the complaint, copyright attorneys for CHIC allege a single cause of action: copyright infringement. CHIC asks the court for damages, attorneys’ fees, costs of court, and pre-judgment and post-judgment interest.

Practice Tip: What seems to have begun as a garden-variety contract dispute has been transformed into a copyright case which will presumably turn in no small part on the term of art “work made for hire.”

Under 17 U.S.C. § 101, a “work made for hire” is (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities.

July 31, 2013

Riders Choice Sues Golden West Saddle Blankets for Declaratory Relief

By Overhauser Law Offices, LLC

Terre Haute, Indiana — Copyright lawyers for Riders Choice, LLC d/b/a Show and Tell Saddle Blankets (“Riders Choice”) and Loni Rhodes (“Rhodes”; collectively,”Plaintiffs”) of Center Point, Indiana sued for declaratory relief over allegations of copyright infringement made by Lori Heckaman (“Heckaman”) d/b/a Golden West Saddle Blankets (“Golden West” or “Defendant”) of Gainesville, Texas.

Riders Choice, sometimes operating as “Show and Tell Saddle Blankets,” makes and sells products related to horseback riding, including hand-woven saddle blankets with colorful geometric designs. Rhodes owns Riders Choice. Heckaman, doing business as Golden West Saddle Blankets, also makes and sells products related to horseback riding, including blankets with colorful geometric designs.

Intellectual property counsel for Heckaman sent two cease-and-desist letters to Rhodes and Riders Choice, the first on June 14, 2013 and the second on July 2, 2013. The first cease-and-desist letter asserted that the designs on Heckaman’s blankets were copyrighted and alleged against Rhodes and Riders Choice claims for copyright infringement based on Rhodes’s and/or Riders Choice’s manufacture, marketing and sale of its own blankets. The second cease-and-desist letter made similar allegations. Claims were also made against Rhodes and Riders Choice for business interference, unfair competition and misappropriation of trade secrets based on Rhodes’s and/or Riders Choice’s marketing of Riders Choice’s blankets and alleged copying of Golden West’s weaving and design methods.

Both cease-and-desist letters threatened Rhodes and/or Riders Choice with imminent litigation if Rhodes and/or Riders Choice did not comply with Defendant’s demands, the first by writing “we will have no choice but to advise our client to protect her interests by instituting a suit in a court of competent jurisdiction,” and the second by writing that although “Golden West prefers to resolve this matter without the necessity of court intervention, all necessary action will be taken if a voluntary agreement cannot be reached.” Both cease-and-desist letters demanded that Rhodes and/or Riders Choice stop marketing, selling and producing its blankets. Further, a July 3, 2013 e-mail threatened Rhodes and Riders Choice with imminent litigation by writing that if Rhodes and/or Riders Choice did not “refrain from promoting, marketing, producing, and selling saddle blankets,” Heckaman would have “no choice but to seek available remedies.”

In response, copyright lawyers for Riders Choice filed a complaint under the Declaratory Judgment Act. In the complaint, Plaintiffs assert that blankets with similar designs are widely produced and sold by third parties, that they did not believe that Heckaman had registered any of her designs with the U.S. copyright office, that the blankets Riders Choice sells are original works designed by Rhodes and that every blanket Riders Choice sells is unique in that no two blankets are sold with an identical pattern. They further asserted that Rhodes learned these methods from books and other publicly available materials unaffiliated with Heckaman and that Rhodes had never copied Defendant’s designs.

In the complaint, Plaintiffs ask for judgments of:

· Count I — No Copyright Infringement

· Count II — No Business Interference

· Count III — No Unfair Competition

· Count IV — No Misappropriation of Trade Secrets

Plaintiffs request that the court: (a) declare that Rhodes’s and Riders Choice’s blankets did not in the past and do not now infringe any of Defendant’s valid copyrights; (b) declare that Rhodes and Riders Choice did not commit in the past and are not now engaged in business interference against Defendant based on the sale, marketing or production of blankets; (c) declare that Rhodes and Riders Choice did not commit in the past and are not now engaged in unfair competition against Defendant based on the sale, marketing or production of blankets; (d) declare that Rhodes and Riders Choice did not commit in the past and are not now engaged in the misappropriation of trade secrets from Defendant based on the sale, marketing or production of blankets; (e) award to Plaintiffs their costs and attorneys’ fees.

Practice Tip:

As with a patentee who believes that his or her patent is being infringed, holders of copyrighted materials often will send a “cease-and-desist letter” — a letter demanding that the purported infringer cease infringing. To aid in convincing the accused infringer to meet its demands, the holder of the intellectual property may be tempted to use language such as plans of “instituting a suit” and seeking “court intervention,” as Defendant did here.

As this case demonstrates, this strategy may backfire. By using such language, the Defendant can create an “actual controversy” for purposes of the Declaratory Judgment Act. Thus, the party alleging infringement (the natural plaintiff in an infringement suit) may instead find itself being sued by the alleged infringer (the natural defendant), often in a jurisdiction that would not have been the first choice of the owner of the intellectual property.

One approach that may have yielded better results for Golden West might have been to approach the accused infringer with an offer to license the purportedly protected intellectual property. With carefully crafted language, such a proposal might have served to put Riders Choice on notice of Golden West’s belief that infringement was occurring without going so far as to create an “actual controversy” sufficient to support a lawsuit under the Declaratory Judgment Act.

July 18, 2013

Master Cutlery Sues Pacific Solution Marketing for Infringement of Three-Dimensional Artwork Applied to Knives

By Overhauser Law Offices, LLC

Indianapolis, Indiana — Intellectual property lawyers for Master Cutlery, Inc. of Secaucus, New Jersey sued Pacific Solution Marketing, Inc. (“Pacific”) of Ontario, California alleging copyright and trademark infringement of three-dimensional artwork applied to knives. Master Cutlery seeks an injunction, damages, treble damages, statutory damages, profits, attorney’s fees and costs.

Founded 30 years ago, Master Cutlery has become the largest importer of knives in the United States. It asserts ownership of federal trademark, patent and copyright registrations for its knives, as well as common law trade dress rights (collectively, “Master Cutlery IP”). Among the rights that Master Cutlery claims are trademarks for the word marks “Sheriff” and “EMT” registered in Class 8 with the U.S. Trademark Office for knives.

Master Cutlery asserts that, after its use and registration of its various items of intellectual property, Pacific also began using the Master Cutlery intellectual property. It contends that Pacific has manufactured, produced, advertised and/or sold knives that infringe upon the Master Cutlery IP. It also asserts that Pacific has distributed advertisements and packaging bearing reproductions of Master Cutlery’s trademarks, trade dress and copyrights.

Master Cutlery sued alleging copyright infringement under the Copyright Act; federal trademark infringement, federal trademark dilution, false designation of origin and false advertising under the Lanham Act; common law trademark and copyright infringement; unfair competition; and theft and counterfeiting under Indiana state law. It further contends that this infringement was willful, intentional and done with the intent to confuse consumers. The complaint, originally filed in Indiana state court, was removed by a trademark attorney for Pacific on both the grounds of federal question and diversity of citizenship.

For its claims, Master Cutlery lists the following:

· Count I: Copyright Infringement Under 17 U.S.C. § 101 et seq.

· Count II: Federal Trademark Infringement Under U.S.C. § 1114

· Count III: Trademark Dilution Under 15 U.S.C. § 1125(c)

· Count IV: False Designation of Origin or Sponsorship, False Advertising and Trade Dress Infringement Under 15 U.S.C. § 1125(a)

· Count V: Common Law Trademark and Copyright Infringement

· Count VI: Unfair Competition

· Count VII: Theft Under Ind. Code § 35-43-4-2(a)

Master Cutlery asks for a permanent injunction enjoining infringement; that Pacific be required to deliver to Master Cutlery both unsold goods and goods already distributed or sold so that they can be destroyed; for compensatory damages; for treble damages or, alternatively, Pacific’s profits trebled; for statutory damages; and for attorneys’ fees and costs.

Practice Tip: Master Cutlery has included a count of felony theft under Indiana Code § 35-43-4-2(a) in its complaint. The extent to which intellectual property is “property” in the usual sense has been litigated several times recently in the Indiana appellate court, which has made it clear that criminal statutes often apply differently to an unlawful taking of intellectual property. For a discussion of two recent cases, see here and here.

July 10, 2013

BMI Wins on Summary Judgment in Infringement Case

By Overhauser Law Offices, LLC

Indianapolis, Indiana — The Southern District of Indiana has granted a motion by New York-based Broadcast Music, Inc. et al. for summary judgment against Diamond Investments, Inc. and Salvatore Mazza of Franklin, Indiana for copyright infringement for the unlicensed use of copyrighted musical compositions in live performances at The Juke Box Live.

Broadcast Music, Inc. (“BMI”) is a “performing rights society” under 17 U.S.C. § 101 that operates on a non-profit-making basis and licenses the right to publicly perform copyrighted musical works on behalf of the copyright owners of these works. The other plaintiffs in this action are the copyright owners of the eight compositions at issue in this lawsuit.

Diamond Investments, Inc. (“Diamond”) is an Indiana corporation that operated The Juke Box Live, a “nightclub restaurant entertainment venue.” Musical compositions were publicly performed at The Juke Box Live in connection with Diamond’s operation of that business.

Salvatore T. Mazza (“Mazza”) was an officer of Diamond with primary responsibility for the operation and management of Diamond and The Juke Box Live. Mazza also had a direct financial interest in the corporation and The Juke Box Live.

Prior to February 2010, BMI learned that The Juke Box Live was offering musical entertainment without a license from BMI and without permission from the copyright owners whose music was being publicly performed. Between February 4, 2010 and May 31, 2011, BMI repeatedly informed Diamond and Mazza (collectively, “defendants”) in writing of the need to obtain permission for public performances of copyrighted music and offered to enter into a license agreement with defendants, but they refused. BMI also sent four letters instructing defendants to cease unauthorized public performances of BMI’s music and telephoned on 55 occasions to advise defendants of the need to enter into a license agreement.

Nonetheless, the infringement continued. On March 19, 2011, a BMI investigator went to The Juke Box Live and recorded the performance of songs owned by the various non-BMI plaintiffs. An action for copyright infringement of eight works performed at The Juke Box Live, brought pursuant to 17 U.S.C. § 101 et seq. (the “Copyright Act”), followed.

BMI later moved for summary judgment and the defendants, although represented by counsel, did not respond. The court held that, due to their failure to answer or object to BMI’s requests for admissions, defendants were deemed to have tacitly admitted to copyright infringement.

The court awarded $3,000.00 for each of the eight findings of infringement in this case, for $24,000.00 in total, for the infringement itself. It also found that the infringement had been willful and consequently awarded to the plaintiffs $17,985.55, to cover in full plaintiff’s costs and attorney’s fees. The court also ordered that post-judgment interest be paid. These damages and costs were assessed against Diamond and Mazza jointly and severally.

Finally, the court ordered that Diamond and Mazza, each individually, as well as all persons acting under their permission or authority, be permanently enjoined from infringing the copyrighted musical compositions licensed by BMI.

Practice Tip:

The Copyright Act empowers a plaintiff to elect to receive an award of statutory damages between $750 and $30,000 per infringement in lieu of an award representing the plaintiffs’ actual damages and/or the defendants’ profits. In a case where the copyright owner proves that infringement was committed willfully, the court may increase the award of statutory damages to as much as $150,000 per infringed work. A finding of willful infringement will also support an award of attorney’s fees.

Here, the court awarded $3,000 per infringement plus attorney’s fees. Courts considering awards of statutory damages have recognized that awards in the range of $3,000 to $7,000 or higher per infringement are appropriate in cases where the infringement resulted from deliberate indifference toward copyright laws.

Furthermore, not only is the performer liable for infringement, but so is anyone who sponsors the performance. A corporate officer will be found jointly and severally liable with his corporation for copyright infringement if he (1) had the right and ability to supervise the infringing activity, and (2) has a direct financial interest in such activities.

July 5, 2013

Indiana Court Orders BitTorrent Defendants Severed

By Overhauser Law Offices, LLC

Ft. Wayne, Indiana — The Northern District of Indiana has directed Malibu Media, LLC of Los Angeles, California to file separate amended complaints against each defendant in its lawsuit for copyright infringement.

The case, initially filed in July 2012 against 14 Doe defendants, had only four defendants remaining. In December 2012, the court had denied the motions to sever and declined to exercise its own discretion to sever the Doe defendants.

The court, in a recent opinion issued by Magistrate Judge Roger Cosbey, moved sua sponte to reconsider the issue. It held that, while permitting joinder earlier had promoted judicial economy and facilitated the discovery process, the case had reached the point where continued joinder would instead create judicial inefficiency due to the different factual issues and legal defenses in each defendant’s case. Does No. 5, 9 and 12 were severed, leaving Doe No. 6 as the only defendant remaining in the current suit.

The practical effect of severance of previously joined claims is the creation of one or more new actions. The court directed Malibu Media to file a separate amended complaint for each of the severed Does.

Practice Tip:

It has been estimated that over 200,000 users of various peer-to-peer file-sharing protocols, usually users of BitTorrent, have been sued for copyright infringement. Instead of a thorough investigation, followed by a lawsuit, these plaintiffs — usually holders of a copyright to a work of adult entertainment — gather the IP addresses of many potential/presumed infringers and then sue tens, hundreds or even thousands of defendants in a single suit. The plaintiffs then extract settlements from the defendants, who are motivated to settle to avoid the embarrassment of being associated with pornography and the expense of litigation, even if they may not have infringed the work.

The problem has become sufficiently widespread that it has garnered attention from mainstream press (see, e.g., here). Different approaches to the growing problem of copyright trolls have been taken. In some cases, defendants have filed suit, alleging fraud and extortion.

The problem has also caused considerable strain on the federal judiciary, leading one judge to deny joinder as serving no legitimate purpose in such cases once IPSs have been put on notice to preserve identifying information for particular IP addresses and to opine that it is “difficult to even imagine the extraordinary amount of time federal judges have spent on these cases.” Many other courts have also denied joinder, often on the theory that, while doing so does not solve the problem it, at least, makes pursuing such abusive litigation much less profitable.

Some courts have exercised their discretion to allow Doe defendants to proceed under a pseudonym, at least during the discovery phase of a suit.

June 26, 2013

Microsoft Sues Mister HardDrive and Mark Cady for Copyright and Trademark Infringement

By Overhauser Law Offices, LLC

New Albany, Ind. — Intellectual property lawyers for Microsoft Corp. of Redmond, Wash. sued Mister HardDrive and Mark Cady of Scottsburg, Ind. alleging infringement of copyrighted work TX 5-407-055 titled Microsoft Windows XP Professional : version 2002 registered with the U.S. Copyright Office; and Trademark Registration Nos. 1,200,236; 1,256,083; 1,872,264 and 2,744,843 registered with the U.S. Trademark Office.

Microsoft, the seventh largest publically traded company in the world, has sued Mister Harddrive, a business entity of unknown legal structure that is also known as Mister HardDrive’s Wipe and Restore (“Mister HardDrive”), and Mark Cady, an individual, alleging that they engaged in copyright and trademark infringement; false designation of origin, false description and representation; and unfair competition.

Microsoft develops, markets, distributes and licenses computer software. Microsoft’s software programs are recorded on discs, and they are packaged and distributed together with associated proprietary materials such as user’s guides, user’s manuals, end user license agreements, and other components. Mister HardDrive is engaged in the business of advertising, marketing, installing, offering, and distributing computer hardware and software, including products sold as Microsoft software.

In its complaint, Microsoft alleges that Mister HardDrive and Mark Cady offered, installed, and distributed unauthorized copies of Microsoft software and thereby infringed Microsoft’s copyrights, trademarks and/or service mark. Infringement and/or misappropriation of Microsoft’s copyrights, advertising ideas, style of doing business, slogans, trademarks and/or service mark in defendants’ advertising is also alleged.

Microsoft asserts that in December 2012, defendants were found to have distributed computer systems with unauthorized copies of Windows XP installed on them. Microsoft asked defendants to stop making and distributing infringing copies of Microsoft software but claims that additional computers with unauthorized copies of Windows XP were subsequently distributed by defendants. Microsoft claims that such distribution of counterfeit and infringing copies of their software — along with related infringing items — is ongoing.

The complaint lists the following counts:

· First Claim [Copyright Infringement – 17 U.S.C. § 501, et seq.]

· Second Claim [Trademark Infringement – 15 U.S.C. § 1114]

· Third Claim [False Designation Of Origin, False Description And Representation –

· 15 U.S.C. § 1125 et seq.]

· Fourth Claim [Indiana Common Law Unfair Competition]

· Fifth Claim [For Imposition Of A Constructive Trust Upon Illegal Profits]

· Sixth Claim [Accounting]

Microsoft asks that the court adjudge that the defendants have willfully infringed its federally registered copyright; that the defendants have willfully infringed several of its federally registered trademarks and one of its service marks; that the defendants have committed and are committing acts of false designation of origin, false or misleading description of fact, and false or misleading representation against Microsoft; and that the defendants have engaged in unfair competition in violation of Indiana common law.

Microsoft seeks damages, an accounting, the imposition of a constructive trust upon defendants’ illegal profits, and injunctive relief.

Practice Tip: Microsoft has named as defendants both the business entity and the individual who has been identified as related to Mister HardDrive as “an owner, operator, officer, [or] shareholder, [who] does business as and/or otherwise controls” the business. A corporate officer, director or shareholder is, as a general matter, personally liable for all torts which he authorizes or directs or in which he participates, even if he acted as an agent of the corporation and not on his own behalf.

June 13, 2013

Bruce Lee’s Daughter Sues Regarding 1965 Bruce Lee Screen Test

By Overhauser Law Offices, LLC

Indianapolis, Ind. — Copyright lawyers for LeeWay Media Group, LLC of Los Angeles, Calif. filed a declaratory judgment suit against Laurence Joachim of New York, N.Y. and Los Angeles, Calif. and Trans-National Film Corporation of New York in a copyright dispute over the use of portions of Bruce Lee’s 1965 screen test in the 2012 documentary “I Am Bruce Lee.”

Bruce Lee, widely considered to have been one of the most influential martial artists of all time, was also an actor and filmmaker. He is most famous for his roles in the films The Big Boss (1971), Fist of Fury (1972), Way of the Dragon (1972), Enter the Dragon (1973) and The Game of Death (1978). Lee was the first celebrity to be cast in major motion pictures after his death.

Lee completed his first Hollywood screen test in or about 1965. It is over eight minutes long and, according to LeeWay Media, has been used freely in many productions over the intervening decades. It is allegedly available for viewing on such sites as youtube.com.

A documentary about Lee entitled I Am Bruce Lee was produced by LeeWay Media, a company founded by Lee’s daughter Shannon Lee. It was released and aired on Spike TV in early 2012. Approximately 91 seconds of the 1965 screen test were included in the documentary. Prior to including the material from the screen test, LeeWay Media searched to determine whether the screen test was copyrighted. It concluded that the material was in the public domain.

LeeWay Media was contacted in July 2012 by Joachim, who claimed to own the copyright to the screen-test footage. He asserted that his copyright had been infringed. Negotiations ensued, but the dispute was not resolved. Among other issues, LeeWay Media asserted that it had requested but not received any relevant copyright-ownership documentation from Joachim.

In May 2013, Joachim informed LeeWay Media that, unless a six-figure settlement fee was paid, he would sue for violations of federal copyright law; federal law for unfair competition; and Indiana and California state law for unfair competition. LeeWay Media instead filed suit against Joachim and Trans-National Film under the Declaratory Judgment Act, asking the court to declare, inter alia, that LeeWay had not committed copyright infringement.

The complaint asks the court for the following:

· Declaration of No Valid Copyright

· Declaration of No Standing

· Declaration of No Copyright Infringement

· Declaration of No Unfair Competition

LeeWay Media also asks for attorneys’ fees and costs; and for a declaration that the claim of copyright infringement and unfair competition are in bad faith and, as such, should be sanctioned.

Practice Tip: In 1994, the Supreme Court addressed the issue of fee shifting in copyright cases in Fogerty v. Fantasy, Inc. Since then, the federal circuit courts have taken a variety of approaches to Fogerty and its statutory underpinning, 17 U.S.C. § 505. The Seventh Circuit is among the most willing of the circuits to shift fees, stating in Riviera Distributors, Inc. v. Jones, “Since Fogerty we have held that the prevailing party in copyright litigation is presumptively entitled to reimbursement of its attorneys’ fees.” This, perhaps, provides some insight into the rationale for a California plaintiff to sue citizens of California and New York in an Indiana court.

May 23, 2013

Keystone Management and Lockridge Sue Alleging Copyright Infringement of Architectural Work

By Overhauser Law Offices, LLC

Indianapolis, Ind. — Copyright lawyers for Keystone Management Systems, Inc. f/k/a Keystone Builders Resource Group, Inc. (“Keystone Management”) and Lockridge Homes-Indianapolis, LLC (“Lockridge”), both of Richmond, Va., filed a copyright infringement lawsuit alleging William Clyde Moore, Jr. (“Moore”) and Carol Cooper (“Cooper”), d/b/a DrafTech, both of Indianapolis, Ind., infringed the copyrighted work “Birkshire II” (architectural work: 1-396-233; and technical drawings: VA 1-396-224), which is registered with the U.S. Copyright Office.

Keystone Management is in the business of creating, designing, producing, distributing and marketing original architectural working drawings, architectural works and related technical drawings (“the Keystone Designs”). Lockridge is in the business of constructing, marketing and selling distinctive single-family residential homes. Keystone Management has granted to Lockridge the right to use the Keystone Designs.

Moore allegedly asked to purchase one of the Keystone Designs but no agreement was reached. He also allegedly discussed various home plans with Lockridge for the purpose of constructing a single-family home on his property. As a part of this discussion, Lockridge provided Moore with a rendering of the floor plan for the Birkshire II design. Moore then allegedly provided these plans to Cooper for the purpose of constructing a home in the Birkshire II design. Construction is either underway or completed.

Keystone Management and Lockridge sued in the Southern District of Indiana. They list two counts in their complaint: copyright infringement and unjust enrichment. They seek an injunction; impoundment and destruction of any homes built from the Keystone Designs; for damages up to $150,000 for each infringement; costs and fees.

We have blogged about similar cases here, here and here.

Practice Tip #1: Copyright protection extends to any architectural work created on or after December 1, 1990, but architectural designs embodied in buildings constructed prior to that date are not eligible for copyright protection.

Practice Tip #2: The second claim, for unjust enrichment, is preempted by The Copyright Act.
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