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Court Declines to Dismiss Patent Infringement Claim on Grounds of Laches and Equitable Estoppel

In a June 18, 2014 ruling, Judge P. Kevin Castel denied defendant's motion to dismiss this patent infringement action on the grounds of laches and equitable estoppel.  With regard to laches, the defendant argued that some discussions between the parties before the patents-in-suit triggered the period for measuring laches, but Judge Castel ruled that the period ran from the issuance of the patents.  The Court also noted that "[f]acts concerning factors, such as the unreasonableness of the delay or the lack of excuse do not appear" in the amended complaint, precluding dismissal.  Judge Keenan likewise rejected the equitable estoppel defense, finding that "facts necessary to establish the affirmative defense of equitable estoppel do not appear on the face of the" amended complaint.

Court Denies Reconsideration of Copyright Infringement Summary Judgment Ruling

In a June 12, 2014 ruling, Judge John F. Keenan denied reconsideration of his March 24, 2014 ruling granting plaintiffs partial summary judgment on their copyright infringement claims.  Defendants argued that the Court's original rulings that substantial similarity only need be shown in the absence of evidence of direct copying and that the Court in any event applied the wrong standard for substantial similarity were erroneous because they "overlooked binding Second Circuit authority."  In rejecting these arguments, the Court wrote:

Even if a substantial similarity analysis is still required when actual direct copying is already established, that would not affect Defendants' liability because the Court went on to engage in this analysis.  As Defendants acknowledge, the Court compared the images on the website to the copyrighted photographs and determined that "the images on the masthead are substantially similar because they are exact copies."

Judge Keenan rejected defendants' argued that one of the photographs at issue was not substantially similar because it was "flipped" in orientation, noting that this "new argument is belied by their concession that the image was actually copied from the photograph registered with on of Plaintiffs' copyrighted albums."

Court Declines to Compel Answers to Contention Interrogatories Early in Patent Infringement Action

In a May 29, 2014 ruling, Judge Katherine B. Forrest declined to compel the answers to contention interrogatories early in this patent infringement action.  The Court wrote:

There is no special "patent rule" that provides for contention interrogatories at the outset of a case.  There are, however, significant alternative means for the parties to obtain additional particularity regarding allegations:  this Court's Individual Rules provide for the virtually immediate disclosure of plaintiff's infringement contentions, followed by a document production, followed by disclosure of any invalidity contentions, followed (again) by a document production.  And so on.  The Local Patent Rules provide similarly.

Court Awards Statutory Copyright Infringement Damages of $750 Per Infringement

In a May 22, 2014 ruling, Judge Paul A. Engelmayer granted the plaintiffs’ unopposed motion to award statutory copyright damages of $750 for each of three copyrights that the defendant had previously been found to infringe. Although the Court did not reach the issue of whether the infringement was innocent, Judge Engelmayer wrote that the $750 award was justified irrespective of the innocence of the infringement. The Court also dismissed the plaintiffs’ motion to voluntarily dismiss with prejudice their remaining claims, finding that a dismissal with prejudice will benefit, not harm, the defendant.

Court Denies Stay of Permanent Injunction Pending Appeal

Following up an earlier decision to grant a permanent injunction (here), Judge Katherine B. Forrest, in a May 21, 2014 ruling, denied the defendant's motion for a stay of the injunction pending appeal.  The Court wrote:

ABN's position is premised on the erroneous assumption that the Court should or intended to provide the time it viewed as necessary to complete an ordinary transition [from the infringing software].  That was not the Court's intent.  How and what ABN chooses to do during the transition period is up to ABN -- the Court's view is that the one year period [before the effective date of the injunction] provides sufficient and reasonable time for ABN to "get off" BankTrade.  Whether ABN starts a transition to using another system or outsources its trade finance business entirely is up to ABN.  The Court does not have a view as to what business decisions ABN will make over the next year.  It has but one requirement:  ABN shall stop using BankTrade by the expiration of that period.

Court Dismisses Contributory Patent Infringement Claim, But Declines to Dismiss Induced and Willful Infringement Claims

In a May 12, 2014 ruling, Judge Robert D. Sweet refused to dismiss the plaintiff’s induced patent infringement claim and claim for willful infringement, but did dismiss the contributory infringement claim under Rule 12(b)(6). With regard to the induced infringement, the Court wrote that the fact that the plaintiff and defendant are competitors in producing the goods covered by the patents-in-suit, that the plaintiff marked its goods with the pertinent patents, and that industry trade publications mentioned the existence of the plaintiff’s patents all gave rise to the inference that the defendant knew of the patents or turned a willful blind eye to their existence. Judge Sweet further ruled that that these same facts supported the plaintiff’s claim of willful infringement. The Court, however, dismissed the contributory infringement claim, noting that claims “of indirect infringement [necessary to support a contributory infringement claim] requires the application of Iqbal/Twombly plausibility standard,” and the “Complaint makes a barebones recitation that the [accused device] was ‘especially made or especially adapted’ for an infringing use and that it has ‘no substantial noninfringing uses.’”

Court Awards Statutory Copyright Infringement Damages of $3,000 Per Infringement

In a May 16, 2014 ruling, Magistrate Judge James C. Francis IV issued a Report and Recommendation after an inquest awarding statutory damages of $3,000 per photograph for six infringing pictures of Lindsay Lohan that the defendant published on its website.  Judge Francis found that this amount of damages "represents three time the amount of the licensing fee for each image," making the award "clearly within the lawful range, and, indeed, near the lower end."  The Court also awarded attorneys' fees of $6,732.50, approving hourly rates for two partners of $525 and $450, but reducing a third year associate's rate from $400 to $200.

Fee Application under Copyright Act for Frivolous Appeal Must Be Directed to Appellate Court

In a May 13, 2014 ruling, Judge J. Paul Oetken ruled that a motion for fees under the Copyright Act incurred in connection with the defendant's unsuccessful appeal must be made in the Court of Appeals.  Accordingly, Judge Oetken denied the plaintiff's request for leave to file the motion for fees before the district court.

Court Grants Permanent Injunction Against Continued Copyright Infringement of Software

In a May 9, 2014 ruling, Judge Katherine B. Forrest granted a permanent injunction against defendant ABN Amro Bank's continued use of the plaintiff's software.  In an earlier ruling (here), Judge Forrest granted summary judgment of copyright infringement after finding that ABN Amro did not retain the right to use the software when it sold a subsidiary that had licensed the software from the plaintiff.  In later defending against the plaintiff's request for an injunction, ABN Amro argued that the software was too important to its business and too integrated into its systems to stop using the software, and since the plaintiff was demanding commercially unreasonable terms for a license, the Court should, in essence, grant it a perpetual license for a commercially reasonable royalty.  In rejecting that argument, Judge Forrest found that the plaintiff would be irreparably harmed without an injunction, that the balance of hardships favored the plaintiff, and the Court was particularly concerned about the public interest, writing:

[I]f this Court were to find that a license for an important piece of software may not be revoked -- or, put otherwise, must be renewed -- on terms the licensee considers reasonable, the Court would be flooded with requests to assume licensing responsibilities it is ill-equipped to assume.  This undue burden is not in the public interest in light of its already busy dockets.  To be sure, there are instances in which courts impose licensing terms -- when judicial fact-finding has determined a particular and unusual need. . . . Courts should not wade into such deep waters casually.

The Court gave ABN Amro one year to transition from the software at issue, and wrote that the Court would consider a "stay on condition that the parties both agree to move with all available speed to perfect and argue any appeals (e.g., no delays or extensions of deadlines)."

Court Dismisses Plaintiffs’ Computer Fraud and Abuse Act and Copyright Infringement Claims

In a May 5, 2014 ruling, Judge Andrew L. Carter, Jr. dismissed the plaintiffs’ claims against a “John Doe” defendant over derogatory blog postings. The plaintiffs asserted claims, among others, for copyright infringement and violations of the Computer Fraud and Abuse Act. Judge Carter disposed of the Computer Fraud and Abuse Act claim based on the defendant’s unauthorized copying of the plaintiffs’ wedding photo from their Facebook page by noting that the complaint inadequately alleged that the defendant had accessed a “protected computer” as the term is defined under the Act, and that the plaintiffs’ allegations of harm to reputation and lost potential business did not claim the sort of damages recoverable under the Act. The Court dismissed the copyright claim because the plaintiffs did not allege that the copied work was registered, which is a precondition to suit.

Court Declines to Dismiss Lanham Act Claim Based on Misleading ISBN

In a May 5, 2014 ruling, Judge Katherine B. Forrest denied a motion to dismiss the plaintiffs’ amended complaint asserting a Lanham Act violation. The original complaint included copyright infringement claims which were dismissed after the Supreme Court’s 2013 ruling in Kirtsaeng “that the first sale doctrine applied to purchase of publications outside of the United States.” In declining to dismiss the Lanham Act claim for false representation or description, Judge Forrest wrote:

The allegations in the Amended Complaint provide specificity as to how defendants are alleged to have mislead purchasers of foreign editions of publications. In short, plaintiffs assert that defendant has used the International Standard Book Number (“ISBN”) for English language editions of publications, as well as images of the covers of English language editions, in a manner that conveys a “net impression” that the buyer will receive an English language edition of the publication. Defendants I fact sell foreign editions. Because foreign editions may have different content and publication quality, plaintiffs are concerned that sales of one masquerading as the other will result in harm to their goodwill and reputation. The Lanham Act prohibits actions which deceive consumers and impair a producer’s goodwill.

The Court rejected the contention that the ISBN is not a trademark, noting first that plaintiffs’ claim is for false description and finding that it “is plausible that a unique mark associated with a good – such as an ISBN number – would represent or describe origin.”

Court Declines to Dismiss Trademark Infringement Claim, But Dismisses Cybersquatting Claim

In an April 30, 2014 ruling, Judge John G. Koetl granted the defendants’ motion to dismiss the plaintiffs’ cybersquatting claim, but denied the motion to dismiss the other Lanham Act-related claims that the defendants’ “Manhattan Elite Prep” mark for test preparation services infringed the plaintiff’s “Manhattan Prep” and “Manhattan Prep” marks. In declining to dismiss the trademark infringement claims, Judge Koetl ruled that the plaintiffs had adequately alleged use of the marks at issue before the defendants’ use, and rejected the defendants’ contention that the plaintiffs’ filing of an intent-to-use application with the Trademark Office estopped the plaintiffs from showing that there had been actual use before the filing of the application. The Court, however, dismissed the cybersquatting claim, writing that:

the allegations in the Complaint regarding the defendants’ use of the domain name simply show another aspect of the alleged trademark infringement, rather than an attempt to profit specifically from “squatting” on the domain name with bad faith. These allegations do not suggest that defendants “perpetrated the core activities that threaten to result in the paradigmatic harm that the ACPA was enacted to eradicate,” that is, “the proliferation of cybersquatting – the Internet version of a land grab.”

Court Again Rejects Plaintiff’s Copyright Infringement Claim as De Minimus

In an April 30, 2014 ruling, Judge Katherine B. Forrest denied the plaintiff’s motion to amend her complaint against the National Football League for a second time. The Court had earlier dismissed the first amended complaint for failing to allege commercial use of the plaintiff’s name or likeness necessary to support a Lanham Act claim and because any copyright infringement was de minimus. Judge Forrest again found the copyright infringement alleged in the second amended complaint to be de minimus, writing:

Here, [the defendant’s] site contains a great deal of substantive content and is comprised of a large number of distinct pages, many of which contain editorial content. Two of the three inclusions of plaintiff’s copyrighted material are in the context of plaintiff as a contributor – plaintiff is not pictured nor mentioned in connection with substantive editorial content. The final inclusion of plaintiff’s copyrighted content is included as a rotating thumbnail image on the site’s landing page. Here, plaintiff’s photograph is again unaffiliated with editorial content. This, combined with the fact that plaintiff’s copyrighted content was on the site for only three weeks – a short period of time in the life of a website – illustrates that the copyright violation here is de minimus.

The Court rejected the plaintiff’s Lanham Act claim, finding no allegations of any cognizable injury.

Court Dismissed Patent and Trademark Infringement Claims on Exhaustion and First Sale Grounds

In an April 23, 2014 ruling, Judge Paul A. Engelmayer dismissed the plaintiff’s patent infringement claims on the grounds of exhaustion and dismissed the trademark infringement claims because the goods at issue were genuine even if they had been sold in unauthorized markets. With regard to patent exhaustion, there was no dispute that the patented goods had been purchased from the patent owner exhausting the patent protection, although the plaintiff contended that they had been sold in violation of contractual restrictions. Relying on the Supreme Court’s decision in Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008), Judge Engelmayer ruled that the patent protection was exhausted despite the contractual breach, writing that “Quanta precludes the argument that any failure by a party to abide by any contractual condition in an agreement involving a patented device will revive an otherwise exhausted patent so as to permit the patentholder to sue for infringement, as opposed to, e.g., breach of contract.”

The Court dismissed the plaintiff’s trademark-related claims on analogous grounds of the “first sale doctrine.” Judge Engelmayer wrote that there can be no trademark infringement if genuine goods are at issue even if those goods are sold in violation of contractual restrictions.

In a follow up May 7, 2014 ruling, Judge Engelmayer declined to exercise supplemental jurisdiction over the remaining state law claims, and dismissed the entire action.

Court Dismisses Copyright Declaratory Judgment Action Finding No “Actual Controversy”

In an April 21, 2014 ruling, Judge Valerie Caproni dismissed the plaintiff’s declaratory judgment action seeking ownership of the copyright in certain computer code, finding that there is no “‘case or controversy’ for the purposes of Article III of the United States Constitution.” The Court first found that there is subject matter jurisdiction because the “Complaint appears to reflect a dispute between the parties over whether and, if so, how the ‘work for hire’ doctrine applies.” Judge Caproni nevertheless dismissed the case because there was no “actual controversy” between the parties, finding that regardless “of this lawsuit, [the plaintiff] can exercise ownership rights unencumbered by [the defendant] and without fear of legal action for anything other than delivery of allegedly non-conforming goods – a suit that has already been filed in New York state court.” The Court also denied an award of attorneys’ fees to the defendant, finding that “both parties bear the blame” for litigating the case.

Court Awards Statutory Copyright Infringement Damages after a Default

In an April 11, 2014 ruling, Magistrate Judge James L. Cott recommended an award of $9,000 in statutory damages after an inquest in the plaintiff’s copyright infringement action for the unauthorized use of a celebrity photograph. The plaintiff sought the $9,000 as three times its lost licensing fee of $3,000. Judge Cott found that “trebling the licensing fee . . . is in line with the general approach taken by courts.”

The Court also awarded attorneys’ fees and costs. While approving the hourly rate of a partner with 20 years copyright experience of $525, Judge Cott reduced the requested associate’s rate from $400 to $300, writing that there was “no detail” about the lawyer’s specialization or experience in copyright litigation.

Court Declines to Dismiss Trademark Infringement Declaratory Judgment Action on Subject Matter Jurisdiction Grounds

In an April 15, 2014 ruling, Judge P. Kevin Castel denied defendant Eveready Battery’s motion to dismiss Gelmart Industries’ declaratory judgment action over the trademark “Skintimate” based on lack of subject matter jurisdiction. Judge Castel imported the Rule 12(b)(6) standard under which a complaint must state a claim that is plausible on its face. Noting that even though Gelmart was not yet in the market with its product, Eveready had sent two cease and desist letters, and opposed Gelmart’s application to register “Skintimate,” the Court wrote:

Here, the Complaint and its annexed exhibits allege the existence of adverse legal interest between the parties, with sufficient immediacy to allege a case of actual controversy under the Declaratory Judgment Act. First, Eveready’s own statements in its cease-and-desist letter and its public filing with the USPTO establish ‘adverse legal interests’ under the Declaratory Judgment Act. . . . While stopping short of using the words “infringement” and “dilution,” Eveready has, in sum and substance, asserted that the proposed Gelmart mark is infringing and dilutive. . . .

Judge Castel rejected Eveready’s contention that the action was not ripe because Gelmart was not yet in the market, finding it “sufficient that Gelmart has alleged that it solicited retailers, designed branding materials, is capable of commencing manufacture of products within weeks, and was ‘poised’ to commence a product launch before Eveready asserted infringement.

Court Declines to Stay Enforcement of Patent Infringement Judgment Pending Patent Office Reexamination

In an April 11, 2014 ruling, Judge Samuel Conti denied the defendants' motion to stay execution of damages pending reexamination in the Patent Office of the patent-in-suit in this infringement action. Following a jury verdict, including for willful infringement, the Court entered judgment against the defendants for $953,424.66. Shortly before the trial, the defendants filed an request for reexamination, and after the trial and the jury’s verdict, the Patent Examiner issued a non-final office action invalidating the single claim at issue. The defendants then moved for the stay.

Noting that courts have discretion stay proceedings during Patent Office proceedings, Judge Conti found that all three factors that usually inform the stay decision weigh in favor of denying the stay, particularly given the lateness of the request and the advanced state of the lawsuit. Although Judge Conti recognized that there is some risk the judgment could become final and the patent-in-suit would later be invalidated (which does not permit reopening the judgment), he found the concerns premature, and wrote that “the Court would be willing to reconsider its decision to stay” if the Patent Office renders a final decision on validity while the appeal is still pending.

The Court also treated the defendants’ motion in the alternative as a request for a stay pending appeal without the posting of a supersedeas bond. Judge Conti again ruled that the pertinent factors weigh against entry of such a stay, and denied the motion.

Court Remands Action Where Complaint Does Not Expressly Mention Copyright Violation

In an April 8, 2014 ruling, Judge Paul A. Crotty remanded the action to the New York State Supreme Court despite the defendant’s contention that the plaintiff’s claims sounded in copyright infringement. The Court wrote:

Here, Plaintiff neither explicitly nor necessarily relies on federal law. Instead, the Summons merely alleges “wrongful conversion” of “intellectual property.” . . . While the action may arise under the Copyright Act, the Summons does not provide the facts necessary to draw that conclusion.

Court Denies Summary Judgment of Invalidity Based on Indefiniteness after Having Denied Summary Judgment on Non-Infringement

In an April 7, 2014 ruling, Judge Jed S. Rakoff denied the defendants’ motion to invalidate two claims in the patent-in-suit in the plaintiffs’ infringement action. Judge Rakoff had earlier denied the defendants’ motion for summary judgment of non-infringement. The defendants argued in the current motion that because the Court had construed the pertinent claim terms but had been unable to reach a conclusion as to non-infringement, the claims are indefinite as lacking a “‘discernible boundary.’” Judge Rakoff rejected this argument, writing:

it would be unusual if a claim that can be construed definitely could suddenly become indefinite because an accused product came close to infringing but left the possibility of its noninfringement. A party should not be able to invalidate another’s patent solely by coming close enough to infringing that a Court cannot determine infringement, a question of fact, as a matter of law on a motion for summary judgment.

Court Rules That Only a Single Award of Statutory Damages Is Allowed to Separate Owners of Musical Composition and Sound Recording

In an April 7, 2014 ruling, Judge William H. Pauley III explained his trial ruling “that where two different owners hold respective copyrights in the musical composition and sound recording of the infringed work, they must share a single award of statutory damages.” The Court reasoned that when the defendants “infringed the copyright covering a sound recording and musical composition for the same song, they infringed only one work because the infringement was directed at the sound recording and the musical composition was not exploited.” The Court noted that had the separate owners sued separately, “they may of course collect separately ‘as long as the infringer’s liability on these statutory damages does not exceed the amount provided in Section 504(c)’” of the Copyright Act.

Court Permits Withdrawal of Deemed Admitted Responses to Requests for Admission

 In an April 4, 2014 ruling, Judge Denise Cote granted the defendants’ motion to withdraw and amend their deemed admissions under Rule 36 in the plaintiffs’ trademark and copyright infringement action. The defendants did not respond to the plaintiffs’ RFA’s until more than a month after the responses were due, and offered only “inadvertence” as an excuse. The Court ruled:

Here, there is no question that permitting withdrawal and amendment of the deemed admissions would “promote the presentation of the merits of the action,” Fed. R. Civ. P. 36(b), as the deemed admissions go to the “ultimate issues” in this litigation and may well be dispositive of the action. . . . In particular, defendants are deemed to have admitted that the Accused Products are “counterfeit” and infringe plaintiffs’ trademarks and copyright, that defendants knew of this when selling them, and that any of defendants’ rights with respect to its Isis Cross Design were abandoned. No meaningful “presentation of the merits” of this action concerning infringement of intellectual property rights would be possible unless these admission are withdrawn and amended by the [deemed admitted responses].

Judge Cote rejected the plaintiffs’ claims of prejudice, noting that “plaintiffs requested so many admissions of ultimate liability in this case, despite knowing defendants had denied these requested admissions in their answers, underscores that plaintiffs’ RFAs were largely made “in the hope that [defendants] w[ould] simply concede essential elements” or would miss the 30-day deadline to respond.”

Court Enters Default Judgment and Awards Maximum Statutory Damages in Copyright Infringement Action

In an April 3, 2014 ruling, Judge J. Paul Oetken granted the plaintiff’s motion for a default judgment in a copyright infringement action over the “Frankie and Johnnie” chair, awarded $150,000 in statutory damages, and directed the plaintiff to submit a fee application. The Court “reviewed the filings in this case and conclude[d] that Plaintiff has satisfied the prerequisites to entry of default judgment on its copyright infringement claim.” Judge Oetken further found that the defendant “acted willfully because it is reasonable to assume that as a furniture company, [the defendant] ‘should have known’ that its conduct was infringing based upon its experience with copyright matters.” The Court awarded the maximum $150,000 statutory amount in “light of the compensatory and deterrent purposes of the Copyright Act, the burden of bringing an action, and [the defendant’s] failure to appear.”

Court Adopts Magistrate’s Report and Recommendation of Statutory Damages and Attorneys’ Fees after Default in Trademark Infringement Action

In an April 3, 2014 ruling, Judge George B. Daniels adopted Magistrate Judge Peck’s Report and Recommendation after an inquest awarding $1 million in statutory damages and approximately $10,000 in attorneys’ fees against the defendants who defaulted in the plaintiff’s trademark infringement action. Judge Daniels approved Judge Peck’s conclusion deeming the infringement willful in light of the default. Since the maximum statutory damages award under the Lanham Act is $2 million, the Court adopted Judge Peck’s conclusion that “an award of $1 million – half of the statutory maximum – is sufficient and appropriate in this case.” With regard to attorneys’ fees, Judge Daniels adopted Judge Peck’s conclusion that “the allegations in the complaint, along with Defendants’ default, are sufficient to justify the award of attorneys’ fees to Plaintiff,” and approved the reduction of 15% that Judge Peck made to the amount of fees the plaintiff sought.

Court Grants Stay of Patent Infringement Action Pending Covered Business Method Review in the USPTO

In an April 1, 2014 ruling, Judge Katherine B. Forrest stayed a patent infringement action pending the USPTO’s decision on the defendant’s petition for a Covered Business Method review, and the outcome of the review. The Court was “persuaded by the undisputed evidence presented by [the defendant] of the high likelihood that both the Patent Trial and Appeal Board will grant the Covered Business Method review, and that such CBM review will result in the cancellation or amendment of at least one claim of” the patent-in-suit. Judge Forrest noted that it “is not this Court’s typical practice or inclination to grant stays,” but found that the four factors for granting a stay set out in the America Invents Act weigh in favor of a stay in light of the likelihood that the CBM review will result in amendment of the patent and the early stage of the proceeding.

Court Dismisses Copyright Complaint as Inadequately Plead Because It Does Not Identify All Infringed Works

In a March 31, 2014 ruling, Judge Thomas P. Griesa dismissed under Fed. R. Civ. P. 12(b)(6) Palmer Kane LLC’s copyright infringement claims against Scholastic Corporation over the use of the plaintiff’s photographs. The Court wrote that the plaintiff failed to adequately allege two of the four necessary elements for a copyright infringement claim. First, the “complaint does not properly specify which photographs are at issue in the case” because although the complaint attaches an exhibit with 146 registered photographs, it further alleges that that is “not an exhaustive list of the photographs infringed by Scholastic.” Judge Griesa ruled these allegations insufficient because “Scholastic cannot know all of the works that Palmer Kane claims it infringed.”

Second, the Court found that “the complaint also fails to properly allege the infringing acts committed by Scholastic.” Specifically, although the complaint alleges that “books published by Scholastic . . . contain unauthorized photographs,” “these acts are not sufficient because Palmer Kane does not specify the timeframe during which Scholastic committed the infringement.”

Court Finds That an Ebook of a Translated Work Is Not a New Derivative Work

In a March 31, 2014 ruling, Judge Paul G. Gardephe granted summary judgment in favor of the plaintiff in its declaratory judgment action that it had the right under the Copyright Act to publish an ebook version of a translation (i.e., derivative work) of a then-public domain book it had previously published in print even though the copyright was restored in the interim under the Uruguay Round Agreements Act. The provision of the Uruguay Round Agreements restoring copyrights for certain foreign works permits those who created derivative works before restoration to continue to publish them upon payment to the rights holder of “reasonable compensation.” The central issue in the case was whether the ebook version is a new derivative work or simply a different medium for an existing derivative work. In deciding that the ebook version is not a new derivative work, Judge Gardephe wrote:

All of the forms of “works” listed in the statutory definition of “derivative work” reference changes and alterations in the content for the pre-existing work, or changes and alterations in both the content and the medium of that work. None of the listed forms describes a change in medium alone. A “translation,” for example, requires the selection of new words, phrases, and idioms that are not part of the original work. A “musical arrangement” involves the exercise of artistic judgment concerning, inter alia, composition, rhythm, and lyrics. A “dramatization” or “fictionalization” involves the introduction of fictional elements to an existing story. A “motion picture version” of a book or play involves elements of production, direction and acting, as well as innumerable artistic judgments about how much of the original work will be used. A “sound recording” of a musical performance or other live event will likewise involve innumerable production and editing determinations. An “art reproduction” typically involves taking an image, sculpture, or other work of art and introduction new colors, shadowing, or otherwise recomposing the original work. A “condensation” or “abridgement” of a literary work is, by definition, a presentation of something less than the original work. Accordingly, the terms “recast, transformed, or adapted” [in the definition of a derivative work] must similarly be read to refer to content-based changes. . . . Had Congress wished to afford derivative work status to works involving changes in medium alone, one would expect to see references to, for example, “hardcover,” “softcover,” “VHS,” and “CD.”

The Court also rejected the defendants’ argument that the ebook was itself an “original work,” finding that the process of creating the ebook “involves little more than pure transcription,” by inputting the work into software designed to create the ebook.

Court Finds Personal Jurisdiction in Copyright Infringement Action

In a March 28, 2014 ruling, Judge Andrew L. Carter denied defendant Na El, Inc.’s motion to dismiss plaintiff Zelouf International Corp.’s copyright infringement action for lack of personal jurisdiction. “Zelouf designs, manufactures, and sells textile fabrics,” in which it obtains copyright registrations. It accused Na El of copying Zelouf’s designs, and supplying the infringing fabric to defendant Lito Children’s Wear, Inc., which manufactured it into children’s apparel. Although Na El sold other fabric to customers in New York in twenty-five different transactions, all the fabric at issue in this action was sold to Lito in California, and had no New York connection.

Zoulef argued for jurisdiction over Na El under the provision in New York’s Long Arm statute conferring “personal jurisdiction over an out-of-state defendant who commits a tortious act outside New York that causes injury to “person or property’ in New York, if the defendant ‘expects or should reasonably expect the act to have consequences in [New York] and derives substantial revenue from interstate or international commerce.’” Na El conceded for purposes of argument that it committed a tortious act outside New York with consequences in the state, but contested whether it expected consequences here. Judge Carter rejected Na El’s contention, and ruled that “Na El’s allegedly tortious conduct created a foreseeable risk of having to defend its actions in a New York court.” In particular, the Court noted that Na El was aware of Zoulef’s activities in New York, making it “conceivable that Na El knew that Zelouf, a New York company had intellectual property rights in those designs.” Judge Carter also found that Na El made a conscious effort to serve the New York market by dealing directly with New York customers, and selling to Lito, which Na El knew to have national sales. In concluding that the Long Arm statute applies, the Court examined Na El’s sales, and found that both “numerically and as a percentage of total revenue, Na El ‘derives substantial revenue from interstate and international commerce.’”

Court Granted Defendant's Motion to Dismiss Copyright Infringement Claims

In a March 28, 2014 Decision and Order, Judge Laura Taylor Swain granted defendant John Wiley & Sons, Inc.’s motion to dismiss plaintiff Ellen Sinisi’s amended complaint concerning copyrights to numerous photographs, without prejudice to the renewal of certain claims.

"In order to state a claim for copyright infringement claims a plaintiff must 1) allege which specific original works are the subject of the copyright claim, 2) that plaintiff owns copyrights in those works, 3) that the copyrights have been registered in accordance with the statute, and 4) by what acts during what time the defendant infringed he copyright." The Court found that plaintiffs adequately pleaded copyright infringement as to each of the works specifically identified in the exhibits but found that their allegation that "[a] reasonable opportunity for further investigation and discovery will confirm that Defendan[t] also has infringed other copyrighted works created and owned by Plaintiffs" was insufficient to satisfy the first element of a claim for copyright infringement. Accordingly, defendant's motion was granted, without prejudice, as to any claims for photographs not identified in the exhibits. With respect to the adequately pleaded claims, the Court also found "that the lack of common questions of fact and law and the potential prejudice to [defendant] justify granting [defendant's] motion to sever those claims." Plaintiffs' declaratory relief claims were also dismissed by the Court, which noted that plaintiffs were unable to identify a "specific provision of the Copyright Act that confers the claimed rights on them" and to the extent the claims are premised on contract rights, plaintiffs failed to state that claim.

Court Denies Protective Order to Nonparty Against Disclosure of Suppliers in Copyright Infringement Action

In a March 26, 2014 ruling, Magistrate Judge Gabriel W. Gorenstein denied a protective order to a nonparty in John Wiley & Sons, Inc.’s copyright infringement action against Book Dog Books LLC. Wiley sought discovery from the nonparty, Thomas Cahill, of the identity of his suppliers of books other than books in which Wiley has rights, and of the names of the books in which he deals that are not Wiley’s. Cahill sought a protective order against the disclosure, arguing that the information is irrelevant, and constitutes protected trade secrets.

Judge Gorenstein noted that the identity of the suppliers could show that the defendants “‘have continued to purchase from known counterfeiters,’” which could tend to show willful infringement. Thus, the Court ruled that “the identity of Cahill’s suppliers and information concerning other titles purchased are relevant under Fed. R. Civ. P. 26(b)(1), as these categories of information would bear upon whether or not defendants engaged in willful copyright infringement with respect to other books.” Judge Gorenstein rejected Cahill’s trade secret argument as well, writing “that defendants may designate these materials for the time being as ‘attorneys’ eyes only’ and for use only in this litigation. Plaintiffs will be under court order to so treat the information.” In light of that designation, the Court found that the “arguments made by Cahill are nothing more than ‘generalized and unsupported claims of harm that might result from disclosure’ to plaintiffs’ attorneys, which are insufficient for the moving party to meet its burden of showing good cause for a protective order.”

Court Grants Summary Judgment Dismissing Design Patent Case

In a March 26, 2014 ruling by Judge Katherine B. Forrest, summary judgment was granted to High Point Design LLC and third-party defendants Meijer, Inc., Sears Holdings Corporation, and Wal-Mart Stores, Inc. dismissing defendant Buyer’s Direct Inc.’s design patent infringement counterclaims, based on the ordinary observer standard, holding the patent claims to be invalid due to anticipation, and also finding non-infringement.  Judge Forrest declined, however, to rule on the question of obviousness, as "the first two rulings are sufficient to dispose of the patent claims in this case."  The dismissal of defendant's patent claims also resulted in the related denial of defendant's motion for discovery in connection with those patent claims.  Judge Forrest also denied defendant's motion to amend its trade dress claim due to its untimeliness and as a result, granted plaintiff and third-party defendants' motion to dismiss defendant's trade dress claim, whic
h was deficiently pleaded.

Court Declines to Disqualify Counsel Under Lawyer-Witness Rule

In a March 24, 2014 ruling, Judge Sidney H. Stein denied as premature the defendants’ motion to disqualify counsel for both the plaintiff and the inventor of the invention claimed in the patent-in-suit in the plaintiff’s infringement action. The defendants argued that the inventor of the patent-in-suit defrauded the Patent Office by failing to disclose that the claimed invention had been on the market for three years before the filing of the inventor’s patent application, which would have prevented a patent from issuing. The inventor, a third party defendant in this action, was represented in the Patent Office by the same counsel as in this action. The defendants claimed that they would call counsel as a witness, requiring his disqualification. Judge Stein rejected the argument, ruling that “it is far too early to know whether this action will proceed to trial and whether [the challenged counsel] will participate as trial counsel,” especially in light of pending summary judgment motions. The Court denied the motion without prejudice.

Court Denies Summary Judgment on Copyright Infringement Claim Finding Factual Issues about Validity

In a March 24, 2014 ruling, Magistrate Judge Lisa Margaret Smith denied summary judgment to plaintiff Steven J. Chirogianis on his copyright infringement claim over architectural plans. The plaintiff prepared plans for a proposed building to be developed by the defendants. The plaintiff obtained two copyright registrations for his original plans, but the defendants claimed that those plans had been copied from another architect.

Judge Smith wrote that under “‘the Copyright Act, a party seeking to establish infringement must prove: (1) ownership of a valid copyright; and (2) copying of constituent elements of the work that are original.’” The Court found that the plaintiff “is entitled to a rebuttable presumption of validity as regards the copyrights” for the plans at issue. The defendants argued, however, that the presumption could be rebutted by the evidence showing that the plaintiff copied the plans from another architect also involved on the project. After reviewing and finding “confusion in the record” about the similarity of the plaintiff’s plans and the plans he allegedly copied, the Court “concludes that there are genuine issues of material fact concerning the originality, and thus the validity, of Plaintiff’s copyrights, precluding a grant of partial summary judgment on Plaintiff’s claims of copyright infringement.”

Court Grants Summary Judgment Declaring the Word “Collective” to Be Descriptive in the Trademark at Issue

In a March 24, 2014 ruling, Judge Katherine B. Forrest held on summary judgment that the word “collective” is descriptive as applied to the defendant’s services in the plaintiff’s declaratory judgment action of trademark non-infringement. Judge Forrest wrote:

The word “collective,” as used by Collective is descriptive. “Collective” is defined in the online Merriam-Webster Dictionary as, inter alia, “denoting a number of persons or things considered as one group or whole,” “formed by collecting: aggregated,” and “of, relating to, or being a group of individuals.” This is precisely the manner in which Collective uses the word; it is an advertising network that offers a collection or collective of advertising opportunities. It is the manner in which Collective uses the word in the Collective Marks themselves (“collective” followed by another word or words) and in its descriptions of those marks. The word “collective” thus literally describes “an immediate idea of the ingredients, qualities or characteristics” of Collective’s product.

The Court also denied the plaintiff’s motion “to grant it summary judgment as to the strength of any trademark rights Collective may have in “collective” as a stand-alone mark,” finding disputed issues of material fact.

Court Denies Stay of Patent Infringement Damages Trial During Interlocutory Appeal

In a March 21, 2014 ruling, Judge Colleen McMahon declined to stay proceedings during a defendant’s interlocutory appeal of the of the Court’s liability rulings in this patent infringement action. In considering the request, the Court wrote that the “decision whether to stay a damages trial pending an interlocutory appeal pursuant to 28 U.S.C. § 1292(c)(2) rests in the sound discretion of the district court,” balancing “‘the harm that a stay might cause to the party who has obtained judgment’” against “‘the harm that denial of a stay would cause the losing party.’” The moving defendant premised its motion “on its assumption that the Federal Circuit is going to reverse this Court’s rulings on claim construction, infringement and/or validity.”

Judge McMahon first found that the moving defendant “has not offered me any reason to doubt the correctness of my previous rulings – at least one of which I described as ‘not even close.’” The Court then considered the remaining factors concerning a stay, i.e., whether: (1) the non-moving party will suffer any prejudice from a stay; (2) the party moving for the stay will be unduly burdened by the denial of a stay; (3) the interests of the Court in an expeditious resolution of the case will be served by a stay; (4) the interests of non-parties will be affected by a stay; and (5) there is any public interest in the grant or denial of a stay. Judge McMahon concluded that as “far as this Court is concerned, [the moving defendant] has failed to identify any basis for concluding that it has a ‘substantial possibility’ of prevailing on its interlocutory appeal, and the other relevant factors either weigh in favor of denying [the] motion or are neutral.”

The Court Denied Plaintiff's Motion for Summary Judgment Dismissing Defendant's Trademark Infringement Counterclaims

In a March 21, 2014 Decision and Order, Judge George B. Daniels denied in its entirety Plaintiff Bath & Body Works Brand Management, Inc.’s motion for summary judgment to dismiss defendant Summit Entertainment, LLC’s counterclaims and for declaratory judgment concerning the right to use the marks "Twilight Woods" and "Twilight Crush" for personal care products.

Plaintiff sought a declaratory judgment to establish "(1) non-infringement of the trademark for Twilight Woods, (2) that it had not engaged in unfair competition, (3) that it had not falsely designated the origin of its goods, (4) non-infringement of trade dress, and (5) that its activities did not constitute dilution of Summit's mark." Defendant is the producer and distributor of the motion picture "Twilight" and, while no evidence was presented that defendant's Twilight marks were strong in the field of personal care products, the Court found defendant's Twilight Motion Pictures marks to be very strong. Applying the summary judgment standard and viewing the evidence in the light most favorable to defendant, the Court denied plaintiff's request for declaratory judgment and did not dismiss any of defendant's claims of trademark infringement, trademark dilution, trade dress, and cancellation.

Court Dismisses Declaratory Judgment Counterclaims as Redundant

In a March 18, 2014 ruling, Judge Andrew L. Carter, Jr. dismissed as redundant Barnesandnoble.com, LLC’s declaratory judgment counterclaims of non-infringement of the plaintiff’s copyrights. The plaintiff moved under Rule 12(f), which provides “that ‘the court may strike from a pleading . . . any redundant matter.’” Judge Carter wrote that a court should dismiss a “counterclaim if it is clear that there is a complete identity of factual and legal issues between the complaint and the counterclaim,” and quoted Second Circuit precedent holding that “‘a counterclaim is not duplicative or redundant if it asserts an independent case or controversy that survives the dismissal of plaintiff’s claim.’” In dismissing the counterclaims, the Court found that the “Defendant’s counterclaims seek to resolve legal and factual issues indistinguishable from those raised by Plaintiff’s complaint,” and that none of them “would survive adjudication of the issues in Plaintiff’s complaint.”

Court Granted Defendant’s Motion In Limine and Plaintiff’s Motion To Amend The Complaint, and Denied Plaintiff’s Motion To Preclude Expert Testimony in Connection with Plaintiff’s Copyright Infringement Claims.

In a March 18, 2014 Opinion and Order, Judge Paul A. Engelmayer: (1) granted defendant Monster Energy Company’s motion in limine; (2) granted the plaintiff Beastie Boys’ motion for leave to file its proposed Amended Complaint; and (3) denied the Beastie Boys’ motion to preclude certain expert testimony in the plaintiff’s copyright infringement and Lanham Act action.

Defendants sought to exclude videos other than the allegedly infringing video at issue. In considering the motion in limine, court found that the plaintiff offered little more than the ostensibly infringing videos in support of its argument that the defendant’s conduct in this case was willful. The court reasoned that the jury, told only of the fact of these other alleged violations of the plaintiff’s rights, would be given no reliable means whatsoever to assess whether the defendant acted willfully in connection with the video at issue. Accordingly, defendant’s motion in limine to preclude the plaintiff from presenting evidence the alleging infringing videos at trial was granted.

Court Denied Fox News Network, LLC’s Motion To Dismiss Amended Complaint Alleging Copyright Infringement.

In a March 18, 2014 Memorandum and Order, Judge Analisa Torres denied Defendant Fox News Network, LLC’s motion to dismiss Plaintiffs Yunghi Kim and Contact Press Images, Inc.’s amended complaint alleging copyright infringement. Plaintiff alleged that defendant made unauthorized copies of and displayed Kim’s copyrighted photograph in a video aired on defendant’s cable television channel and posted on defendant’s website. Defendant contended that the video constituted “fair use” as defined by Section 107 of the Copyright Act. Defendant argued that, because a fair use purportedly appeared on the face of the compl
aint and in the video, this action should be dismissed pursuant to Rule 12(b)(6).

Fair use is an affirmative defense, and is, therefore, not appropriate for determination on a Rule 12(b)(6) motion unless the defense appears on the face of the complaint. “[F]air use is a mixed question of law and fact.” Section 107 of the Copyright Act provides that “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright.” 17 U.S.C. § 107. The four factors identified by Congress as especially relevant in determining whether the use was fair are: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the substantiality of the portion used in relation to the copyrighted work as a whole; (4) the effect on the potential market for or value of the copyrighted work. Thus, a fair use defense appears on the face of a complaint where the complaint contains unambiguous factual allegations sufficient to enable the district court to evaluate each of these four factors.

Court Awards Plaintiff Attorneys’ Fees and Expenses Incurred As A Result Of Defendant’s Improper Cancellation of A Deposition.

In a March 18, 2014 Opinion and Order, Judge Gabriel W. Gorenstein granted plaintiffs John Wiley & Sons, Inc., Cengage Learning, Inc., and Pearson Education, Inc.’s motion seeking an order requiring defendants Book Dog Books, LLC and Philip Smyres to pay the expenses plaintiffs incurred when Smyres’s counsel cancelled the second day of his deposition the night before it was scheduled to occur in the plaintiffs’ copyright infringement action.

The Court had previously found that defendants had failed to present an adequate excuse for why they did not appear at their deposition, and gave plaintiffs leave to file the instant application for expenses. In opposition to plaintiffs’ request, defendants argued “[t]he discovery disputes addressed in the Feb. 20 and Feb. 24 letters would have occurred even if Mr. Smyres had submitted to deposition [and thus] Mr. Smyres should not be assessed for the cost of litigation events that would have happened in any event.”

Court Denies Withdrawal of Counsel on Eve of Trial

In two separate March 18, 2014 rulings (here and here), Judge Marvin E. Aspen denied counsel’s request to withdraw from their representation of defendants A.V.E.L.A., Inc. and Leo Valencia in Bruce Lee Enterprises, LLC’s trademark infringement action, and addressed the parties’ in limine motions in advance of the scheduled April 11, 2014 trial. With regard to withdrawal, counsel advised the Court that his clients had terminated the representation in December 2013, but he did not inform the Court or seek to withdraw until March 17, 2014 to permit California counsel (not admitted in New York) time to try to settle the matter. Judge Aspen began his analysis noting that Local Rule 1.4 governing withdrawals gives courts “considerable discretion,” and that courts should consider two factors, ““the reasons for withdrawal and the impact of the withdrawal on the timing of the proceeding.’”

As to whether there is a satisfactory reason for withdrawal, counsel argued that his withdrawal was required because he had been discharged by his clients. Judge Aspen wrote that in the cases on which counsel relied for this argument, there had been irreconcilable or material differences between the lawyers and clients, and that counsel here did not contend there were any such differences. The Court ruled that such differences are not required in every case, but merely “examples of why it is often prudent to grant withdrawal unless there are compelling circumstances” not to do so. Judge Aspen found that the potential disruption to the trial from the belated withdrawal weighed conclusively in favor of denying the motion. Judge Aspen noted that the “case has a lengthy history of litigation, the complaint having been filed nearly five years ago,” and that the “trial date has already been postponed on two occasions.”

Court Transfers Copyright and Trademark Infringement Action to Kentucky

 In a March 12, 2014 ruling, Judge Alison J. Nathan transferred an action alleging copyright and trademark infringement to the Western District of Kentucky under 28 U.S.C. § 1404(a). The plaintiffs, The McGraw-Hill Companies Inc. and other publishing companies, alleged that the defendants operated a “chop shop” in which they altered textbooks intended for use and sale outside the United States so that they could be sold and used in the U.S. This conduct allegedly occurred in Kentucky, but many of the infringing books were sold in New York. The defendants moved to transfer under § 1404, and Judge Nathan undertook the well-established multi-factor test for considering such motions. The Court noted that a “primary factor” is the “locus of operative facts” for the action. Judge Nathan wrote that “in cases of copyright infringement, the operative facts typically relate to the design, development, and production of an infringing product, suggesting the locus of operative facts in the Western District of Kentucky,” but that “in trademark infringement cases courts often hold that the locus of operative facts is the initially chosen forum if acts of infringement, dilution, or unfair competition have occurred in that forum.”

Ultimately, the Court concluded that the locus of operative facts is the Western District of Kentucky. Judge Nathan considered that the “scheme was executed in Kentucky,” whereas “the only alleged event that gives rise to the claims in this litigation that connect it to the Southern District of New York is the sale of some unspecified number of the infringing textbooks here.” The Court furthered discounted the sale of textbooks in New York because there were also sales nationwide.

Judge Nathan considered the remaining factors for considering a transfer, and giving due emphasis to the locus of operative facts, transferred the action to the Western District of Kentucky.

Defendant Who Wins Dismissal on Personal Jurisdiction Grounds Is Not a Prevailing Party Under the Lanham Act

In a March 17, 2014 ruling, Judge Paul G. Gardephe adopted Magistrate Judge Gorenstein’s Report and Recommendation denying attorneys’ fees to defendants who secured dismissal of a trademark infringement action on personal jurisdiction grounds. After the Court dismissed the action on jurisdictional grounds, the defendants “moved for an award of attorneys’ fees under Section 35(a) of the Lanham Act” and under the Court’s inherent authority. Judge Gardephe adopted Judge Gorenstein’s reasoning that the defendants were not “prevailing parties” under the Lanham Act, and thus not entitled to fees. The Court approved of Judge Gorenstein’s application of the “closely analogous” decision of the Second Circuit in Dattner v. Conagra Foods, Inc., 458 F.3d 98 (2d Cir. 2006) which found that a defendant who secures a dismissal on forum non conveniens grounds is likewise not a “prevailing party” entitled to fees.

Judge Gardephe disagreed with the Report and Recommendation’s conclusion that the defendants had waived their argument for fees under the Court inherent authority “because their briefs were ‘devoid of any citations to relevant case law’ and did not ‘advance any reasoned argument supporting such an award.’” Instead, the Court noted that the defendants “included their ‘inherent authority’ argument in the headings of their opening brief and addressed this claim in several paragraphs in their reply.” Judge Gardephe concluded that the defendants’ “moving papers are ‘devoid of any relevant citations’ or ‘reasoned argument’ on this point” but did “not hold that these deficiencies result in a waiver of the argument.” On the merits, though, the Court found that fees were not warranted under its inherent authority because “it cannot be said that Plaintiffs engaged in bad faith or vexatious conduct amounting to an abuse of the judicial proves.”

Court Dismisses Patent Infringement Action on the Ground of Laches

In a March 14, 2014 ruling, Judge Shira Scheindlin dismissed Medinol, Ltd.’s patent infringement action against Cordis Corporation and Johnson & Johnson on the ground of laches following a five day bench trial on that issue. Medinol had two suites of patents for arterial stents, the so-called “Pinchasik patents” and the so-called “Israel patents” which issued from continuation-in-part applications from the Pinchasik patents. In 2000, Medinol sued Cordis over the Israel patents. That series of lawsuits was ultimately unsuccessful, and ended in 2004. The parties thereafter entered into a distribution relationship, which included a tolling provision for any unspecified claims that the parties might have against each other. Sometime in 2005, Medinol explored an infringement action against Cordis on the Pinchasik patents, but did not file that action (or in any way inform Cordis that it was contemplating such an action) until 2013. The parties’ distribution relationship ended early by mutual agreement in 2012. There were some ultimately unfruitful negotiations to renew the relationship, and when those collapsed, Medinol sued on the Pinchasik patents.

Judge Scheindlin noted that to “‘prevail on a defense of laches, a defendant must establish that (1) the plaintiff’s delay in filing a suit was “unreasonable and inexcusable,” and (2) the defendant suffered “material prejudice attributable to the delay.”’” The Court further wrote that in a patent case, the time period for laches does not begin to run until after the patent issues, and that a “delay of more than six years before bringing suit raises a presumption that such a delay was both unreasonable and prejudicial to the defendant.” The presumption shifts the burden to the plaintiff to submit evidence reasonably putting into dispute the reasonableness of the delay and the lack of any prejudice.

Court Awards Summary Judgment of Copyright Infringement Over Publication of E-Book

In a March 14, 2014 ruling, Judge Naomi Reice Buchwald granted summary judgment to plaintiff HarperCollins Publishers LLC in its copyright infringement action against Open Road Integrated Media, LLP over the children’s book Julie of the Wolves. The book was first published in 1972, and Open Road published an e-book version in 2011. The central issue in dispute was whether the original 1971 contract between HarperCollins and the author conveyed the rights to publish e-books.

Judge Rice began the analysis by noting that to “maintain an action for copyright infringement, plaintiff must establish two elements: ‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are in the original.’” The Court further wrote that in this case “the parties dispute only the first element – that is, whether HarperCollins’ uncontested publication rights to Julie of the Wolves encompass the exclusive right to publish and license e-book versions of this work,” and concluded that copyright “infringement actions such as this ‘involving only the scope of the alleged infringer’s license present the court with a question that essentially is one of contract: whether the parties’ license agreement encompasses the [relevant] activities.’”

Judge Rice then engaged in a lengthy analysis of the contract between HarperCollins and the author under New York contract principles, and held that “by its language, the contract grants to HarperCollins the exclusive right to license electronic publications, a right which was infringed by Open Road in its unlicensed e-book publication of Julie of the Wolves.” The Court cautioned, however, that the case turned on “antiquated” language in a forty year old contract, so the holding in this case might have limited applicability.

Court Denies Motion to Dismiss Inequitable Conduct Counterclaim and to Strike Affirmative Defenses

In a March 6, 2014 ruling, Judge Denise Cote denied plaintiff Keystone Global LLC’s motion to dismiss defendants’ counterclaim of inequitable conduct and certain patent-related affirmative defenses. The inequitable conduct counterclaim was based on the defendant’s assertion that it had invented the claimed invention more than a year before the plaintiff applied for the patents-in-suit, that the plaintiff bought one of the defendant’s devices using a pseudonym, and that the plaintiff failed to disclose the defendant’s device or its purchase of the plaintiff’s product during prosecution of the patents-in-suit. In considering the motion to dismiss the counterclaim, Judge Cote applied the Iqbal/Twombly plausibility standard, and further noted that the “Federal Circuit has . . . required a party alleging inequitable conduct on the basis that an applicant failed to disclose prior art to ‘identify the specific prior art that was allegedly know to the applicant and not disclosed.’” Since the counterclaim identified “the piece of prior art the applicants are alleged to have failed to disclose to the PTO and, in alleging that one of the applicants purchased the prior art using a pseudonym, suggests that the failure to disclose was willful,” the Court found the allegations sufficient, and denied the motion to dismiss.

As to the motion to strike, Judge Cote wrote that such motions are “‘not favored and will not be granted unless it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense.’” The Court ruled that the defendant’s “affirmative defenses, while not artfully pled, raise core issues in the patent litigation,’” and denied the motion.