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.

Court Sets Post-Judgment Patent Royalty Rate

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.

Court Declines to Dismiss Lanham Act Claims for Mark on Supplemental Register

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.

Invalidity Counterclaims Dismissed as Moot After Summary Judgment of Non-Infringement

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.

Court Denies Attorneys' Fees to Successful Defendant in Copyright Infringement Claim

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.'"

Court Denies Belated Supplementation of Patent Invalidity Contentions

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."

Court Denies Motion to Dismiss Patent Infringement Complaint, Citing Relaxed Pleading Standard

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."

Court Dismisses Third Party Claim Seeking to Shift Blame for Copyright Infringement

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.

Court Invalidates Two Patents and Awards Summary Judge to Defendant

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.

Court Rejects Copyright Infringement Defenses, Grants Summary Judgment to Plaintiff

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

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

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

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

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

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

Court Denies Reconsideration of Motion to Compel Settlement-Related Documents

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

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

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

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

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

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

Court Invalidates Patent Based on Patent Counsel's Inequitable Conduct

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

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

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

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

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