Court Grants Fees in Copyright Infringement Action after Finding Plaintiff’s Claims Untimely

In a July 17, 2015 ruling, Judge Lorna G. Schofield granted attorneys’ fees to the prevailing plaintiff in a copyright infringement action. The Court had previously granted summary judgment dismissing the plaintiff’s claims as untimely. In granting fees, Judge Schofield wrote that “Plaintiff’s claims under the Copyright Act were plainly time barred and therefore objectively unreasonable. Claims brought after the statute of limitations has run may be considered objectively unreasonable.”

Court Denies Attorneys’ Fees to Prevailing Patent Infringement Defendants

In a July 17, 2015 ruling, Judge P. Kevin Castel declined to award attorneys’ fees to the prevailing defendants in a patent infringement case, finding that the case was not exceptional. Judge Castel noted that his summary judgment ruling in defendants’ favor turned largely on claim construction issues and a determination that one of the patents-in-suit was not entitled to an early priority date, and did not require a detailed examination of the accused products. Thus, the Court reasoned, a more thorough pre-suit investigation by the plaintiff would not have exposed the action as lacking merit. Judge Castel also rejected defendants’ contention that the plaintiff’s lack of expert testimony on the doctrine of equivalents made the case exceptional, writing that the testimony on the plaintiff’s director of product innovation was sufficient.

Court Remands Removed Action as Not Involving a Substantial Federal Question

In a July 7, 2015 ruling, Judge John G. Koeltl ruled that the Court lacked subject matter jurisdiction over a removed action in which the plaintiff alleged that the defendant submitted false affidavits in an earlier copyright infringement action about a third party’s (named Sorenson) ownership of the copyrights at issue. The plaintiff prevailed in the earlier action, but claimed that the defendant’s false declarations prolonged it. Judge Koeltl found that although the present action raised a federal question (authorship in the copyright context), it was not a “substantial” question. The Court wrote:

In this case, [the plaintiff] agrees with this Court’s conclusion that Sorenson did not have a valid copyright. His argument is that this Court would have reached that decision earlier on a motion for summary judgment, or that Sorenson would not have brought the prior lawsuit, had it not been for [the defendant’s] allegedly fraudulent affidavits. That is not a substantial copyright question because it will not change the result of the prior litigation with respect to the invalidity of Sorenson’s copyright, and indeed [the plaintiff] does not argue that it should change the result.

Court Denies DMCA Safe Harbor Protection to Subsidiary Not Specifically Named in Copyright Office Directory

In a June 30, 2015 ruling, Judge J. Paul Oetken found that a Digital Millennium Copyright Act notice filed with the Copyright Office directory under 17 U.S.C. § 512 to take advantage of the safe harbor provisions for internet service providers does not protect subsidiaries of the filer that are not specifically named. Judge Oetken noted that the statute requires the filing to contain the “‘Full Legal Name of Service Provider,’” and concluded that “the statute does not contemplate that a service provider entity can be shielded by the safe harbor where that entity has no presence at all in the [Copyright Office] directory.” The Court further found it “implausible that parties attempting to find a provider’s DMCA agent designation, using the [Copyright Office’s] database are expect to have independent knowledge of the corporate structure of a particular service provider.”

Court Denies Preliminary Injunction, Finding No Likelihood of Success on the Merits

In a June 29, 2015 ruling, Judge Robert W. Sweet denied the plaintiff’s motion for a preliminary injunction against the defendant’s use of the plaintiff’s trademarks in purchased keyword internet searches. Among other things, Judge Sweet found that the plaintiff had not demonstrated a likelihood of success on the merits because where a plaintiff “is seeking an injunction that will alter, rather than maintain, the status quo, it is required to show ‘a clear or substantial likelihood of success,’ . . . a higher showing than the likelihood of success on the merits required under the traditional preliminary injunction standard.” The Court found that while the plaintiff’s “case is persuasive, and there is a real possibility that it will prevail on its merits, at this stage it has not made a showing sufficient to meet this bar.”

Court Invalidates Patent As Claiming Patent-Ineligible Subject Matter

In a June 29, 2015 ruling, Judge Katherine Polk Failla invalidated U.S. Patent No. 7,885,887 under 35 U.S.C. § 101 as claiming ineligible subject matter. The Court summarized representative claim 1 as having the following “relevant limitations”:

(i) a computer operating either on the Internet or other network with access to a server; (ii) providing software tools with a suite of features allowing management of one or more creative projects; (iii) making certain types of offers associated with the project in exchange for funds for the project; (iv) facilitating the acceptance of offers by fans; (v) storing contact and marketing information of those who have accepted offers in exchange for funds in a database; and (vi) providing software tools that enable and control the exchange of information with a fan through the database.

In invalidating the patent, Judge Failla first noted that the “‘887 Patent’s claims are directed to the concept of a crowd-funding or fan-funding, i.e., raising funds for a project from interested individuals in exchange for incentives,” and concluded that these “claims are squarely about patronage – a concept that is ‘beyond question of ancient lineage.’” The Court then considered whether the claims in the ‘887 patent nevertheless had an “inventive concept,” and found that beyond “the abstract idea of patronage, the claims merely recite ‘well-understood, routine conventional activities or routine data-gathering steps.” Judge Failla thus concluded that “because the ‘887 Patent claims the abstract idea of incentive-based fan-funding and lacks an ‘inventive concept’ sufficient to ‘transform’ the claimed subject matter into a patent-eligible application of that idea, it is invalid under Section 101.”

Court Finds Copyright Ownership Claim Time-Barred, Allows Work-for-Hire Defense

In a June 26, 2015 ruling, Judge Kimba M. Wood ruled that the counterclaim plaintiff’s copyright ownership claim over certain photographs taken by the counterclaim defendant was barred by the three year statute of limitations. The Court wrote that the statute begins to run “‘when a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right.’” Judge Wood found that the counterclaim plaintiff had been put on notice of the counterclaim defendant’s “‘express assertion of sole authorship or ownership’” more than three years before suit. Judge Wood nevertheless permitted the counterclaim plaintiff to assert its work-for-hire defense in response to the counterclaim defendant’s copyright ownership claim, noting that the statute of limitations does not bar a defense. In considering the work-for-hire defense, the Court wrote that merely because the counterclaim defendant’s job responsibilities included taking photographs at times, that does not automatically mean that every photograph the counterclaim defendant took (for example, while “off the clock”) was in the scope of his employment duties, and thus denied in part summary judgment on the defense.

Court Finds No Laches Where There Is Intentional Trademark Infringement

In a June 22, 2015 ruling, Judge Jed S. Rakoff granted the plaintiffs’ summary judgment motion on the defendants’ laches defense in a trademark action on the ground that the defendants intentionally infringed. Judge Rakoff wrote that “the defendants fail to clear the critical threshold hurdle applicable to any party asserting an equitable defense – clean hands,” noting that “a laches defense is not available to a defendant who ‘intentionally traded off the [plaintiff's] name and protected products.’” The Court concluded that even “viewing the evidence in the light most favorable to defendants, the conclusion that defendants intentionally infringed plaintiffs’ trademark and trade dress is inescapable,” and granted plaintiffs’ summary judgment on the defense.

Court Applies "Plausibility" Pleading Standard to Patent Invalidity Counterclaim

In a June 16, 2015 ruling, Judge Denise Cote ruled that the Twombly/Iqbal pleading standard applies to a patent invalidity counterclaim. The counterclaim plaintiff argued that the enhanced pleading standard was inconsistent with the Local Patent Rules, which provide for the early disclosure of invalidity contentions. The Court adopted Judge Engelmayer’s earlier decision on the issue that “‘[a]lthough some superfluity may result, the Local Patent Rules and the [Twombly/Iqbal] pleading standard are not inconsistent. And in the absence of any directive that claims of invalidity . . . should be measured under a different standard than almost all other claims in this Circuit are, the Court declines to do so.’”

Court Denies, in Part, Ex Parte TRO in Counterfeit Action

In a June 15, 2015 ruling, Judge Richard J. Sullivan denied in part the plaintiff’s application for an ex parte temporary restraining order to enjoin the defendants’ sale of allegedly counterfeit goods and for related relief. As to enjoining the sale of goods, Judge Sullivan wrote that “Plaintiff fails to explain why Defenants’ alleged conduct, ongoing since at least November 2014, . . . is of a type where advance notice of the relief sought ‘would itself be likely to trigger irreparable injury.’” The Court also denied ex parte relief “locking and transferring” the defendants’ infringing websites, finding that the plaintiff has again failed to explain why notice would be harmful. Judge Sullivan did, however, freeze the defendants’ PayPal account, and permitted service by email.

Court Declines to Divide Ownership of Collabortively Developed Trademark

In a May 29, 2015 ruling, Judge Valerie Caproni decided ownership of the “Fashion Digital” trademark for fashion-related conferences between the two parties that had collaboratively developed the mark, Greenpearl and Hussain. The Court rejected dividing ownership between the parties, noting that “division of ownership has come to be strongly disfavored because it is not beneficial to the public, even if it might be equitable as between the parties.” In awarding ownership of the mark to Hussain, Judge Caproni wrote:

In sum, because there is no dispositive contractual agreement, the Court finds that Hussain is the party who (1) most proximately exerted control over the nature and quality of the services that the consuming public identified with the mark; (2) invented the mark; and (3) was seen by the public as the driving force behind the mark. Fashion Digital was a joint endeavor between Hussain and GreenPearl; because the parties’ joint endeavor has disintegrated, and the Court cannot assign a portion of the mark to each party, the Court finds that the balance of equities weighs in Hussain’s favor.

Court Denies Summary Judgment of Patent Infringement Because of "Battle of the Experts"

In a May 28, 2015 ruling, Judge Jed S. Rakoff denied summary judgment of patent infringement because the parties’ experts had conflicting views on the issue. Judge Rakoff wrote that the plaintiff “has proffered expert testimony that” the accused product contains a particular claim limitation and the defendant “has proffered expert testimony that it does not. Upon careful review, it is clear that the resulting 'battle of experts' involves genuine disputes of material fact precluding judgment as a matter of law. Accordingly, the Court hereby denies both parties' motions for summary judgment.”

Court Rejects Trade Dress Protecton for Point-of-Sale Display as Functional

In a May 26, 2015 ruling, Judge P. Kevin Castel rejected trade dress protection for the counterclaim plaintiff’s point-of-sale display of its goods, and granted summary judgment to the counterclaim defendant.  The counterclaim plaintiff argued that although at least some of the elements of the claimed trade dress are functional, the Court must consider the “overall impression” created by the trade dress.  Judge Castel rejected that argument, quoting a Ninth Circuit case for the proposition that “where the whole is nothing other than the assemblage of functional parts, and where even the arrangement and combination of the parts is designed to result in superior performance, it is semantic trickery to say that there is still some sort of separate ‘overall appearance’ which is non-functional.”  The Court further noted that “where the only similarities between the parties’ trade dresses consist of unprotectable elements, a trade dress infringement claim must fail.”  Judge Castel concluded that recognizing trade dress protection for the counterclaim plaintiff’s display would confer on the counterclaim plaintiff “a marketing advantage based not on brand recognition or advertising prowess, but simply on its right to display its goods more effectively than its competitors.”

Court Declines to Enforce Patent Claim with Uncorrected Error

In a May 12, 2015 ruling, Judge Laura Taylor Swain granted summary judgment partially dismissing the plaintiff’s infringement action because the asserted claims in the patent-in-suit had an uncorrected error that was not evident from the face of the patent. The patent-in-suit issued with a clause that should have been added to one of the claims omitted from the as-issued patent. Judge Swain first found that the error “is not evident from the face of the patent, because the phrase from which it was omitted in [the claim at issue] makes grammatical sense and does not have obvious missing information. Moreover, there is no information on the face of the patent that would alert a reader to any missing limitation.” The Court further found that the omitted phrase was material because it had been added during prosecution specifically to avoid prior art. The Court concluded “that the undisputed material facts direct the conclusion that [the claim at issue in the patent-in-suit] was issued with an omitted material limitation, and that the error is not evident on the face of the patent. Therefore, the uncorrected independent patent claim cannot be asserted in this litigation,” nor can the dependent claims that depend from it.

Court Denies Priority to a Patent Claim, Thus Invalidating It Based on Prior Art

In a May 8, 2015 ruling, Judge P. Kevin Castel found a patent claim to be invalid over prior art despite the patentee’s claim of earlier priority for the claim at issue. Relying on Federal Circuit precedent, the Court noted where a defendant produces prior art with a date preceding the filing date of the patent at issue, the burden shifts to the patentee to provide evidence and argument at least creating an issue of fact that the claim is supported by the written description of the patent from which it claims priority. If the patentee does so, the burden shifts back to the defendant to show by clear and convincing evidence that the earlier written description does not support the claim. In invalidating the claim at issue, Judge Castel wrote:

Under the Videotek burden-shifting framework described earlier, the defendants met their initial burden of production by identifying prior art—the Flex Binders—which, the parties agree, would invalidate Claim 20 if it cannot claim the benefit of the ’640 Patent’s earlier filing date. It was then incumbent upon Chizmar to produce “evidence and argument” that creates a genuine issue of material fact with respect to whether the disclosures of the ’640 Patent satisfy the written description requirement. This Chizmar has failed to do. Accordingly, Claim 20 of the ’140 Patent is invalid as anticipated by the Flex Binders.

Court Suspends Liability Finding Pending Evidentiary Hearing on Whether Plaintiff Falsified Evidence

In an April 30, 2015 ruling and as a follow up to this post, Judge Alvin K. Hellerstein suspended his liability judgment of copyright liability against the defendants pending an evidentiary hearing on whether the defendants' newly discovered evidence "if credited, clearly establishes that Plaintiff attempted to commit a fraud upon this court, going so far as to fabricate evidence and to commit perjury"  Judge Hellerstein wrote that a "sufficient showing has been made to cause me to lose trust in the integrity of the trial testimony. As credibility is very much an issue, an evidentiary hearing is necessary."

Court Dismisses Patent Infringement Action for Lack of Standing

In an April 28, 2015 ruling, Judge Colleen McMahon found that the plaintiff in a patent infringement action lacked standing because of a defect in the patent’s chain of title. The plaintiff’s title to the patent depended upon a transfer from the plaintiff’s wholly-owned subsidiary to the plaintiff. The Court found that not such transfer had taken place. Judge McMahon wrote that there had not been an express assignment, and that the plaintiff had not acquired the patent automatically upon the plaintiff’s filing of a certificate of dissolution for the subsidiary. According to the Court, the mere filing of the certificate does not cause the transfer, which happens only upon the filing of a plan of dissolution within three years of the filing of the initial certificate.

Court Finds Jurisdiction Over Declaratory Judgment Action for Trademark Non-Infringement

In an April 27, 2015 ruling, Judge Thomas P. Griesa found that the Court had summary judgment matter jurisdiction to entertain a declaratory judgment action trademark non-infringement, but that exercising such jurisdiction would serve no useful purpose. In this action, the owner of the “Rolcx” trademark for watches and jewelry sued to invalidate the registered “RLX RALPH LAUREN” and “RALPH LAUREN RLX” marks for the same goods, and the defendant counterclaimed for non-infringement. In finding a justiciable declaratory judgment controversy, Judge Griesa noted:

Multiple facts in the record demonstrate that this question meets the Medlmmune standard for justiciability. First, Rolex acknowledges it will bring an infringement action if [the declaratory judgment plaintiff] produces watches and jewelry bearing those marks.…Second, [the declaratory judgment plaintiff] has already offered and sold, between 2004 and 2007, a watch bearing the RLX mark, demonstrating the reality of the controversy, as well as [its] ability and willingness to launch the products in question. …Third, [the declaratory judgment plaintiff] has entered into a joint venture with [a] watchmaker .… Both sides have vigorously pursued this litigation at considerable expense. All this tends to show that the parties here have a real, substantial dispute concerning the trademarks in question, satisfying the Medlmmune standard and establishing the court's declaratory judgment jurisdiction.

The Court nevertheless found that exercising jurisdiction would not be useful, based in part on “legitimate concerns about whether the parties can litigate questions of infringement or dilution (in connection with the declaratory judgment claim) without evidence flowing from the products’ existence in the markets” (and based in part on redacted material unavailable to the public).

Court Dismisses Claims of Foreign Copyright Infringement Against U.S. Licensees

In an April 22, 2015 ruling, Judge Paul A. Crotty dismissed copyright infringement claims against U.S. licensees of the copyrighted work for actions taken in the U.S. that allegedly facilitated foreign copyright infringement. Under U.S. copyright law, so-called “predicate acts” undertaken in the U.S. that are themselves acts of U.S. copyright infringement can also support claims of foreign copyright infringement. In dismissing the copyright infringement claims against the U.S. licensees here, the Court wrote:

Plaintiffs have failed to allege facts demonstrating a predicate act that in itself violates the U.S. Copyright Act. None of the actions taken by Domestic Defendants constitute a violation of U.S. copyright law, when undertaken within the U.S. For example, allegedly creating duplicate master tapes or electronic files, distributing or streaming [the allegedly infringing work], offering to distribute copies of [the allegedly infringing work], signing agreements, and “authorizing” Affiliate Defendants to commit infringement abroad do not constitute violations of U.S. copyright law because Domestic Defendants possessed a license considered valid under U.S. law.

Court Denies Comity to Conflicting Foreign Decisions

In a March 20, 2015 ruling, Judge Kimba M. Wood, in dismissing the plaintiff’s preliminary injunction motion, declined to grant comity to a decision of a French court about the ownership of the copyright at issue in light of another conflicting French decision. Judge Wood ruled that “[b]ecause the copyright analyses in [the two French cases] are irreconcilable on this potentially critical point, and both foreign litigations remain active and apparently independent, the Court concludes, in its discretion, that it would be premature to afford comity to either holding.” The Court thus dismissed the motion with leave for the plaintiff to refile it at any time.