July 14, 2009 by thomason.

In Quantum Sys. v. Sprint Nextel, 2009 WL 1931196 (4th Cir. July 7, 2009), the panel unpublished that they had followed the 9th Circuit’s MAI Sys. v. Peak ruling, which deems loading software into RAM the making a “copy,” which is “sufficiently fixed for purposes of copyright infringement.” Sprint had licensed Quantum software for “several hundred Sprint computers,” but then terminated the licenses. Thereafter, and still later after a settlement, Quantum had evidence that the software continued being loaded into RAM on less than nine Sprint computers, “when the computers were turned on or rebooted.” When this occurred, Quantum received “autoreporting” message, but the unlicensed software was not actually being used, rather the “software automatically loaded” and was not accessed.

Quantum called non-removal and each autoloading of the software an infringement of its copyright, to which Sprint rejoined that removal of the programs was not a requirement of the parties’ written agreements. Why not? Quantum also got past the defense, crafted from 4th Circuit precedent, that copyright infringement requires “volitional” conduct, viz., HAL 3000 can make you to an auto-infringer. One other practice pointer was the possible waiver of the attorney-client privilege due to in-house counsel’s affidavit in opposition to Quantum’s summary judgment motion. Two problems with that: potential waiver, and the magistrate allowed in-house counsel to be deposed “on a very limited basis.” Neither one is automatically fun.

Rather than enjoin those eight autoloading computers from doing their autoloads, the court adjudged Sprint liable for the $8,700 license fee, times eight. Of course, what with all these ads about ED, no not that, Electronic Discovery, there was sure to be a claim for attorneys fees larger than the damages awarded. Indeed, on top of the $69K in damages, the district court awarded $400K in fees and costs. The panel was “constrained to vacate” that $400K award because the reasons for it were not articulated. Noted too was the disparity between the fees/costs and the amount awarded as damages, and that the $69K in damages was “far less” than the $1M “originally sought.”  Sorry Dave, I’m afraid I can’t do that.

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July 13, 2009 by thomason.

A Michigan legal malpractice suit against patent attorneys, alleged a lapse due to unpaid maintenance fees, having to settle patent litigation on unfavorable terms, as well as “sundry other breaches … the precise contours of which breaches are not altogether clear from the Complaint.” The alleged nonfeasance regarded patenting an improved “lacrosse stick head.” Suit began in state court, but then the patent attorney defendants persuaded the plaintiff to re-file in federal court, based on two Federal Circuit rulings that found federal jurisdiction over two legal malpractice cases pleaded under Texas law.

So, in Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., 2009 WL 1975383 (E.D.Mich. July 10, 2009), the adversaries were of one mind about federal court jurisdiction over malpractice claims arising from patent practice, but the district court felt obligated to self-check its power to act.

It did not check out, and the court found “unpersuasive” the arguments that there was any “substantial question of federal patent law.” At the crux, was whether proving damages proximately caused by legal malpractice required proving the underlying patent dispute as a “necessary element.” In answer to that inquiry, it was held that alleged malpractice did not require that the court “engage in claim construction, evaluate the viability of underlying patent litigation, or determine if others are infringing the patent in question.” The case was dismissed and sent back to state court, which plaintiff hopes will agree that it has jurisdiction. Guess that answers where the parties will have to go to deal with the “precise contours” of their “breaches.”

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July 12, 2009 by thomason.

A later-filed, Lanham Act suit between two diamond merchants, which sell ‘enhanced’ gemstones, hits on the issue of standing. In Diascience Corp. v. Blue Nile, Inc., 2009 WL 1938970 (S.D.N.Y. 2009), the district court revists the somewhat unresolved law of Lanham Act standing. Taken to an extreme, the courts could place standing in Lanham Act cases on a footing equal to antitrust standing. It could define a zone of protected commercial interests, and require that the claimant to compete in the same “relevant market” as the defendant.

The District Judge notes the 1980 2nd Circuit decision, which declined to decide whether “section 43(a)’s provision allowing suit ‘by any person who believes he is or is likely to be damaged’,” is ” a matter of standing to sue, or as an element of the substantive claim.” Some would wonder why the 2nd Circuit hasn’t answered that after nearly 30 years. It has decided that the harm that confers standing can be presumed, or if that is not triggered, then what need be shown to meet a “heightened showing of injury and causation.” Citing the most recent Supreme Court ruling on motions to dismiss, the district judge found that Diascience had pleaded enough to go forward with “discovery limited to the issue of standing.” That limitation may lack the clarity of the litigants’ gemstones, since for 29 years the 2nd Circuit hasn’t cut a line between what shows “standing” and what shows the “substantive” Lanham Act claim. Discovery on!

Another point worthy of modest surprise was the denial of a stay of this later-filed suit. In the first case, Blue Nile alleged that Diascience had “false advertising” on its website. That is different, and does “not bear on” the claim by Diascience in the later-filed case that there is “false advertising [on] Blue Nile’s website.” That distinction was enough for the judge to refuse to stay the later-filed case in the Southern District pending the upcoming trial in the earlier-filed suit in the Western District.  But, can I get it wholesale?

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July 1, 2009 by thomason.

In reversing an award of substantial attorneys fees in a copyright case, a Ninth Circuit panel reversed another panel’s seventy-year old ruling about whether a voluntary dismissal without prejudice makes the defendant a “prevailing party.” In Cadkin v. Loose, 2009 WL 1813263 (9th Cir. June 26, 2009), the parties were trusts formed by two former musical collaborators, who composed “cues,” which are “short musical works used” in TV and films.
‘We’ll be right back after this message; cue my music, Billie!’

Although the Ninth Circuit’s ruling in Corcoran v. CBS had been followed by courts there and in other circuits, it was “clearly irreconcilable” with a 2001 Supreme Court case on Fair Housing Act fee awards. The panel in Cadkin ruled that the “dictionary definition” of a prevailing party that J. Rehnquist applied in Buckhannon v. W.Va., 532 U.S. 598, 603 (2001) signaled a change in the application of each statute using that term. The panel held that a voluntary dismissal of a copyright case, even after some of plaintiff’s claims had been lost or dismissed, where it dismisses voluntarily without prejudice, does not cause a “material alteration of the legal relationship” between the litigants. Thus, the party benefitted by the voluntary dismissal is not a “prevailing party.” It could be sued again on the same claims.

The late plaintiff, Emil Cadkin, also composed film scores, such as one for “The Killer Shrews” featuring dog-sized shrews run amok on an isolated island and starring Ken Curtis, b/k/a Festus on TV’s Gunsmoke. Cue that killer reel up on your NetFlix account, and see if the shrews or the islanders prevail.

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