Packets: Vol. 3, No. 5

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Federal Circuit vacates dismissal of a patent infringement suit, finding that a patent holder retains standing to sue in an excl
In this patent infringement suit, the United States Court of Appeals for the Federal Circuit considered the question of whether a patent holder retained the standing to sue for infringement according to the terms of a licensing agreement it had concluded with a non-party. According to the Court, the issue turned on whether the agreement “transferred all substantial ownership rights to the ‘747 patent” from Contour Optik, the patent holder, to Chic Optic, the nonparty, “in which case Contour lacked standing to sue for infringement, or whether it merely granted Chic a license to that patent, in which case Contour was still the owner of the patent and had standing to sue.” The patent concerned the attachment mechanism between a traditional eyeglass frame and an auxiliary eyeglass frame that housed sunglasses.

Federal Circuit Dissent Calls for Clarification of Written Description Doctrine
The Federal Circuit denied a petition for rehearing en banc over the issue of what is required in the written description to justify a patent’s claims. Lizardtech’s patent claim was invalidated by the Federal Circuit for having claims “in excess of the specification’s embodiments.” Lizardtech appealed arguing that prior law created uncertainty about what is required in a written description. The concurring opinion stated that the statute governing written description in patent claims (35 U.S.C. § 112) is clear in its requirements but the dissent called for a clarification of written description doctrine in light of confusing case law.

Court rules website not liable for third party false information
Plaintiff Shelly Landry-Belle sued defendant Various Inc., the operator of and several other websites, after Landry-Belle’s ex-boyfriend purportedly posted false, defamatory, and sexually obscene material about her to several of Various’ websites. The posts suggested that Landry-Belle would “engage in lewd and obscene acts of perversion” including “sexual encounters with men and women.” Landry-Belle sought damages for invasion of privacy, defamation, and intentional infliction of emotional distress, as well as an order directing Various to remove the content in question from their sites.

California District Court Enjoins Enforcement of Violent Video Game Law
The United States District Court for the Northern District of California, granted plaintiffs’ Video Software Dealers Association (VSDA) and Entertainment Software Association (ESA) motion for a preliminary injunction prohibiting enforcement of a California law (“the Act”) that requires violent video games to be labeled and prohibits their rental or sale to minors.

Governor Schwarzenegger signed the Act into law on October 7, 2005 (to take effect on January 1, 2006). VSDA and ESA, associations of companies in the video game industry, filed a complaint on October 17, 2005; a motion for a preliminary injunction to prevent enforcement of the new law followed two days later. VSDA and ESA claimed that: (1) the Act’s definition of “violent video game” is unconstitutionally vague, (2) the Act’s restriction on sales and rentals to minors violates the First Amendment, and (3) the Act’s labeling requirement violates the First Amendment. The defendants responded that the Act is “neither too vague nor violative of the First Amendment” and is “narrowly tailored to further a compelling state interest.”

Communications Decency Act Does Not Protect Internet Author-Administrators
The district court for the Southern District of Texas remanded this Internet libel action to state court. Plaintiff had originally filed suit in state court against Defendant, an Internet site administrator and site author who allegedly posted defamatory material on his website. Defendant had then removed the case to federal court. The federal court rejected two possible grounds for removal. First, it did not have original jurisdiction as the parties were not diverse and no federal question was raised in the complaint. Second, the Communications Decency Act (CDA) did not completely preempt the state law defamation claim because the suit was against an author as well as a site administrator and thus was “consistent” with the CDA. The court quickly dismissed any claims that it might have original jurisdiction in this case, pointing to the lack of diversity of citizenship and absence of a federal question in the Plaintiff’s complaint. Though the Defendant raised the CDA as a defense, removal to federal court based solely on a federal question defense is not appropriate, as established in Louisville & Nashville R.R. Co. v. Mottley.

Court Finds No Antitrust Injury From GNU General Public License (GPL)
This case involves the GNU General Public License (GPL), which governs the use of many products sold and distributed by the Free Software Foundation (FSF), including GNU/Linux operating systems. The GPL requires, among another things, that users who distribute or publish any work derived from GPL-covered software to license that work to under the GPL to all third parties at no charge. The plaintiff, Daniel Wallace (Wallace), was not a user of FSF software; rather, he was a competitor of FSF’s, trying to sell his own operating system. Wallace brought an action pro se against FSF claiming that it was conspiring with commercial distributors IBM, RedHat, Novell, and others to fix prices for intellectual property in the market by attaching the GPL to GNU/Linux operating system software. Wallace claimed, in essence, that the GPL constituted a horizontal price-fixing scheme among competitors in violation of Section 1 of the Sherman Antitrust Act and sought to enjoin FSF from developing and distributing Linux under the GPL. On motion by FSF, Judge Tinder of the United States District Court for the Southern District of Indiana dismissed the complaint for failure to show any “antitrust injury” from FSF’s conduct, but held that Wallace had otherwise stated a claim upon which relief could be granted.In his third amended complaint, Wallace alleged that FSF was conspiring with its competitors to fix prices for software via the GPL. The court determined that Wallace was effectively claiming the existence of a horizontal price-fixing agreement, which would be illegal per se under the Section 1 of the Sherman Antitrust Act (prohibiting contracts and conspiracies in restraint of trade) because such horizontal arrangements are perceived to have a “pernicious effect” on competition. By comparison, vertical agreements (those between enterprises at different levels within the same chain of distribution) are governed by a “rule of reason” analysis because their effects will not always be anticompetitive. The court determined that the GPL could not be reasonably characterized as a horizontal agreement because it governs agreements between licensees and licensors, who are users at different levels within the same chain of distribution. Therefore, the court reasoned, the GPL is a vertical agreement, and it cannot alone constitute a per se violation of the Sherman Act.

Eighth Circuit Holds that a Computer Security Contractor May Be Considered a “Victim” Under the CFAA
Defendant Thomas Millot worked for Aventis Pharmaceuticals as a systems analyst in the company’s information security department. Among other duties, Millot was responsible for the administration of computer user accounts at Aventis’s Kansas City, Missouri facility. This responsibility included oversight of the company’s SecureID card system—a two-factor authentication system which allows an employee to remotely access the company network when she inputs her secret personal identification number and the time-sensitive code generated by a small SecureID card in her possession.In October 2000, Aventis outsourced its security functions to IBM. Although several members of the information security department were subsequently hired by IBM, Millot was not offered a job with IBM, and he left Aventis in September 2000. Before he departed, Millot took a former employee’s SecureID card which he had upgraded to the highest possible remote access level. He then kept the card active by periodically accessing the network.

California District Court Finds Anti-Bootlegging Statute Constitutional
This decision granted a motion by intervenor the United States to reconsider a motion to dismiss granted on December 21, 2004, in the United States District Court for the Central District of California by the late Judge William Rea. Plaintiffs' claim that defendants violated 17 USC § 1101(a)(3), an anti-bootlegging statute (“the Statute”) with no durational limit on its protection, had been dismissed because the court found that the statute was “copyright-like” and therefore unconstitutional because it violated the "for limited Times" requirement of the Copyright Clause of the Constitution. By way of background, “’[b]ootlegging’ is ‘the making of an unauthorized copy of a commercially unreleased performance,’ and is distinct from ‘piracy,’ which is an unauthorized duplication of an authorized recording.” Moghadam, 175 F.3d at 1272 n.3 (citation and internal quotation marks omitted). The Court granted the motion to reconsider because it found proper Constitutional authorization for the statute in the Commerce Clause, and, since the statute is authorized by another part of the Constitution, there is no need for this admittedly "copyright-like" statute to conform to the "limited Times" requirement of the Copyright Clause. The Court vacated the previous order finding the statute unconstitutional and denied defendants' motion to dismiss the claim based on the anti-bootlegging statute.In this decision affirming the statute's constitutionality, the Court relied on the research and reasoning provided in two conflicting opinions from other jurisdictions concerning a related criminal statute, United States v. Moghadam, 175 F.3d 1269 (11th Cir. 1999) and United States v. Martignon, 346 F. Supp. 2d 413 (S.D.N.Y. 2004). Moghadam found the criminal anti-bootlegging statute constitutional, while Martignon found the criminal anti-bootlegging statute unconstitutional. The Court organized its analysis into two separate questions: "(a) did Congress have the power to enact the anti-bootlegging legislation? and (b) if so, is the legislation ‘fundamentally inconsistent’ with the Copyright Clause?”

Internet service provider’s forum selection clause that requires California residents to travel to Georgia to recover small sums
The California Court of Appeals for the Second Appellate District found that the forum selection clause in defendant EarthLink, Inc.’s (“EarthLink”) membership contract, which would have required consumers (in this case, putative class plaintiff California residents), to travel 2,000 miles to Georgia in order to recover claims of $40 to $50, is unenforceable because it is unreasonable as a matter of law. Additionally, the Court held that the contract’s class action waiver was procedurally unconscionable because it took the form of an adhesion contract with no opportunity to opt out, and also substantively unconscionable, because, if the allegations were found to be true, EarthLink would have been cheating numerous customers out of small sums of money. The case arises out of a class-action suit brought by plaintiff Ozgur Aral (“Aral”), who alleged that EarthLink began charging him for his DSL line on the date that he ordered the service, even though he did not receive the equipment necessary to utilize the service until five weeks afterwards. As part of his user agreement with EarthLink, Aral agreed that any claim related to the agreement would be adjudicated in arbitration, governed by Georgia law and held in Atlanta, Georgia. The agreement also contained a clause that precluded class action suits.