A blog about patent, copyright and trademark law in the U.S. District Court
for the Southern District of New York

Court Rejects Copyright Infringement Defenses, Grants Summary Judgment to Plaintiff

In an October 25, 2013 ruling, Judge Katherine B. Forrest granted summary judgment in favor of plaintiff Complex Systems, Inc. on its copyright infringement claims against defendant ABN Ambro Bank N.V. over a software application known as BankTrade 8.0.  Complex Systems holds the copyright registration for BankTrade 8.0, and alleged ABN Ambro's willful infringement arising from its continued use of the software.  ABN Ambro asserted as defenses that it had rights to use BankTrade 8.0 because of its subsidiary's prior licensed use, or joint authorship and ownership.  Judge Forrest had previously rejected ABN Ambro's argument that its subsidiary had assigned the license to BankTrade 8.0 before the subsidiary was divested.

The Court, plainly annoyed with ABN Ambro's shifting positions and theories throughout the litigation, first rejected ABN Ambro's contention that its former subsidiary could belatedly assert some ownership rights in the software, and transfer those rights to ABN Ambro.  Judge Forrest noted that the registration was first filed in 2008, and thus ruled that whether the subsidiary "could have once, long ago, asserted ownership rights to BankTrade 8.0 (by virtue of its position as an 'author' of some code), is now an irrelevant detour:  it did not."  

The Court further rejected on the merits the claim that ABN Ambro's former subsidiary was a joint author or co-owner of BankTrade 8.0.  Quoting the Copyright Act, Judge Forrest wrote that a "joint work of authorship is 'a work prepared by two or more authors with the intention that their contributions be merged into an inseparable or interdependent parts of a unitary whole.'"  Judge Forrest then found that, even if the facts established joint authorship, the former subsidiary had failed to timely assert those facts and to assert ownership as a result of that authorship.  The Court, applying a three year statute of limitations, noted that neither ABN Ambro nor its former subsidiary asserted any ownership right in BankTrade 8.0 in the limitations period.  Finally, Judge Forrest rejected ABN Ambro's standing to assert its former subsidiary's ownership rights, even if they existed, ruling that the "law is clear that a party accused of infringement cannot defeat that claim by pointing to rights that another may have to the work in question."

Court Denies Motion to Dismiss Copyright Infringment Action, But Suggests Summary Judgment Motion

In an October 23, 2013 ruling, Judge Katherine B. Forrest denied defendant Governance Risk Management Compliance, LLC's motion to dismiss plaintiff The Regulatory Fundamentals Group LLC's amended copyright infringement complaint.  The plaintiff alleged that the defendant "'had misappropriated, copied, distributed, created derivative works of, and publicly displayed on [the defendant's] website'" the plaintiff's works without permission.  The defendant moved to dismiss, contending that the plaintiff's claims sounded in contract law, not copyright.

Judge Forrest rejected the defendant's argument, ruling that a "review of the case law indicates that there is support for the proposition that, under certain circumstances, there is a cause of action under copyright law where a party has allegedly exceeded a license agreement so as to infringe upon a licensor's copyrighted works."  The Court denied the motion to dismiss, but noted "that a prompt Motion for Summary Judgment by Defendants will either dispose of this case entirely or at least will significantly narrow it."

Court Denies Reconsideration of Motion to Compel Settlement-Related Documents

In an October 11, 2013 ruling, Judge Denny Chin, sitting by designation, denied reconsideration of plaintiff the American Society of Media Photographers, Inc.'s motion to compel production of documents listed on defendant Google, Inc.'s privilege log.  Judge Chin rejected the argument that their inclusion on the log demonstrated their relevance, writing that "the inclusion of documents merely means that they are responsive to the request for the production of documents, not that they are relevant or are reasonably calculated to lead to admissible evidence."  The Court also noted that the plaintiff also failed to explain how documents relating to Google's settlement talks with another party are relevant, ruling that  if "defendant expressed its view as to its fair use defense in settlement discussions, those statements are not relevant or, even assuming some relevance, they are not admissible."

Court Grants Copyright Ownership to the Plaintiff and Awards Attorneys' Fees

In a September 30, 2013 ruling, Judge Richard J. Sullivan granted summary judgment and attorneys' fees to plaintiff 16 Casa Duse, LLC in its copyright declaratory judgment action against defendant Alex Merkin over the ownership of the copyright in the short film entitled "Heads Up."  The plaintiff purchased all rights to the screenplay for the film, and then assembled a cast and crew.  Every member of the cast and crew, except Merkin, the director, signed agreements specifically assigning all intellectual property rights to the plaintiff.  After a director's cut of the film had been completed, a dispute about copyright ownership developed between the plaintiff and Merkin.  When the parties' relationship completely broke down, Merkin obtained a copyright registration in the director's cut of the film, listing his authorship as "direction/director."  Plaintiff commenced this action, and its amended complaint asserted, among other claims, declaratory judgments that the plaintiff is not liable for copyright infringement and that Merkin has no ownership in any copyright to the film, and to invalidate Merkin's registration.  Merkin counterclaimed with various declaratory judgment claims relating to the copyright issues.  Both parties moved for summary judgment.

Judge Sullivan easily disposed of the plaintiff's claim of non-liability for copyright infringement, ruling that the plaintiff was -- at the very least -- a joint author of the work, so the plaintiff could not "be liable for copyright infringement because co-authors each own an undivided interest in the work." 

The Court next considered whether the plaintiff was the sole or co-author of the work under the Second Circuit's two-pronged test which looks at whether "'each of the putative co-authors (1) made independently copyrightable contributions to the work; and (2) fully intended to be co-authors.'"  Regarding the first prong, Judge Sullivan found that the plaintiff did "not contest that Merkin made independently copyrightable contributions to the Film."  Judge Sullivan, however, strongly found against Merkin on the second prong, finding that "the record uniformly establishes that Plaintiff, through its principal, . . . never intended to share authorship of the film with Merkin or anyone else." 

The Court concluded the plaintiff "is entitled to a declaratory judgment that Merkin holds no copyright ownership interest in the Film."  Judge Sullivan rejected Merkin's counterclaims based largely on the conclusion that Merkin has no copyright interest in the film, and likewise invalidated Merkin's registration in the director's cut to the film that Merkin had obtained.

Court Invalidates Patent Based on Patent Counsel's Inequitable Conduct

In a September 30, 2013 ruling, Judge Laura Taylor Swain invalidated plaintiff Worldwide Home Products, Inc.'s patent on the ground of inequitable conduct, and dismissed plaintiff's infringement action against Bed, Bath and Beyond, Inc. and Cohesion Products Inc.  The patent-in-suit relates to a clothing hanger having two configurations.  During the prosecution of the application that matured into the patent-in-suit, the plaintiff's patent lawyer submitted to the PTO pages from a website of another product that it deemed relevant to the claimed invention.  The website pages, however, only had low resolution images of the product, which made it difficult to distinguish particular product features.  The plaintiff's patent counsel made representations to the patent examiner about what the web pages showed about the product, and on the basis of those representations, the examiner allowed the application.  Unbeknownst to the PTO, however, the plaintiff's attorney had an actual sample of the product and high resolution photographs of the product that had been supplied by the defendants' counsel.  The actual product and the high resolution photographs showed that plaitniff's patent counsel's representations to the PTO were untrue.  Patent counsel claimed that he did  not supply the product or high resolution photographs to the PTO because they were undated, so he could not tell whether or not they were prior art.

A threshold issue for Judge Swain in determining the defendants' motion for summary judgment of invalidity based on inequitable conduct was the admissibility of the report and testimony of defendants' expert witness, William Poms, n former patent examiner, that that plaintiff's patent counsel had committed inequitable conduct.  The plaintiff argued that Poms' testimony was "not properly admissible under Federal Rule of Evidence 702 in that it inaccurately informs the Court of the law and usurps the court's and jury's roles in determining the law and facts of" the case.  The Court rejected the challenge, ruling that "Mr. Poms is qualified as an expert in the patent prosecution process, having served as both a PTO examiner and a prosecuting attorney.  He has based his opinions on the factual record before the Court, and has reliably applied his knowledge of the facts and the law."

Court Denies Cross-Motions for Summary Judgment in Copyright Infringement Claim and Dismisses Fair Use Defense

In a September 26, 2013 ruling, Judge Cathy Seibel denied the parties' cross-motions for summary judgment in Firesabre Consulting LLC's copyright infringement claim against educator Peggy Sheehy and the board of the Ramapo Central School District.  The "copyright case arises from a dispute over payment for computer programming and digital design services rendered in connection with the virtual world Second Life.  Second Life is an internet-based simulation in which users appear via digital characters called 'avatars' and interact with a computer-generated environment."  Sheehy and others in the school district created three "islands" in Second Life for educational use with her students.  After meeting the principal of Firesabre Consulting, Frederick Fuchs, at a conference, Sheey had him to do some development work on the islands.  Fuchs also later developed three additional islands for Sheey's Second Life project.  There was never any written contract between Firesabre Consulting and the school district, but the district did pay Firesabre Consulting $5,000 for some of the work.  After a falling out, Firesabre Consulting demanded that the school district stop using its work.  Also after that, the school district migrated its "islands" from the Second Lfe platform to SIMS, copying some of plaintiff's work in the process.

Firesabre Consulting sued for copyright infringement, alleging that the defendants' continued to use his work after the relationship soured (and thus ended any license to the work), and that the migration from Second Life to SIMS involved unauthorized copying.  Defendants defended by arguing that the plaintiff's work was ineligible for copyright protection because it was not "fixed," and that the plaintiff's copyright deposit was insufficient to bring defendants' copying within its scope.  Judge Seibel rejected both these defenses, ruling that "[d]igital images in a video game are 'fixed' within the meaning of the Act" when they are stored in memory, and that although plaintiff's deposit could have been more complete, the overall design of Firesabre Consulting's work was sufficiently visible in the deposit.  The Court denied plaintiff's motion for summary judgment, though, finding issues of disputed fact about whether the defendants' work was substantially similar to the copyrighted work, and about the scope of defendants' authority to use plaintiff's work.
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