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U.S. Intellectual Property and New Media Law Update IN SEARCH OF ATTORNEYS’ FEES Harris Custom Builders, Inc. v. Hoffmeyer (Seventh Cir. -Decided- April 9, 1998) THE WRONGS OF SPRING Boosey & Hawkes Music Publishers, Ltd. v. The Walt Disney Company et al. (Second Cir. -Decided- April 30, 1998) FLYING RUGS IN CYBERSPACE Blackburn v. Walker Oriental Rug Galleries, Inc. et al. (E.D. Pa. -Decided- April 7, 1998) THE UNNECESSARY PATENTEE Dainippon Screen Manufacturing Co., et al. v. CFMT, Inc. et al. (Fed. Cir. -Decided- April 29, 1998) IN SEARCH OF ATTORNEYS’ FEES Harris Custom Builders, Inc. v. Hoffmeyer (Seventh Cir. -Decided- April 9, 1998) Here, the District Court awarded a prevailing Defendant in a copyright action $228,918 worth of attorneys' fees. It did so with an opinion and order that said little more than the District Court was exercising its discretion in that amount. In operative part, the Court stated: This court in its equitable discretion believes that an award under 17 U.S.C. Sec. 505 in Mr. Hoffmeyer's favor should be ordered under all of the circumstances especially in light of this court's previous error in accepting plaintiff's erroneous arguments which prompted this court's ruling against Mr. Hoffmeyer's position. That decision prolonged this litigation in error. Mr. Hoffmeyer is properly entitled to all the attorney's fees and costs he seeks to recover. The Plaintiff appealed to the Seventh Circuit. The underlying case of copyright infringement hinged on questions of publication which were complex but no longer of interest since the 1976 Copyright Act. The Seventh Circuit found that it was inappropriate for a District Court to have indicated that fees were appropriate, in effect, to make up for the Court's erroneous ruling. The Seventh Circuit went on to list factors that should be considered by a judge in awarding attorneys' fees including, among other things, reasonable time expended on the case, the nature of the litigation, the conduct of the prevailing party. None of these were discussed in the District Court's opinion. In summary, the Seventh Circuit said "with these brief comments, we send this case back to the very able District Judge, who is more familiar with it than he probably wants to be, for his comments, which need not be extensive, on how his discretion is being exercised." The decision can be viewed at: http://www.kentlaw.edu/7circuit/1998/apr/97-3055.html THE WRONGS OF SPRING Boosey & Hawkes Music Publishers, Ltd. v. The Walt Disney Company et al. (Second Cir. -Decided- April 30, 1998) An interesting case for you old movie buffs. Plaintiff is the assignee of Igor Stravinsky's copyrights to "The Rite of Spring." Plaintiff brings the present action against The Walt Disney Company claiming infringement of copyright by foreign distribution, in video cassettes and laser disc format, of FANTASIA which includes "The Rite of Spring." In 1939, Stravinsky licensed Disney's distribution of "The Rite of Spring" in the motion picture. Plaintiff maintains that this license did not authorize distribution in video format. The District Court granted partial summary judgment to Plaintiff finding that Disney's video release format was not authorized by the license agreement. The District Court also granted partial summary judgment to Disney dismissing Plaintiff's claim for breach of contract and violation of Section 43(a) of the Lanham Act. Finally, the District Court dismissed Plaintiff's foreign copyright claims under the doctrine of forum non conveniens. Each side appealed. The Second Circuit agreed that Disney deserved summary judgment with regard to the Lanham Act claims, but that material issues of fact barred the other grants of summary judgment. The Court also reversed the order dismissing for forum non conveniens and sent everything but the Lanham Act claims to trial. While "The Rite of Spring" was in the public domain in the United States, the license agreement was necessary due to Stravinsky's copyrights in other countries. The agreement indicated, among other things, that the license was limited to use of the music, composition and synchronism or timed- relationship with the motion picture and that: The right to record the musical composition as covered by this agreement is conditioned upon the performance of the musical work in theatres having valid licenses from the American Society of Composers, Authors and Publishers, or any other performing rights society having jurisdiction in the territory in which the said musical composition is performed. (ASCAP Condition). Licensor reserved all rights and uses not specifically granted. The Court of Appeals concluded that in drafting the license agreement, the burden fell on Plaintiff to exclude new marketing areas arising from subsequent developments in motion picture technology, by inserting such language or limitation in the license, rather than on Disney to add language that reiterated what the license already stated. Neither the absence of a future technology clause in the agreement, nor the presence of the reservation clause, altered this analysis. The Court of Appeals found the ASCAP Condition did not require that every use be in an ASCAP approved theater, only that there be at least two uses in an ASCAP theater. The Court left it to trial to determine whether the video format violated the ASCAP Condition in view of whatever extrinsic evidence is offered as to its meaning. With regard to forum non conveniens, the Court indicated that such analysis requires two step, the District Court determining whether there exists an alternative forum with jurisdiction to hear the case and what forum would serve the ends of justice best. Here, the District Court made no analysis whether the Plaintiff would be subject to jurisdiction in the various countries where the Court would anticipate a trial would occur. After a detailed analysis, the Court of Appeals found that New York was, as always, convenient. The decision can be viewed at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/96-9205.opn.html FLYING RUGS IN CYBERSPACE Blackburn v. Walker Oriental Rug Galleries, Inc. et al. (E.D. Pa. -Decided- April 7, 1998) The question of jurisdiction and venue in cyberspace is becoming fixed black-letter law. Here, Plaintiff is a Lancaster dealer in oriental rugs. It created an Internet web site: www.wholesalerug.com which contained graphics illustrating the major varieties of rugs sold by the Plaintiff, accompanied by text that gave a brief description of each type. It did not display specific rugs or prices. The only communication between the Plaintiff and a viewer of the web site is by e-mail. It was alleged that Defendants copied a substantial portion of this web site to produce its own oriental rug advertisement in violation of Plaintiff's copyright. The question before the Court is whether there is venue under 28 U.S.C. Sec. 1400(a). Since this statute provides that Defendant's venue is proper wherever Defendant may be found (i.e., wherever the Defendant would be amiable to personal jurisdiction as if the district were a separate state) the question becomes, "Is there jurisdiction over the Defendant in the Eastern District of Pennsylvania?" The Court reviewed the various cyberspace jurisdiction cases and, in particular, the different types of contacts over the web. If the Defendant does business over the Internet (actually buys and sells) there is jurisdiction and, thus, venue. If the user can exchange information with the host computer, jurisdiction is determined by examining the level of interactivity and commercial nature and exchange of information that occurs on the web site. And, finally, the mere passive posting of information or advertisements on the Internet web site, does not give rise to jurisdiction. Here, the Court found that Plaintiff's web site was purely passive, even if it could allow for e-mail exchanges and, accordingly, transferred the case to the Western District of Pennsylvania where the Defendant resided. This decision can be viewed at: http://www.bna.com/e-law/cases/blackburn.html THE UNNECESSARY PATENTEE Dainippon Screen Manufacturing Co., et al. v. CFMT, Inc. et al. (Fed. Cir. -Decided- April 29, 1998) In this case, Plaintiffs appeals the final decision of the U.S. District Court for the Northern District of California dismissing its declaratory action against Defendants for lack of personal jurisdiction over one of the Defendants which it considered a necessary and indispensable party. Here, the Federal Circuit disagrees both on the question of jurisdiction and indispensable party. CFM is a Pennsylvania corporation which competes with Dainippon in the semiconductor manufacturing equipment market. In 1992, CFM incorporated CFMT under Delaware law as a holding company for its intellectual property. CFMT was assigned all of CFM's patents. The complaint alleges that Dainippon wished to exhibit a wafer cleaning apparatus but was concerned about possible infringement of one of CFMT's patents. Negotiations and various maneuvers ensued. Finally, negotiations failed and the present suit was brought. The District Court, noting that CFMT was merely a holding company with no employees, agents or officers in California, that all negotiations were conducted by CFM rather than CFMT, found no jurisdiction over CFMT. Since CFMT was the owner of the patents and the only entity authorized to take legal action, the District Court found CFMT an indispensable party. Accordingly, the District Court dismissed. The Federal Circuit disagreed with the California Court's finding that CFMT was not represented during the settlement negotiations in California. It pointed out that the persons involved in the negotiation were employed by or held positions at both CFM and CFMT. Despite wearing two hats, these negotiations could only have been made on behalf of CFMT and, thus, personal jurisdiction was proper. The Court also found that such a finding was reasonable and fair, due to a parent-subsidiary relationship between CFM and CFMT. The Court went on to find that CFMT was not an indispensable party. CFMT's rights would be protected by those who are present in the district, its parent, CFM. CFM had complete control over CFMT. CFMT was, of course, free to intervene. A copy of the decision can be seen at: http://www.ll.georgetown.edu/Fed-Ct/Circuit/fed/opinions/97-1569.html |
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