Stanford Center for Internet and Society

Plaintiff Carol Loeb Shloss (“Plaintiff”) sought a declaratory judgment that the use of written works in an electronic supplement to Plaintiff’s book Lucia Joyce: To Dance in the Wake would not infringe the copyrights of Defendants Seán Sweeney and the Estate of James Joyce (“Defendants”). Defendants filed a motion to dismiss the declaratory judgment based on several grounds. The Court found that Plaintiff demonstrated the existence of an actual “case or controversy” and interpreted Defendants’ unwillingness to extend a covenant not to sue based on the amended electronic supplement as a continuing threat of litigation. The Court denied Defendants’ motion to strike three of Plaintiff’s claims. First, and most significantly, the Court denied the motion to strike Plaintiff’s copyright misuse affirmative defense, holding that the standard for copyright misuse merely requires “a nexus between the copyright holder’s actions and the public policy embedded in the grant of a copyright.” In applying this standard, the Court found that Plaintiff’s allegations demonstrated such a nexus between Defendants’ actions and their negative effect on creative expression. Second, the Court denied Defendants’ motion to strike Plaintiff’s claims that the 1922 Paris edition of Ulysses is in the public domain. Third, the Court denied Defendants’ motion to strike allegations of Defendants’ unclean hands.

Schloss v. Estate of Joyce.

Plaintiff Blue Nile, Inc. and Defendant Ice.com both own and operate online diamond and fine jewelry retail sales businesses. Plaintiff alleged that Defendant copied both certain elements of Plaintiff’s website in violation of the Copyright Act and the “overall look and feel” of Plaintiff’s diamond search webpages in violation of the Lanham Act. Under Fed. R. Civ. P. 12(b)(6), Defendant moved to dismiss Plaintiff’s claim of trade dress infringement and three state law claims—violation of Washington’s Consumer Protection Act, unfair competition, and unjust enrichment and restitution—on the grounds that these were preempted by Plaintiff’s copyright claims. The District Court for the Western District of Washington (i) denied Defendant’s motion to dismiss Plaintiff’s trademark infringement claim finding that a developed factual record was necessary given the novel nature of the claim, but (ii) granted Defendant’s motion to dismiss on the three state law claims.

Blue Nile, Inc. v. Ice.Com, Inc., No. C06-1002RSL (W.D. Wash. 2007).

Plaintiff Therapeutic Research Faculty brought suit in the Eastern District of California against defendants NBTY, Rexall Sundown, and Le Naturiste. Plaintiff alleged that NBTY had violated the terms of a single user license for plaintiff’s database by sharing access and information with its employees and with the other defendants. Defendants moved to dismiss eight of plaintiff’s claims: direct, contributory, and vicarious copyright infringement; violations of the Computer Fraud and Abuse Act, Title II of the Electronic Communications Privacy Act, and the California Comprehensive Data Access and Fraud Act; trespass; and misappropriation of trade secret. The court held that violation of a single user license by allowing access to copyrighted content by multiple users constituted unauthorized access and infringed the exclusive rights of copyright holders, and that a confidential username and password can be a trade secret,and therefore denied the motion to dismiss.

Therapeutic Research Faculty v. NBTY, Inc., No. 2:05-cv-2322-GEB-DAD (E.D. Cal. Jan. 25, 2007)

Brilliance Audio, Inc. (“Brilliance”) appeals from the district court’s dismissal of its claims for copyright and trademark infringement under Fed. R. Civ. P. 12(b)(6). This case presents the novel question of whether the record rental exception to copyright’s first sale doctrine, codified at 17 U.S.C. § 109(b)(1)(A), applies to all sound recordings, or only sound recordings of musical works. Specifically, this case asks whether the exception applies to sound recordings of literary works such as Brilliance’s audiobooks. The Court of Appeals of the Sixth Circuit held that it does not, and thus affirmed the district court’s dismissal of Brilliance’s claims for copyright infringement. However, the Court held that the district court erred in dismissing Brilliance’s claims for trademark infringement. Following the law of other circuits, the Court concluded that two exceptions exist to the first sale doctrine under trademark law and that Brilliance’s complaint, construed broadly, had alleged that these exceptions apply in the present case. Thus, the Court affirmed the decision of the district court with respect to the copyright claims but reversed with respect to the trademark claims.

Brilliance Audio, Inc. v. Haights Cross Communications, Inc., WL 188103 (6th Cir. Jan. 26, 2007). .

Plaintiff Auto Inspection Services, Inc. (“AIS”) sought a preliminary injunction against Defendants Flint Auto Auction, Inc., Inviso, Inc., and Priority Inspections, Inc. (collectively “FAA”) for copyright infringement and violation of the Digital Millennium Copyright Act (“DCMA”) with respect to an automotive inspection program. In the copyright infringement action, the Court found that AIS failed to demonstrate substantial similarity of their program with FAA’s program. In the DMCA claim, the Court found that AIS failed to demonstrate that FAA circumvented a technological measure that controls access to AIS’s source code. The Court therefore dissolved a TRO against FAA and denied AIS’s motion for a preliminary injunction.

Petitioner, a patent licensee in good standing, appealed dismissal of its declaratory judgment claims for lack of subject matter jurisdiction. The Supreme Court held that petitioner had established an Article III case or controversy as required by the Declaratory Judgment Act, 28 U.S.C. §2201(a), and thus, that dismissal was inappropriate. Because the threat of a patent infringement suit served to coerce petitioner into making royalty payments, the payments did not constitute a resolution to the controversy.

MedImmune, Inc. v. Genentech, Inc., 549 U.S. ___ (2007).

Declining to follow similar cases in other circuits, a federal district court for the Eastern District of Pennsylvania ruled that a website’s attempt to increase its ranking in search engine listings through invisible use of a competitor’s trademarks, either through hidden meta tags or as a keyword to trigger its own paid advertisements, does not violate federal trademark law under the Lanham Act. The court’s decision rests on its determination that consumers who enter a trademarked term into a search engine should be aware that the search results contain sites which are related to the trademark, but may not be about the subject of that trademark or belong to the trademark owner. Because of this, the court concluded that consumers should investigate any site listed in the search results before concluding that it belongs to the trademark owner, avoiding any likelihood of confusion and any violation of the Lanham Act.

J.G. Wentworth, S.S.C. v. Settlement Funding LLC

Plaintiff, SFX Motor Sports, Inc. (now Live Nation Motor Sports, Inc.), sued Robert Davis for providing a link to audio webcasts of its motorcycle racing events on his website, alleging trademark infringement, copyright infringement, and unfair competition. The Court analogized Davis’s unauthorized website link for audio webcasts to the unauthorized satellite transmission of live television broadcasts in National Football League v. PrimeTime 24 Joint Venture, 211 F.3d 10 (2d Cir. 2000). As a step in the process by which copyrighted works made their way to an unintended audience, either unauthorized act should be considered a public display or performance for the purposes of a copyright claim. Accordingly, the Court held that Davis’s unauthorized website link likely constituted copyright infringement and granted Plaintiff’s motion for preliminary injunction.

Live Nation Motor Sports, Inc. v. Davis, No. 3:06-CV-276-L (N.D. Tex. 2006).

In Propat v. RPost, a case addressing standing to file in a patent suit, the Federal Circuit Court of Appeals affirmed the district court’s decision stating that the plaintiff-licensee did not have substantial rights to file a patent infringement suit in its own name.
Propat International Corporation (“Propat”) was a licensee of Authenticational Technologies Ltd. (“Authentix”), the patent owner. The two parties entered into an agreement authorizing Propat to license and litigate one of Authentix’ patents. Propat filed an infringement suit against RPost, Inc.; RPost US, Inc.; RPost International Limited; and three individuals (collectively, “RPost”). The district court dismissed Propat’s action for lack of standing, because Propat was not the patent owner and the agreement between Authentix and Propat did not transfer “all the substantial patent rights.” Therefore, Propat did not have a proprietary interest to sue infringers even if the patent owner joined the suit.

Propat v. RPost.

The Second Circuit upheld a summary judgment finding of fair use by the U.S. District Court for the Southern District of New York in a case involving “appropriation art,” art that incorporates objects and images taken from popular media and consumer advertising. Plaintiff Andrea Blanch, a fashion photographer, sued Jeff Koons, a visual artist, for unlicensed use of one of her photographs in his piece called “Niagara.” Analyzing the case under the four statutory fair use factors in 17 U.S.C. § 107, the court found that Koons’ use was transformative, allowing the court to discount the commercial nature of the new work and the creative nature of the original. The court also found that the extent of Koons’ copying was reasonable in light of his justification, and he did not copy the aspects of the photograph that were a result of Blanch’s artistic direction. Finally, Blanch’s own testimony established that no market existed for her photographs and Koons’ copying had not resulted in any economic harm to Blanch’s career or works. Thus, the factors weighed in favor of a finding of fair use.

Blanch v. Koons, 467 F.3d 244 (2d Cir. 2006).