Court Refuses to Dismiss Trademark Infringement Claims, But Notes They Are Close to Line of Improper Copyright Claims

In a September 23, 2013 ruling, Judge Andrew L. Carter denied plaintiff Expressway Music, Inc.'s motion to dismiss defendant Slep-Tone Entertainment Corp.'s trademark infringement and unfair competition counterclaims.  Slep-Tone alleged that Expressway "acquired or made unauthorized duplicates of Slep-Tone's karoke accompaniment tracks.  These unauthorized media- and format-shifted duplicates were marked with Slep-Tone's 'SoundChoice' trademark and distinctive trade dress."  The Court found that these allegations were sufficient to meet the Iqbal standard and state trademark and unfair competition claims.

Expressway argued that the real thrust of Slep-Tone's complaint was to challenge the copying of the media- and format-shifted recordings, which is in the nature of copyright infringement, not trademark infringement.  Judge Carter noted that the "case may toe the line between a trademark claim attempting an 'end run around the copyright laws' and a viable trademark claim," but that "regardless of the copyright status of these videos, Slep-Tone alleges facts about the misuse of its trademark on products it did not create, namely because Slep-Tone's registered trade dress and trademark appear on Expressway's media- and format-shifted tracks.  These are cognizable claims under the Lanham Act."

"Manufactured" Sale in District to Party's Counsel Insufficient for Personal Jurisdiction

In a September 20, 2013 ruling, Judge Robert W. Sweet granted defendant Roger Nunn's motion to dismiss plaintiff North Jersey Media Group, Inc.'s copyright infringement complaint against him for lack of personal jurisdiction.  North Jersey Media alleged that Nunn violated its copyright "of a photographic impage depicting firefighters raising an American flag at the site of the World Trade Center in the immediate aftermath of the events that took place in New York City on September 11, 2001 . . . by selling a copy of the WTC Photo over the internet." 

Judge Sweet wrote that in "order for a federal court sitting in New York to assert personal jurisdiction over Nunn, a California resident, NJ must satisfy the requirements of both New York's long-arm statute, N.Y. C.P.L.R. § 302 . . ., as well as the Due Process Clause."  The Court noted that in "general, an allegation of a defendant's infringing sales to residents in New York is sufficient to satisfy § 302," and found that the complaint did allege such a sale, thus complying with New York's long-arm statute.  Judge Sweet held, though, that Nunn's single sale in New York -- a "manufactured" sale to North Jersey Media's counsel -- failed to satisfy the Due Process Clause.  In particular, the Court ruled that North Jersey "has failed to establish that Nunn's conduct satisfies either the minimum contacts inquiry or the reasonableness inquiry; accordingly, Nunn's right to due process bars this Court's exercise of personal jurisdiction over him in the instant action."

Court Allows Expedited Discovery About Defendants' Identity in Trademark Action

In a September 11, 2013 ruling, Judge Lorna G. Schofield granted plaintiff Admarketplace, Inc.'s motion for expedited discovery before the parties' Rule 26(f) conference to identify the citizenship and location of defendant Tee Support, Inc.  Admarketplace asserted claims for defamation and trademark infringement against Tee Support, but was unable to learn sufficient details to effect service despite its diligence in trying to do so.  Judge Schofield ruled that Admarketplace had made a prima facie case of trademark infringement (and defamation) .  The Court concluded that "Plaintiff, who has a potentially meritorious claim and no ability to enforce it absent expedited discovery, has demonstrated good cause for expedited discovery upon the five parties identified in their motion."

Attorneys' Fees Awarded to Prevailing Defendant in Copyright Infringment Action

In a September 10, 2013 ruling, Judge Paul G. Gardephe granted defendant Hilton Worldwide, Inc.'s motion for attorneys' fees after it secured summary judgment against plaintiff Aqua Creations USA, Inc.'s copyright infringement claims.  Aqua Creations had sought copyright registrations on its lighting designs.  The Copyright Office denied registration, finding that the lighting designs were useful articles that did not contain any creative authorship separable from the articles themselves.  After the Copyright Office denied reconsideration, Aqua Creations started the action against Hilton, alleging copyright infringement of its unregistered lighting designs.  Hilton sought a pre-motion conference to dismiss the complaint because it failed "'to identify any separable, non-functional, artistic elements of the designs.'"  At the conference, the Court gave Aqua Creations leave to file another amended complaint.  That amended complaint, however, suffered from the same defect, and Judge Gardephe granted Hilton's motion to dismiss.  Aqua Creations appealed, and the Second Circuit affirmed, relying on the same cases and adopting the same reasoning as Judge Gardephe had in dismissing the amended complaint.

Hilton then sought attorneys' fees, for the cost of the appeal only, under the Copyright Act provision giving the Court discretion to award fees to the prevailing party, 17 U.S.C. § 505.  Judge Gardephe found that "[b]y the time Aqua filed its appeal, it had been alerted on at least five separate occasions that its copyright claims were defective, because it had not demonstrated that the designs in its light fixtures were separable from the utilitarian and functional aspects of these lamps" -- twice by the Copyright Office, once by Hilton in its letter asking for a pre-motion conference, and twice by the Court in considering the adequacy of Aqua Creations' complaints.  The Court thus ruled that "[u]nder these circumstances, this Court cannot find that Aqua's actions in prosecuting the appeal were objectively reasonable."  Judge Gardephe awarded fees, but in a reduced amount from that sought by Hilton.

Court Rules in Favor of Manufacturer Over Distributor in Lanham Act Dispute

In a September 10, 2013 ruling after a bench trial, Judge Marvin E. Aspen ruled in favor of plaintiff Excell Consumer Products Ltd. in its Lanham Act and state law claims over the the "Smartcandle" mark and related logos.  Defendants Structural Integrity Property Services, LLC and Smart Candle LLC had been Excell's distributor of battery-operated candles sold under the "Smartcandle" marks.  Excell had originally licensed the marks from a party referred to as SCK.  After the distribution arrangement between Excell and Structural ended, Structural asserted ownership of the marks, and sought to register them with the USPTO.  Excell asserted Lanham Act and state law unfair competition claims against Structural, which counterclaimed with like causes of action.

Judge Aspen found that since the parties essentially asserted mirror Lanham Act claims against each other, they had effectively conceded all the elements of the claims, so the dispute became one of ownership of the marks at issue. Excell argued three ways through which it had acquired the marks at issue:  (1) as a licensee from SCK; (2) as a purchaser from SCK under another agreement; and (3) as the acquirer of the marks after SCK abandoned them.  The Court rejected the first two grounds, but found in Excell's favor on the abandonment issue.

Judge Aspen noted that a mark is abandoned if the owner "'discontinues use with the intent not to resume such use in the foreseeable future,'" and that there is presumptive abandonment after three years of non-use.  Also according to the Court, "[o]nce abandoned, 'a mark returns to the public domain and may, in principle, be appropriated for use by other actors in the marketplace, in accordance with the basic rules of trademark priority.'"  Judge Aspen ruled that the marks had been abandoned because SCK was dissolved in 2007, "and there is no evidence that it ever resumed operations." 

Court Dismisses in Part Copyright Infringement Claim Over Sampled Music

In a September 10, 2013 ruling, Judge Alison J. Nathan granted in part defendants' motion to dismiss plaintiff TufAmerica, Inc.'s copyright infringement action.  TufAmerica, which is "the putative exclusive administrator and copyright licensee of a number of copyrights to the compositions and sound recordings of the musical group Trouble Funk," sued the individual members of the Beastie Boys and others, alleging that the group "unlawfully sampled a number of Trouble Funk's songs on the Beastie Boys' hit albums Licensed to Ill and Paul's Boutique."  TufAmerica's amended complaint asserted copyright infringment claims for six acts of unlawful sampling in Beastie Boys songs, and in particular that the samples "infringed both the musical composition and the sound recording of the sampled Trouble Funk songs." 

In analyzing whether the accused songs were substantially similar to the sampled songs for copyright infringement purposes, Judge Nathan applied the "fragmented literal similarity" test under which the Court examines whether there is "'localized' rather than 'global' similarity between the two pieces."  Applying this test, the Court noted that "'the question of substantial similarity is determined by an analysis of "whether the copying goes to trivial or substantial elements' of the original work.'"  Further, Judge Nathan wrote that the "real question" at the motion to dismiss "stage -- more so than the question of how to label the relevant test -- is whether (as to each sample) Plaintiff has plausibly alleged that the sample is quantitatively and qualitatively important to the original work such that the fragment similarity becomes sufficiently substantial for the use to become an infringement."

Court Finds Video Service to Be in Contempt of Injunction Against Copyright Infringement

In a September 10, 2013 ruling, Judge Naomi Reice Buchwald granted plaintiff CBS Broadcasting Inc.'s motion for civil contempt against Filmon.com, Inc., and ordered Filmon.com to comply with the permanent consent injunction to which it had previously agreed.  Judge Buchwald also ordered Filmon.com to complete a payment of $1,350,000, and awarded the costs of the enforcement motion. 

The action arose out of CBS's and other broadcasting networks' claims that Filmon.com's retransmission of their broadcast signals to its customers constituted copyright infringement.  After CBS filed a motion for a preliminary injunction, and the parties engaged in discovery, the parties reached a settlement that "was conditioned upon this Court's entry of a stipulated consent judgment and permanent injunction prohibiting FilmOn from further infringing plaintiffs' copyrights."  The Court entered the consent injunction in July 2012.

By January 2013, CBS and other plaintiffs began to allege various violations of the injunction, including the lack of a promised payment, Filmon.com's principal's continuing disparagement of CBS, and, most significantly, Filmon.com's launch of a new video on demand service that plaintiffs contend violate their copyrights.  After the parties were unable to resolve their differences, CBS sought an order of contempt.