11th Circuit adopts "joint endeavors" test to determine who owns trademark rights where ownership is unclear

What should a court do to determine who owns a trademark where it is unclear who or which of two or more claimants owns it? In a case involving a dispute whether a music group’s members or its manager owns trademark rights in the group’s name, the 11th Circuit yesterday held that in “joint endeavors” such as this, courts should: (1) first identify what “qualities or characteristics” for which the group is known; and (2) figure out who actually controls those qualities or characteristics.

In Crystal Entertainment & Filmworks, Inc. v. Jurado, No. 10-11837 (11th Cir. June 21, 2011), the plaintiff management company’s predecessor came up with the band’s name, hired the original band’s members, songwriter, and producer, and arranged for the original band’s performances. After a few fruitless years, however, new band members in 1986 replaced the original members. Despite the new members’ having signed two license agreements in the 2000s acknowledging the management company’s ownership of the mark, the district court found that the management company could not prove that it had exercised control over the new members or taken any role in scheduling their performances. The 11th Circuit did not find these findings to be clearly erroneous. Under the “joint endeavors” test, the court held that the replacement band members therefore controlled the qualities and characteristics for which the band is known by the public.

2d Cir. broadens copyright preemption as to state law “misappropriation of hot news” claims

Barclays Capital Inc. v. Theflyonthewall.com, Inc., No. 10-1372 (2d Cir. June 20, 2011), involved allegations that the uncovering and dissemination of financial firms’ daily securities trading recommendations constituted copyright infringement and the New York common law tort of misappropriation of “hot news.” Such a misappropriation claim was first accepted in the days of federal common law in Int’l News Serv. v. Associated Press, 248 U.S. 215 (1918) (“INS”), but really hasn’t gotten much traction since.

The defendant conceded copyright infringement. The only question on appeal was whether the misappropriation claim was preempted.

The panel majority’s decision turned on whether a five-part test set forth in a prior “hot news” case, NBA v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), was dictum. In NBA, the Second Circuit held that the NBA’s misappropriation claim was preempted, but suggested that an INS-type misappropriation claim could survive preemption if it required an “extra element” beyond those required for copyright infringement. The NBA court posited a five-part test that it believed would characterize a non-preempted claim possessing such an extra element.

The panel majority characterized the NBA court’s five-part test as dictum. Instead, the panel majority compared the misappropriation claim itself to that involved in NBA and determined that they were alike in that (1) the plaintiffs in both cases “created” the news (as opposed to simply reporting it) and (2) defendants in both cases gave proper attribution to the respective plaintiffs for the news. The court contrasted this with the facts in the INS case, where the plaintiff was a news reporting service, not the “creator” of the news itself, and the defendant had taken credit for the report it obtained from the plaintiff. Since the plaintiffs’ claims in NBA and Barclays were alike in these respects (and unlike INS), the panel majority held that, like the claim in NBA, the plaintiffs’ misappropriation claims were similarly preempted.

The concurring judge would not have rejected the NBA court’s five-part test as dictum, but instead would have found preemption due to the failure of the plaintiffs to demonstrate one of the five parts of the NBA test (direct competition between the parties).

D.C. Cir.: Licensee estoppel prevents licensee from arguing ownership due to naked licensing

In a decision involving unique circumstances, the D.C. Circuit held today that a licensee was precluded by licensee estoppel from arguing that the licensor abandoned the licensed mark by engaging in “naked licensing.” The licensee argued, unsuccessfully, that licensee estoppel shouldn’t preclude it from asserting that it owned the mark because it was undisputed that:

• The licensor ceased monitoring the licensee in 1991;
• The licensor went bankrupt in 1991, and, a few years after the bankruptcy was converted to Chapter 7 in 1993, the licensor’s former owners misappropriated the mark (from the trustee) and re-started the essentially the same business under the mark;
• The bankruptcy court then entered an order enjoining the licensor’s former owners from continuing to use the mark; and
• Business associates of the licensor’s former owners later purchased the marks from the trustee.

Although it’s hard to draw categorical conclusions from such a unique case, it’s at least safe to say that, if a licensee can’t assert ownership/abandonment in these circumstances, licensee estoppel is pretty robust in the D.C. Circuit.

The case is John C. Flood of Va., Inc. v. John C. Flood, Inc., No. 10-7098 (D.C. Cir. June 17, 2011)

3d Circuit: Removal of NON-DIGITAL author info violates DIGITAL Millennium Copyright Act

Peter Murphy photographed two of New Jersey’s radio “shock jocks” for a NJ magazine. In the magazine, Murphy was identified, in the margin of the photo, as the photographer. The radio station that employed the jocks scanned the image, deleted Murphy’s name from the margin, and posted the photo on their website for a promotion.

Murphy sued for violation of §§ 1202(b) & (c) of the Digital Millennium Copyright Act. Section 1202(b) prohibits removal of “copyright management information,” and § 1202(c) defines “copyright management information” as “information conveyed in connection with copies . . . of a work . . . , including in digital form . . . the name of the author . . . .”

The 3d Circuit rejected the station’s argument that § 1201 of the Act—which mentions circumvention of “technological measures”—limits § 1202’s coverage to some sort of automated copyright management system. Instead, the 3d Circuit said that §§ 1202(b) & (c) include automated technological measures, but don’t require that the removed or altered copyright management information be digital or automated.

The court also rejected a weak fair use argument.

The case is Murphy v. Millennium Radio Group LLC, No. 10-2163 (3d Cir. June 14, 2011).

Puzzling (to me) 7th Circuit Cypress Hill copyright decision

In Johnson v. Cypress Hill, No. 08-3810 (7th Cir. June 1, 2011), the 7th Circuit affirmed summary judgment against a plaintiff who claimed that the hip-hop group Cypress Hill infringed his alleged copyright in a 1969 sound recording. Because it’s a 1969 (i.e., pre-1972) sound recording, however, the plaintiff could not have had a copyright in it under 17 USC § 301(c).

After getting poured out on summary judgment, the plaintiff (among other arguments) asked the district court and then the 7th Circuit to rule that the dismissal was not on the merits but rather due to lack of subject matter jurisdiction (because he possessed no copyright). The Seventh Circuit refused, holding that Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010) “foreclosed” that argument.

But I thought Reed Elsevier held only that lack of a copyright registration was not a jurisdictional requirement. In the Cypress Hill case, by contrast, the issue isn’t whether a copyright was registered, but whether any copyright exists at all. How does Reed Elsevier foreclose the argument that where no copyright exists at all there is no subject matter jurisdiction under the Copyright Act?

Any thoughts?