S.D.N.Y. Intellectual Property Law

Court Dismissed Defendants’ Counterclaims Asserting Anti-Trust and Unfair Competition Claims Alleging Misuse of Copyright-Protected Jewelry

In a February 19, 2014 ruling, Judge Colleen McMahon dismissed defendants’ A.O.D. Jewelry Company and David Aghbashoff’s three counterclaims against plaintiff IDI Design Inc. for (i) violation of the antitrust laws through misuse of its copyright registration; (ii) copyright misuse constituting unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a); and (iii) unfair competition in violation of the New York General Business Law § 360.

First, defendants alleged that plaintiff had violated antitrust laws by misusing its copyright registration, basing its claim on the belief that plaintiff was “engaged in interfering in commerce by expanding the scope of its Copyright Registration beyond a reasonable scope to intimidate and inhibit commerce in the jewelry business.” The Court held that the defendants plead no facts to support its allegation of a violation of the antitrust laws, and failed to state which antitrust law had allegedly been violated. In order to state an antitrust claim, “[P]laintiff must allege a relevant product market in which the anti-competitive effects of the challenged activity can be assessed.” The defined market must be supported in the complaint by a “theoretically rational explanation” for why the boundaries of the market are defined as they are. Finding that the “jewelry business,” in which plaintiff was purportedly trying to intimidate and inhibit commerce,” was not a bounded market, the court dismissed defendants’ first counterclaim.

In a February 6, 2014 ruling, Judge P. Kevin Castel dismissed plaintiff Newlight Eyewear, LLC’s action seeking a declaration that it does not infringe defendant Art-Optic, Ltd.’s copyrights and asserting claims for Art-Optic’s interference with Newlight’s contractual relations with its customers. Both parties currently sell hand-painted eyeglass frames. Newlight had previously distributed Art-Optics’ frames. After the relationship ended, Art-Optics sued Newlight for copyright infringement, but discontinued the action after it was assured that Newlight’s sales were merely disposing of left over inventory from the distributorship relationship. In its complaint, Newlight alleges that Art-Optics is nevertheless still informing Newlight’s customers that Newlight’s products infringe its copyrights and that they should not do business with Newlight.

Judge Castel dismissed the claim to declare non-infringement of Art-Optics’ copyrights, writing that the “Complaint does not describe [Newlight’s] product line, or the differences and similarities between [Newlight’s] eyeglass frames and the” Art-Optics frames. The Court added that the Complaint “is silent as to the design of the [Newlight] product line and how the design and how the design elements compare with those of” Art-Optics, and that “Newlight has offered no examples of its products and does not allege that it has registered copyrights for any of its designs.” Judge Castel concluded that the Complaint “is so lacking in detail as to which of Newlight’s products are at issue and the design elements of those products as to fail to state a claim for relief.” The Court also dismissed Newlight’s claim to declare Art-Optics’ copyright registrations invalid, finding that Newlight did not make any “allegations that plausibly contend that defendant’s copyrights for the [Art-Optics] frames are somehow invalid and/or unenforceable.” And having dismissed the federal claims, Judge Castel declined to exercise supplemental jurisdiction over Newlight’s common law claims, and dismissed the entire action.

Court Finds No Personal Jurisdiction Over Defendant in Trademark Infringment Action; Transfers It to Proper Court

In a February 5, 2014 ruling, Judge Ronnie Abrams granted defendant Positive Impact, Inc.’s motion to dismiss the trademark infringement claims against it for lack of personal jurisdiction, and transferred the action to the Northern District of Georgia. Having concluded that the Court lacks personal jurisdiction, Judge Abrams declined to reach Positive Impact’s motion to dismiss certain claims.

After the Atlanta-based Positive Impact sent New York-based plaintiff DH Services, LLC a cease and desist letter over DH Services use of the “Mister” mark for its online dating services and made a follow up telephone call to Positive Impact, Positive Impact started this action as a declaratory judgment of non-infringement. It later amended the complaint to add statutory and common law claims of unfair competition and deceptive practices.

Because Positive Impact is located outside New York, and the Lanham Act “‘does not specifically provide for national service of process,’” Judge Abrams applied the law of the forum state, New York’s Long Arm statute. It was undisputed that there was no general jurisdiction over Positive Impact in New York. So DH Services alleged jurisdiction based on Positive Impact’s transaction of business in New York, its alleged commission of a tort here, and its alleged commission of a tort outside New York that had a foreseeable impact in New York.

In a January 31, 2014 ruling, Judge Kimba M. Wood granted defendant The McGraw-Hill Companies’ motion to dismiss plaintiff David Young-Wolff’s copyright infringement claim under Rule 12(b)(6). Young-Wolff alleged that McGraw-Hill used his copyrighted photographs in text books that it published. Young-Wolff further alleged that it licensed certain photographs to McGraw-Hill for certain specified texts to be published in specified numbers. McGraw-Hill, according to Young-Wolff, “(1) published Plaintiff’s photographs without permission; (2) reused Plaintiff’s photographs in subsequent editions of titles without obtaining a valid license; (3) published Plaintiff’s photographs prior to obtaining a valid license; (4) exceeded limited license agreements. . .; and (5) refused to provide information to Plaintiff regarding the scope of its past, current, and ongoing use of Plaintiff’s photographs.”

The Court began its analysis by noting that a “‘properly plead copyright infringement claim must allege 1) which specific original works are the subject of the copyright claim, 2) that plaintiff owns the 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 the copyright.’” McGraw-Hill asserted that Young-Wolff had failed to allege that the copyrights have been duly registered, and to specify the acts and times of infringement. Although Judge Wood rejected most of McGraw-Hill’s arguments, the Court did find that “Plaintiff has failed to adequately allege ‘during what time the defendant infringed the copyright.’”

In a January 29, 2014 ruling, Judge Jed S. Rakoff, after a three day bench trial, awarded co-ownership of four song recordings by legendary jazz pianist Oscar Peterson to his estate and to Jayarvee, Inc., the owner and operator of the Birdland jazz club in New York City. The four recordings were duets, with Peterson on the piano, and jazz singer Hilary Kolodin, who is known professionally as Hilary Kole, as the singer. At the time of the recordings, Kole and the principal of Jayarvee, John Valenti, were in a relationship. After the relationship ended, Kole disputed ownership of the recordings.

The central issue in the case was the validity of an assignment of the recordings that was inarguably signed by Kole, although the assignee was not specifically identified. Valenti testified that the assignment, which was produced in the lawsuit from his possession, was intended to assign the recordings from Kole to Jayarvee. Kole testified that the assignment was meaningless, and that she filled it out and executed it merely to show another musician how to fill out such a form. Judge Rakoff, with some seeming dismay about Kole’s testimony, credited Valenti’s testimony and declined to credit Kole’s. The Court thus concluded that “any copyright interest Kole may have had in any of the Recordings was transferred to Jayarvee through the” assignment.

Judge Rakoff also found that “there is a threat of infringement of that ownership interest sufficient to support plaintiffs’ request for a permanent injunction” because Kole attempted to register her own copyrights in slightly modified recordings, and also caused one of the songs to be played on an Internet website. So the Court concluded that “plaintiffs are entitled both to a declaration that they are owners of the copyrights in all versions of the Recordings and to an injunction permanently barring Kole from any sale, distribution, or other public use of the recordings.” Judge Rakoff denied an award of fees, though, finding that in the circumstances of the case, “an award of fees would be excessive.”

Court Grants Summary Judgment of Nonobviousness, Orders Trial on Damages

In a January 29, 2014 ruling, Judge Colleen McMahon granted plaintiff Medien Patent Veraltung AG’s motion for summary judgment of nonobviousness of the patent-in-suit, and denied defendant Deluxe Entertainment Services Group, Inc.’s cross motion for summary judgment of invalidity. The Court had previously entered summary judgment of infringement, so the only remaining issue was Deluxe’s invalidity contention. The parties stipulated that obviousness was the only arguable ground for invalidity.

In considering the cross-motions, Judge McMahon first noted that summary judgment may be granted on the issue of nonobviousness, and that such “a motion does not require a court to find that a challenged patent claim is valid, but rather only that the claim in not invalid in view of the particular prior art references cited by the defendant.” The Court further wrote that obviousness “under 35 U.S.C. § 103 is an issue of law based on underlying issues of fact.” A determination of obviousness requires a “‘showing that a person of ordinary skill in the art at the time of the invention would have selected and combined [the] prior art elements in the normal course of research and development to yield the claimed invention.’”

In a January 29, 2014 ruling, Judge William H. Pauley III disposed of nineteen motions in limine in plaintiffs Capitol Records, Inc.’s and other music publishers’ long-running copyright infringement action against MP3tunes, Inc. The Court characterized some of the motions as seeking to “resurrect discovery disputes and legal determinations this Court decided previously. Others level an impressive array of claims and defenses, including perjury, fraud, and witness harassment. Many seek determinations on the merits rather [than] a ruling on the admissibility of evidence.”

Of note are some of the substantive rulings that Judge Pauley made while addressing the evidentiary issues. First, Capitol Records sought to introduce evidence of MP3Tunes’ alleged infringement of copyrights other than copyrights-in-suit as so-called “red flag” or “willful blindness” evidence that would strip the defendant of the safe harbor provisions (for internet service providers) under the Digital Millennium Copyright Act. Relying on the Second Circuit’s controlling decision in Viacom Int’l v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2013), Judge Pauley ruled that “only ‘specific infringements’ that correspond to songs-in-suit are relevant to a determination of liability under a willful blindness or red flag knowledge theory.” The Court added that even “if the evidence were relevant, its probative value would be substantially outweighed by the danger of unfair prejudice to Defendants,” and concluded that “evidence of the infringement of copyrights not owned by Plaintiffs is excluded as to Defendants’ liability.” Judge Pauley further ruled, however, that because “evidence of general infringement is relevant to the issue of willfulness [for the assessment of statutory damages], but irrelevant to infringement liability, this Court will bifurcate liability from willfulness and damages at trial.”

In a January 29, 2014 ruling, Judge Robert W. Sweet entered judgment in favor of plaintiffs Debra Schatzki and BPP Wealth, Inc. in their trademark infringement action against defendant Weiser Capital Management, LLC and others after a bench trial. BPP owns the registered service mark “Building, Protecting and Preserving Wealth for Generations,” as well as other marks. The Court found that the “evidence establishes that [Weiser Capital] incorporated BPP’s service marks into its website and promotional materials during Schatzki’s tenure at [Weiser Capital] and continued to incorporate BPP’s service marks into its website and promotional materials for six weeks after Schatzki’s termination.” Judge Sweet wrote that given “the totality of the evidence, [Weiser Capital] did infringe on Plaintiff’s service marks.” Noting that the plaintiffs elected statutory damages, the Court ruled that “given the totality of the circumstances surrounding the use of the service marks by Defendants, including the circumstances of Schatzki’s termination by [Weiser Capital] and role at [Weiser Capital] prior to her termination and that the service marks were ultimately removed from the website and promotional materials” a $15,000 award is appropriate.

In a follow up February 18, 2014 ruling, Judge Sweet declined to award prejudgment interest on the statutory trademark damages award. Judge Sweet acknowledged that prejudgment interest would be permissible, but is typically awarded for "willful conduct or bad faith and 'exceptional' circumstances." The Court found that the plaintiffs had not show willful misconduct or bad faith at trial, and so were not entitled to an award of prejudgment interest.

Court Permits Email Sevice of Summons and Complaint

In a January 28, 2014 ruling, Judge Paul A. Engelmayer granted plaintiff Richard Noble’s motion for email service on the defendants, which consist of “a number of websites and individuals” that “are party of an intertwined, opaque online T-Shirt-selling enterprise that has sold T-Shirts bearing the ‘Bo Knows” photograph [of Bo Jackson], in violation of Noble’s rights” in the copyright of the photograph. Judge Engelmayer noted that alternative service was permitted under New York CPLR § 308(5) where traditional service is impractical, and ruled that “Noble has more than shown the impracticability of traditional service – he has shown that actual prior attempt, performed with due diligence, have been unsuccessful.” The Court also found that email service comports with Due Process because “Noble has served the defendants at email addresses that they listed on their websites and on confirmation emails sent to [Noble’s] lawyer, Edward Greenberg, after Greenberg purchased T-Shirts from defendants.” Judge Engelmayer was “persuaded that these emails are likely to reach the defendants. As a result, the email service comports with the requirements of due process.”

Court Issues Claim Construction Ruling Construing "Means-Plus-Function" Terms

In a January 28, 2014 ruling, Judge Shira A. Scheindlin issued a claim construction ruling in plaintiff Rates Technology Inc.’s patent infringement action against defendant Broadvox Holding Company, LLC and others. While construing 14 claim terms in two patents-in-suit, the Court decided three general threshold issues. First, Judge Scheindlin declined to strike Broadvox’s experts declaration as “conclusory and contradict[ed] by the intrinsic record,” noting that if “I find that a construction proposed by [the expert] contradicts the intrinsic evidence, I will simply discount it.” Second, the Court found that it was not strictly bound by prior rulings about the construction of some of the same terms in earlier litigation, the Court nevertheless found them “persuasive,” and largely followed the reasoning of those decisions. Third, without citing any cases, the plaintiff argued that it was not bound by statements made to the PTO Board of Appeals for purposes of claim construction. Judge Scheindlin rejected that argument, ruling that statements to the PTO Appeals Board “give rise to a prosecution disclaimer where they ‘unequivocally and unambiguously disavow[] a certain meaning . . .’”

Many of the disputed terms involved the “means plus function” language under 35 U.S.C. § 112(f). In arguing for a particular construction of one such term that used “means for,” Rates Technology argued that a person of ordinary skill in the art would understand certain language “as connoting sufficient structure” so that the term at issue was actually not a “means plus function” limitation. Judge Scheindlin ruled that it “‘is not enough for the patentee simply to state or later argue that persons of ordinary skill in the art would know what structures to use to accomplish the claimed function,’” and found it to be a “means plus function” term.

In a January 20, 2014 ruling, Judge Donald E. Walter ruled that the willfulness requirement for the recovery of damages under 15 U.S.C. § 1117(a) does not apply to claims arising under 15 U.S.C. § 1125(a). Judge Walter wrote: “The issue of damages is controlled by the 1999 Amendment to 15 U.S.C. § 1117(a). The court can only presume that Congress knew what it was doing in drafting in the disjunctive the willfulness requirement of 15 U.S.C. § 1125(c).” Since the Court had already dismissed the claims under § 1125(c) and only the § 1125(a) claim remained, the Court concluded that “the willfulness requirement does not apply,” and so “no evidence of willfulness need to be proven.”

Court Declines to Dismiss Claim to Declare “Tiffany Setting” Generic for Rings

In a January 17, 2014 ruling, Judge Laura Taylor Swain denied Tiffany and Company’s motion to dismiss Costco Wholesale Corporation’s counterclaim to declare the term “Tiffany setting” to be generic for a ring “‘setting comprising multiple slender prongs extending upward from a base to hold a single gemstone.’” Costco advertised two rings it sold at one of its stores as having a “Tiffany setting,” and Tiffany sued for statutory and common law trademark infringement. Costco counterclaimed for declaratory relief to declare the term “Tiffany setting” generic as applied to rings, and Tiffany then moved for summary judgment or judgment on the pleadings.

The Court first noted that although the “Tiffany” mark had first been applied to jewelry in 1868 and the registered mark had long since become “incontestable,” “[e]ven an incontestable or famous mark can become generic and lose protection.” Judge Swain further wrote that a “court may partially cancel or limit a registered trademark if only one use of the trademarked term has become generic.”

In deciding the motion, the Court observed that only “‘in the rarest of cases may summary judgment be granted against a plaintiff who has not been afforded the opportunity to conduct discovery.’” Judge Swain also noted that the “question of whether a mark is, or has become, generic is generally one of fact.” Judge Swain then denied summary judgment, writing that in “support of its argument that ‘Tiffany’ has acquired a generic meaning when used to refer to a type or style of ring setting, Costco offers excerpts from dictionary definitions of ‘tiffany’ and ‘Tiffany setting,’ a preliminary report by a lexicographer, evidence of generic use of the term ‘Tiffany setting’ by jewelry manufacturers, retailers and consumers, and examples of the generic use of the term ‘tiffany setting’ in publications.” The Court cautioned that “none of this evidence is by any means conclusive of the proposition” of genericness “advanced by Costco,” but that it is sufficient at the “pre-discovery” phase to defeat summary judgment.

Magistrate Recommends Case Be Restored to Docket and Consent Injunction Entered

In a January 14, 2014 ruling, Magistrate Judge Henry Pitman issued a Report and Recommendation in which he recommended that plaintiff Time Square Foods Imports LLC’s motion to reopen the case and execute the consent judgment entered into with defendant Ursa Philbin in open court before Judge Pitman. In the action, Time Square foods asserted the right to use “My Skinny”-formative marks for human and pet foods under a license from a company called Eximp. Philbin, a purportedly minority shareholder in Eximp, asserted that the license was invalid. Upon a referral from Judge Engelmayer, Judge Pitman presided over a settlement conference. The parties reached a settlement, and placed its terms on the record in open court. A dispute then arose about Philbin’s right to use “Skinny” in connection with food, and Philbin refused to execute a settlement agreement.

Judge Pitman noted that the “parties’ dispute presents two issues for resolution: (1) was there a meeting of the minds on the existence of a settlement, and, if so (2) is the mark SKINNY with respect to food for humans or pets within the injunction to which the defendants agreed.” Writing that “the existence of a contract is determined by what a party says and does and not subjective beliefs,” and the Court found, based on the parties’ colloquy at the settlement conference, that “defendants unequivocally agreed to the entry of an injunction prohibiting them from ‘using the disputed marks and anything confusingly similar.’” Judge Pitman concluded that “there is a binding settlement and the only remaining issue is whether the mark SKINNY is confusingly similar to the marks MY SKINNY, MY SKINNY RICE, MY SKINNY PETS OR MY SKINNY PET TREATS for food products for human or animal consumption.”

The Court found that there “can be little question that SKINNY is confusingly similar to the marks MY SKINNY, MY SKINNY RICE, MY SKINNY PETS or MY SKINNY PET TREATES when used for food products.” Judge Pitman ruled that the “presence or absence of the single, one syllable word ‘my’ is insufficient to distinguish SKINNY from plaintiff’s marks when used in connection with similar goods.”

In a February 10, 2014 ruling, Judge Paul A. Engelmayer adopted Magistrate Judge Pitman’s Report in full. Judge Engelmayer wrote that the defendants’ objection to the Report “simply reiterates the arguments made in their original opposition – primarily, that Time Square Foods does not own an independent trademark in the word SKINNY.” The Court added that “[c]areful review of the Report reveals no clear error.”

Court Reaffirms Willfulness Requirement for Recovery of Lanham Act Monetary Damages

In a January 16, 2014 ruling, Judge Katherine B. Forrest denied defendant ContextMedia, Inc.’s motion for summary judgment on plaintiff Guthrie Healthcare System’s Lanham Act and related state law claims, but ruled that Guthrie was not entitled to its actual d
amages or lost profits, and so struck its jury trial demand. With regard to the damages claim, Judge Forrest wrote that in “order for a plaintiff to recover its damages or defendants’ profits as to these [Lanham Act] claims, a plaintiff must show actual consumer confusion, bad faith, or willful deception.” The Court then found that “plaintiff has failed to raise a triable issue of fact as to these elements,” and dismissed the damages claim. In reaching its conclusion, the Court noted the split in District decisions as to whether a 1999 amendment to the Lanham Act damages provisions altered the willfulness requirement for an award of damages (which was especially strong in the Second Circuit). Judge Forrest found “the rationale of those courts continuing to require willfulness as more persuasive.” and continued the willfulness requirement.

With regard to the conclusion of no willfulness, the Court found that: (1) the defendant commissioned a third party designer to design its allegedly infringing logo; (2) neither the defendant’s principal nor the designer were aware of the plaintiff’s mark at the time, and (3) the Trademark Office registered three of the defendant’s marks that allegedly infringed the plaintiff’s mark, negating any inference that the defendant should have known of the infringement. Judge Forrest rejected as insufficient as a matter of law plaintiff’s supposedly contrary evidence that the defendant failed to conduct a trademark search before adopting its mark and that the defendant continued to use the mark after being sued. So the Court rejected the plaintiff’s claim for its lost profits, but did hold that the defendant could be liable for nominal damages and costs if infringement is found.

In a January 16, 2014 ruling, Judge Alvin K. Hellerstein denied plaintiff Mayimba Music, Inc’s summary judgment motion against Sony Corporation and others in Mayimba’s copyright infringement action. Mayimba alleged that well-known Dominican Republican singer-songwriter El Cata, in collaboration with the performer Shakira, included an adapted version of Mayimba’s song Loca con su Tiguere in an album issued by Sony.

The Court wrote that to “successfully prove copyright infringement, plaintiff must show ownership of a valid copyright and unauthorized copying of constituent, original elements,” and that to “prove actual copying, plaintiff may present actual evidence of copying or indirect evidence that demonstrates proof of access.” Mayimba alleged that El Cata has access to the song because El Cata met with the song’s author “informally outside of a production studio where [the author] sang El Cata several of his songs.” El Cata then supposedly recorded the author singing Loca con su Tiguere. The song’s author later signed documents disclaiming authorship of the song and acknowledging El Cata’s ownership. Judge Hellerstein, however, found that although the evidence was questionable, “[b]arely, the issue is one for the jury to
decide,” and denied summary judgment.

Court Declines to Rescind Copyright Assignments, and Dismisses Infringement Claims

In a January 13, 2014 ruling, Judge William H. Pauley III granted summary judgment in favor of defendants Thomas v. Conigliaro and another defendant dismissing plaintiff Christian McDonald’s copyright infringement and other claims against them. Judge Pauley ruled that McDonald could not rescind his assignment of the copyrights at issue because Conigliaro was a bona fide purchaser, and that McDonald’s rescission claim was time-barred in any event.

McDonald claimed that an interim August 2006 assignment of the copyrights to Reiss had been fraudulently induced, and that the later assignment to Conigliaro was void because Conigliaro “had notice of the alleged fraud.” Judge Pauley noted that “[c]ontracts effecting the sale and license of copyrights are construed ‘according to state law principles of contract interpretation,’” and wrote that under “‘New York law, a recipient of property takes the property free of any equitable interest, such as would give rise to a constructive trust, when the recipient is a bona fide purchaser.’” After considering the evidence of Conigliaro’s knowledge of the alleged fraud urged by McDonald, the Court concluded that “no reasonable jury could find that Conigliaro was on notice of Reiss’s purported fraud,” and ruled that Conigliaro was a bona fide purchaser of the copyrights.

With regard to the statute of limitations issue, Judge Pauley wrote that “McDonald’s claim to the . . . copyrights rests on rescission of the 2006 assignments because Reiss allegedly fraudulently induced them.” The Court ruled that a “‘claim for rescission based on actual fraud is governed by the statute of limitations for claims based on fraud.’” Since McDonald filed the action more than six years after the supposed fraud giving rise to the rescission, the action was, according to the Court, time barred unless it was nevertheless filed within “’two years from the time the plaintiff . . . discovered the fraud, or could with reasonable diligence have discovered it.’” Judge Pauley found that McDonald was aware of the alleged fraud more than two years before filing suit, and held that the rescission claim was time barred.

Court Finds Personal Jurisdicition in Patent Infringement Action Based on Acts of Subsidiaries

In a January 6, 2014 ruling, Judge Shira A. Scheindlin declined to dismiss plaintiff Rates Technology Inc.’s patent infringement action against Broadvox Holding Company, LLC and others for lack of personal jurisdiction. In considering the jurisdictional issue, the Court applied Federal Circuit law which, like Second Circuit law, applies “the personal jurisdiction rules of the forum state.”

Noting that “Broadvox Holding, through its subsidiaries, operates a VoIP [voice over internet] network in New York, which is among its top ten retail markets,” Judge Scheindlin wrote that where “a defendant who has purposefully directed its activities at the forum state seeks to defeat jurisdiction, it must ‘present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.’” The issue thus became whether the actions of Broadvox Holding’s subsidiaries in New York should be imputed to Broadvox Holding. The Court wrote that under “certain circumstances, a court may assert jurisdiction over a foreign parent corporation based of its subsidiaries in New York,” if the subsidiary is “either an ‘agent’ or a ‘mere department’ of a foreign parent.”

Judge Scheindlin concluded that Broadvox Holding’s subsidiaries carrying out business in New York are its agents under the applicable agency test. In particular, the Court found that “Broadvox Holding is more than just an ‘investment mechanism [that] diversif[ies] risk through corporate acquisitions.’ Instead, it is in the same business as its subsidiaries – providing IP-based communication services to customers.” So the Court ruled that “[g]iven the importance of its subsidiaries’ activities in New York – one of its ‘top ten retail markets’ – it is fair to say that Broadvox Holding would perform these functions if no agent were available.” Before finding personal jurisdiction, though, Judge Scheindlin considered whether the assertion of jurisdiction comports with due process. The Court noted that because “Broadvox Holding purposefully directed its business toward New York, it must make a ‘compelling case that the presence of some other considerations would rendered jurisdiction unreasonable,” and ruled that Broadvox Holding failed to do so. The Court thus found personal jurisdiction, and denied the motion to dismiss.

Court Finds Trademark and Trade Dress Infringement; Awards Treble Damages and Attorneys' Fees

In a January 6, 2014 ruling, Judge Harold Baer, Jr. entered judgment in favor of the plaintiffs after a four-day bench trial on the plaintiffs’ trademark and trade dress infringement claim over plaintiff Audemars Piguet Holding S.A.’s well-known octagonal watch design. The plaintiffs contended that two models of the defendants’ watches infringed their trademarks and trade dress in their “Red Oak” line of watches. In finding in favor of the plaintiffs, Judge Baer found that “the similarities between these watches remain striking.”

In considering the trade dress claim, the Court wrote that a “plaintiff asserting product design trade dress infringement must prove distinctiveness by showing that ‘“in the minds of the public, the primary significance of [the mark] is to identify the source of the product rather than the product itself” (what is known as ‘acquired distinctiveness’ or ‘secondary meaning’).’” Judge Baer added that to “determine whether a secondary meaning has attached, the court considers six factors: ‘(1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts to plagiarize the mark, and (6) length and exclusivity of the mark’s use.’” The Court considered each factor in turn, and found that all but one of them favored the plaintiffs.

Having found that the plaintiffs’ trade dress has secondary meaning, the Court conducted a similar analysis to determine whether there was a likelihood of confusion between the plaintiffs’ and the defendants’ watches, using the well-known eight factor Polaroid test. Finding that four of the factors favored the plaintiffs, the Court concluded that the defendants’ “use of the allegedly infringing designs is likely to cause customer confusion.”

In a January 6, 2014 ruling, Judge Colleen McMahon converted the defendants’ Penguin/Berkley Publishing US A and others’ Rule 12(b)(6) motion to dismiss plaintiff Charles Newton’s copyright infringement claims into a Rule 12(d) motion for summary judgment, based on defendants’ arguments which required the consideration of evidence not included in the pleadings.

Plaintiff, acting pro se, claimed that defendants infringed upon his copywrited material by defendants’ reprinting portions of plaintiff’s book in a book published by defendants covering the same subject matter. Defendants presented the following arguments in support of their motion to dismiss: (1) plaintiff failed to satisfy the copyright registration precondition to suit, see 17 U.S.C. § 411, (2) the copying of plaintiff’s work was de minimis, and (3) the copying of plaintiff’s work constituted “fair use.”

In a December 20, 2013 ruling, Judge Donald C. Pogue, sitting by designation, declined to award attorneys’ fees under 17 U.S.C. § 505 to the prevailing defendant, Supap Kirtsaeng, in plaintiff John Wiley & Sons, Inc.’s copyright infringement action. The Court ruled that because “Plaintiff’s claim was not unreasonable or frivolous, and because no other equitable consideration weighs in favor of Defendant’s request, . . . Defendant’s motion is denied.” The case had been returned to the district court after the Supreme Court’s reversal of the Court’s previous ruling finding the defendant liable for copyright infringement. The defendant imported lawfully obtained foreign editions of the plaintiff’s text books into the United States. The Supreme Court ruled that that activity was protected by the “first sale doctrine.”

The Court began its discussion by noting that an award of fees is not mandatory under § 505, but should instead be guided by the Court’s “equitable discretion.” Judge Pogue wrote that although there are a number of factors to consider in awarding fees, the most significant one under Second Circuit precedent is the “objective reasonableness” of the claim; “’a court should not award attorneys’ fees where the case is novel or close because such a litigation clarifies the boundaries of copyright law.’”

Judge Pogue found that fees were unwarranted because “neither the factual allegations nor the legal theory on which Wiley’s claim was based were objectively unreasonable. Wiley’s claim – which persuaded this Court, the Court of Appeals, and three Justices of the Supreme Court – represented the legitimate attempt of a copyright holder to enforce its rights against the unauthorized importation to low-priced, foreign-made copies of its copyrighted works.” The Court also noted that although attorneys’ fees can still be awarded where the plaintiff’s claim is objectively reasonable – such as where a claim is frivolous, brought for an improper purpose or where “considerations of compensation an deterrence” are furthered – none of these factors is present in this case. Judge Pogue thus denied the defendant’s motion for fees.

Court Finds Patent Infringement Action Moot Upon Filing of Covenant Not to Sue

In a December 19, 2013 ruling, Judge Coleen McMahon dismissed with prejudice plaintiff Commercial Recovery Corporation’s patent infringement claim against Bilateral Credit Corp., LLC upon Commercial Recovery’s filing of a covenant not to sue, and dismissed as moot Bilateral’s counterclaims of non-infringement and invalidity. The covenant not to sue filed by Commercial Recovery “is unconditional and irrevocable, and reaches beyond Bilateral to protect Bilateral’s suppliers, distributors, customers, and partners.” Judge McMahon found it “’hard to imagine a scenario’ under which Bilateral could infringe the [patent-in-suit] and yet not fall under [Commercial Recovery’s] covenant.”

Bilateral argued that the covenant was ineffective because Commercial Recovery was in receivership and held title to the patent only for purposes of the suit against Bilateral, so Bilateral remained exposed to claims from successors-in-title. Judge McMahon rejected this argument, ruling that under 35 U.S.C. § 281, the term “patentee” includes “’not only the patentee to whom the patent was issued but also the successors in title to the patentee,’” so any successor-in-title would be bound by the covenant.

Bilateral also argued that the covenant was not necessarily broad enough to cover Bilateral’s future activities. The Court held, however, that given the breadth of the covenant not to sue, it was incumbent upon Bilateral to proffer evidence of sufficiently concrete plans to engage in conduct not covered by the covenant. Judge McMahon found that Bilateral had failed to provide any such evidence.

The Court also rejected Bilateral’s request to condition Commercial Recovery’s request for a voluntary dismissal with prejudice on the payment of Bilateral’s attorneys’ fees. Judge McMahon noted that courts frequently condition requests for dismissal without prejudice on the payment of fees because plaintiffs can, and frequently do, refile such cases leading to duplicative expenses for the defendants, but that fees are rarely awarded for a dismissal with prejudice because there is no risk of duplicative work. The Court also rejected Bilateral’s request for fees under 35 U.S.C. § 285 and 28 U.S.C. § 1927, finding no evidence that Commercial Recovery had engaged in objectively baseless litigation in bad faith.

Court Enhances Damages But Declines to Award Fees in Patent Infringement Action

In a December 18, 2013 ruling, Judge Samuel Conti denied the defendants’ motion for a new trial or for judgment as a matter of law following a jury verdict of patent infringement against them, and granted in part the plaintiff’s motion for enhanced damages and attorneys’ fees (in light of the jury’s finding of willful infringement) and for a permanent injunction.

With respect to the new trial motion, Judge Conti rejected the two individual defendants’ challenge to a jury instruction that they contended improperly allowed the jury to impute infringement to them in their individual capacities. Since the jury found that the individuals are general partners in a partnership that was also found liable for infringement, the individuals could be held liable under general partnership law, mooting the issue about the jury instruction. The Court also rejected the defendants’ contention that the plaintiff’s expert’s use of demonstrative exhibits that were not disclosed as part of the expert report warranted a new trial, noting that the exhibits merely illustrated points that were included in the report, and the exhibits were not admitted into evidence.

Judge Conti analyzed the request for enhanced damages under the nine factors set out in Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992). The Court found that the first three factors – whether the infringer deliberately copied the ideas or design of another, whether the infringer acted with knowledge of the patent and formed a good faith belief of non-infringement or invalidity, and whether the infringer engaged in litigation misconduct – all strongly favored the enhancement of damages. Judge Conti found that the remaining factors did not mitigate against enhancing damages, and accordingly trebled the jury’s $300,000 damages award. The Court declined to award attorneys’ fees, though, finding that the defendants’ conduct was not egregious, and that “some of the positions advanced at trial by Defendants had merit.” In a later January 8, 2014 ruling, Judge Conti awarded prejudgment interest at the prime rate (3.25%), rejecting the plaintiff's request to use the 9% rate specified in the New York CPLR. The Court awarded prejudgment interest only on the $300,000 damages award, not on the enhanced. amount.

In a December 17, 2013 ruling, Judge P. Kevin Castel denied attorneys' fees to defendants Facebook, Inc. and Google, Inc. after they successfully secured summary judgment dismissing plaintiff Wireless Ink Corporation's patent infringement action. Noting that a court may award attorneys' fees under 35 U.S.C. § 285 in an exceptional case, Judge Castel wrote that as "a threshold matter, a court must first determine whether the party seeking attorney fees has proved by clear and convincing evidence that the case is exceptional."

Google and Facebook argued that the case is exceptional, and became objectively baseless and pursued in bad faith after the Court's claim construction ruling rendered it impossible for Wireless Ink to prevail on its infringement claims. Wireless Ink contended that it opposed summary judgment based on its expert's opinion of infringement that was rendered after the Court's claim construction. In rejecting the defendants' argument, Judge Castel first noted that a "loss on summary judgment does not . . . lead to a presumption that a claim was objectively baseless," and accepted Wireless Ink's contention that its reliance on its expert witness was reasonable. The Court concluded that because "Facebook and Google have not shown, by clear and convincing evidence, that [Wireless Ink's expert's] opinions were objectively baseless, a finding that Wireless Ink's positions on infringement were objectively baseless is not warranted.

In a December 31, 2013 ruling, Judge Jed S. Rakoff denied the parties’ cross-motions regarding infringement, granted defendants’ Microscan Systems, Inc. and the Code Corporation’s motion for partial summary judgment, and ruled that plaintiffs Cognex Corporation and Cognex Technology & Investment LLC were not entitled to damages for patent infringement prior to providing actual notice of the alleged infringement to the defendants, and further sanctioned plaintiffs for spoliating evidence.

The plaintiffs plead in the complaint that damages should run from actual notice of the patent-in-suit, and later sought to add a constructive notice theory. In considering the date from which patent infringement damages may be awarded, the Court recognized that the patent statute requires that “when a patented article has been produced by a patentee or its licensee, the amount of damages the patentee can recover in an infringement suit is statutorily limited to those acts of infringement that occurred after the patentee gave the alleged infringer notice of infringement.” While the statute permits either “constructive notice, which is accomplished by marking the article with the patent number, or actual notice,” the court nevertheless held that “when a patent owner or licensee makes or sells a product that embodies at least one claim of a patent but does not mark that product as patented as required by 35 U.S.C. § 287(a), damages are limited to the period beginning when the patentee provides actual notice of infringement.” As the plaintiffs failed to plead compliance with the marking statute, the Court ruled that allowing the plaintiffs to amend the complaint in order to comply with the marking statute at the summary judgment stage would unduly prejudice the defendants because the defendants would have been entitled to discovery on the constructive notice theory which they did not pursue. Accordingly, the plaintiffs were permitted to collect infringement damages only for the period after the date on which the actual notice of the infringement was provided to the defendants.

In a December 31, 2013 decision, Judge Ronnie Abrams considered the application of the “Safe Harbor” defense in the Digital Millennium Copyright Act to plaintiffs’ claims against Vimeo, LLC. Vimeo operates a service that allows users to upload videos that they have created. The plaintiff music publishers sued Vimeo “asserting claims for direct, contributory, vicarious, and common law copyright infringement, as well as for inducement to infringe copyright and unfair compliance.” In a prior decision, the Court ruled that certain videos on the Vimeo service met the Safe Harbor requirements, others did not, and that “the Safe Harbor did not extend to videos containing music recorded before February 15, 1972.” Vimeo sought reconsideration of the denial of Safe Harbor status as to some of the videos, and sought leave to file an interlocutory appeal about the pre-February 15, 1972 recordings.

Regarding the reconsideration motion, the Court noted that the “Safe Harbor limits the liability of service providers for copyright infringement that occurs ‘by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider,’ as long as the provider satisfies certain criteria.” Vimeo argued on reconsideration that the only evidence that Vimeo had viewed certain of the challenged videos was that its employees could review videos in the accounts of the users who had uploaded these videos, not that they had done so. Judge Abrams ruled that this evidence was too tenuous to permit the Court to conclude that Vimeo’s employees had in fact viewed the videos. The Court largely rejected, however, Vimeo’s argument on reconsideration that even if Vimeo had viewed the videos, they did not have “red flag” knowledge – i.e., it was not “obvious” that they infringed the plaintiffs’ copyrights – finding fact questions for the jury about that issue.

The Court also agreed to certify two questions for interlocutory review: (1) the issue about the pre-February 15, 1972 recordings, and (2) “whether . . . a service provider’s viewing of a user-generated video containing all or virtually all of a recognizable, copyrighted song may establish ‘facts or circumstances’ giving rise to ‘red flag’ knowledge of infringement.” As to the first issue, Judge Abrams ruled that it is a pure question of law, and “that there exists a substantial ground for difference of opinion on this issue.” As to the second issue, the Court noted that although the inquiry depends in part on the contents of each video, the defendants do not contest for purposes of the appeal that the videos “contain visual images set to copyrighted songs played essentially in their entirety.” The Court further found that determining whether a defendant has sufficient “knowledge of infringement [to void the Safe Harbor] is a difficult question that has important ramifications for service providers such as Vimeo,” and that there is a “substantial ground for difference of opinion” on the issue. Thus, the Court certified both issues for interlocutory review.

Court Finds Commodore Computer Marks Infringed

In a December 17, 2013 ruling, Judge Richard J. Sullivan entered judgment against defendant Asiarim Corporation after a bench trial in favor of plaintiff C=Holdings B.V. on its claim, among others, for trademark infringement of the "Commodore" marks for computers that were popular in the 1980's. The principal dispute at trial was the ownership of C=Holdings, which had been a subsidiary of Asiarim until a claimed spin-off. There was no dispute at trial that C=Holdings owned the registrations for the Commodore marks, and that another subsidiary of Asiarim had previously been licensed to use the marks.

Judge Sullivan began the analysis of the trademark infringement claim by noting that "when a plaintiff sues for infringement of its registered mark, the defendant bears the burden of production and persuasion to rebut the presumption of ownership" of the mark provided by the registration. Judge Sullivan rejected defendant Asiarim's contention that it was the owner of the mark, in fact ruling that Asiarim's attempt to claim ownership was fraudulent. Thus, the Court concluded "that C=Holdings owns the Commodore trademarks, and that any unsanctioned use by Asiarim would amount to an infringement."

In a December 11, 2013 ruling, Judge Shira A. Scheindlin granted defendant Regent Baby Products Corp.'s summary judgment motion to dismiss plaintiff Luv N' Care, Ltd.'s trade dress infringement action over infant sippy cups. In considering the motion, Judge Scheindlin noted that a "plaintiff asserting a trademark infringement claim must show first that its trade dress or trademark is a protectable interest under the Lanham Act, and second that there is a likelihood of confusion. If a plaintiff offers no evidence of a protectable interest, a court need not consider likelihood of confusion."

Regent did not contest likelihood of confusion, but instead argued that Luv N' Care's cups are not entitled to trade dress protection because they are generic. In support of its argument, Regent submitted "exhaustive evidence" of numerous designs similar to Luv N' Care's cups "that have been widely available on the market for over two decades, through submission of third party catalogs and websites of online retailers." Judge Scheindlin accepted this evidence, and ruled:

There is no genuine issue of material fact as to whether these designs are generic. [Luv N' Care's] trade dress descriptions refer to common shapes frequently used in the sippy cup industry -- a "generally cylindrical cup with a slightly wider upper portion" and a cap with a "bulb-like base and a slightly pointed top" or a "football-helmet shaped cap" with a "ring shaped base" -- that even when configured together would simply be too broad and too general to warrant trade dress protection. . . . [T]hese general shapes and configurations are ubiquitous in the sippy cup market and do not warrant Lanham Act protection.

The Court also rejected Luv N' Care's argument that its designs had acquired secondary meaning "as irrelevant for generic trade dress. Second Circuit law is clear that 'even a showing of secondary meaning is insufficient to protect product designs that are overbroad or generic' and that '[g]eneric trade dress in never entitled to protection.'" The Court thus dismissed the trade dress claims.

In a subsequent February 13, 2014 ruling, Judge Scheindlin stayed the remaining design patent infringement claims so as to avoid duplicative trials of the trade dress and design patent infringement claims should the trade dress claims proceed to trial first, and the design patents later survive reexamination. The Court also declined to permit an interlocutory appeal, finding that the plaintiff's request did "not raise a controlling question of lwa, 'a new legal question or [a legal issue] of special consequence appropriate for interlocutory review."

Court Refuses to Return Christmas Song to Authors

In a December 16, 2013 ruling, Judge Shira A. Scheindlin rejected the plaintiffs' copyright termination notice to the song "Santa Claus Is Coming to Town," and left ownership of the copyright with defendant EMI Feist Catalog, Inc. The parties cross-moved for summary judgment, and EMI moved to exclude the plaintiffs' "purported copyright law expert" under Daubert. Judge Scheindlin granted EMI's motions.

With regard to the expert testimony, the Court noted that the expert "opines on one issue: the meaning of Sections 304 and 203 of the Copyright Act." Judge Scheindlin excluded the opinion, ruling that the "Second Circuit has held that the testimony of an expert on matters of domestic law is inadmissible for any purpose. Courts have an obligation to exclude affidavits that purport to construe Copyright Law. Alter's [the expert's] affidavit expresses legal conclusions on the meaning of the 1976 [Copyright] Act, with the sole exception of some brief historical background on the Act."

With regard to the merits, the Court noted that the "sole issue in this case is whether Plaintiffs have the right to terminate EMI's copyright ownership in the Song." The Court concluded that the plaintiffs did not have the right to do so because they failed to record a 1981 notice that terminated a 1951 agreement regarding ownership. The failure to record the 1981 termination notice leaves the 1951 agreement in place until 2029. Judge Scheindlin also found that the failure to record the 1981 notice of termination rendered subsequent notices ineffective even though those notices were served and filed according to the correct procedures. The Court thus granted summary judgment in favor of EMI.

Court Rejects Patent Infringement and Unfair Competition Claims

In a December 9, 2013 ruling, Judge Richard J. Sullivan granted the defendants' motion for summary judgment of non-infringement in plaintiff Enzo Biochem, Inc.'s patent infringement action. Enzo entered into a distribution agreement with PerkinElmer to manufacture and distribute Enzo's patented biotechnology inventions. PerkinElmer appointed defendants Molecular Probes, Inc. and Orchid Biosciences, Inc. as sub-distributors. In dismissing the patent infringement claims against Molecular Probes and Orchid Biosciences, the Court noted that "[b]ecause the features of the accused product are not in dispute, the Court may construe Claim 1 and then compare it to the undisputed features" of the accused product.

Judge Sullivan rejected the defendants' argument that Enzo's proposed construction was limited solely by statements made to the PTO during prosecution of the patent-in-suit, and instead looked both to the language of the claim, and to the prosecution history. The Court wrote that as "it turns out, though, the language of Claim 1 aligns with Enzo's statements to the PTO," and concluded that "[b]ased on the record before the Court, Enzo's statements to the PTO have not been wrenched from their context or mischaracterized; rather, they clearly set forth a difference -- evident on the face of Claim 1 -- between the accused features" of the challenged product.

In a December 11, 2013 ruling, Judge Jed S. Rakoff set the post-judgment patent royalty rate in Tomita Technologies USA, LLC's patent infringement action against Nintendo Co., Ltd. The Court rejected Tomita's request for a flat dollar amount for each unit, finding that the "rapid pace of technological advancement -- and its effect on prices -- counsels the Court that it is highly likely that the price will drop with time. If, as Tomita suggests, the ongoing royalty rate were expressed as a flat dollar amount per unit sold, Tomita would capture an increasingly large proportion of each sale as the price falls, even as the technology's reliance on the infringed patent remains constant." Judge Rakoff also rejected Nintendo's argument to set the royalty rate as the same implied rate found by the jury as was subsequently halved by a remittitur, noting that "Tomita . . . argues with some force that courts routinely increase the implied royalty rate of a verdict after a finding of infringement because the status of the parties has changed, as would the result of the hypothetical negotiation between them." The Court then set the royalty rate at two thirds the implied royalty rate found by the jury.

Court Finds Use Might Be Authorized By Agreement, Denies Summary Judgement of Patent Infringement

In a December 9, 2013 ruling, Judge Richard J. Sullivan denied plaintiff Roche Diagnostics GMBH's motion for summary judgment to dismiss, among other claims, defendant Enzo Biochem, Inc.'s patent infringement counterclaims. Enzo alleged that Roche breached a distribution agreement authorizing "Roche to use Enzo's patented property." The Court wrote that to "the extent that Roche can show that its use of the Products was permitted under the terms of the Distribution Agreement, Roche may well be insulated from liability for patent infringement." Since Judge Sullivan found that he could not "conclude as a matter of law that Roche's activities fell within the Agreement's use authorization" and denied Roche's motion for summary judgment for breach of the distribution agreement finding that, the Court ruled that "Enzo's patent infringement claims remain viable."

Court Finds Order Bias in Claim Terms

In a December 2, 2013 ruling, Judge Jed S. Rakoff in construing 24 claim terms in ADREA, LLC's patent infringement action against Barnes & Noble, Inc. over its ebook reader, construed the terms "selecting a title from the transmitted list of titles," and " "supplying a selected electronic book corresponding to the selected title to be encrypted" to have an order bias. Judge Rakoff wrote: "Although it is true that '[u]nless the steps of a method actually recite an order, the steps are not ordinarily construed to require one,' . . . 'if, as a matter of logic or grammar, they must be performed in the order in which they are written,' an ordered construction is required." The Court ruled that an ordered construction is required here because the supplied ebook must first be selected before it can be supplied.

Court Awards Reasonable Royalty of 50% of Gross Margin in Patent Infringement Action

In a December 3, 2013 ruling, Judge Denise L. Cote entered a damages award in the last of a long-running series of patent infringement actions brought by Astrazeneca against generic drug manufacturers over the active ingredient in Astrazeneca’s brand-name drug Prilosec for heartburn. Apotex Corporation, the largest generic drug manufacturer in Canada, was the remaining defendant. The Court had previously found Apotex liable for infringement, and the December 3 ruling concerns only the assessment of a reasonable royalty as damages. After a lengthy analysis, Judge Cote concluded that “the hypothetical licensing fee to which [the parties] would have agreed would have been at least 50% of the Apotex gross margin from its sales” of the infringing products, and ruled that Astrazeneca “is entitled to damages in the amount of $76,021,994.50 plus pre-judgment interest.”

In reaching that decision, the Court considered three threshold issues. First, Judge Cote analyzed whether the royalty should be applied to the full value of the infringing product, or merely to the supposedly “minimal” value of the infringing component. The Court noted that “[w]here a product, typically an electronic product, is composed of many different components, royalties for infringement are awarded ‘based not on the entire product, but instead on the smallest salable patent-practicing unit.’” The Court further wrote, though, that under the “entire market value” rule, “a patentee may assess damages based on the market value of the entire product ‘where the patented feature creates the basis for customer demand or substantially creates the value of the component parts.’” The Court rejected the notion that a rule developed for complex electronic products should be applied to generic pharmaceutical products. The Court further ruled that even applying the entire market value rule, the patented component of the infringing generic drug did substantially create the value for the finished products. So Judge Cote concluded that the royalty rate should be applied to the value of the generic pills sold by Apotex.

In a November 19, 2013 ruling, Judge Louis L. Stanton largely denied defendant American Tibetan Health Institute, Inc.'s motion to dismiss plaintiff C&L International Trading Inc.'s action asserting Lanham Act and related claims. C&L had a design mark registered on the Trademark Office's supplemental register that incorporated the word mark "Tibetan Baicao Tea," and a registration for the word mark alone with New York State's Department of State. American Tibetan claimed that it had its own registration for the identical word mark on the Trademark Office's principal register. American Tibetan filed a trademark infringement action against C&L, and C&L started this separate trademark infringement action against American Tibetan, which did not mention American Tibetan's trademark registration.

American Tibetan moved to dismiss C&L's complaint, arguing that its superior rights arising from its registration on the principal register should prevail. The Court noted that although American Tibetan's superior rights could provide a defense, C&L's complaint does not mention American Tibetan's registration and so cannot be considered on a motion to dismiss. Judge Stanton also ruled that C&L's complaint adequately alleged that American Tibetan had abandoned any rights it might ever have had in the marks.

In a November 25, 2013 ruling, Judge Shira A. Scheindlin dismissed as moot the patent invalidity counterclaims of TNS Media Research LLC and other defendants in plaintiff TRA Global, Inc.'s patent infringement action. After granting summary judgment of non-infringement, the Court noted that the defendants "raised their patent invalidity contentions as affirmative defenses to TRA's patent infringement claims, and the only affirmative relief they seek is a declaratory judgment of non-infringement." Thus, Judge Scheindlin ruled that the "motion for summary judgment of invalidity is moot."

Court Applies Fair Use Defense to Dismiss Copyright Infringement Claims Over Google Books

In a November 14, 2013 decision, Judge Denny Chin (continuing a case in which he presided before joining the Second Circuit) granted summary judgment in favor of Google, Inc in the long-running case by The Authors Guild, Inc. based on the fair use defense to copyright infringement. As part of its Google Books program, Google "has scanned more than twenty million books," "has delivered digital copies to participating libraries, created an electronic database of books, and made text available for online searching through the use of 'snippets.'" Since many of the scanned books are still under copyright, The Authors Guild, and three named plaintiffs brought a class action copyright infringement action. The parties cross-moved for summary judgment on Google's fair use defense.

At the outset, Judge Chin assumed that the plaintiffs had made out a prima facie case of infringement, and that the sole issue for decision "is whether Google's use of the copyrighted works is 'fair use' under the copyright laws." The defense, which the defendant has the burden of proving, is codified at 17 U.S.C. § 107, and requires the consideration of four non-exclusive factors: "(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work." The Court considered each of these factors in turn.

In a November 12, 2013 ruling, Judge John G. Koetl denied the parties' cross-motions for attorneys' fees after the dismissal of plaintiff Overseas Direct Import Co.'s copyright infringement claim against defendant Family Dollar Stores Inc. and another. Before the trial of the copyright infringement claim, Family Dollar Stores made an offer of judgment under Rule 68, which Overseas Direct rejected. The jury, however, returned a verdict for Family Dollar Stores and Overseas Direct took nothing. Family Dollar Stores moved for fees under the Copyright Act, 17 U.S.C. § 505 and Rule 68. Overseas Direct cross-moved for its fees in defending the motion.

The Court explained that a plaintiff that recovers less than an offer of judgment can be liable for costs under Rule 68, and that those costs can include attorneys' fees where the underlying statute allows them, as the Copyright Act does here. Family Dollar Stores argued that the verdict of $0 for Overseas Direct was less than the offer of judgment, so it is entitled to costs. Judge Koetl ruled that "this argument is squarely foreclosed by the Supreme Court's holding in Delta Air Lines, Inc. v. August that the costs provision of Rule 68 is 'simply inapplicable' when the defendant has 'obtained the judgment.'"

In a November 12, 2013 ruling, Judge Richard J. Sullivan denied plaintiff Roche Diagnostics GMBH's motion to supplement its invalidity contentions in its patent infringement action against Enzo Biochem, Inc. The Court noted that the dates for the service of infringement and invalidity contentions were originally proposed by Roche because, as Roche urged, early contentions streamline discovery and simplify patent cases. In denying the motion to supplement, Judge Sullivan noted that the Court had previously denied Enzo's motion to supplement its infringement contentions, and that although the parties jointly sought discovery extensions, they did not seek to extend either of the contention deadlines. Thus, the Court concluded: "If Roche needed more time to research or respond to Enzo's accusations, then it should have sought an extension before the may 17, 2013 deadline -- an interim deadline Roche emphatically advocated -- or at the very least before now, nearly half a year later."

Court Denies Indirect Profits in Copyright Infringement Action as Lacking Causal Link to Infringement

In a November 8, 2013 ruling, Judge Katherine B. Forrest granted defendant ABN Ambro Bank, N.V.'s motion in limine to preclude plaintiff Complex Systems, Inc. from offering evidence of indirect profits in its copyright infringement action. Judge Forrest had previously granted summary judgment of liability in favor of Complex Systems on its claim that ABN Ambro infringed its copyright in a software program known as BankTrade 8.0, which is used by ABN Ambro "in its letter of credit and guarantee business." ABN Ambro then moved to preclude evidence of Complex Systems' indirect profits as part of its damages.

Judge Forrest first described the way in which the BankTrade 8.0 software was used by ABN Ambro. In particular, "BankTrade is one of four trade processing systems used by ABN to process letters of credit and guarantees; BankTrade is not used to process foreign exchange spreads, treasuring funding, loans, lines of credit, or overdrafts." Based on this use, Complex Systems argued for a portion of ABN Ambro's profits under the following reasoning (as characterized by ABN Ambro): "'(1) without BankTrade, ABN could not process letters of credit, (2) without letters of credit, [ABN] would not conduct other types of trade finance transactions, and (3) therefore, without BankTrade, ABN would not conduct other types of trade finance transactions.'"

The Court then examined the reports of Complex Systems' experts, Jarosz and Smith. The Court concluded that "Jarosz has proffered reasonable estimates of revenues somehow connected to or touching BankTrade. His extensive analysis supports this much. . . . [W]hat is missing is the necessary causation component" between the revenues and the use of BankTrade. Judge Forrest further found that "Smith's reports and deposition provide significant support for ABN's (and not [Complex Systems']) position on this motion: that a causal connection between BankTrade itself and specific trade finance revenues is lacking."

In a November 8, 2013 ruling, Judge Richard J. Sullivan declined to dismiss plaintiff Joao Control & Monitoring Systems, LLC's third amended patent infringement complaint against Digital Playground, Inc. and others. First, the Court denied the defendants' motion to dismiss the direct infringement claim. In doing so, Judge Sullivan wrote:

Direct infringement claims operate under a unique legal standard. The Federal Circuit has held that any direct infringement claim mirroring Form 18 of the Federal Rules of Civil Procedure is sufficient to state a claim. This is so even if the pleadings would otherwise not satisfy the plausibility-pleading standard that applies to all other claims.

(citation omitted) The Court also applied the relaxed pleading standard to the allegations against all "Defendants" generally, noting that there is "no reason not to interpret every allegation that 'Defendants' did something as a stand in for an allegation that 'Defendant A, Defendant B, . . .and Defendant Z' each did something."

In a November 4, 2013 ruling, Judge Paul A. Engelmayer granted summary judgment dismissing with prejudice the third party complaint of defendant Monster Energy Company against a disk jockey known as "Z-Trip" arising from The Beastie Boys' copyright infringement and Lanham Act claims against Monster Energy over a remix made by Z-Trip that included four Beastie Boys songs and that Monster Energy used in a promotional video. The Beastie Boys sued Monster Energy for copyright infringement and a Lanham Act violation, and Monster Energy asserted a third party claim against Z-Trip for breach of contract and fraud in falsely representing that Z-Trip and Monster Energy had permission to use the Beastie Boys songs.

The underlying facts, briefly, are as follows: In connection with their promotion of an upcoming album, the Beastie Boys authorized Z-Trip to make a Megamix of their older music, and to post it on his website for free download. Monster Energy later hired Z-Trip to DJ at an event sponsored by Monster Energy, and recorded the event for a promotional video. There were some brief conversations and email exchanges between a Monster employee and Z-Trip about what music Monster Energy could use for the video. Z-Trip suggested the Beastie Boy Megamix, which was available for free download, but there was no discussion about permission or clearance to use the music. The Monster Energy employee assumed from the mention of the free download that the Megamix was available for use in Monster Energy's promotional video.

In an October 25, 2013 ruling, Judge John F. Keenan granted IBM's motion for summary judgment dismissing plaintiff Alexander Orenshteyn's long-running patent infringement action. The plaintiff asserted two patents, the '569 patent and the '942 patent, against IBM in this action, which was then stayed pending the outcome of litigation on the same two patents against Citrix Systems, Inc. in the Southern District of Florida. The Florida district court granted summary judgment of non-infringement, but the Federal Circuit overturned the decision for the '942 patent. The parties lifted the stay in the action before Judge Keenan, and the Florida district court then almost immediately invalided the asserted claim, claim 1, of the '942 patent. IBM then moved for summary judgment, arguing that the same reasoning used to invalidate claim 1 of the '942 patent applied equally to all the asserted claims in the '569 and '942 patent.

Judge Keenan first noted that under Federal Circuit law as applied in the district, "'collateral estoppel may apply to patent claims that were not previously adjudicated, because the "issues" litigated, not the specific claims around which the issues were framed" are determinative,'" and that "collateral estoppel 'forecloses patent claims that are "patentably indistinct" from rejected claims.'" The plaintiff argued against the application of collateral estoppel by contending that his counsel's failure to fully oppose the summary judgment motion in the Florida district court amounted to a "default." The Court rejected this argument, ruling that a "default" is narrowly defined under Fed. R. Civ. P. 55(a), and noting that in his appeal to the Federal Circuit of the Florida district court's decision, the plaintiff was represented by the same counsel as has appeared in this action.

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