CAFC Could Be Cited As Authority In Rocket Clemens Defense.

Showing their every-widening expertise in everything from IP to HGH to Latinisms, the Federal Circuit has reversed 2-1 a decision over the firing of a federal correctional officer, who had tested positive for steroids after losing his bout in a Ultimate Fighting Championship event UFC 75 in London. 

http://sportsillustrated.cnn.com/2009/writers/josh_gross/01/15/ufc-testing-in-uk/

Anthony Torres used what sounds like the same defense employed by The Rocket, and other [alleged] sports-roiders – that ‘I didn’t know what the trainer injected in me.’  Torres filed a grievance over being fired by the U.S. Bureau of Prisons, and the CAFC reversed the arbitrator’s decision.  Torres v. DOJ, (Fed. Cir. 8/10/2009).  The CAFC decided that to have been fired for “illegal conduct,” it would have to be proved that Torres knew he’d been injected with illegal drugs.   As it is with hair color and tan tones, ‘only his trainer knows for sure’ what was injected.

Colting Caught in the Rye, with Friends.

An expedited appeal to the 2nd Circuit {09-2878 by the author known as J.D. California} of the injunction against his unauthorized sequel to Salinger has garnered several amici, including some IP Law professors.  As briefs by amici-teachies tend to be, this one is a position paper on the fair use/transformative test and against a presumption of irreparable harm when infringement is likely.  In sum, it argues that a likely fair use defense must trump a presumption of non-economic harm if drawn from the likelihood that the derivative work infringes the original.

The profs challenges the presumption of irreparable harm, in sort of a say-it-ain’t-so manner. Where likely infringement can be shown, these learned amici had to acknowledge that many Circuit cases permit that presumption.  They stare down those decisions as being “no longer compatible with controlling law,” viz. MercExchange.  To stretch that incompatibility contention further, they cite a recent 5-4 Supreme Court decision on environmental policies and law, which I for one have a hard time believing translates to First Amendment and Copyright clause cases. Also, the reversal in that NEPA case was based on the 9th Circuit being “lenient” in displacing the “likelihood” of harm with the “possibility” of environmental harm. Winter v. NRDC, 129 S.Ct. at 375. Note too, that the majority in Winters never cited MercExchange, suggesting that IP and NEPA considerations are unrelated.

MercExchange regards whether a presumption of harm, appropriate in the pre-proof setting of a TRO, remains appropriate when all the evidence has been heard and liability adjudged.  MercEx said ‘no,’ and reversed the rule of automatic, permanent injunctions.  In the TRO setting though, the court is charged to assess likelihoods, use presumptions, and balance the four-factors.  The amici-professors argue that each factor is mandatory, and that a copyright owner must ‘win’ on each factor.

Also, the amici-professors argue, perhaps in a transformative or mash-up way, that the harm prong of the preliminary injunction assessment is trumped by the harm inquiry of the fair use defense.  The fair use inquiry “must take account not only of harm to the original but also of harm to the market for derivative works.” Campbell v. Acuff-Rose, 510 U.S. at 590.   Amici were dismissive of the opinion of Salinger’s agent about how much would be paid for the author to publish his sequel to “The Catcher.”  Mainly though, the contention is that the author’s exclusive right to create derivative works is overwhelmed by the potential worth of transformative works, “even if the new author is ultimately a poor craftsperson and fails to reach his or her audience.”  Even “poor” Derivation, if transformative, is assigned value.

In an argument that practically concedes that the to-be-commercialized derived sequel is, on a literary scale, substantially similar to the original, amici contend that it has fair use value as critical comment on the original author’s work.  Instead of a derived tale of a later-life Holden, the unauthorized sequel embodies a foundation of similarities over its root, subtextual commentary on Salinger’s work.  “Because of the widely recognized link between the book and its creator, however, it is particularly appropriate to repurpose Catcher to engage with the cultural relevance of its creator.”  That re-purposing is fine, when literati are waxing philosophically over glasses of wine, but to argue that commentary is commercially distributable and insulated from the copyright owner’s exclusive rights is a hard sell.

Rather than try to sum up the profs lengthy arguments about works that are “transformative,” suffice it to say this.  Definitionally, and perhaps legally, the term transformative connotes metamorphic changes, not a re-write or a do-over.  Transformative work cannot equate to plagiarized or substantially derived work.

Last, the amici-profs argue that Salinger’s rights as author and copyright owner were given too much worth, to the point that his statutory rights were equated to droit suite.  “By framing the question as one of Salinger’s interest in leaving his artistic vision untouched, the District Court imported moral rights concepts …[which] are not part of U.S. Copyright law.”  Plainly; but, to argue that a later-writer deserves a “right” to publish for profit a deriviative work, despite the author’s exclusive rights, is to elevate fair use to a moral right of that later-writer. 

In a contest between the author’s rights as the copyright owner, and the fair use protection for the writer of a derivative work, it’s less a matter of droit suite than a contest over who has the right to profit from the author’s original work.

If enough air is released, everyone held aloft by the joint defense balloon may need to have packed their own parachute.

An article by Zuzha Elinson in The Recorder points out the risks attendant to joint defense groups in patent litigation. The prime risk is being unprepared to go it alone when everyone else settles out around you. Two cases are mentioned, one defense verdict and one for the plaintiff, from which it is implied that winning or losing “singlehandedly” was the result of being unprepared, or not, to “scramble” from a “back-seat” posture to taking the wheel.
While preparedness is perhaps the most important aspect of patent litigation – that you can control – it’d be uninformed to discount away all of the uncontrollable factors. You win for a lot of reasons, and you can lose for every more reasons.

The article gives less insight into what needs to be secured in a joint defense agreement (JDA), as well as the other estimable risks. It is suggested that a lesser participant in the joint defense effort was left with no trial expert. A well-crafted JDA always should cede the jointly-retained expert to the use of any party that doesn’t settle. Of course, if a “back-seat” participant doesn’t get that expert prepared for trial with a report that covers the issues of importance to that party, then unpreparedness will cut off their options.

The greater risks can result from a ‘compromise’ defense strategy. Rarely are each of the defendant’s interests, and product mix, exactly aligned with all defendants. The effect then is to seek jointly a one-size-fits-all claims construction; to not pursue certain counterclaiming strategies; to limit discovery to topics acceptable to all defendants; and, to let the defendants with the largest exposure have the final say in all strategy decisions. It’s cheaper for the lesser defendants to ride in the back-seat, but in those jurisdictions that stringently enforce pre-trial disclosure rules, if the big-guns go silent, then it’ll be hard to negotiate a good settlement with a plaintiff that sees that the issues unique to that defendant were not addressed in the final claims construction statement, or in the joint expert’s report.

The article notes a trend toward common counsel, rather than a joint defense group with a liaison counsel. As good an approach is to have common counsel for the defense, but separate counsel for each counterclaimant. That way, several theories of invalidity or even inequitable conduct can be pursued, while common counsel can keeps the main defense moving straight ahead.
For the full article, see the Aug. 7th edition of The Recorder.

I’m Sorry Dave, but copying this program into RAM is too important for me to allow you to jeopardize it.

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.

About my lapsed patent, unpaid maintenance fees and the contours of your breaches, ‘See you in Court’ – somewhere.

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.”

No Friends in the Diamond Business.

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?

9th Cir. Cues The ‘Traveling Music’ for a Prevailing Copyright Party.

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.

Maybe Patent Agents Were Needed In Puerto Rico.

It’s a short trip from S. Florida to Puerto Rico, but what’s there to do there. You could stroll a white sand beach along Playa Brava, or spend eight hours at the Univ. P.R. – Mayaguez making an illicit copy of a standardized exam. The defaulting defendant in National Council of Examiners for Engineering and Surveying v. Cameron-Ortiz, 2009 WL 1674768 (D.Puerto Rico June 16, 2009) chose the latter.

To sit for the patent bar exam, the OED requires an engineering degree, or credit hours in pure sciences and math, and then, there are Category C applicants. To be Cat. C, an applicant must pass the FE exam, but that is not easy. Defendant Cameron-Ortiz may, or may not, have planned to spawn a horde of new patent agents, but she did sit for the FE planning to copy the entire test. As the decision notes, the exam proctors suspected copying, and “a search of her jacket and bag” found “recording and transmitter devices … sewn into the pockets of her jacket and her bag, including: (1) a wireless audio/video transmitter module with a built-in microphone, (2) a mini video camera, (3) a receiver, (4) a pocket video recorder, (5) a cradle used to connect to a TV or computer with audio/video input, and (6) two battery packs … to power the equipment …[which] allowed Cameron-Ortiz to copy, transmit, duplicate, and otherwise reproduce the contents of the exam.”

The FE exam is copyrighted, but not in the public domain, because of a regulatory exception for registering a “secure test.” 37 C.F.R. 202.20. As a consequence of the infringement, NCEES “retired one copyrighted exam form, and a portion of another copyrighted exam form.” Damages allowed by statute were based “upon the cost of replacing the test questions” which resulted in an award “total of $1,021,630.80 in actual damages, plus “costs and attorney’s fees.”

So, in this week of federal court awards of non-recoupable copyright damages, the RIAA leads the NCEES by several hundred thou.

I ‘Know a Guy’ – Generically Speaking.

One word added to the parlance, but still known as “fixed” to a novel and film is “The Godfather.” Capece? It seems the term is at once, unique and attributable to the Puzo book and Coppola film, while too being generic and adjectival. Can you brand your next product with it; can you put the godfather in your next film…

Indeed, can its use infringe the constitutional rights of an accused, as argued in U.S. v. Kincannon, — F.3d —-, 2009 WL 1577686 (7th Cir. 2009). There, Kincannon (no relation to James Mason’s character in “The Verdict”) complained that “the prosecutor inflamed the passions of the jury, rendering the trial unfair, by referring in closing argument to The Godfather.” Kincannon, a 77-year old meth dealer (but only 30-35 in the 1960’s) was accused of masterminding the actions of others, and in his closing soliloquy, the prosecutor brought in an allusion to Coppola’s work.

The Circuit panel suggested that there’s a right and wrong way to do that. “It would be one thing if the government compared Kincannon to Michael Corleone, an organized crime kingpin responsible for murders and a whole host of other criminal activity.” That’s the wrong way, or the way that could ‘inflame’ an Illinois jury. But by contrast, it “was not Corleone’s criminality, but Francis Ford Coppola’s direction that was at the heart of the prosecutor’s closing remarks.” That apparently is the right way to send the jury away, un-inflamed. “The prosecutor explained to the jury that he would try to do orally what Coppola did in his film-that is, tie together the events that occurred during the two controlled buys into one seamless story.” Not only was that an errorless way to close, it too is the hard way to do it. “To do so as eloquently as Coppola is a tall task, but there is certainly nothing improper about the attempt” by this prosecutor.

The Circuit panel then re-ignited the debate over how the Academy gets it wrong. To present two events, occuring separately, so as to urge a “poetic implication” that the audience “can understand it very easily, is difficult.” With that, the panel did “agree, as did the Academy of Motion Picture Arts and Sciences, who nominated Coppola for an Oscar for best director.” However, in “an upset along the lines of the 2009 Kentucky Derby win by Mine That Bird, the 1972 Oscar went to Bob Fosse (for Cabaret) rather than Coppola.” A search of copyright deposits for “Godfather” yielded 570 entries, including The Godfather Waltz “What are you doing the rest of your life?” but nothing criminal. It just shows that there’s a right and a wrong way to use, reuse, close, and even author anew from the term “The Godfather.”