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U.S. Intellectual Property and New Media Law Update U.S. INFRINGEMENT BASED ON FOREIGN COPYRIGHT Itar-Tass Russian News Agency, et al. v. Russian Kurier, Inc. et al. (Second Cir. - August 27, 1998) LOOKS LIKE MINNEHAHA WAS A BETTER NAME First National Bank, Sioux Falls v. First National Bank, South Dakota (Eighth Cir. - August 21, 1998) INTRANSIGENCE DOESN’T PAY Imax Corp. v. Cinema Technologies, Inc. et al. (Ninth Cir. - August 19, 1998) PATENT PREEMPTION OF STATE COURT CLAIMS Hunter Douglas, Inc. et al. v. Harmonic Design, Inc. et al. (Fed. Cir. - August 18, 1998) U.S. INFRINGEMENT BASED ON FOREIGN COPYRIGHT Itar-Tass Russian News Agency, et al. v. Russian Kurier, Inc. et al. (Second Cir. - August 27, 1998) This is an important case in a rather esoteric area. Under the various International Conventions, including the Berne and Universal, an author or assignee of the copyright in one country may sue based on an infringer's use in another. The question becomes which law applies in such suits. Defendants are in a number of different ways connected to Kurier, a Russian language weekly newspaper published in New York City. Plaintiff, Itar-Tass, is a well-known Russian news agency. Kurier regularly copied, inter alia, articles that first appeared or were distributed by the Plaintiffs. The copied material, though extensive, was a small percentage of the total number of articles published by Kurier. As part of the determination below, the Court ruled that the copied works were Berne Convention works and, accordingly, the Plaintiffs' rights would be determined according to Russian Copyright Law. Under this law, Russian newspapers are not entitled to consider works of reporters as works for hire and, thus, the copyrights remained with the original authors. However, the newspaper did retain a right in each issue as a whole, even though it didn't own the individual articles. The District Court then concluded that Preliminary Injunction was warranted because what Kurier has copied was "the creative effort in the newspaper in compilation of articles including numerous articles in the same issue together with headlines and photographs." A Preliminary Injunction issued and the matter was then tried. This was a trial of dueling experts as to the meaning of Russian Copyright Law and to the present situation. The judge accepted the viewpoint that, while individual articles were not protected, the work as a whole was. The Second Circuit divided the question of what law would govern between two distinct issues, ownership and substantive rights, that is scope of protection. The Second Circuit decided that since copyright is a form of property and the usual rule is the interest of the parties in the property as determined by the law of the state with the most significant relationship to the property, that the copyright laws of ownership of the country of origin (Russia) would govern with one procedural qualification. Under United States law, an owner (including one determined according to foreign law), may sue for infringement in the United States court only if it meets the standing test of 17 U.S.C. § 501(b), which accords standing only to the legal or beneficial owner of the "exclusive right." On the other hand, infringement issues are tort issues and the law would be where the tort occurred. That is United States law would apply to the infringement issues. The Court then goes on to make a determination in the present fact situation, affirming judgment to the extent it granted relief to the news agency and reversing with regard to other judgments and remanding for further proceedings. I believe the court missed a critical distinction. There are two ways that a foreign plaintiff may sue for copyright infringement. It may sue under the convention based on the foreign copyright or may obtain a U.S. copyright and then sue. The opinion is silent on whether a U.S. registration was obtained. Where there is a U.S. registration, courts have traditionally found that even when the work is authored abroad, it is the U.S. Copyright which is in issue and that U.S. law governs all issues relating to the copyright rights.( See cases cited disparagingly by the court). As having successfully argued that U.S. law applies to all aspects of a U.S. registration in two other cases, I find the application of the Second Circuit's decision where a U.S. registration has been obtained disingenuous. As noted by a number of courts, what the court looks to is the authorship not with regard to the development of the local copyright, but rather to the simultaneous and inherent creation of a corresponding U.S. copyright by the single act of authorship in a Berne or UCC country. On the other hand, if only the foreign copyright is relied upon the court's distinction makes sense. By failing to make the distinction, the Second Circuit has either obscured its decision or has broadly applied a rule which is good for the gander but should have nothing to do with the goose. The decision can be seen at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/97-7498.opn.html LOOKS LIKE MINNEHAHA WAS A BETTER NAME First National Bank, Sioux Falls v. First National Bank, South Dakota (Eighth Cir. - August 21, 1998) This case is an appeal by the Plaintiff from the scope of its Preliminary Injunction. Plaintiff is a bank originally known as the Minnehaha National Bank of Sioux Falls, but since 1952, has been known as First National. A competitor, 90 miles down the road, started using First National Bank, South Dakota, in 1994. When the Defendant opened a branch in Sioux Falls in 1995, Plaintiff sued. The District Court granted Plaintiff a preliminary injunction under the Lanham Act and common law from using the marks "First National" or "First National Bank" within a ten-mile radius of Plaintiff's bank but denied Plaintiff's request for an injunction against the use of Defendant's full corporate name. The Eighth Circuit noted that the Plaintiff agreed with substantially all of the District Court's findings of fact and challenged only the District Court's ultimate determination that the full name would not create a likelihood of confusion. The Eighth Circuit noted that the burden was on Plaintiff to establish the likelihood of confusion and it was not clearly erroneous to find that it had failed to do so. The decision can be viewed at: http://ls.wustl.edu/8th.cir/Opinions/980821/972278.P8 INTRANSIGENCE DOESN’T PAY Imax Corp. v. Cinema Technologies, Inc. et al. (Ninth Cir. - August 19, 1998) By now you should have either seen or heard of the Imax movies with the giant screens. They use a special patented projector called a rolling loop projector. While the broad concepts were disclosed in the patent, there remained undisclosed information for trade secret purposes, principally in the dimensioning and tolerances of the various component parts. Once the patent expired, Defendants wished to market a competing machine and, accordingly, attempted to gain information about the machinery, including visiting various theaters with these projectors, from which dimension were taken. Defendants may have falsely indicated the purpose of such visits. It sounds like Imax might have a good suit. Well, the Plaintiff's attorney's intransigency in identifying its trade secrets cost the Imax its trade secrets. During discovery, Defendants asked a number of times to specifically identify its trade secrets and, in particular, which dimensions and tolerances fell within that category. Plaintiff only replied after prodding from the Magistrate and, then, with only vague statements as to dimensions and tolerances. Defendants moved for summary judgment. The District Court then reviewed the evidence minus the precise numerical dimensions and tolerances and found that they did not meet the definition of trade secrets. Defendants' evidence indicated that all these attributes, without the dimensions were generally known to the industry or available through public means and the dimensions had not been identified. Accordingly, the District Court dismissed the trade secret claim. The Ninth Circuit affirmed, finding that Imax had failed to identify the precise numerical dimensions and tolerances of its projector as trade secrets with sufficient particularity. The use of a catch-all phrase, "including every dimension and tolerance which defines or reflects that design," just does not do it. A different result would have been reached if reference was made to specific drawings containing such dimensions. The Ninth Circuit viewed Imax's argument as an attempt to have this Court modify the Magistrate Judge's discovery order and indicated that Imax should have accepted the Magistrate's denial of its motion for reconsideration. Legal arrogance, like Presidential arrogance, has consequences. PATENT PREEMPTION OF STATE COURT CLAIMS Hunter Douglas, Inc. et al. v. Harmonic Design, Inc. et al. (Fed. Cir. - August 18, 1998) This is one of those sprawling, complex, but rather interesting Federal Circuit cases that defines a heretofore unexplored area of the law. The issue is the extent federal patent law preempts state law causes of action prohibiting tortious conduct in the marketplace, when to prevail on them, the Plaintiff's must prove that a United States patent is either invalid or unenforceable. The parties are manufacturers and sellers of motorized window blinds. Defendants own several patents on the technology. The Plaintiffs had a new product which they wanted to bring to the marketplace, which might be covered by the patents. Accordingly, Plaintiffs requested a declaratory judgment of non-infringement, invalidity or unenforceability. Plaintiffs alleged the claims are invalid or unenforceable for the usual reasons. Counts two through seven were for causes of action which are creatures of California, i.e., unfair competition, violation of the Unfair Competition Act, injurious falsehood, negligence, internal interference with prospective economic advantage and negligent interference with prospective economic advantage, all based on the invalid obtaining and assertion of a patent by the Defendants. The District Court dismissed the first count for lack of a controversy, since there had been no direct threat of suit. The District Court, however, preserved the state law counts as having subject matter jurisdiction as a federal question because the state counts required a determination of whether the patents were valid or invalid. The District Court then went on to dismiss since it argued that the federal patent statute preempted the state claims. The Plaintiffs appealed. The Federal Circuit upheld the District Court's finding of lack of actual controversy in the declaratory judgment action. Incidentally, they found also that there was not a federal right to copy and use, implied in either the Constitution or the Patent Act. The Federal Circuit determined that the dismissal should be for want of jurisdiction under Rule 12(b)(1) rather than for failing to state a claim upon which relief could be granted under Rule 12(b)(6). Supplemental jurisdiction under 28 U.S.C. 1367 no longer existed since there is no federal claim on which it can depend. However, the state claims were based on a false assertion of patent rights and, thus, gave rise to jurisdiction under Section 28 U.S.C. 1338(a). With regard to the question of preemption, the Court remanded to the District Court. Essentially, it found that state unfair competition claims based on fraudulent assertion of a patent was not preempted and the only question was whether that was the gist of the pleading in the District Court. This decision can be seen at: http://www.ll.georgetown.edu/Fed-Ct/Circuit/fed/opinions/97-1399.html |
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