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.

Court Granted, In Part, And Denied In Part, Third Party Defendants’ Motion To Preclude Defendant From Offering Certain Documents and Witnesses.

In a March 7, 2014 Opinion and Order, Magistrate Judge Henry Pitman granted, in part, and denied in part, third party defendant Bambams, LLC’s motion to preclude defendant Sherwood Group, Inc. from offering certain documents and witnesses. Plaintiff Max Impact, LLC commenced this lawsuit against defendant Sherwood Group, Inc. asserting patent and copyright infringement claims in connection with Sherwood's sale of a banner product called "Expand-A-Banner". Sherwood filed its answer and asserted counterclaims against third party defendant BamBams, LLC alleging that the counterclaim-defendants, including BamBams, made false statements in advertisements regarding Expand-A-Banner and had tortiously interfered with plaintiff's business relationships.

BamBams moved to preclude Sherwood from offering: (1) Bank of America deposit slips and cancelled checks for 2006; (2) the balance sheet and P&L statements Sherwood obtained from its accountant; (3) the QuickBooks summaries and reports as evidence of gross profits and/or costs of banners sold and (4) testimony from either Sherwood's accountant or bookkeeper. BamBams sought this relief pursuant Federal Rule of Civil Procedure 37(c) and argued that it was appropriate because Sherwood had (1) failed to provide adequate damages computations and documentary support for its damages claims as required by Fed.R.Civ.P. 26(a)(1)(A)(iii), (2) failed to comply with the fact discovery deadline set forth in my Order, dated July 25, 2013 and (3) failed to disclose its accountant and bookkeeper as potential witnesses in its initial disclosures.

Court Denied in Part, and Granted in Part, Defendant Monster Energy Company’s Motion To Preclude Plaintiff Beastie Boys’ Expert Witness Concerning Music Licensing.

In a March 6, 2014 Opinion and Order, the Honorable Paul A. Engelmayer denied defendant Monster Energy Company’s motion to preclude plaintiff Beastie Boys’ expert witness. The plaintiff intended to offer expert testimony from Lisa Thomas concerning the fair market value of (1) a license to use the musical composition and sound recordings included in the allegedly infringing video and (2) the implied endorsement allegedly created by defendant’s use of plaintiffs’ names and trademarks in the video. The defendant moved to preclude Thomas’s testimony from trial.

“Federal Rule of Evidence 702 grants an expert witness testimonial latitude unavailable to other witnesses, provided that (1) ‘the testimony is based on sufficient facts or data,’ (2) ‘the testimony is the product of reliable principles and methods,’ and (3) ‘the expert has reliably applied the principles and methods to the facts of the case.’” “The proponent of expert testimony has the burden of establishing by a preponderance of the evidence that the admissibility requirements of Rule 702 are satisfied.” The Court’s task “is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” “A trial judge should exclude expert testimony if it is speculative or conjectural or based on assumptions that are so unrealistic and contradictory as to suggest bad faith.” Additionally, “an expert opinion requires some explanation as to how the expert came to his conclusion and what methodologies or evidence substantiate that conclusion.” Pursuant to Rule 403, the Court may also exclude evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Important here, “[a] minor flaw in an expert’s reasoning or a slight modification of an otherwise reliable method will not render an expert’s opinion per se inadmissible.” “The judge should only exclude the evidence if the flaw is large enough that the expert lacks good grounds for his or her conclusions.” “This limitation on when evidence should be excluded accords with the liberal admissibility standards of the federal rules and recognizes that our adversary system provides the necessary tools for challenging reliable, albeit debatable, expert testimony.”

The defendant did not dispute Thomas’ expertise in music licensing, nor did it take issue with the five factors that Thomas stated, in her experience, usually affect the negotiated value of a music license. Instead, the defendant disputed her application of those factors to the facts at hand.

In the main, the Court found defendant’s objections were without merit, or went to the credibility of Thomas’s testimony, which were to be tested not by preclusion but by “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof,” which “are the traditional and appropriate means of attacking shaky but admissible evidence.”

The defendant did have one trenchant objection to Thomas’s report and testimony. Thomas estimated the fair market value of an appropriate license based on a perpetual term of use. But the measure of damages must be based on “the use the infringer made,” not unrealized risks created by the infringer’s use. Thomas’s decision to value the license and implied endorsement based on a perpetual term of use, when the law requires her to use a five-week term of use, was not a “minor flaw.” Rather, “the flaw is large enough” that, while it remained a basis for her report, the report “lacks good grounds for [its] conclusions.” This flaw, however, was eminently correctable, the court ruled. Thomas was allowed to render a prompt, revised opinion, that valued the license based on a factually defensible assumption as to the term of use.

In a subsequent May 7, 2014 ruling,  Judge Engelmayer again refused to prohibit Thomas from testifying.  The defendant argued that Thomas's estimate of damages was so vague as to be illusory.  The Court wrote that Thomas "is not fairly to be faulted for acknowledging that inherent uncertainty in estimating the value of a unique, intangible good.  In acknowledging that uncertainty, Thomas, in fact, keeps company with the Second Circuit, which, when it first approved the method of measuring a copyright holder's actual damages through the fair market value of a hypothetical license fee, recognized the difficulty of that exercise."  The Court did, however, did preclude Thomas from testifying about the settlement of a widely-publicized dispute between the Beastie Boys and toymaker GoldieBlox under Federal Rule of Evidence 403.  Judge Engelmayer wrote that "the confusion and delay occasioned by introduction of evidence as to the GoldieBlox Settlement would substantially outweigh -- indeed, it would overwhelm -- the limited probative value of the GoldieBlox testimony."

Court Appoints Forensic Investigator After Defendant Failed to Issue Litigation Hold

In a March 4, 2014 ruling, Magistrate Judge Michael H. Dolinger ordered that plaintiff Klipsch Group, Inc. could appoint a forensic investigator to examine defendant Big Box Store Ltd.’s “computer systems for the purpose of determining, if possible the likelihood of document destruction . . ., the likely nature and volume of any such destroyed documents, whether some or all of those documents may be recovered, the status of the sales information in the defendants’ system of computers, whether any pertinent sales data has been destroyed or simply not produced, the recoverability of any destroyed sales data, and what any recovered sales data pertaining to infringing goods indicates as to volume, revenue and profits.” Klipsch had accused Big Box Stores of a variety of discovery abuses in its trademark infringement action, including failure to issue a written litigation hold and issuing an oral litigation hold seven months after the start of the litigation, and further argued that that failure permitted documents to be destroyed, especially documents relating to sales of the goods infringing its trademark. Big Box Stores admitted some trademark infringement, but only as to a small number of units.

Judge Dolinger concluded that Big Box Stores had fallen short in its discovery obligations, including making misleading statements about the documents that it had. The Court found, however, that despite the fact that documents had been destroyed, there was no evidence that any documents relating to the amount of sales had been destroyed, nor was there any evidence that the defendant’s infringing sales were any greater than the small number of sales to which Big Box Stores admitted. In these circumstances, Judge Dolinger rejected a number of harsher penalties, such as termination in Klipsch’s favor, preclusion of evidence about the amount of infringing sales, and a mandatory or permissive adverse jury instruction, in favor of the forensic investigation. The Court ordered the plaintiff to bear the cost of the investigation in the first instance with leave for the plaintiff to apply for a shifting of the costs “in light of actual problems in obtaining discovery from defendants.”

Court Recommended Preliminary Injunction and Declaratory Judgment Be Granted, In Part, And Denied Monetary Damages and Attorneys’ Fees Be Denied, For Copyright Infringement Of Documentary Film.

In a March 3, 2014 Report and Recommendation to the Honorable Ronnie Abrams, Magistrate Judge Ronald L. Ellis recommended that declaratory judgment for the plaintiff be granted in part; that the plaintiff’s request for a permanent injunction be granted; and that the plaintiff’s requests for monetary damages and attorneys’ and costs be denied.

Plaintiff Tanya Steele commenced this action against defendants Richard Bell and Josh Milani Gallery, Pty. Ltd. for declaratory judgment, copyright infringement, fraud on the U.S. Copyright Office, breach of contract, and other claims concerning the ownership of the film, Blackfella’s Guide to New York City. Plaintiff sought declaratory and injunctive relief, damages, and attorney's fees and costs, pursuant to the Copyright Act. On May 16, 2013, the Honorable Ronnie Abrams entered default judgment against defendants and referred the case for an inquest on damages.

Plaintiff sought a declaration that she is the "sole author of the Film because she singlehandedly generated the concept for the Film and supervised the Film's creation from start to finish." The Supreme Court has stated that "[t]he sine qua non of copyright is originality." "Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity." As the plaintiff developed the concept, content, and overall aesthetic for the film, created the title to the film, executed the film, prepared production schedules, shot and reviewed footage, and wrote the script, the court recommended that plaintiff's request for a declaration that she is the sole author of the film be granted.

Court Dismisses Trademark Infringement Claims on Summary Judgment, Finding No Likelihood of Confusion as Matter of Law

In a March 3, 2014 ruling, Magistrate Judge Andrew J. Peck granted summary judgment to defendant New Balance Athletic Shoe, Inc. against plaintiff defendant Denimafia Inc. Denimafia asserted trademark infringement, counterfeiting and unfair competition claims (and related state law claims) against New Balance over the mark <=> on footwear. Denimafia has used the marks on “men’s t-shirts, woven shirts, jackets, chinos jeans, and casual suits, as well as women’s dresses and skirts.” New Balance used the marks on its “Minimus collection of three athletic shoe models,” as well as “‘performance running apparel, sandals, socks, other outdoor products, water shoes, multisport training shoes, and kids’ shoes.’” Although Denimafia had somewhat substantial sales of the trademarked goods before 2008, since then, its sales have been insignificant.

The Court first noted that Denimafia did not submit any survey evidence, and rejected Denimafia’s anecdotal evidence of actual confusion, consisting of five communications from individuals with whom Denimafia’s principal had previous relationships. Judge Peck found that none of this evidence showed actual confusion, but merely documented speculation that Denimafia’s principal might be collaborating with New Balance. By contrast, New Balance commissioned a survey that failed to document any evidence of actual confusion.