The Sixth Circuit today held that a copyright (or patent) license that expressly provides that it is non-assignable or non-transferrable is breached when (1) the licensee merges with its corporate sibling entity, (2) the licensee is not the surviving entity, and (3) state law provides that the surviving entity owns all the assets of the constituent entities.
The court noted that even if the license hadn’t expressly addressed assignability or transferability, federal common law would have led to the same result because its default rule prohibits transfer of a patent or copyright license without authorization.
The case is Cincom Systems, Inc. v. Novelis Corp., No. 07-4142 (6th Cir. Sept. 25, 2009).
Showing posts with label 6th Cir. copyright. Show all posts
Showing posts with label 6th Cir. copyright. Show all posts
Friday, September 25, 2009
Thursday, June 21, 2007
6th Circuit decision employing an uber-lenient causation standard for copyright damages
The Sixth Circuit recently issued a decision, that, in my opinion, stretched the well-established causation requirement for copyright damages beyond the breaking point.
In Thoroughbred Software Int'l, Inc. v. Dice Corporation, No. 06-2080 (6th Cir. June 14, 2007), the plaintiff licensed software to the defendant. Under the license, the licensee was permitted to copy and install the software on end-users' computers, but had to pay a license fee each time it did so. Further copying by the defendant was prohibited. At trial, the plaintiffs proved that the defendant made several copies of the software for which it did not pay the plaintiff. Some involved software the defendant installed on end-users' computers. Some copies were never installed on anyone's computer.
The most interesting question on appeal was whether the plaintiff should have been awarded damages for the copies that were NOT installed on any end-user's computer. They were just sitting there in defendant's office, gathering dust.
The defendant argued that, since it never installed the uninstalled copies on anyone's computer, the plaintiff didn't lose any of the licensing fees provided in the license for them, so there was no damage. Sixth Circuit acknowledged that a plaintiff "must prove the existence of a causal connection" between the alleged infringement and the alleged damage. It then pointed to a 2d Circuit case where someone had used a copyrighted object in an ad campaign without obtaining permission. The 2d Circuit case held that the copyright owner should have received a reasonable royalty for the use of the copyrighted object in the ad campaign.
The 6th Circuit then stretched this holding even further (way too far, in my view), and used it as the basis to hold that the plaintiff should receive a reasonable royalty even as to the copies that were made but never used. Its basis for doing this was that it was more equitable to give something to the plaintiff for the unlawful copies than to let the wrongdoer off scot-free as to those wrongly-made copies. This would seem to make a mockery of the causation requirement, as this "principle" would apply in almost every case, causation or not.
So if you want a broad interpretation of the causation requirement, here's your authority.
In Thoroughbred Software Int'l, Inc. v. Dice Corporation, No. 06-2080 (6th Cir. June 14, 2007), the plaintiff licensed software to the defendant. Under the license, the licensee was permitted to copy and install the software on end-users' computers, but had to pay a license fee each time it did so. Further copying by the defendant was prohibited. At trial, the plaintiffs proved that the defendant made several copies of the software for which it did not pay the plaintiff. Some involved software the defendant installed on end-users' computers. Some copies were never installed on anyone's computer.
The most interesting question on appeal was whether the plaintiff should have been awarded damages for the copies that were NOT installed on any end-user's computer. They were just sitting there in defendant's office, gathering dust.
The defendant argued that, since it never installed the uninstalled copies on anyone's computer, the plaintiff didn't lose any of the licensing fees provided in the license for them, so there was no damage. Sixth Circuit acknowledged that a plaintiff "must prove the existence of a causal connection" between the alleged infringement and the alleged damage. It then pointed to a 2d Circuit case where someone had used a copyrighted object in an ad campaign without obtaining permission. The 2d Circuit case held that the copyright owner should have received a reasonable royalty for the use of the copyrighted object in the ad campaign.
The 6th Circuit then stretched this holding even further (way too far, in my view), and used it as the basis to hold that the plaintiff should receive a reasonable royalty even as to the copies that were made but never used. Its basis for doing this was that it was more equitable to give something to the plaintiff for the unlawful copies than to let the wrongdoer off scot-free as to those wrongly-made copies. This would seem to make a mockery of the causation requirement, as this "principle" would apply in almost every case, causation or not.
So if you want a broad interpretation of the causation requirement, here's your authority.
Wednesday, January 31, 2007
6th Circuit Decides Interesting Copyright and Trademark Case Involving Repackaging and Reselling of Audio Recordings of Books
First the copyright part of the case. Under copyright law, the legitimate owner of a “copy or a phonorecord” can “sell or otherwise dispose of them” without the consent of the copyright owner. 17 U.S.C. § 109(a). There’s an exception, however, in § 109(b)(1)(A). It says that:
Notwithstanding the provisions of subsection (a), unless authorized by the owners of copyright in the sound recording . . . and in the case of a sound recording in the musical works embodied therein, . . . the owner of a particular phonorecord . . . may [not], for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord . . . by rental, lease, or lending . . . .”
This exception came about in the early 1980s because record companies were concerned that they were losing too much business through record and tape rentals (to people would simply copy the rented music). In Brilliance Audio, Inc. v. Haights Cross Communications, Inc., No. 05-1209 (Jan. 26, 2007), the question was whether this exception applied to rentals of audio recordings of books. The Sixth Circuit though that the statutory language could go either way. (I had to read this part of the opinion three times to see how it could be read NOT to include recordings of books, but I digress.) Because it considered the language capable of going either way, the court jumped into the dreaded legislative history and discussed evanescent notions of “policy.” To make a long story short, the court decided that, in 1984, Congress was concerned only with music recordings. Nobody mentioned books on tape at all. And as to policy, the court decided that exceptions to the first sale doctrine should be construed narrowly, since such exceptions would “upset the bargain” in copyright law between copyright owners (who want to protect their creative works) and the rights of owners of stuff (to do what they want with their stuff). So it concluded that first sale doctrine exonerated the defendant on the copyright count.
The trademark claim was that the defendant was repackaging and re-selling the audio books in violation of the Lanham Act. The plaintiff sold two different versions of the audio books: one for consumers and one for libraries. It claimed that the defendant was taking the consumer versions and labeling them as library versions. The court (correctly in my view) upheld the trademark claim in the face of a first sale defense because (a) the plaintiff alleged that the defendant’s labeling didn’t make clear that the product was repackaged, plus (b) the goods weren’t “genuine” because there were differences between the two versions.
Notwithstanding the provisions of subsection (a), unless authorized by the owners of copyright in the sound recording . . . and in the case of a sound recording in the musical works embodied therein, . . . the owner of a particular phonorecord . . . may [not], for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord . . . by rental, lease, or lending . . . .”
This exception came about in the early 1980s because record companies were concerned that they were losing too much business through record and tape rentals (to people would simply copy the rented music). In Brilliance Audio, Inc. v. Haights Cross Communications, Inc., No. 05-1209 (Jan. 26, 2007), the question was whether this exception applied to rentals of audio recordings of books. The Sixth Circuit though that the statutory language could go either way. (I had to read this part of the opinion three times to see how it could be read NOT to include recordings of books, but I digress.) Because it considered the language capable of going either way, the court jumped into the dreaded legislative history and discussed evanescent notions of “policy.” To make a long story short, the court decided that, in 1984, Congress was concerned only with music recordings. Nobody mentioned books on tape at all. And as to policy, the court decided that exceptions to the first sale doctrine should be construed narrowly, since such exceptions would “upset the bargain” in copyright law between copyright owners (who want to protect their creative works) and the rights of owners of stuff (to do what they want with their stuff). So it concluded that first sale doctrine exonerated the defendant on the copyright count.
The trademark claim was that the defendant was repackaging and re-selling the audio books in violation of the Lanham Act. The plaintiff sold two different versions of the audio books: one for consumers and one for libraries. It claimed that the defendant was taking the consumer versions and labeling them as library versions. The court (correctly in my view) upheld the trademark claim in the face of a first sale defense because (a) the plaintiff alleged that the defendant’s labeling didn’t make clear that the product was repackaged, plus (b) the goods weren’t “genuine” because there were differences between the two versions.
Wednesday, April 13, 2005
Blogger ate my homework
Haven't posted in a while, but tried to last week. Unfortunately, as I clicked "Publish Post," Blogger croaked. All was lost. This "Retrieve Post" stuff? Didn't work. So herewith, below, are overly simplistic and only marginally humorous synopses of some recent decisions for the attention-span impaired. As you will see, it wasn't a good month for owners of what they thought were trademark rights or copyrights:
- What parts of the graphic and user interface of a video golf game are protectible under trade dress and copyright law? None, that's what, sez the 7th Circuit in Incredible Technologies, Inc. v. Virtual Technologies, Inc., No. 03-3785 (March 15, 2005).
- How about part numbers and part drawings in a transmission parts catalog? Protectible under copyright law? Nope, quoth the 6th Circuit in ATC Distribution Group, Inc. v. Whatever It Takes Transmissions & Parts, Inc., No. 03-6505 (March 30, 2005).
- OK, what about a last name registered as a trademark under German law? Out of luck in Murica, says the Federal Circuit in In re Rath, No. 04-1419, -1420 (March 24, 2005).
- I don't own the copyright, but I have an assignment of all causes of action from the copyright owner, so I can sue, right? Wrong, according to the en banc 9th Circuit in Silvers v. Sony Pictures Entertainment, Inc., No. 01-56069 (March 25, 2005).
- I've got a jury finding of intentional trademark infringement. Pretty exceptional, huh? I get fees, don't I? Well, don't I?? Nope. Intentional doesn't mean the same thing as willful, says a panel of the 9th Circuit, apparently deciding the case without their Roget's Thesaurus. Watec Co. v. Liu, No. 03-55823, -56079 (March 30, 2005).
- Hey! There's a guy using my trademark for the domain name of a web site where he says rotten things about me. Doesn't trademark law prohibit that? Not if he's just griping. That's not "use in connection with the sale of goods," as required under the Lanham Act, but you might have a beef under the Anticybersquatting Act. Bosley Medical Inst., Inc. v. Kremer, No. 04-55962 (9th Cir. April 4, 2005).
- Finally, the 8th Circuit held that (a) a bankruptcy court order approving the sale of assets, including "all intellectual property," was a valid transfer of ownership in copyrights, (b) an appellate court should review a district court's finding of "substantial similarity" under the clearly erroneous standard, not de novo (a bad sign for the appellant in the case), and (c) no jury trial for plaintiffs who drop their damage claims prior to trial. Taylor Corp. v. Four Seasons Greetings, LLC, No. 04-1088 (April 11, 2005). (Hard to do anything flip with that decision -- sorry.)
Tuesday, January 11, 2005
Kid Rock Copyright . . . . Forever
The Sixth Circuit, in Ritchie v. Williams, recently thwarted an attempt by a purported music promoter who claimed to have an ownership interest in the rights to Kid Rock's music. The promoter claimed to have entered into the alleged agreement in 1989 (i.e., before Kid Rock had money like Fort Knox), alleging several claims in state court under state law. But when the fog lifted, the earth had shifted -- Kid Rock removed to federal court. Citing federal preemption, the Kid said the state law claims were still the same as copyright claims 'cause they ain't changed nothin. That is, they were completely preempted by the Copyright Act.
Where it applies, complete preemption doctrine permits the recharacterization of state law claims as federal claims, thus permitting removal of such a case from state to federal court. The reason Kid Rock wanted to recharacterize the promoter's claims as copyright claims was that he'd thought the claims had got rusty, thought they'd got dusty -- the Copyright Act has a 3 year statute of limitations.
Fat and ugly, broke, black and blue, the promoter came back to the Sixth for round two. The Sixth Circuit, however, used the opportunity to fall in line with the Second and Fourth Circuit's adoption of complete preemption doctrine. The promoter was told, don't test the boss, 'cause he's got this sewn like Betsy Ross. According to the court:
You take the copyright claim
And you give it the state law name
You know that trick is lame
You're in the federal domain
Forever
Pre-empted
Forever
Time-Barred
Forever
Sorry, I just couldn't resist.
Where it applies, complete preemption doctrine permits the recharacterization of state law claims as federal claims, thus permitting removal of such a case from state to federal court. The reason Kid Rock wanted to recharacterize the promoter's claims as copyright claims was that he'd thought the claims had got rusty, thought they'd got dusty -- the Copyright Act has a 3 year statute of limitations.
Fat and ugly, broke, black and blue, the promoter came back to the Sixth for round two. The Sixth Circuit, however, used the opportunity to fall in line with the Second and Fourth Circuit's adoption of complete preemption doctrine. The promoter was told, don't test the boss, 'cause he's got this sewn like Betsy Ross. According to the court:
You take the copyright claim
And you give it the state law name
You know that trick is lame
You're in the federal domain
Forever
Pre-empted
Forever
Time-Barred
Forever
Sorry, I just couldn't resist.
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