March 10, 2010 by thomason.
Licensing disputes so often involve termination provisions. Someone wants out, but has to manufacture a way out - and, the other party sues for wrongful termination. Many of the decisions are fairly pedestrian contract interpretation ruling, but then there’s Brunskill Associates, Inc. v. Rapid Payroll, Inc., 2010 WL 779688 (Cal.App. 2nd Dist. March 09, 2010).
A software developer named Olsen licensed his payroll processing package to Mr. & Mrs. Brunskill, who grew from one-client to a @2M/yr business. As business grew, they relied on the Olsen software, and paid the license fee. The license (possibly not authored by counsel) did not allow either party to cancel. It too assured support to the licensees, and if that was not provided, the source code would be delivered to them.
Along comes Paychex, another one-client outfit that grew into a really huge firm. At the behest of its founder, Thomas Golisano, a subidiary Rapid Payroll was set up, which acquired the software and licensing clients of Olsen. Internal memos indicated a plan to expand in a market not served by Paychex. After providing substantial assurances to the licensees, including the Brunskills, all of the software licenses were cancelled by Rapid.
The Brunskills’ business was ‘hard-wired’ to use of the Olsen software, and the loss of its use caused significant lost business and revenue. A jury determined that the cancellation was wrongful, and that pretextual reasons were given for it. Possibly as a tactic to limit liability, Rapid declared bankruptcy, ostensibly because cancelling the licenses ended its receipt of licensing revenues. The automatic stay was lifted.
A substantial judgment was assessed against defendants, and too, punitive damages of $10Mil were awarded to the Brunskills against Paychex founder Golisano (reportedly, a billionaire). These judgments were affirmed. This was not your average disagreement between geekhead software types and payroll clerks, for as the court stated: “Golisano followed a strategy of falsely and publicly assuaging licensees’ fears while secretly planning to take over their businesses by vaporizing the software that was their economic lifeline.” That’s not contract interpretation.
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February 17, 2010 by thomason.
In a NFP order, the CAFC affirmed trial court rulings of not invalid and enforceable, in a suit about patents for those clunky tag devices and sensors used to deter shoplifters. Defendants appeared for trial in 2008 and stipulated to infringement, choosing to defend on invalidity and unenforceability grounds. Earlier, the defendants filed for re-exam, and with one possibly important exception, the claims survived.
The trial presentation on invalidity apparently relied on references submitted in the re-exams, and in consonant fashion, the court upheld the patents as valid.
The inequitable conduct ruling, and the remarks in the CAFC order, are curious or provoke this curiosity. In the re-exam, a claim was rejected based on the `033 patent, which defendants contended was withheld during prosecution. Quare: would not rejection based on that reference be prima facie proof that it was “material to patentability.” Even if that `033 reference was not enough to reject the claim, it at least would seem to be “material” prior art.
At trial, one of the inventors explained why he felt the `033 disclosed less than the examiner had said in the re-exam. On that basis, the trial Judge ruled that “the `033 patent was not material.” Per curiam, the CAFC affirmed, but stated “we do not address the question whether the information that was not disclosed was material.” It affirms based on the finding that the inventors “did not act with intent to deceive.” That’s a bit oblique to the district court’s specific findings that the non-disclosed art was cumulative and/or non-material, which was disconnected from the conclusory ruling that defendant “have not shown” the references were “intentionally withheld ..with an intent to deceive.”
Perhaps, here’s the difference between for-publication and NFP rulings by the CAFC: publication is needed to articulate how to reach the result on appeal; a ruling NFP comes to the right result, so there no need to say more about it. Sensormatic v. Von Kahle, (CAFC 2009-1193,
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February 12, 2010 by thomason.
An argument lost, an opportunity renewed. Way back, before online multiplayer games were so viral, copyright interests made comments against passage of the DMCA. Particularly questioned were prohibitions on DRM circumvention measures, but the DMCA, with those prohibitions, was enacted by Congress.
Just filed is a case making a most interesting accusation under the DMCA. Owners of the online game RuneScape® sued claiming damages from ‘bots’ and ‘scripts’ that allegedly “circumvent security measures” that the owners intended to “protect its copyrighted works.” The suit is Jagex v. Impulse Software filed in federal court in Boston. http://bit.ly/8Y4a4a
Never played this game, so only the complaint and the news guide my thoughts. One concern with adding a prohibition against any “technological measure that effectively controls access to a work protected” by copyright, was it might be extended to protect what is not protected by copyright.
A fair difference can be seen between hacking in to use copyrighted, password-protected software [being bad], and modifying uncopyrighted software, which comes in a box with a copyrighted picture on it.
In this new suit, there is no claim that the game software is copyrighted – rather, there are visual elements that are copyrighted – a “fish icon,” a “pickaxe icon,” etc. That provoked the question whether the ‘bots’ let you access these icons, when the real gripe is access to uncopyrighted game routines. A story in a London newspaper said one wondrous aspect of the game was that no special software was needed – it works within any browser. Also, the complaint says that the software is “accessed using a web browser to interact with servers in” the UK. That suggests that users “interact” with software resident on servers outside the territory of U.S. copyright, and so, unlike a player in the U.S. licensing downloaded game software to use.
One further observation is that the complaint enters that realm of infringement by contract - that any departure from ‘terms & conditions’ agreed to by users becomes transformed into an infringement of copyright. A gameplayer agrees not to use bots or scripts to “gain an unfair advantage,” but the suit is not pleaded against the mighty horde of game players. If a player cheats, the RuneScape masters remedy should be banishment from the realm.
The DMCA’s anti-circumvention prohibitions have gained strength in the few cases that have considered various “technological” measures to control “access” to copyrighted work. We will have to think that this case will write a further chapter in the DRM gamebook.
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February 11, 2010 by thomason.
A newly-filed suit in Michigan, accusing Comcast of tying premium cable TV with the rental of a set-top box, presumably will add to the cases before the Multidistrict Judicial Panel, 626 F.Supp.2d 1353 (MDL 2009). In Rogers v. Comcast, 2:10-CV-10547 (E.D. Mich.), the class pleads a Sherman §1 claim along with Michigan Consumer Protection Act claim.
The class alleges upon “information and belief, the set-top box is required for the class to view the premium and/or digital channels” provided by Comcast. ¶23. It alleges that the “market for cable boxes ..is separate and apart from the market for …cable [TV] services.” ¶52. Although set-top boxes can be bought elsewhere, class members allegedly are “forced to rent a set-top box from” Comcast to “fully view” premium content from the cable TV provider. Early on, Comcast is accused of conspiring with “its officers and owners …to violate the Sherman Anti-Trust Act …by purposefully creating an unlawful tying arrangement” between premium cable and set-top boxes.
The Rogers complaint tracks what is alleged in the cases collected under the MDL order. Still, one wonders (what is latin for ‘I wonder, ergo I blawg’).
Pleading a Sherman Act tying claim leads to a rule of reason analysis. That pretty much opens the season for hunting down every economic species known to experts in the field. There too are limits in the law on whether tied items are separate or integral, e.g., Virtual Maint., 11 F.3d 660 (6th Cir. 1993), and whether cable TV is a good or a service, Morrison v. Viacom, Inc., 66 Cal.App.4th 534 (Cal.App. 1st Dist. 1998). Conspiracy with corporate “officers and owners” is less favored in the law than a concert with those outside one’s company.
The MDL order conditionally consolidated the Sherman Act, i.e., the rule of reason cases. Consider though that §3 of the Clayton Act, which may provoke a rule of per se illegality, makes it “unlawful …to lease …commodities ..on the condition …that the lessee ..shall not use or deal in the goods” of others.
We will watch the wire for continuing developments. Recalled however is that cartoon, with two neighbors talking over the fence, and one observes: ‘I’ve got 387 channels now, and there’s not a darn thing on any of them.’
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February 9, 2010 by thomason.
Per an earlier post, this Spring semester has a lot of IP to offer. Tomorrow afternoon, 2/10, Prof. Donald Chisum will sum up some of the most significant patent cases from 2009. Then, on Thursday afternoon, 2/11, Prof. Janice Mueller will give the Randall-Park lecture on The ‘Impossible Issue’ of Non-Obviousness in Design Patents.
Both lectures are in the main courtroom at the UK Law School, Lexington, KY.
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January 27, 2010 by thomason.
Of late, most of my posts are on Twitter. Work, school and play are causing me to cramp down my expressiveness to 140 characters.
Check it out over at http://twitter.com/SPATLAW
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January 20, 2010 by thomason.
The FTC decided, after public comment, to retain the Amplifier Rule, which is for consumers to compare power outputs of amps used in home entertainment products. http://www.ftc.gov/opa/2008/02/amp.shtm
It decided there was no present reason to amend the rule due to the multi-channel home theater and surround sound systems, which now take up a lot of the market.
When you bought that last amp for your home sound system, did you use the Amplifier Rule or the ‘that one sounds better than that one’ standard?
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January 17, 2010 by thomason.
IP and patent attorneys tend to wonder how best to position their advertising. The back, and fold-over on the phone books are taken up with ‘are you injured?’ as is most of afternoon TV.
Saturday night at the Hard Rock Hotel, few knew about the super flyweight bout, but it too was sporting some lawyer advertising. On the front of the boxing trunks of pugilist Robles, who hails from Kansas City, was embroidered “Immigration Law” below the firm name. Now there’s an option for some TV time that few considered.
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January 15, 2010 by thomason.
Hey Forever 21 got sued, again, for copyright infringement - and it’s not over clothing design.
It is alleged in a L.A. Federal Court complaint that F21 made and sold clothing bearing a copyrighted photo of the [to some, legendary] rock band, the MC-5. Said photo, exhibit A to said complaint, was on the F21 garment “H81Rock-N-Roll Studded Top.” That’s rock and roll with a capitol N, and in caps MC-5 (Motor City 5).
Well-known rock icon photographer, Robert Matheu, intends to kick the jams out of that F21, H81 ”Studded Top.” His photo, taken in the ’summer of `69′ was not attached to the PACER copy, but it’s likely this photo on his website, http://www.robertmatheu.com/mc5-photo.htm. Matheu’s suit filing nearly coincides with the passing of another legend of Detroit hard rock, Ron Asheton of the Stooges. The filing is 2:2010cv0214-CAS (C.D. Cal.). Rock on Ron.
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January 8, 2010 by thomason.
At its conference today, the Supreme Court may decide, or decline, to consider the product-by-process issues in Astrellas Pharma v. Lupin Ltd., 09-335. The mystery of the chemistry was detailed by blawgers right after the CAFC issued its 8-4 decision on May 18, 2009. In the end, the CAFC ruled that that only the claimed product of a claimed process can be infringed.
The petitioner, after a 5-page table of cases, says it’s a case ”without precedent,” then follows that with “the Federal Circuit violated the Court’s precedent.” Indeed, on pg. 16, petitioner points to an instance in the majority opinion that “ignores over 110 years of precedent.” One wonders if the rationale of 100 years ago to allow claiming a novel, but mysterious, product of known process steps is still viable in today’s laboratories.
Initially, petitioner argues error with the CAFC ruling en banc, sua sponte (my, those Latin classes at X have come in handy) to resolve an intra-circuit conflict about product by process claims. If the Supreme Court takes an issue, then it is more likely to review patent issues than Circuit operating procedures.
Petitioner’s further contentions regard fears that the CAFC crossed the bright-line rule that patent claims be interpreted the same for validity and infringement purposes. That point is key to disputes between the majority opinion or J. Rader and the dissent of J. Newman. And too, in a nutshell, it provokes the issue: what’s the issue, and how should product-by-process claims be treated? The legal inquiry may devolve upon claim interpretation (nonstatutory), or definiteness and full enablement (statutory), or 110 years of precedent (?), or more plainly, what ground sustains product-by-process claiming (nonstatutory).
The respondents point to the en banc issue arising within a “rarely invoked exception” for “rare” products that are not understood, but are known only as the product of a fully enabled process. That “exception” is nonstatutory, like many of the central issues. Respondents’ arguments also highlight whether the fundamental question is claim interpretation - should a claim be construed to cover unclaimed products of claimed process - or is it some broader inquiry into product-by-process claiming.
The proverbial ‘fly on the wall’ at today’s in camera conference (one more Latinism) will hear how constitutional rights have been stripped, property taken without due process, statutes violated, etc. When the Astrellas petition comes up, then that fly will wonder whether the CAFC’s treatment of nonstatutory product-by-process claims deserves further, Supreme review.
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