Intellectual Property Archives - Page 21 of 58

“Knock-Offs” Beware: SCOTUS Makes a Fashion-Forward Decision

The U.S. Supreme Court has settled the closely watched Varsity Brands Inc. et al. v. Star Athletica LLC copyright dispute, holding that cheerleading outfits contain distinct design elements that allow for copyright ownership. The ruling has wide implications for both the fashion apparel and home furnishings industry, both of which rely on distinctive, eye-catching designs to sell products.

On Wednesday, the Supreme Court sided with Varsity Brands in a 6-2 vote. Varsity Brands Inc., the world’s largest maker of cheerleading apparel, alleged copyright infringement claims against rival manufacturer Star Athletica LLC. In particular, Varsity Brands claimed that the stripes, chevrons and other visual design elements on their uniforms are eligible for copyright protection.

Uniforms

Writing for the majority, Justice Clarence Thomas agreed with that contention if such designs “can be perceived as a two- or three-dimensional work of art separate from the useful article” and “would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.” The Varsity Brands uniform designs satisfied that test and, thus, are eligible for copyright protection, he wrote.

Justice Thomas also was careful to note that the ruling only limits competitors from copying Varsity Brands’ “surface designs” and not the underlying clothing shape. “Respondents have no right to prevent anyone from manufacturing a cheerleading uniform that is identical in shape, cut, or dimensions to the uniforms at issue here,” he wrote.

The dispute began in 2010. Star Athletica’s attorneys contended that clothing, as a “useful item,” is not eligible for copyright protection. Furthermore, Star Athletica claimed that the asserted design elements were simply a component of the cheerleading uniforms, and without them, each garment no longer would be a cheerleading outfit. A federal district court initially sided with defendant Star Athletica in 2014, but a Sixth Circuit panel reversed that decision the following year.

This decision confirms long-standing principles of copyright protection which have been found to include three-dimensional sculptural works and ornamentation applied to other “useful items” such as furniture pieces. A 2010 Court of Appeals decision from the Fourth Circuit set forth this principle in Universal Furniture Int’l, Inc. v. Collezione Europa USA, Inc., 618 F. 3d 417, and copyright remains an important tool in the furniture and home furnishings industry.

With yesterday’s Supreme Court decision, manufacturers of other fashion-guided products, including specifically apparel and clothing accessories, can take advantage of this new standard of copyright protection to combat increasing threats of counterfeits and other “knock-offs.” In particular, fashion brands should review their product lines to ensure that copyright-eligible products are protected under this new standard, as well through more traditional trademark mechanisms.

Click here to read our previous article on this case.

USPTO Freedom Of Information Act Inquiry

The Freedom of Information Act (“FOIA”) can be a very powerful tool. It provides unqualified right to access certain public records. Patent attorney Gary Shuster used it to file a FOIA request (Request No. F-17-00099) with the USPTO on January 26, 2017, seeking the following:

1. Any document written by or on behalf of Michelle Lee constituting a resignation from office, a request to withdraw a resignation from office, or a request to refrain from her position.

2. The most current document identifying the Director of the USPTO or, if there is no director, the acting director of the USPTO.

3. Any written instructions received between January 20, 2017 and the date of this request regarding deletion of any data from web sites operated by or on behalf of the USPTO, including USPTO.com.

To spare the USPTO having to compile and produce all documents responsive to this request, Shuster offered: “In the alternative, you may satisfy this request by simply answering the following question: Who is the current director or acting director of the USPTO?”

On February 24, 2017, USPTO FOIA specialist Karon Seldon sent Shuster a letter stating that the agency was extending the time limit, citing FOIA provisions allowing extensions in “unusual circumstances.” This is a FOIA provision which provides an extension may be claimed in usual circumstances where there is a “need for consultation … with another Federal Agency having a substantial interest in the determination of the request.” This is likely to give a bit of breathing room to determine how the Trump administration will affect the decision.

The new deadline for response is March 10, 2017. Although it’s currently a bit of a mystery, we’ll see tomorrow who will be named to the Director role.

ARTICLE BY Annie Dike of IMS ExpertServices

Trade Secret Preemption: Possible Defense To Trade Secrets Claim?

Two recent decisions by the Fifth Circuit Court of Appeals clarify the intersection between federal copyright law and state trade secret law. In GlobeRanger Corp. v. Software AG United States of America, Inc., 836 F.3d 477 (5th Cir. Sep. 7, 2016), the Fifth Circuit rejected an appeal in which the defendant argued that a plaintiff’s trade secret misappropriation claim was preempted by federal copyright law. Just four months later, in Ultraflo Corp. v. Pelican Tank Parts, Inc., No. 15-20084, 2017 U.S. App. LEXIS 509 (5th Cir. Jan. 11, 2017), the Fifth Circuit upheld a district court’s dismissal of a plaintiff’s state law claim of unfair competition by misappropriation, holding that the state law claim was preempted by federal copyright law. What accounts for these seemingly inconsistent conclusions over two strikingly similar state law claims? The difference lies in the elements needed to establish each state law claim.

In its September 2016 GlobeRanger decision, the Fifth Circuit heard an appeal after a jury awarded plaintiff GlobeRanger a $15 million jury verdict following a trial in the United States District Court for the Northern District of Texas on its state trade secret misappropriation claim. The central allegation in that case was that competitor Software AG misappropriated GlobeRanger’s radio frequency identification (RFID) technology – most commonly used in electronic readers in tollbooths, like EZ-Pass – after it had taken over Software AG’s subcontract with the U.S. Navy to implement the technology. Following the verdict, Software AG appealed, contending that federal copyright law preempted GlobeRanger’s state trade secret claim.

The Fifth Circuit explained in GlobeRanger that the different spheres of intellectual property can sometimes overlap and, as the software code at issue illustrates, the same intellectual property can be protectable under copyright laws or subject to trade secret protection. If the creator of the IP seeks copyright protection, it obtains the exclusive right to make copies of the work for decades but must publicly register the work before enforcing that right through a lawsuit. The supremacy of federal copyright law means, however, that state protection of copyrightable subject matter must sometimes defer to its federal counterpart. As the Fifth Circuit explained, two conditions must be met in order for the Copyright Act to preempt a state law claim. First, “the work in which the right is asserted must come within the subject matter of copyright.” Second, “the right that the author seeks to protect . . . [is] equivalent to any of the exclusive rights within the general scope of copyright.” This inquiry asks whether the state law is protecting the same rights that the Copyright Act seeks to vindicate or against other types of interference. “If state law offers the same protection, then the state law claim is preempted and must be dismissed.”

Applying this articulated two-part test to the facts in GlobeRanger, the Fifth Circuit found that the first condition was satisfied (because Software AG conceded its software code was copyrightable) but the second condition was not. This is because while federal copyright law and Texas trade secret misappropriation both involve copying, trade secret misappropriation involves an extra element: the state law prevents any improper acquisition through a breach of a confidential relationship or improper means. Accordingly, the Fifth Circuit ruled that GlobeRanger’s trade secret claim was not preempted because it was required to establish an “extra element” in order to establish a copyright violation: that its “protected information was taken via improper means or breach of a confidential relationship.” Significantly, the Fifth Circuit noted, ten other circuit courts that have considered this issue agreed that trade secret misappropriation claims are not preempted by the Copyright Act for this same reason.

Revisiting the issue of preemption just four months later in Ultraflo, the Fifth Circuit reached the opposite result when faced with a different state law cause of action. In this case, Ultraflo asserted an unfair competition by misappropriation claim under Texas law alleging that competitor Pelican stole its drawings showing how to design butterfly valves used in the transportation industry and then used them to make duplicate valves. The United States District Court for the Southern District of Texas dismissed Ultraflo’s Texas state law claim, finding that the general scope of federal copyright law preempts the claim. Ultraflo appealed, challenging the ruling. As it did in GlobeRanger, the Fifth Circuit utilized the two-part test to determine whether the Copyright Act preempted the state law cause of action. First, it found that Ultraflo’s design drawings were “undoubtedly” within the scope of federal copyright, as were the valve designs themselves even though they were not actually protectable under the Copyright Act. Second, unlike in GlobeRanger, the Fifth Circuit found that the second condition was met because Texas’s unfair competition by misappropriation cause of action does not afford protection materially different from federal copyright law. The elements of Texas’s unfair competition by misappropriation claim are: (1) the creation by a plaintiff of a product through extensive time, labor, skill, and money; (2) the use of that product by defendant in competition with plaintiff; and (3) commercial damage to the plaintiff. In other words, unlike the traditional trade secret misappropriation claim asserted in GlobeRanger, the unfair competition by misappropriation claim asserted in Ultraflo lacks the “extra element” necessary to bring it out of the general scope of copyright. Therefore, the claim was preempted.

These two Fifth Circuit decisions demonstrate that parties should pay attention to the possible application of copyright preemption to claims involving alleged theft of information or unfair competition. While most such claims will not be preempted, Ultraflo illustrates that some will be.

ARTICLE BY Jonathan L. Shapiro of Epstein Becker & Green, P.C.

Intellectual Property Cases to Watch in 2017

The New Year brings excitement and anticipation of changes for the best. Some of the pending patent cases provide us with ample opportunity to expect something new and, if not always very desirable to everybody, at least different. In this post, we highlight several cases that present interesting issues and that we anticipate may provide for new and important developments in the patent law this year.

Samsung Electronics Co. v. Apple Inc.

This highly-publicized case, now on remand from the Supreme Court, concerns damages for design patent infringement.

Apple sued Samsung in 2011 for infringement of U.S. Patent Nos. D618,677 (claiming an electronic device having black rectangular front face with rounded corners), D593,087 (claiming an electronic device having a rectangular front face with rounded corners and a raised rim) and D604,305 (claiming a grid of 16 colorful icons on a black screen of an electronic device). As we reported earlier, a jury found that several Samsung smartphones resembling the iPhone infringe those patents and awarded $399 million in damages to Apple, the entirety of Samsung’s profit from sale of the infringing smartphones.

The Federal Circuit upheld the award. The decision centered on 35 U.S.C. § 289, which provides that an accused infringer manufacturing or using a patented “article of manufacture” is liable to the patent owner “to the extent of his total profit.” The Federal Circuit rejected Samsung’s argument that damages should not be determined based on the entire smartphone but rather should be limited to individual components covered by the patents, such as a front face or a screen. The smartphone as a whole was deemed to be an “article of manufacture” in the context of Section 289. The Supreme Court, in an unanimous (but short) decision, however agreed with Samsung and remanded, stating that an “article of manufacture” is “simply a thing made by hand or machine,” and is broad enough to include both a multicomponent product sold to a consumer and individual components of that product, “whether sold separately or not.” No test however was provided on how to identify an “article of manufacture” relevant to damages.

On remand, the Federal Circuit will determine whether “the relevant article of manufacture for each design patent … is the smartphone or a particular smartphone component.” A test for determining what exactly constitutes an “article of manufacture” for the purpose of determining damages in design patent cases is highly anticipated.

TC Heartland LLC v. Kraft Foods Group Brands LLC

This case concerns a choice of venue in patent cases, and a decision by the Supreme Court is expected around June, 2017.

Kraft Foods sued TC Heartland in the District of Delaware, alleging that Heartland’s liquid water enhancer products infringed three of Kraft Foods’ patents. Heartland moved to either dismiss the action or transfer venue to the Southern District of Indiana, where it is headquartered and incorporated. In support, Heartland stated that it is not registered to do business and has no presence in Delaware. After the district court denied its motion, Heartland appealed. The Federal Circuit affirmed and stated that patent suits may be filed in any judicial district in which the defendant sells an allegedly infringing product (Heartland ships accused products to Delaware, which amounts though to only about 2% of its total sales). The Federal Circuit has consistently applied this interpretation of the patent venue statute since its 1990 decision in VE Holding, which has since allowed patent holders to file suits in favorable courts that are perceived to be more plaintiff-friendly, such as the Eastern District of Texas. Opponents of this doctrine refer to it as a “forum shopping.”

As we reported before, on December 14, 2016, the Supreme Court agreed to review the Federal Circuit’s decision. A decision in favor of Heartland would fundamentally change where patent cases can be litigated. In particular, many patent holders may effectively be barred from bringing suits in the Eastern District of Texas.

Lexmark International v. Impression Products

On December 2, 2016, the Supreme Court granted Impression Products’ petition to hear a case concerning whether patent exhaustion arises from foreign sales.

Lexmark, a manufacturer of printers and cartridges for those printers, sold the cartridges covered by Lexmark’s U.S. patents in the U.S. and abroad. Some of the cartridges were sold at a reduced price and, according to a “Return program,” were subject to a single-use/no-resale restriction set forth in the user agreement. With the goal of protecting quality and reputation of its products, and for other reasons, Lexmark required that customers who bought Return program cartridges return the empty cartridges only to Lexmark for remanufacturing or recycling. Impression, among others, acquired and re-purposed (which included modifying the original chip) both the foreign- and domestically-sold cartridges, and sold the modified cartridges in the U.S. When Lexmark took legal actions and other defendants agreed to settlements, Impression however argued that the first sale of the cartridges, either in the U.S. or abroad, exhausted Lexmark’s U.S. rights to exclude.

The district court partially sided with Impression, ruling that Lexmark’s sale in the U.S. exhausted its patent rights, despite the express single-use/no-resale restrictions under the Return Program, but concluded that foreign sales did not exhaust Lexmark’s patent rights. As we said earlier, on February 12, 2016, the en banc Federal Circuit agreed with Lexmark and confirmed two important aspects of the patent exhaustion doctrine, namely that (1) a patentee can “sell[] a patented article subject to a single-use/no-resale restriction that is lawful and clearly communicated to the purchaser” without exhausting the patentee’s rights to that item; and (2) because foreign sales do not permit “the buyer to import the article and sell and use it in the United States,” an authorized foreign sale of a product does not exhaust a patentee’s U.S. patent rights to exclude associated with that product.

In re Aqua Products

This is a pending en banc case before the Federal Circuit regarding whether it is the patent owner who bears the burden of proving patentability of its amended claims in inter partes reviews before the Patent Trial and Appeal Board.

Aqua Products, Inc., as a patent owner, faced a claim amendment issue. In particular, after an inter partes review (IPR) of Aqua’s patent on a robotic swimming pool cleaners was initiated, Aqua moved to substitute several of the challenged claims with limitations from the claims that were not challenged, effectively amending the claims. The America Invents Act (AIA) permits patent owners to move to amend claims of a patent, and 35 U.S.C. § 316(d) states that “the patent owner may file one motion to amend the patent,” with additional motions to amend allowed in limited circumstances.

Applying its rule making authority, the PTO ruled that Aqua failed to demonstrate that its amendments would make the claims-at-issue patentable over the known prior art. On August 12, 2016, the Federal Circuit granted Aqua’s motion for an en banc hearing and asked Aqua and the USPTO to brief whether the USPTO may require that a patent owner bear the burden of persuasion regarding patentability of the amended claims, even though the AIA assigns the burden of proving unpatentability of the proposed claim amendments to an IPR petitioner. See 35 U.S.C. § 316(e)).

Argument was heard on December 9, 2016, and a blog post on the upcoming decision will appear in due course.

ARTICLE BY Inna Dahlin, PhD & Brad M. Scheller of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

U.S Supreme Court Revisits Design Patent Damages

On December 6, 2016, the U.S. Supreme Court, in Samsung Electronics Co. Ltd., v. Apple Inc., 580 U.S. ____ (2016), unanimously ruled that in multicomponent products, the “article of manufacture” subject to an award of damages under 35 U.S.C. §289 is not required to be the end product sold to consumers but may only be a component of the product.

In 2007, when Apple launched the iPhone, it had secured several design patents in connection with the launch. When Samsung released a series of smartphones resembling the iPhone, Apple sued Samsung, alleging that the various Samsung smartphones infringed Apple’s design patents. A jury found that several Samsung smartphones did infringe those patents. Apple was awarded $399 million in damages for Samsung’s design patent infringement, the entire profit Samsung made from its sales of the infringing smartphones. The Federal Circuit affirmed the damages award, rejecting Samsung’s argument that damages should be limited because the relevant articles of manufacture were the front face or screen rather than the entire smartphone.

The Supreme Court reversed and remanded the case back to the Federal Circuit. In its unanimous opinion, the Court reasoned that for purposes of a multicomponent product, the relevant “article of manufacture” for arriving at a damages award (based on 35 U.S.C. §289) need not be the end/finished product sold to the consumer but may be only a component of that product. The Court determined that “The Federal Circuit’s narrower reading of the ‘article of manufacture,'” limiting it to the end product, “cannot be squared with the text of §289.” How to arrive at §289 damages? According to the Supreme Court, “Arriving at a damages award under §289 thus involves two steps. First, identify the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.”

This decision could have potential impact on future design patent infringement cases, especially when calculating infringement damages. It remains to be seen, what kind of guidance the Federal Circuit will provide in addressing the scope of the “article of manufacture” for multicomponent products.

ARTICLE BY Sudip K. Mitra of Vedder Price

Hillary Clinton’s Intellectual Property Litigation Experience

Many people are surprised to learn that Hillary Clinton was an intellectual property attorney when she practiced law from 1977-1992 for the Rose Law Firm. While the New York Times has reported that former colleagues cannot remember any cases she tried and that court reporters in Little Rock say she appeared in court infrequently, there are at least three reported court decisions on which she is named as counsel. A review of those decisions provides an interesting glimpse into Clinton’s background with intellectual property.

In a case involving allegations of false advertising, Clinton represented Maybelline Co. in a suit against Noxell Corp. regarding Noxell’s “Cover Girl Clean Lash” mascara product.^[1] According to the complaint, Maybelline’s principal place of business and only factory in the United States was located in North Little Rock, Arkansas. Maybelline asked the court to restrain Noxell from advertising the Clean Lash mascara as being waterproof. Maybelline submitted to the court a videotape of a Clean Lash commercial in which a voice-over claimed that “water won’t budge” Clean Lash and that it “laughs at tears,” and then submitted independent laboratory tests contradicting those claims. Maybelline argued that the commercials were deceptive. Unfortunately for Clinton, it was found that Maybelline brought suit in the wrong venue because Noxell was not doing business in the Eastern District of Arkansas.^[2] The case was transferred to a court in New York and settled.^[3]

In a trademark infringement case, Clinton represented First Nationwide Bank against Nationwide Savings and Loan Association regarding the use of the mark “Nationwide Savings.”^[4] In particular, First Nationwide Bank sought an injunction against the Savings and Loan Association’s use of the phrase “Nationwide Savings” for financial services. First Nationwide Bank argued that the use of the disputed phrase was likely to cause confusion among customers as to the provider of the financial services and was an attempt by the Savings and Loan Association to benefit from the valuable goodwill and reputation established by First Nationwide Bank. Clinton helped to secure injunctive relief for the Bank to prevent the Savings and Loan Association from using the mark.

In another case involving allegations of trademark infringement, Clinton represented Holsum Baking Co. against W.E. Long Co.^[5]regarding the use of the “Holsum” trademark in the marketing of bakery products. Long registered the “Holsum” mark on bakery products in Arkansas and later entered into an agreement granting Holsum Baking the right to use the “Holsum” name for advertising purposes in certain areas for three years. After that time, Holsum Baking began using the composite mark “Holsum Sunbeam” until more than 40 years later when it introduced a wheat bread product and marketed it as “Holsum Grains” with no mention of Sunbeam. Long then contacted the packaging suppliers of Holsum Baking and advised them not to sell packaging bearing the “Holsum” mark to Holsum Baking. Holsum Baking sought injunctive relief to reinstate its packaging source with the “Holsum” mark, arguing that the earlier agreement had been breached or abandoned by the parties and that Holsum Baking had acquired the rights to the “Holsum” mark due to use for more than 44 years. Clinton helped to secure a preliminary injunction for Holsum Baking.

While the number of reported cases involving Clinton is too small to draw any definitive conclusions, the above three cases demonstrate Clinton’s advocacy for companies that had their IP rights threatened. Some commentators have criticized Hillary Clinton’s current intellectual property platform as being vague, consisting of passing references to patent litigation reform and copyright policy. However, given her past experience, she may have more detailed thoughts on IP policy–an area that rarely is a focus in presidential campaigns.

ARTICLE BY Justin M. Sobaje of Foley & Lardner LLP

^{[1] Maybelline Co. v. Noxell Corp., 643 F. Supp. 294 (E.D. Ark. 1986).}

^{[2] Maybelline Co. v. Noxell Corp., 813 F.2d 901 (8th Cir. 1987).}

^{[3] Morrison, T.C., “The Regulation of Cosmetic Advertising under the Lanham Act,” 44 Food Drug Cosm. L.J. 49, 57 1989.}

^{[4] First Nationwide Bank v. Nationwide Sav. & Loan Ass’n, 682 F. Supp. 965 (E.D. Ark. 1988).}

^{[5] W.E. Long Co. v. Holsum Baking Co., 307 Ark. 345 (Ark. 1991).}

U.S. Supreme Court Denies Redskins’ Petition to Join SLANTS Case

U.S. Supreme Court today, without comment, refused the Redskins’ Petition to join the SLANTS case challenging the U.S. Trademark Office’s ban on “offensive” trademarks. Since both cases involved a provision in Section 2(a) of the Lanham Act, the football team hoped to have both cases considered concurrently by the high Court. However, this now means that the outcome of the SLANTS case will have a huge impact on the Redskins’ appeal still pending before the Fourth Circuit. Although the team’s case will not be heard with the SLANTS case, it will have the opportunity to file amicus briefs in the proceeding.

See our previous post about this here.

ARTICLE BY Susan Neuberger Weller of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Supreme Court Set to Settle Dispute over Washington Redskins Trademark Registration

There has been another twist in the story of the long battle by Native American interest groups to obtain revocation of the U.S. registration of the infamous Washington Redskins trademark. This is another step in the 20-year journey that began with the initial challenges to the team name.

On Thursday, September 29, 2016, the U.S. Supreme Court granted certiorari to review the Federal Court’s ruling in the case of Lee v Tam. That case involved a rock band called “The Slants”. The leader of the band, Simon Tam, appealed the denial by the U.S. Patent and Trademark Office of the band’s request for trademark registration of the band’s name. The US PTO had denied the band’s application on the grounds that it was offensive to Asian-Americans.

The Federal Circuit Court sided with the band and overturned the US PTO’s ruling. The Court stated that the government “cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks.” This decision is summarized in more detail in our prior blog posts on that ruling.

The ruling by the Federal Circuit Court was particularly important to Native Americans and tribes because it was contrary to the prior ruling by the Fourth Circuit Court in a case challenging the Washington Redskins trademark. In that case, Pro-Football, Inc. v Amanda Blackhorse, et al, the Court had sided with the US PTO on the same issue. The Court found that the Redskins trademark was disparaging and invalidated its federal trademark registration.

That case is still pending. Thus, the ruling by the Supreme Court on the validity of the US PTO ruling in Lee v Tam will have important consequences (indeed, it will most likely be decisive) for the Pro-Football case.

The Supreme Court, as in almost all actions granting certiorari review, did not state any reasons for its action, but it is typical for the Supreme Court to accept cases involving issues of national impact when there has been a split in the lower courts. It is good to see that the high court appreciates the importance of this controversial matter, and we will all have to wait and see what the result will be.

ARTICLE BY Fred Schubkegel of Varnum LLP

Iron Man Composer Battles Tech Giant Sony and Ghostface Killah

The US Court of Appeals for the Second Circuit ruled in favor of the composer of the 1960s Iron Man theme song, finding material facts in dispute as to whether the song was commissioned as a work for hire. Jack Urbont v. Sony Music Entertainment, Case No. 15-1778-cv (2d Cir., July 29, 2016) (Hall, J).

In 1966, Jack Urbont wrote the theme songs for various characters in the “Marvel Super Heroes” television show, including Iron Man. In 2000, hip hop artist Dennis Coles (known as Ghostface Killah), Sony and Razor Sharp Records produced and released the album “Supreme Clientele” featuring the Iron Man theme song on two tracks, prompting Urbont’s June 2011 copyright infringement lawsuit against Sony, Razor Sharp Records and Ghostface Killah. At trial, the district court found that the defendants had standing to challenge Urbont’s ownership of the copyright under the “work for hire” doctrine, and granted the defendants’ motion for summary judgment on standing, finding that the Iron Man song was a “work for hire” composed at Marvel’s instance and expense, and that Urbont had not presented evidence of an ownership agreement with Marvel sufficient to overcome the presumption that the work was for hire. Urbont appealed.

Third-Party Standing to Assert Right to Hire Defense

On appeal, Urbont cited the US Court of Appeals for the Ninth Circuit’s 2010 holding in Jules Jordan Video v. 144942 Canada,which rejected third-party standing under the work for hire doctrine. The Second Circuit rejected Urbont’s argument, explaining that in that case both potential owners of the copyright were parties to the lawsuit, neither of which disputed ownership. Here, Marvel was not a party to the suit, and a plaintiff in a copyright infringement suit bears the burden of proving ownership of the copyright when ownership is challenged either by an employer or a third party. Citing Island Software & Computer Serv. v. Microsoft, the Court explained that Sony, a third party to an alleged employer-employee relationship, did have standing to raise the “work for hire” defense to try to refute Urbont’s alleged ownership of the copyright.

The Copyright Act Claim

Under the Copyright Act, an employer is considered an “author” of a copyrightable work in the case of works made for hire. Citing to its 2013 case Marvel Characters v. Kirby, the Second Circuit explained that absent an agreement to the contrary, a work is made for hire when it is “made at the hiring party’s ‘instance and expense,’” i.e., when the employer induces the creation of the work and has the right to direct and supervise the manner in which the work is carried out.

In reversing, the Second Circuit credited the district court’s reliance on evidence supporting the assertion that the song was a work for hire developed at Marvel’s instance, including that Urbont had not previously been familiar with the Marvel superheroes and had created the work from material given to him by Stan Lee, who had the right to accept or reject his song. However, the Court concluded that Urbont’s evidence that he retained all creative control over the project and that Lee was not permitted to modify the work, coupled with his testimony that he approached Lee, not the other way around, weighed against finding that the work was created at Marvel’s instance.

As for the expense factor, Urbont claimed that he created the song with his own tools and resources, including renting a recording studio, supported his assertion that it was he, not Marvel, who bore the risk of the work’s success. Although the $3,000 payment Urbont received weighed in favor of a finding that the work was created at Marvel’s expense, Urbont’s testimony that he also received royalties undermined such a conclusion. The Second Circuit explained that while a hiring party’s payment of a specific sum in exchange for an independent contractor’s work satisfies the “expense” requirement, the payment of royalties weighs against finding a “work for hire” relationship. The Court thus found that a genuine issue of material fact remained as to whether the Iron Man composition was a work for hire created at Marvel’s instance and expense.

Finally, the Second Circuit found that the district court erred in concluding that Urbont failed to produce evidence to rebut the presumption that Marvel owned the work, noting that on summary judgment, the district court was required to accept Urbont’s testimony in support of his position. The Court reversed and remanded the case back to the district court.

ARTICLE BY Andrea Coronado of McDermott Will & Emery

Led Zeppelin Prevails in Copyright Infringement Case: Now on Appeal in Ninth Circuit

In May 2014, the Trust acting on behalf of the estate of Randy Wolfe (a/k/a Randy California) of the rock group Spirit filed a copyright infringement suit against Led Zeppelin related to the first chords in the band’s most famous song, “Stairway to Heaven.” See Skidmore v. Led Zeppelin, 15-cv-03462, U.S. District Court, Central District of California(Los Angeles). The Trust brought the case against Led Zeppelin after a 2014 Supreme Court decision opened the door for a broader interpretation of the time frame to seek damages for copyright infringement under the U.S. Copyright Act. See Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014). The Petrella decision limited the application of the defense of laches and permitted lawsuits to be brought involving older copyrighted works with more recent acts of infringement that fall within the statute of limitations pursuant to 17 U.S.C. § 507(b). Hence, in the Skidmore case, despite the decades-old circulation of “Stairway to Heaven,” the plaintiffs decided to bring suit against Led Zeppelin within three years after the release of a re-mastered version of the famous song.

In Skidmore, the crux of the plaintiffs’ case was that Led Zeppelin (with Jimmy Page and Robert Plant as co-authors) allegedly stole the opening passage of “Stairway to Heaven” from “Taurus,” an instrumental by Randy Wolfe that can be found on Spirit’s 1968 debut album. The dispute largely concerned a brief musical passage 45 seconds into “Taurus.” It was alleged that the iconic opening guitar sequence of “Stairway to Heaven” (which was released in 1971, three years after “Taurus”) was copied from “Taurus.”

The Trust also sought an injunction against the release of any additional albums containing the song “Stairway to Heaven” in an attempt to obtain a writing credit for Wolfe, who died in 1997. This case was not the first time Led Zeppelin had been accused of copying another artist’s work. The Trust’s lawsuit listed other songs for which Led Zeppelin had paid settlements over songwriting credits, including “The Lemon Song,” “Babe I’m Gonna Leave You,” “Whole Lotta Love,” and “Dazed and Confused.”

On April 11, 2016, Los Angeles District Judge Gary Klausner ruled that there were enough similarities between “Taurus” and “Stairway to Heaven” for a jury to decide the claim. On June 23, 2016, following a trial, an eight-member panel jury unanimously found that the similarities between the songs did not amount to copyright infringement. The decision came one year after a jury (in a lawsuit filed in the Central District of California before Judge John A. Kronstadt) ruled that Robin Thicke’s “Blurred Lines” (produced by Pharrell Williams) infringed Marvin Gaye’s “Got to Give It Up.” In the Blurred Lines case, Thicke and Williams were ordered to pay $7.4 million (reduced to $5.3 million) and ongoing royalties to Gaye’s family. The Blurred Lines decision is currently on appeal in the Ninth Circuit.

The Trial

Jurors in the Led Zeppelin case had to decide two issues: First, was it plausible that members of Led Zeppelin had sufficient opportunity (i.e., access) to hear “Taurus” before they wrote “Stairway to Heaven”? Second, if so, were the opening chords of “Stairway to Heaven” “substantially similar” to “Taurus”?

Issue 1: Access

Led Zeppelin’s guitarist, Jimmy Page, singer, Robert Plant, and bassist, John Paul Jones, all took the stand to testify about their recollections of Spirit and whether they attended Spirit performances, listened to Spirit music or recalled playing the same shows. The Led Zeppelin band members also were questioned by the plaintiffs’ counsel on how “Stairway to Heaven” was created 45 years ago. The jurors sided with the plaintiffs on the issue of access, finding that Page and Plant would have been familiar with “Taurus.” Specifically, the jury relied on the evidence presented in court that (1) Page had the Spirit record in his collection of more than 10,000 records and CDs, (2) Spirit had appeared as an opening act for Led Zeppelin and (3) other members of Spirit testified to encounters with Led Zeppelin members.

Issue 2: Substantial Similarity

The jury next had to determine whether the famous opening to “Stairway to Heaven” was substantially similar to the instrumental opening portion in “Taurus.” Both sides presented expert musicologists, who offered divergent opinions on the musical composition of “Taurus.” Defense experts testified that the two songs shared little in common other than a chord sequence that dates back 300 years. Plaintiffs’ experts said there were significant other likenesses, including the use of arpeggios, similar note combinations, pitch and note durations.

However, the jury never heard the original recording of “Taurus,” notwithstanding its conclusion that Led Zeppelin had access to the recording. The original recording of “Taurus” was made prior to 1972, when sound recordings were not subject to federal copyright protection. The Sound Recording Act of 1971 (effective February 15, 1972) changed federal copyright law to include protection for sound recordings. Instead, jurors had to hear and rely on expert renditions of the sheet music (i.e., the underlying musical notes) for “Taurus” to assess and decide the issue of “substantial similarity” to “Stairway to Heaven.”

Notably, the Trust’s expert played the sheet music on guitar, the instrument used in recorded versions for both “Taurus” and “Stairway to Heaven,” whereas Led Zeppelin’s expert decided to play the sheet music on piano. Irrespective of similarities in the sound recordings, theSkidmore case was decided based on the only protectable aspect – the musical composition of “Taurus” and not the sound recording. During deliberations, the jurors asked to see clips of each expert rendition more than once. Ultimately, the jury returned a unanimous verdict in favor of Led Zeppelin.

**Comparisons and Impact: Blurred Lines and Led Zeppelin Cases**

The “Stairway to Heaven” infringement decision came one year after a jury ruled Robin Thicke’s “Blurred Lines” infringed Marvin Gaye’s “Got to Give It Up.” In the Blurred Lines case, the eight-member jury also returned a unanimous decision based on the musical composition of “Got to Give It Up” and not the actual recorded version of Gaye’s song. However, the outcome for Led Zeppelinwas decidedly different from the Blurred Lines ruling.

The Blurred Lines decision, and its large award of damages, has been followed by a noticeable uptick in copyright infringement claims surrounding popular songs and recordings. Well-known artists such as Sam Smith, Ed Sheeran, Robin Thicke and Justin Beiber are making news for copyright infringement claims being brought against them. However, the recent verdict in favor of Led Zeppelin suggests that limitations inherent in protected music can limit a determination of infringement. Even though the jury sided with the plaintiffs regarding Led Zeppelin’s access to Spirit’s “Taurus,” the jury concluded that the protected elements of “Taurus” − the musical composition in the sheet music and not the sound recording − were not “substantially similar” to “Stairway to Heaven.” It is too soon to say whether the Blurred Lines outcome or the Led Zeppelinresult will be the norm.

Notwithstanding the appeal, the Led Zeppelin case reinforces the notion that different aspects of an entire song, specifically the musical composition, the instrumentation and the final recording, each are subject to analysis in a potential copyright infringement claim, and the analysis can dictate different outcomes in claims of infringement.

As for the appeal, the Trust’s attorneys are challenging the jury verdict in the Ninth Circuit. The notice of appeal reads:

Please take notice that Plaintiff Michael Skidmore, Trustee for the Randy Craig Wolfe Trust, hereby appeals to the United States Court of Appeals for the Ninth Circuit from the final judgment entered on June 23, 2016, as well as any and all interlocutory rulings, decisions, and orders that gave rise to the judgment and are merged therein.

The filing does not provide legal arguments for why the case should be reconsidered, making it difficult to anticipate the basis for appeal. Furthermore, Led Zeppelin’s publishing company is seeking more than half a million dollars from the Trust in legal fees already incurred for the defense, triggered by a 2016 U.S. Supreme Court decision that allows prevailing parties in copyright cases to seek legal fees. See Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979 (2016). Given the appeal, these fees will only increase. This case and the Blurred Linescase are ones to watch as their outcomes could impact the music industry and copyright law in general.

ARTICLE BY Lamis G. Eli of Wilson Elser Moskowitz Edelman & Dicker LLP

Category: Intellectual Property

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