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U.S. Intellectual Property and New Media Law Update A SECRET CHOO-CHOO Learning Curve Toys, Inc. v. Playwood Toys, Inc. (Seventh Cir. August, 2003) TRADITIONAL CATS WANT A TRADITIONAL REMEDY The Traditional Cat Association, et al. v. Gilbreath, et al. (Ninth Cir. August, 2003) VERY FOREIGN COPYRIGHT INFRINGEMENT Los Angeles News Service v. Reuters Television International Limited, et al. (Ninth Cir. August, 2003) YOU GOTTA SUCK DE HEAD ON DEM DER CRAWFISH Emanation Inc. v. Zomba Recording Inc. et al, (Fifth Cir. August 2003) PLEASE NOTE: SEMINAR NOTE: THE MADRID PROTOCOL IS COMING - ARE YOU READY? We will be conducting a seminar with representatives from the USPTO and WIPO regarding the Madrid Protocol on October 8th, 2003 in New York. We would love for you to join us. See particulars below and RSVP early to confirm yourhttp://www.legalmediagroup.com/mip/madridprotocolseminar/ A SECRET CHOO-CHOO Learning Curve Toys, Inc. v. Playwood Toys, Inc. (Seventh Cir. August, 2003) This is a case of misappropriation of a trade secret in a realistic looking and sounding toy railroad track under the Illinois Trade Secret Act. The jury awarded the plaintiff a royalty of 8% for a license that would have been negotiated absent the misappropriation to last for the lifetime of the product. However, the judge at the District Court level granted judgment as a matter of law in favor of the defendant, holding that the defendant did not have a trade secret. Here the Seventh Circuit reversed and ordered a trial on exemplary damages and consideration of the request for attorney's fees. Playwood developed a prototype of a wooden toy. At a meeting, Learning Curve Toys indicated they had a problem with their toy trains tracks and plaintiff offered an alternative design, which would make noises and look more like real train tracks under a verbal agreement of confidentiality. While there were further meetings between the parties there was no further discussion of the train track until one day Playwood discovered that defendant was selling its track design. Learning Curve even filed a patent application and obtained a patent for Playwood's track design. Defendant sent a warning letter and plaintiff filed a declaratory judgment that it owned the concept for noise producing toy rail road tracks, which while successful with the jury was tossed out by the judge. The Seventh Circuit reviewed the circumstances and found that there was sufficient evidence to go to trial. It noted that while Playwood could have done more to protect its secret, it did obtain an oral confidentiality agreement. That it did not obtain a receipt for its prototype or a written confidentiality agreement while unwise in hindsight, did not take away from the fact that the jury could conclude that Playwood's reliance on the oral confidentiality agreement was reasonable under the circumstances of the case. The evidence showed the value of the concept, to both the plaintiff and defendant, its novelty and lack of awareness in the industry. Despite this evidence, the District Court concluded that Playwood's concept had no economic value. This was based in part on the fact that Playwood's prototype did not work perfectly, however, the Seventh Circuit did not require perfection. Also the District Court found that Plaintiff spent insufficient time and money developing the concept since it took but a dollar worth of goods and less than half an hour. However, the Seventh Circuit felt that the District Court gave too much weight to the time, effort and expense in developing the track, since the end result was valuable. The expenditure of time or money in the production of information only may provide evidence of value but it is, however, not required. Finally, under the Illinois Trade Secret Act, exemplary damages up to twice the amount of actual damages is available if there is willful and malicious misappropriation. The jury never received instructions on this since its verdict was overturned by the Court. Accordingly, on remand, the judge was instructed to hold a jury trial on exemplary damages. The decision can be viewehttp://laws.findlaw.com/4th/021396p.htmlhttp://caselaw.lp.findlaw.com/data2/circs/7th/021916p.pdf TRADITIONAL CATS WANT A TRADITIONAL REMEDY The Traditional Cat Association, et al. v. Gilbreath, et al. (Ninth Cir. August, 2003) This case arose out of a dispute over who owns the right to use the name Traditional Cat Association and the right to use, copy, disseminate certain documents such as a constitution, by-laws, and registry. The case went to trial for copyright infringement and conversion on the Plaintiff's side and defamation and intentional interference with respect to the economic advantage and conversion on the defendant's side. At the close of evidence the defendant voluntarily dismissed the claim for intentional interference with prospective economic advantage. The copyright claims were dismissed during the trial when the District Court granted defendants Motion for Judgment as a matter of law. The defendants filed for attorneys' fees pursuant to the Copyright Act. The court found that the defendants were entitled to attorneys' fees as the prevailing party. Defendant requested 100% of its disbursements from the beginning of the case until a resolution of the copyright infringement claim during the trial on the grounds that all claims in the case rested on a common core of facts or related legal theories. In the alternative they asked for 80% of the reimbursements on the grounds that 80% of the attorneys time was spent on the copyright claim. The district court agreed with the plaintiff, i.e., that defendants were only entitled to recover fees attributable to the successful defense of the plaintiff's copyright infringement claim precluding 100% recovery and that the defendant's accounting did not support their claim of 80% of their attorney's fees. Instead of arriving at a different allocation or adopting the 25% recovery suggested by defendants, the district court simply denied the fee request. Here the defendant's claimed two abuses of discretion, first they contend the court was wrong in assuming they could only recover fees attributable to their copyright claim without first deciding whether the copyright and non-copyright claims were related. Second they contend that even if the district court properly limited their recovery to fees attributable to the copyright claim, it appears that discretion was abused by denying the fee request in the entirety for lack of adequate documentation. The Ninth Circuit first found that the case should be remanded to permit the district court to rule on the issue of whether the copyright and non-copyright claims are related. Secondly, if the copyright and non-copyright claims are not related, the district court must apportion the fees even when it is impossible to make an exact apportionment. The decision can be viewed at: http://caselaw.lp.findlaw.com/data2/circs/9th/0156595p.pdf VERY FOREIGN COPYRIGHT INFRINGEMENT Los Angeles News Service v. Reuters Television International Limited, et al. (Ninth Cir. August, 2003) This case answers a not very often asked question of whether a news organization may recover actual damages under the Copyright Act for acts of infringement that mostly occur outside the United States and the answer is a resounding "No" to damages and yes to accounting of profits if at least part of the infringement occurred in the U.S. The copyright works at issue are the rather famous or possibly notorious videotapes entitled "The Beating of Reginald Denny" and "Beating of Man in White Panel Truck" depicting the rather unsavory news events that took place during the 1992 Los Angeles riots. Los Angeles News Service ("LANS"), an independent news organization which produces video and audio tape recordings of news worthy events and licenses them for profit produced the works, while filming the riots from its helicopter. It copyrighted the works and sold a license to rebroadcast them to, amount others, the National Broadcasting Company network, which used them on the Today Show. Visnews International is a joint venture among NBC, Reuters Television Ltd. and the British Broadcasting Company. Pursuant to a news supply agreement between NBC and Visnews, NBC transmitted the Today Show broadcast by fiber links to Visnews in New York; Visnews made a video copy of the works which it then transmitted via satellite to its subscribers in Europe and Africa and via fiber link to the New York office of the European Broadcast Union, a joint venture of Visnews and Reuters. They subsequently made another video copy of the work and transmitted it to Reuters in London, which in turn distributed the works via video feed to it own subscribers. LANS sued Reuters and Visnews for copyright infringement. The district court granted Reuters and Visnews partial summary judgment on the issue of extraterritorial infringement, holding that no liability could arise under the Copyright Act for acts of infringement that occurred outside the United States. However, the district court held that the Visnews act of copying the work in New York was a domestic act of infringement and rejected a defense of fair use. The district court further concluded that LANS had failed to prove any damages arising domestically and that damages arising extraterritorially was unavailable under the Act, which meant that LANS was limited to statutory damages for that single copying in New York. After a bench trial the court set the statutory damages at $60,000. There was a first appeal in which the 9th Circuit concluded that while the district court was correct to hold that the copyright does not apply extraterritorially, an exception existed when an act of infringement is completed within the United States and that such infringing act enabled further exploitation abroad and held that LANS was entitled to recover damages flowing from the exploitation abroad of the domestic act of infringement committed by defendants. When remanded to determine actual damages, Reuters and Visnews moved for summary adjudication of the claim for actual damages. They asserted that the decision on appeal permitted LANS to recover only defendants profits attributable to the extraterritorial infringement, not actual damages for injuries the infringement caused LANS overseas. After a hearing the district court agreed with Reuters and Visnews on both points and granted the motion. The court concluded that the Ninth Circuit had held only that LANS could recover any profits or unjust enrichment on the theory that the infringers held such profits in a constructive trust for LANS. It then concluded that Reuters and Visnews had reaped no such profits from their infringement, giving the plaintiff a choice again of $0 or $60,000 in statutory damages awarded in the previous decision. LANS claims error in disallowing recovery for actual damages. The Ninth Circuit felt a narrow application was appropriate and held that only award of profits as an constructive trust would be appropriate. There was a strong decent by Judge Silverman arguing that the majority actual reversed its prior decision. The decision can be viewed at: http://caselaw.lp.findlaw.com/data2/circs/9th/0256956p.pdf YOU GOTTA SUCK DE HEAD ON DEM DER CRAWFISH Emanation Inc. v. Zomba Recording Inc. et al, (Fifth Cir. August 2003) Plaintiff made and sold a novelty play back gadget to the public called the Pocket Cajun. The hand-held pocket device bore six buttons which when pushed played the following spoken phrases (1) "Aieee"; (2) "We gon pass a good time, yeah, cher"; (3) "Oo, I love you like a pig loves corn"; (4) "You gotta suck da head on dem der crawfish"; (5) "Laissez les bons temps rouler"; and (6) "Oo, cher, look like you gotta Cajun in you pocket." At issue were spoken phrases number two and four. Emanation sold some 60,000 units since 1997. It obtained a copyright registration for this important sound recording. A little before obtaining its registration but some three years after the device was marketed the defendant began distributing an album recorded by Michael Tyler a/k/a Mystikal which included the song "Shake Ya Ass", which included the exact word arrangements found in phrases two and four of the Pocket Cajun. After obtaining its registration Emanation sued for copyright infringement. The district court wasted little time in granting summary judgment in favor of the defendants on both the copyrights and on Lanham Act and state law claims of trademark infringement and unfair trade practices. Here, the Fifth Circuit turns down its Cajun resident and supports the summary judgment. There is no issue that plaintiff had a valid copyright in the sound recording of the six miniature Cajun sayings and a valid copyright protecting the word arrangement in the six sayings used in the Pocket Cajun. The summary judgement and the Fifth Circuit focus on the second requirement for a copyright infringement, i.e., the unauthorized copying of constituent elements of the works that are original. In the present case the packaging of the pocket device states the device plays six authentic Cajun sayings and provides a definition for the two phrases. The district court and the Fifth Circuit found that the phrases do not satisfy the originality requirement of the Copyright Act. There was not even a minimal degree of creativity since these are common Cajun phrases. The decision can be viewed at: http://www.ca5.uscourts.gov/opinions/unpub/02/02_30992.0.wpd.pdf |
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