Category: Intellectual Property

Disclaiming Patent Claims Leads PTAB to Grant a Request for Adverse Judgment

In Arsus, LLC v. Unified Patents, LLC, (Fed. Cir. Nov. 16, 2021), the Federal Circuit affirmed, through a Rule 36 judgment, the PTAB’s ruling granting a Request for Adverse Judgment After Institution of Trial.

Arsus initially sued Tesla Motors, Inc. for patent infringement in the Northern District of California asserting U.S. Patent No. 10,259,494. The ’494 patent is directed to a “rollover prevention apparatus.” The patent describes an “adaptive steering range limiting device,” which “prevents the steering wheel of the vehicle from being turned beyond the threshold of vehicle rollover, but otherwise does not restrict the rotational range of motion of the steering wheel of the vehicle.”

Unified Patents filed for inter partes review, challenging Arsus’ claims as being unpatentable under 35 U.S.C. § 103. Arsus then filed for statutory disclaimer of all challenged claims with the USPTO under 37 C.F.R. 1.321(a), and subsequently filed a Motion to Dismiss with the Board. In doing so, Arsus argued that because all of the claims at issue were disclaimed, there was no longer any case or controversy, and thus the Board had no jurisdiction to do anything other than to dismiss the IPR. However, the Board construed Arsus’s disclaimer as a Request for Adverse Judgment under 37 C.F.R. § 42.73(b), and terminated the IPR in favor of Unified Patents.

Arsus responded by filing a Motion to Vacate Judgment and, relying on Federal Circuit precedent from Sanofi-Aventis U.S. v. Dr. Reddy’s Laboratories, Inc., 933 F.3d 1367, 1373-75 (Fed. Cir. 2019), argued that the Board did not have jurisdiction to enter the Judgment because the disclaimer mooted the IPR petition and “deprived the Board of subject matter jurisdiction.”  Unified Patents, LLC v. Arsus, LLC, IPR2020-00948, Paper 19, 3 (PTAB Jan. 29, 2021). The Board, however, pointed out that Sanofi-Aventis concerned a district court’s jurisdiction under Article III of the Constitution, and determined that Arsus failed to show that the same requirements applied to administrative proceedings.

Arsus subsequently appealed to the Federal Circuit, which affirmed without opinion by issuing a Rule 36 judgment.

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

Article By Andrew N. Schneider, Shannon M. Patrick and Amanda K. Murphy, Ph.D. of Finnegan

For more articles on the PTAB, visit the NLR Intellectual Property section.

Quentin Tarantino’s Secret NFTs

Quentin Tarantino recently announced plans to auction off seven scenes from the 1994 motion picture Pulp Fiction as non-fungible tokens or NFTs. These “Tarantino NFTs” will include a collection of high-resolution digital scans of the original handwritten Pulp Fiction screenplay. The NFTs each contain scans of the uncut screenplay pages themselves that form a single scene from the movie. They will be auctioned on the NFT marketplace OpenSea and are built on the blockchain platform Secret Network, which launched in February 2020.

Secret Network, developed by SCRT Labs, has additional data privacy & encryption features compared to other blockchain platforms that implement NFTs. These additional features are used to keep information associated with an NFT secret. For example, the buyer of an NFT is better able to hide their identity. Further, content associated with an NFT can be kept private to the buyer if they so choose.

Miramax was quick to oppose this new venture, filing suit on the heels of Tarantino’s announcement. Miramax asserts that because Tarantino assigned to Miramax in 1993 nearly all of his rights to Pulp Fiction, Tarantino’s remaining rights under the operative agreements are too narrow for him to produce, market, and sell NFTs. Tarantino’s reserved rights include “print publication” and “screenplay publication”, but Miramax contends that that is insufficient for Tarantino to produce NFTs. Miramax’s reasoning is that since each NFT is by definition unique and therefore a “one-time transaction,” distributing an NFT is not “print publication.” Miramax may find some support for that argument in the Copyright Act, which defines “publication” as “distribution of copies,” using the plural form and not the singular. Further, Miramax claims that Tarantino’s rights do not include a “future media” clause, supporting its contention that NFTs were not contemplated by the operative agreements, while Miramax’s rights specifically do. As Miramax states, “Tarantino’s conduct may mislead other creators into believing they have rights to exploit Miramax films through NFTs and other emerging technologies, when in fact Miramax holds those rights for its films.”

Ultimately, the dispute centers on these two questions:

  • Is Miramax correct that an NFT is not a “printed publication” because it is a “one-time transaction?”
  • Does the Copyright Act’s definition of “publication” as “distribution of copies” in the plural favor Miramax’s argument, since each NFT is unique by definition?

Tarantino’s announcement has generated intense interest in the cachet and bragging rights associated with owning a portion of his work. Like previous new technologies, however, NFTs may not fit neatly into existing legal structures. And since it has yet to be determined whether Tarantino has the rights to produce NFTs of the Pulp Fiction screenplay, interested buyers would do well to exercise a healthy degree of caveat emptor until the legal landscape is more certain.

This article was written by Michael R. Graif, Frank L. Gerratana and Allen Loayza of Mintz Levin law firm. For more articles about NFTs, please click here.

China’s Supreme People’s Court Rules No Accounting for Profit for Joint Patent Ownership

In decision no. （2020）最高法知民终954号 dated November 25, 2021, China’s Supreme People’s Court ruled that if the co-owners of a patent or patent application right do not make an agreement on the exercise of the right and one of the co-owners independently practices the patent,  the other co-owner cannot claim the distribution of the proceeds from the separate practicing of the patent on the grounds of co-ownership of the patent right.

 

 

 

 

 

The appellant, the First Affiliated Hospital of Wenzhou Medical University 温州医科大学附属第一医院 (hereinafter referred to as Wenzhou Hospital) and the appellee Shenzhen Huilistong Information Technology Co., Ltd. 深圳市汇利斯通信息技术有限公司 (hereinafter referred to as Huilistong Company) were involved in a patent infringement litigation for CN Patent No. ZL 201210235924.0 entitled “a self-service terminal used in the lobby of a hospital.”

Wenzhou Hospital asserted that it co-owns the involved patent with Huilistong. Without its permission, Huilistong Company violated the rights of Wenzhou Hospital by practicing the patent involved in the case, and requested an order for Huilistong Company to stop the infringement and destroy inventory of infringing products and compensate Wenzhou Hospital for economic losses of 2.5098 million RMB and reasonable expenses for rights protection of 116,400 RMB.

The Shenzhen Intermediate People’s Court of Guangdong Province held that Huilistong Company could independently practice the patent involved in the case in accordance with the law, which does not constitute an infringement of the patent right of Wenzhou Hospital.

Wenzhou Hospital appealed to the Supreme People’s Court. The Supreme People’s Court made a determination on the issue of “allocation of royalties,” and on September 24, 2020, it rejected the appeal and upheld the original judgment.

The Supreme People’s Court explained that Article 15 of the Patent Law stipulates that if the co-owners of the patent right have an agreement on the exercise of the right, such agreement shall prevail. If there is no agreement, the co-owners may practice the patent alone or permit others to implement the patent by way of ordinary licensing; if the patent is permitted to be practiced by others, the royalties collected shall be distributed among the co-owners.

Except for the circumstances specified in the preceding paragraph, the exercise of joint patent application rights or patent rights shall obtain the consent of all co-owners.

Therefore, without the consent of the co-owner of the patent, the co-owner of a patent may directly obtain economic benefits through the co-owned patent in two ways: first, to separately practice the co-owned patent, and second, to license others to exploit the patent in the way of ordinary license, and only in the latter circumstance may there be a requirement for distributing the profits to the co-owners, but under the circumstance of independent exploitation, there is no such requirement.

In this case, Wenzhou Hospital claimed that some of the self-service registration integrated machines involved in this case were marked with such words as the joint research and development by Huilistong Company and the hospital involved in this case. However, this does not prove that Huilistong Company licensed the hospital involved in this case to use the patent involved, and there was no evidence in this case that the hospital involved in this case paid any patent licensing fee to Huilistong Company.

Therefore, the claim of Wenzhou Hospital for sharing the economic proceeds obtained by Huilistong Company from the exploitation of the patent at issue was not valid.

Wenzhou Hospital separately claimed that, according to the provisions of the civil law on the sharing of proceeds by the co-owners with respect to the co-owned property, Wenzhou Hospital also had the right to share the economic proceeds obtained by Huillistong Company from the implementation of the patent in question.

In response, the Supreme People’s Court held that, although Article 78 (2) of the General Principles of the Civil Law of the People’s Republic of China provides that “a co-owner enjoys the rights and assumes the obligations over the co-owned property,” this provision is a general provision on the co-owned property, and the aforesaid provision of the Patent Law falls under the special provisions on the distribution mechanism of the rights and interests of all co-owners under the circumstance of co-ownership of patents, and the special provisions of the Patent Law shall prevail.

Therefore, the Supreme People’s Court ruled for Huilistong Company.

The full text of the decision is available here (Chinese only).

© 2021 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Intellectual Property Consolidation in the Agriculture Industry

Ever since agencies around the world such as the USPTO, USDA, and Union for the Protection of New Varieties of Plants (UPOV) have started recognizing and enforcing intellectual property rights relating to plants, there has been a slow yet massive consolidation in global seed markets.  This article discusses a brief history of how intellectual property rights and lax antitrust enforcement in the seed industry created one of the largest industry consolidations and how the current Administration seems to be taking steps in the right direction.

Intellectual Property in the Agriculture Industry

In 1930, the United States began granting plant patents and the USPTO issued the first plant patent in 1931 for a rose.  The UPOV is an international organization that was founded in 1961 to acknowledge and make available exclusive property rights for breeders of new plant varieties in all member states to the UPOV Convention. The U.S. Plant Variety Protection Act (PVPA) was enacted by Congress in 1970 to encourage the development of new varieties and to make them available to the public.  The Plant Variety Protection Act established in the Department of Agriculture an office to be known as the Plant Variety Protection Office.  These regulations are all very important for the protection and continued innovation of certain varieties of crops and plants.  However, when genetically modified seeds were introduced in 1996, seed companies began to take advantage of these protections and began to invest heavily in amassing as many seed-related IP rights as they could.  As these companies have merged and acquired smaller businesses, they remove competition from the industry, harming farmers, families, and consumers.

There are many ways that companies protect intellectual property in the agricultural industry.  For example, companies file for utility patents to protect a wide variety of plant-related inventions, such as breeding methods, plant-based chemicals, plant parts, and plant products. Plant patents are unique to the United States and provide protection to any distinct and new variety of plant that has been asexually reproduced, other than a tuber-propagated plant or a plant found in an uncultivated state.  Plant Variety Protection certificates, which are similar to plant patents, provide certain exclusive rights to breeders of any new, distinct, uniform, and stable sexually or asexually reproduced or tuber-propagated plant varieties.  Other rights, known as Breeders’ Rights, exist in other countries outside the United States and are very similar to the Plant Variety Protection regulations.  These protections generally last for 20 years from the date of filing and, according to the World Intellectual Property Organization, the patent owner has the right to decide who may – or may not – use the patented invention for the period in which the invention is protected.

The Key Players in the Agriculture Industry

Monsanto was a multinational agricultural biotechnology corporation founded in 1901 and based in the United States.  In 1970, Monsanto scientist John Franz discovered that glyphosate was an herbicide and quickly patented it as such.  In 1974, Monsanto brought the patented glyphosate herbicide to the market using the tradename “Roundup.”  In 1996, Monsanto created the first genetically engineered (GE), glyphosate-resistant crop, causing Roundup-resistant soybeans to be planted commercially throughout the United States.  By 1998, glyphosate-resistant corn was available on the market, and Monsanto became the largest supplier of these new GE, “Roundup-Ready” seeds.  This was such a breakthrough in the agriculture industry that in 2003, Roundup-Ready seeds accounted for about 90% of the genetically modified seeds planted around the globe.

As with many industries, the agriculture industry has those companies that are at the top and those that are not.  The agriculture industry’s “Big Six” companies—Monsanto, DuPont, Syngenta, Dow, Bayer, and BASF—turned into the “Big Four”—ChemChina, Corteva, Bayer, and BASF— after a series of mergers and acquisitions that took place in the last decade with very little oversight from some of the antitrust authorities in the United States and around the world.  As a result of these mergers, the “Big Four” companies now control around 60% of the proprietary seed in the world market.

The Consolidation of the Seed Industry

Dr. Phil Howard from Michigan State University discussed the tremendous consolidation of the commercial seed industry in one of his first publications, 2009’s Visualizing Consolidation in the Global Seed Industry: 1996-2008.  Dr. Howard describes how the hybrid-seed corn industry of 1930, the enforcement of patent-like protections, and especially the commercialization of fully patent-protected transgenic, genetically engineered seeds in the mid-late 1990s triggered a wave of consolidation in the agricultural industry.  To make matters worse, when these companies consolidated and amassed massive intellectual property portfolios, it was not uncommon for seed rights to be bundled with other inputs to protect profits in other, agrochemical divisions.  For example, as Dr. Howard details in Visualizing Consolidation, in order to use Monsanto’s herbicide-tolerant transgenic seed, farmers are required to also use Monsanto’s proprietary glyphosate herbicide, rather than a generic herbicide.  Essentially, if you were buying Roundup-Ready seed, you were buying Roundup herbicide, and if you were using Roundup herbicide, it was probably a good idea to buy Roundup-Ready seed.  This type of competitive business practice is one that eventually creates a multitude of problems for smaller, independent businesses, breeders, and farmers.

Antitrust and Anti-Competition in America

Antitrust laws are not a new concept in American society.  Antitrust laws are statutes and regulations that are designed to promote the overall competition in the market by promoting free, open, and competitive markets.  Congress passed the first antitrust law in 1890 when it wrote the Sherman Act, which made it illegal for companies to enter into agreements to compete with one another, resulting in price fixing and monopoly power.  Several years later, in 1914, Congress passed the Clayton Act and Federal Trade Commission Act to protect American consumers by giving the Federal Trade Commission (FTC) and the Department of Justice (DOJ) the authority to oversee and review mergers and acquisitions that are likely to stifle competition.  Under the Hart-Scott-Rodino Act, the FTC and DOJ review most of the proposed transactions that affect commerce in the United States and either agency can take legal action to block deals that it believes would “substantially lessen competition.”

While these laws are all beneficial in theory, their implementation in the agricultural industry has been lacking to say the least.  According to a study in 2018, Bayer alone is estimated to control 35% of corn seed, 28% of soybean seed, and 70% of cottonseed in the global market!  Even more alarming may be the USDA’s 2014 report citing concerns that glyphosate-resistant crops have become ubiquitous with American agriculture with 93% of soybeans, 85% of corn, and 82% of cotton planted being genetically modified to be glyphosate-resistant.  The herbicides that are used to combat the weeds surrounding the crops, in many cases, are supplied by the same company that provides the seeds.

Promoting Competition in the Agriculture Industry

It has been almost a century since the first antitrust laws were enacted, and yet the problem of corporate consolidations remains in many industries across America.  On July 9, 2021, the Biden Administration signed an executive order aimed to promote competition within various industries in the United States.  The order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.  According to the Administration, this order is a “whole-of-government” approach to drive down prices for consumers, increase wages for workers, and facilitate innovation. This was a major step in the right direction to weaken the power that major businesses have obtained as a result of corporate consolidation in industries like healthcare, technology, transportation, and especially agriculture.

This Executive Order also established the White House Competition Council to drive forward the Administration’s whole-of-government effort to promote competition.  On September 10, 2021, the Competition Council held its inaugural meeting to discuss promoting pro-competitive policies and new ways of delivering concrete benefits to America’s consumers, workers, farmers, and small businesses.  During the meeting, the heads of the Department of Health and Human Services, the Department of Transportation, the Department of Justice, the United States Department of Agriculture, and the Federal Trade Commission briefed the council members on their efforts to implement the directives of the Executive Order.

The Challenge of Facing the Consolidated Agriculture Industry

According to an October 20, 2021 report by Thomson Reuters, Tom Vilsack, the U.S. Secretary of Agriculture, said that the Biden Administration plans to take a hard look at the consolidation of the seed industry and figure out “why it’s structured the way it’s structured” and “whether these long patents make sense.”  The White House Competition Council is certainly faced with a difficult challenge to parse through both anti-competition law and intellectual property law.  For centuries these bodies of law have caused great debate.  One body of law restricts monopolization wherein the later grants monopolistic opportunities.

There is no doubt that any changes to the current seed industry scene would shake things up.  But what exactly would that look like?  Are we going to see the “Big-4” morph into another, new identity?  Are changes to the patent law system likely?  Whatever happens, the agriculture industry will likely pay close attention to the actions of the White House Competition Council over the next couple months.

Article By Reinier R. Smit of Summa PLLC

Copyright 2021 Summa PLLC All Rights Reserved

CosmoKey Gets a Duo-Over – Federal Circuit Panel Reverses Finding of Ineligibility

In CosmoKey Solutions GMBH & Co. KG v. Duo Security LLC, No. 2020-2043 (Fed. Cir. Oct. 4, 2021), the Federal Circuit reversed a finding of ineligibility for claims directed to a computer authentication method.

CosmoKey’s patent is directed to an authentication method that requires a user to activate a timed authentication function on a mobile device to log into a computer. Duo Security moved for judgment on the pleadings. The district court found the claims ineligible under § 101, specifically finding that the claims were directed to the abstract idea of “authentication” at step one of Alice, and that the remaining elements were generic computer functionality at step two.

The Federal Circuit reversed. The majority first stated it was “not convinced” the claims were broadly “directed to” authentication, instead noting the focus of the claims and the specification on the activation of a timed authentication function. Nonetheless, according to the majority, answering this question at step one was “unnecessary” because the claims were eligible at step two for reciting a specific improvement to authentication that “increases security, prevents unauthorized access by a third party, is easily implemented, and can advantageously be carried out with mobile devices of low complexity.”

Judge Reyna concurred in the judgment, but did so by resolving the inquiry at step one, finding the claims directed to a “specific improvement to authentication.” He viewed the majority’s decision to skip step one and resolve the inquiry at step two as “turn[ing] the Alice inquiry on its head.” He noted that, without the step one analysis, it is difficult to determine whether “additional elements transform the nature of the claim into a patent-eligible application” of an abstract idea.

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
For more patent litigation, visit the NLR Intellectual Property Law section.

Oh the Horror: No Work for Hire in Friday the 13th Screenplay

The US Court of Appeals for the Second Circuit affirmed a summary judgment grant, ruling that an author was an independent contractor when writing the screenplay for a horror film and entitled to authorship rights, and therefore entitled to exercise his copyright § 203 termination right. Horror Inc. v. Miller, Case No. 18-3123 (2d Cir. Sept. 30, 2021) (Carney, J.)

Victor Miller is an author who has written numerous novels, screenplays and teleplays. Sean Cunningham is a producer, director and writer of feature films and is the general partner of Manny Company. Miller and Cunningham were close friends who began working together around 1976 and collaborated on five motion pictures in their first five years working together. Miller was a member of the Writers Guild of America, East (WGA) and was a signatory of their Minimum Basic Agreement (MBA), which was the collective bargaining agreement at the time.

In 1979, the success of the horror film Halloween inspired Cunningham to produce a horror film. Cunningham reached out to Miller and they orally agreed that Miller would write the screenplay for their upcoming project. The two came to an agreement using the WGA standard form. Miller then began developing the screenplay and the two worked closely together in discussing ideas for the film. Miller picked his working hours but was responsible for completing drafts based on the production schedule of the film. Cunningham had no right to assign additional works to Miller beyond the screenplay.

The dispute concerns whether, for Copyright Act purposes, Miller was an employee or independent contractor of Manny Company, of which Cunningham was the general partner. Cunningham argued that he taught Miller the key elements of a successful horror film, that he gave significant contributions and that he had final authority over what ended up in the screenplay. Miller agreed that Cunningham gave notes but stated that Cunningham never dictated what he wrote. The parties agreed that Cunningham did provide the ideas for making the movie killings “personal,” that the killer remain masked and that they kill a major character early. Miller received “sole ‘written by’ credit” as the screenwriter.

Horror Inc. (successor to Georgetown Horror) financed the project and was given complete control over the screenplay and film. Manny assigned its rights in the film and screenplay to Horror, which registered the copyrights. In the registration, Horror was listed as the film’s work made for hire author with a credit given to Miller for the screenplay. The initial film was a huge hit and has spawned 11 sequels.

In 2016, Miller attempted to reclaim his copyright ownership by invoking his termination rights under 17 U.S.C. § 203 and served notices of termination to Manny and Horror. The two responded by suing Miller and seeking a declaration that the screenplay was a “work for hire,” and therefore Miller could not give a valid termination notice. The district court granted summary judgment to Miller, stating that Miller was the author as he did not prepare the screenplay as a work for hire and that Miller’s termination notice was not untimely. Manny and Horror appealed.

In its de novo review, the Second Circuit considered the district court’s determination as to whether Miller was an employee or an independent contractor based on its balancing of the 13 factors established by the Supreme Court in its 1987 ruling in Community for Creative Non-Violence v. Reid. Because a “work made for hire” is a statutory exception to the general rule of author ownership of a copyright, the party claiming the exception bears the burden of proving that the exception applies.

Manny and Horror argued that the screenplay was a work for hire as Miller was an employee under his WGA membership, that the district court erred for not considering the WGA collective bargaining agreement within the Reid factors and that the court incorrectly balanced the Reid factors by not giving more weight to Miller’s membership in the WGA or his collective bargaining agreement.

The Second Circuit found that Miller was not an employee, explaining that a finding of employment status for copyright claims is determined under copyright law and not labor law. The Court determined that Miller’s employment status under the National Labor Relations Act (NLRA) and the terms of his membership in the WGA do not remove the determination of employment status under the Copyright Act and principles of agency. The Court found that the district court correctly declined to consider NLRA arguments and was correct to focus on common law principles and the Reid factors.

After finding that the WGA membership was not dispositive, the Second Circuit determined that the WGA collective bargaining agreement should not be considered as an additional Reid factor. The Court found that although Miller’s WGA membership could play a role in how the relationship between the parties played out, membership itself would not alter the Reid factors analysis.

The Second Circuit approved the district court’s application of the Reid factors and its refusal to accord “great weight” to Miller’s union membership. Rather, the Court rejected the proposition that the WGA membership should be given “great weight,” explaining that the membership was not to be treated as a separate factor and that union membership was relevant only to the extent it played into the analysis of the Reid factors. Ultimately, the Court concluded that Miller was an independent contractor and had sufficiently rebutted the statutory presumption given to Georgetown’s copyright registration listing the work as for hire.

© 2021 McDermott Will & Emery

Article By Joshua Revilla of McDermott Will & Emery

For more articles on IP law, visit the NLR Intellectual Property section.

 

SDNY: Use of Photojournalists’ 9/11 Footage May Be Fair Use

A firefighter digging through rubble. An ambulance being lifted out of the wreckage. Photographs of these and other somber scenes from downtown Manhattan on September 11, 2001 formed the basis of photojournalist Anthony Fioranelli’s copyright infringement case against several media organizations that allegedly used these photos without permission. Recently, the S.D.N.Y. issued a mixed ruling on whether use of these harrowing-yet-iconic photos was fair.

Background

Plaintiff Fioranelli was one of four reporters allowed access to Ground Zero immediately after the September 11, 2001 terrorist attack on the World Trade Center (“9/11”). Fioranelli compiled his raw footage of Ground Zero and registered it with the Copyright Office (the “Content”). CBS licensed Fioranelli’s Content and agreed to pay Fioranelli for each use of any portion of the Content, but later created multiple newsreels and licensed them to other media organizations without Fioranelli’s permission and without compensating Fioranelli for those further uses. Fioranelli sued CBS and its purported sublicensees, including BBC, A&E Television Networks, and Paramount Pictures (among others), alleging that sixteen works—including the CBS newsreels, ten documentaries/docuseries, a docudrama, a “making of” featurette, a religious TV program, and two programs exploring/debunking conspiracy theories—infringed his copyright in the Content. The parties moved for summary judgment, with the defendants seeking a judgment from the court that their use was de minimis and fair.

De Minimis Use

While there was no dispute that the defendants actually copied Fioranelli’s Content, the parties disputed whether the amount copied was legally actionable. The defendants relied on a quantitative analysis, arguing that because they used only a small portion of Fioranelli’s total footage, their use was de minimis.

The court disagreed, holding that a defendant’s quantitatively brief display of a copyrighted work, “when conspicuously displayed, can be actionable.” Applying this standard, the court found that defendants prominently displayed the Content in fourteen of the sixteen challenged works, which contained a full-screen depiction of Fioranelli’s Content. The court noted that the Content was “not mere background footage” but was “clearly observable” and “the focus of the film when shown.” The court further found that the remaining two works—a docudrama and its “making of” featurette—used the Content as the focal point of an entire scene and were also not de minimis. Accordingly, the court denied defendants’ motion for summary judgment on de minimis use, finding that the qualitative prominence of defendants’ uses (i.e., to occupy an entire screen or as the focal point for the viewer) outweighed the quantitative brevity of such uses.

Fair Use

Regarding defendants’ motion for summary judgment on fair use, the court analyzed the four familiar fair-use factors.

Regarding the second factor (the nature of the copyrighted work), the court found that photojournalism (like Fioranelli’s Content) consists primarily of non-fictional renderings of historical events, and often precludes substantial demonstrations of creativity. As such, the nature of the Content—which was non-fictional and historical—weighed in favor of the defendants.

As for the fourth factor (the effect on the potential market for the copyrighted work), the court found that defendants’ uses were paradigmatic of the market for the Content, i.e., licensing to media organizations and “a clear substitute” for Fioranelli’s Content. The court also found that allowing CBS to sublicense the Content to other media organizations without compensating Fioranelli for those sublicensed uses would gravely impact freelance photojournalists, who seek out footage expecting to collect licensing fees for their work. Accordingly, the court found that the fourth factor weighed against the defendants.

As for the first and third factors, the court separately analyzed the alleged infringements. Regarding the first factor (the purpose and character of the use), the court found that some alleged infringements were transformative, whereas others were not, and further found that, for some alleged infringements, fair use issue could not be decided at summary judgment. While the court agreed with Fioranelli that each of the defendants’ uses were commercial in nature, which tends to weigh against fair use, it found that this was not dispositive of the various fair use determinations.

The court found that seven of the challenged works were not transformative because none incorporated Fioranelli’s Content to comment on or critique it, and because those works shared the original purpose of Fioranelli’s Content—to inform the viewer of what happened on 9/11 and its aftermath. In particular, the court held that “[t]he expressive purpose of the original use and the secondary use are the same,” and that defendants’ use of unaltered copies of Fioranelli’s Content to achieve the same purpose that Fioranelli sought to achieve, led the court to conclude that such uses were not transformative.

As for another seven of the challenged works (which included the religious TV program and programs exploring/debunking conspiracy theories), the court declined to make a fair use determination on summary judgment, based in part on defendants’ arguments that their use was transformative because it served a different purpose than Fioranelli’s purpose in creating the Content. For example, the court noted that the programs exploring/debunking conspiracy theories were intended “to educate viewers about conspiracy theories surrounding 9/11” which was not Fioranelli’s original purpose. Similarly, the court held that a reasonable juror could find that use of Fioranelli’s Content to build a political argument was a sufficiently different purpose so as to potentially render the use transformative. Accordingly, the court held that this was an issue to be determined at trial.

The court also found that a docudrama and its “making of” featurette were transformative. The docudrama was a fictionalized retelling of a story of two police officers trapped in the rubble at Ground Zero, wherein Fioranelli’s Content is superimposed on the television that a fictionalized police officer’s family is watching. The court found that the docudrama used Fioranelli’s Content creatively to construct a unique fictionalized setting, not to record or share history. As such, the docudrama’s use of Fioranelli’s Content was found transformative. As for the “making of” featurette, the court found that its purpose was to provide insight into the rationale behind the cinematic choices made in the film, rendering that transformative as well.

As for CBS’ alleged unauthorized use of the Content, the court held the first fair use factor favored Fioranelli for the additional reason that the infringement was in bad faith because CBS removed a watermark reading “NOT FOR BROADCAST” from Fioranelli’s footage before CBS used the footage in its newsreels. The court found that this decision, together with the fact that CBS’ use duplicated Fioranelli’s original purpose and was commercial in nature, led the first factor to weigh slightly in Fioranelli’s favor.

In analyzing the third factor (the amount and substantiality of use), the court referred back to its de minimis use analysis and declined to adopt the defendants’ mathematical, quantitative approach, instead considering whether “the extent of Defendants’ copying is consistent with or more than necessary to further the purpose and character of the use.” For seven works found not transformative, the court found this factor neutral, and for seven additional works the court left this determination for trial, as reasonable jurors could disagree regarding whether the defendants used more of the copyrighted material than necessary for each work’s purpose. For the two uses that the court found transformative (the docudrama film and featurette), the court found that the few seconds of copyrighted material shown on the in-scene television were “no more than necessary to ensure the viewer understood that the family was watching the events of 9/11 unfold on television.”

In sum, the court found that the seven non-transformative uses (the two newsreels and six historical, non-political documentaries) were not fair use; that the two uses that were transformative (the docudrama film and featurette) were fair use; and that for the seven remaining works, fair use could not be decided on summary judgment.

The case is Fioranelli v. CBS Broad. Inc., No. 15-CV-0952 (VSB), 2021 WL 3372695 (S.D.N.Y. July 28, 2021).

This article was written by Brooke M. Wilner and Samuel V. Eichner of Finnegan Law Firm.

For more articles relating to Intellectual Property, please click here.

Texas Hammer Nails Trademark Infringement Appeal

The US Court of Appeals for the Fifth Circuit reversed a district court’s dismissal of an initial confusion trademark complaint, finding that the plaintiff alleged a plausible claim of trademark infringement under the Lanham Act. Adler v. McNeil Consultants, LLC, Case No. 20-10936 (6th Cir. Aug. 10, 2021) (Southwick, J.)

Jim Adler is a personal injury lawyer who trademarked and used several terms, including JIM ADLER, THE HAMMER and TEXAS HAMMER, to market his business, including via keyword advertisements. McNeil Consultants, a personal injury lawyer referral service, purchased keyword ads using Adler’s trademarked terms, which allowed McNeil’s advertisements to appear at the top of any Google search of Adler’s trademarked terms. McNeil’s advertisements used generic personal injury terms, did not identify any particular law firm and clicking on the ads placed a phone call to McNeil’s call center rather than directing the user to a website. The call center used a generic greeting so consumers did not realize with whom they were speaking.

Adler filed suit against McNeil, asserting Texas state law claims as well as trademark infringement under the Lanham Act. McNeil moved to dismiss, arguing that its keyword ads did not create a likelihood of confusion. The district court agreed and dismissed Adler’s complaint. Adler appealed.

To successfully plead a trademark infringement claim under Fifth Circuit law, the holder of a protectable trademark must establish that the alleged infringing use “creates a likelihood of confusion as to source, affiliation, or sponsorship.” To determine whether a likelihood of confusion exists, the Court weighs a non-exhaustive list of several confusion factors, including the similarity of the marks, the similarity of the products, the defendant’s intent and the care exercised by potential consumers.

The Fifth Circuit explained that Adler alleged initial interest confusion, which exists where the confusion creates consumer interest in the infringing party’s services even where no sale is completed because of the confusion. The Court noted that this case presented the first opportunity for the Fifth Circuit to consider initial interest confusion as it pertains to search engine keyword advertising. Relying on Ninth Circuit precedent and parallel reasoning to its own opinions on initial interest confusion in the context of metatag usage, the Court concluded that Adler’s complaint alleged a plausible claim of trademark infringement under the Lanham Act.

The Fifth Circuit noted that initial interest confusion alone is not enough to raise a Lanham Act claim. The Court explained that if a consumer searches TOYOTA and is directed to search results containing a purchased ad clearly labeled as selling VOLKSWAGEN products, a consumer who clicks on the VOLKSWAGEN ad has been distracted, not confused or misled into purchasing the wrong product. Distraction does not violate the Lanham Act. However, the Court explained that where the use of keyword ads creates confusion as to the source of the advertisement—not mere distraction—an infringement may have occurred. Because McNeil’s advertisements were admittedly generic and could have been associated with any personal injury law firm, the Court found that the keyword ads raised a possibility of consumer confusion rather than distraction.

The Fifth Circuit also disagreed with the district court’s finding that Adler’s claims were conclusory. The Court found that Adler submitted factual allegations sufficient to support a claim that McNeil’s generic ads—combined with their misleading call-center greetings—caused consumer confusion as to who had placed the advertisements.

The Fifth Circuit also rejected McNeil’s argument that its ads were generic and therefore unprotected under the Lanham Act. The Court explained that although the Lanham Act does not protect generic terms, it does protect against generically worded advertisements integrating trademarks admittedly owned by another. The Court found that McNeil’s use of generic language was actually a factor to be weighed against McNeil because it increased the likelihood that consumers would be confused as to the source.

Finally, the Fifth Circuit rejected the district court’s conclusion that Adler’s claims failed as a matter of law because consumers cannot see the terms purchased in a keyword search. The district court essentially ruled that if the mark is not visible to the consumer, then no confusion can be created. The Court disagreed, finding the district court’s ruling unsupported by precedent and contrary to its rule of law that no single factor be dispositive.

© 2021 McDermott Will & Emery

Article By Joshua Revilla of McDermott Will & Emery

For more articles on copyright, visit the NLR Intellectual Property section.

Iced Out: Use of Ice Cube’s Image and Catchphrase Was Not Endorsement

Rapper and actor O’Shea Jackson, professionally known as Ice Cube, lost his day in court (for now) on claims of false endorsement against trading platform Robinhood because he failed to plausibly allege that Robinhood’s use of his image and catchphrase implied endorsement.  Robinhood had published a newsletter on its website “Robinhood Snacks” which featured an article discussing market corrections for technology stocks with an alteration of Ice Cube’s lyric and catchphrase “Check yo self before you wreck yourself”—here, “Correct yourself before you wreck yourself”—along with the below image of Ice Cube from Are We Done Yet? (2007):

In response, Ice Cube filed a complaint in the U.S. District Court for the Northern District of California, alleging that Robinhood’s article falsely implied that he had endorsed Robinhood and its services.  He claimed false endorsement under the Lanham Act as well as misappropriation of likeness and unfair competition under California law.  Robinhood filed a motion to dismiss the complaint for lack of standing and a motion to strike the state law claims under California’s Anti-SLAPP statute as protected speech.

As noted by the court, to establish standing a plaintiff must demonstrate an “injury in fact,” meaning the plaintiff suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).  Citing Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1110 (9th Cir. 1992), the court further held that “a celebrity whose endorsement of a product is implied through the imitation of a distinctive attribute of the celebrity’s identity, has standing to sue for false endorsement” under the Lanham Act.

While the court acknowledged that a celebrity could establish standing under Waits, Robinhood argued that Ice Cube failed to plausibly plead (1) his celebrity status, (2) he was deprived of compensation, and (3) use of his identity and catchphrase implied endorsement.

In ruling on the motion to dismiss, the court found that Ice Cube sufficiently pleaded celebrity status.  It discredited Robinhood’s argument that Ice Cube lacked such status because he relied on his music in the 1980s and movies in the 1990s.  The court questioned why Robinhood would have used Ice Cube’s image and catchphrase in the first place if he had no status as a celebrity.  The court also found that Ice Cube robustly alleged he had commercialized his celebrity status and therefore adequately pleaded economic injury.

In the end, however, the court held that Ice Cube did not plausibly plead that the use of his likeness or catchphrase suggested he endorsed Robinhood’s products.  Although Ice Cube cited Robinhood’s other celebrity endorsements from rappers Nas and Jay-Z, the court found those endorsements were irrelevant.  It also contrasted Robinhood’s use of his likeness and catchphrase with other cases cited by Ice Cube, which all involved explicit endorsements.  Furthermore, without explaining the distinction, the court noted that the article was part of a newsletter, not an “advertisement” as Ice Cube claimed, and that under such circumstances no other court had found standing.  Thus, the court concluded that Ice Cube lacked standing because “he did not allege how Robinhood’s use of his identity created the misapprehension that the plaintiff sponsored, endorsed, or is affiliated with Robinhood.”

Although the court granted Robinhood’s motion to dismiss, it allowed Ice Cube to amend his complaint, which he amended and refiled on July 6, 2021.   Whether Ice Cube has now plausibly pleaded endorsement remains to be seen.

The case is Jackson v. Robinhood Markets, Inc., No. 21-CV-02304-LB (N.D. Cal. June 15, 2021).

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
For more articles on trademark misappropriation, visit the NLR Communications, Media & Internet section.

Don’t Count Your Lamborghinis Before Your Trademark is in Use

The US Court of Appeals for the Ninth Circuit affirmed a grant of summary judgment, finding that a trademark registrant had alleged infringement of its trademark without having engaged in bona fide use of the trademark in commerce, as required by the Lanham Act. The Court found no material issue of fact as to whether the registrant had used the mark in commerce in a manner to properly secure registration, and the alleged infringer therefore was entitled to cancellation of the registration. Social Technologies LLC v. Apple Inc., Case No. 320-15241 (9th Cir. July 13, 2021) (Restani, J., sitting by designation)

This dispute traces back to a 2016 intent-to-use US trademark application filed by Social Technologies for the mark MEMOJI in connection with a mobile phone software application. After filing its application, Social Technologies engaged in some early-stage activities to develop a business plan and seek investors. On June 4, 2018, Apple announced its own MEMOJI software, acquired from a third party, that allowed users to transform images of themselves into emoji-style characters. At that date, Social Technologies had not yet written any code for its own app and had engaged only in promotional activities for the planned software.

Apple’s MEMOJI announcement triggered Social Technologies to rush to develop its MEMOJI app, which it launched three weeks later (although system bugs caused the app to be removed promptly from the Google Play Store). Social Technologies then used that app launch to submit a statement of use for its trademark application in order to secure registration of the MEMOJI trademark. The record also showed that over the course of those three weeks, Social Technologies’ co-founder and president sent several internal emails urging acceleration of the software development in preparation to file a trademark infringement lawsuit against Apple, writing to the company’s developers that it was “[t]ime to get paid, gentlemen,” and to “[g]et your Lamborghini picked out!”

By September 2018, Apple had initiated a petition before the Trademark Trial & Appeal Board to cancel Social Technologies’ MEMOJI registration. Social Technologies responded by filing a lawsuit for trademark infringement and seeking a declaratory judgment of non-infringement and validity of its MEMOJI registration. When both parties moved for summary judgement, the district court determined that Social Technologies had not engaged in bona fide use of the MEMOJI trademark and held that Apple was entitled to cancellation of Social Technologies’ registration. Social Technologies appealed.

Reviewing the district court’s grant of summary judgment de novo, the Ninth Circuit framed its analysis under the Lanham Act’s use in commerce requirement, which requires bona fide use of a mark in the ordinary course of trade and “not merely to reserve a right” in the mark. The issue on appeal was whether Social Technologies used the MEMOJI mark in commerce in such a manner to render its trademark registration valid.

The Ninth Circuit then explained the Lanham Act’s use in commerce requirement, which requires “use of a genuine character” determined by the totality of the circumstances (including “non-sales activity”), and explained that mere adoption of a trademark, without bona fide use in commerce, in an attempt to reserve rights for the future, is insufficient to establish rights in the mark. The Court reviewed supporting case law, distinguishing between cases where mere promotional activities or internal sales were determined not to constitute use in commerce, and cases where continuous use of a mark as a business name, in public relations campaigns, in sales presentations and in media coverage together sufficiently established bona fide use in commerce. The Court explained that looks for “external manifestation” and “sufficiently public use” to warrant trademark protection.

On the facts of the case before it, the Ninth Circuit found that the record evidence clearly demonstrated that Social Technologies’ use of the MEMOJI mark had not been bona fide use in commerce. With respect to its activities prior to Apple’s June 2018 MEMOJI announcement (which included no software code, the unsuccessful solicitation of investors, and no “association among consumers between the mark and the mark’s owner”), there was not sufficient use to entitle Social Technologies to trademark protection. The Court found that Social Technologies failed to put forward evidence that its admittedly rushed release of the software following Apple’s 2018 announcement was for a genuine commercial purpose warranting trademark protection, rather than mere “token use” in an attempt to reserve a right in the mark.

Affirming the district court’s grant of summary judgment, the Ninth Circuit concluded that Social Technologies did not engage in bona fide use of the MEMOJI trademark in commerce, that its registration was invalid, and that Apple was entitled to cancellation of Social Technologies’ MEMOJI registration.

© 2021 McDermott Will & Emery
For more articles on IP law, visit the NLR