IP Law Chat : IP Law Chat -- Hendricks & Lewis, intellectual property, trademark, copyright and technology attorneys

Another Righthaven copyright infringement case before the District of Nevada is headed for closed case status.

Yesterday, another judge from the District of Nevada granted defendant Dean Mostofi's motion to dismiss based on Righthaven's lack of standing.

The Court's standing analysis mirrored that of earlier decisions (see here, here and here):  to have standing to sue for copyright infringement, a plaintiff must be the owner of one of the exclusive rights of copyright and the bare right to sue for infringement is not one of those rights.  Here, the agreement defining the relationship between Righthaven and the original owner of the copyrights with respect to the copyrights (the Strategic Alliance Agreement ("SAA")) "expressly denies Righthaven any right from future assignments other than the bare right to bring and profit from a copyright infringement action."

The Court also declined to consider amendments to the SAA made since the filing of the complaint in the action, stating that the existence of federal jurisdiction is generally determined based upon the facts as they exist at the time the complaint was filed.

Additionally, the Court concluded that even if it were to consider the SAA amendments, "these cosmetic adjustments do not alter the fact that Plaintiff has failed to sufficiently allege whether or not Stephens Media assigned the copyrighted Work to Righthaven pursuant to the SAA, as amended or not."

Thus, "[b]ecause the SAA prevents Plaintiff from obtaining any of the exclusive rights necessary to maintain standing in a copyright infringement action and because Plaintiff fails to sufficiently allege an assignment of rights from Stephens Media to Plaintiff, the Court finds that Plaintiff lacks standing in this case."

Complaint dismissed.

The case cite is Righthaven LLC v. Mostofi, No. 2:10-CV-1066-KJD-GWF (D. Nev. July 13, 2011).

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This is a case that I always intended to blog about but never quite got to; a recent decision in the case gave me an opportunity to follow up on the case.

Plaintiff Amaretto Ranch Breedables filed its original complaint against Ozimals in December 2010, alleging claims for, among others, misrepresentation under the Digital Millennium Copyright Act ("DMCA"), tortious interference, unfair competition and misuse of copyright.  The parties competed in the "market of virtual animal sellers" in Second Life; "Amaretto created a breedable horse and associated virtual horse food" and Ozimals sold "virtual breedable bunnies."

According to the original complaint, the dispute generally involved Ozimals' DMCA takedown notification issued to Second Life:

13.  On or about December 1, 2010 Ozimals submitted a DMCA Notification to Linden Research, Inc., owners of Second Life, claiming copyrights to "in world" items, such as "the scripts, the screen displays, expression and game play generated by those scripts for a breedable virtual animal in the form of a bunny" and that the "in world" Amaretto Horses Product Line infringed Ozimals' alleged copyrights, therefore requiring Second Life, pursuant to its Terms of Service and 17 U.S.C. [Section] 512, in order to preserve its Safe Harbor status, to takedown Amaretto's products during the present busy holiday shopping season.

14.  On or about December 9, 2010, Amaretto submitted a Counter DMCA Notification to Linden Research, Inc. requesting that it reject Ozimals [sic] claims for copyright infringement because the claimed copyright violation was based on mistaken information, misidentification of material in question, or deliberate misreading of the law.

At the time the original complaint was filed, no takedown of content had actually occurred however and the Court subsequently entered both a temporary restraining order and a preliminary injunction preventing a takedown of plaintiff's "Horse Product Line" in Second Life.

Ozimals then filed a motion to dismiss plaintiff's claims for (1) misrepresentation under the DMCA; (2) tortious interference; (3) unfair competition under California statutory law; and (4) copyright misuse, as stated in plaintiff's first amended complaint.

In April 2011, the Court granted Ozimals' motion to dismiss in part.  Specifically, the Court dismissed with prejudice plaintiff's claim for misrepresentation under the DMCA because there had been no takedown of plaintiff's content, which is required under the statute.  The Court likewise dismissed plaintiff's tortious interference claim but without prejudice to amend the claim to allege additional facts.

Plaintiff then filed a second amended complaint now alleging claims for:  (1) a declaratory judgment of invalidity and/or non-infringement of copyright and of misuse of copyright; (2) unfair competition under California law; (3) defamation; (4) trade libel; (5) intentional interference with contract; and (6) tortious interference with prospective business advantage.

Ozimals again moved to dismiss certain of the claims in plaintiff's second amended complaint, which the Court similarly granted in part.  Specifically, the Court granted the motion to dismiss plaintiff's common law unfair competition claim, its tortious interference claim and the other state law claims to the extent they were based on Ozimals' DMCA takedown notification.

As to the latter part of the Court's order, the Court held that plaintiff's state law claims based on Ozimals' allegedly improper DMCA takedown notifications were preempted by the DMCA, thereby agreeing with two earlier decisions from the Northern District of California.  See Lenz v. Universal Music Corp., No. C 07-03783 JF (N.D. Cal. Apr. 8, 2008); Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004).  The Court concluded that

[t]hese cases stand for the propositions that (1) a DMCA Takedown Notification is a creature of a federal statutory regime, and (2) that regime preempts any state law claim based on an allegedly improper DMCA Takedown Notification.

The Court acknowledged the "rhetorical thrust" of plaintiff's argument against preemption, namely that "it is unfair to leave it without a remedy by holding both that (1) it cannot state a DMCA misrepresentation claim because no takedown occurred and (2) its related state law claims are preempted."

But the preemption analysis did not turn on whether plaintiff would be left without a remedy; rather,

the preemption analysis turns on whether federal law conflicts with state law and/or occupies a particular field.  Such is the case here because DMCA Takedown Notifications are a creature of federal law, and there is a specific federal remedy for their misuse.

Result...preemption.

The case cite is Amaretto Ranch Breedables, LLC v. Ozimals, Inc., No. C 10-05696 CRB (N.D. Cal. July 8, 2011).

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UPDATE:  On July 12, 2011, Coventry First filed a Notice of Voluntary Dismissal without prejudice of its complaint against the unnamed defendants who were never "formally served," according to the dismissal.  Following is the original post about the lawsuit.

There is no shortage of reports about the complaint filed by Coventry First, "a leading company in the life settlement industry," against unnamed defendants for the use of the "domain" <twitter.com/coventryfirst>, so I'll keep this brief.

Coventry First makes the typical claims of, among others, trademark infringement and false designation of origin under the Lanham Act, but also asserts a claim under the Anti-Cybersquatting Consumer Protection Act ("ACPA").  Specifically, Coventry First alleges that defendants registered, operate, traffic in and/or otherwise use "the domain name twitter.com/coventryfirst," which incorporates its COVENTRY FIRST trademark.  The complaint doesn't appear to specifically allege that these purported activities were done with "a bad faith intent to profit" from the mark--an element required by the ACPA--but it does state that the alleged use of the mark in the "domain name" is unauthorized.

The case cite is Coventry First, LLC v. Does 1-10, No. 2:11-cv-03700-JS (E.D. Pa.), filed June 7, 2011.  You can find a copy of the complaint here.

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This case is an excellent reminder that there can be more to worry about in copyright infringement cases than damages.

Plaintiff Jason Spooner sued a number of defendants for copyright infringement based on the alleged use of plaintiff's song in an advertisement.

Plaintiff settled with certain of the defendants for $30,000 and plaintiff then prevailed at the bench trial against the remaining defendants.  The court found that defendants had willfully infringed plaintiff's copyright and granted plaintiff injunctive relief and $40,000 in statutory damages.  As to the $40,000 in statutory damages, the court set off the amount paid by the settling defendants, leaving plaintiff with a net additional recovery of $10,000 in statutory damages.

The court also determined that plaintiff was entitled to his attorneys' fees as the prevailing party, ultimately awarding $98,745.80 in fees.  Defendants appealed, primarily arguing that the attorneys' fee request was so extravagant that the request should have been denied entirely.

The First Circuit acknowledged, as did the trial court, that the attorneys' fee award "far exceeded both the statutory damages that the plaintiff had recovered ($40,000) and the lesser amount that he stood to collect after setting off the . . . settlement ($10,000)."  But the "law . . . does not demand strict proportionality between fees and damages," the First Circuit noted.

The trial court has discretion to deny fees entirely if the requested fees are "gluttonously high," the First Circuit stated, but noted that "denying fees altogether because of an overly ambitious fee request is a drastic step" that should "be administered sparingly and in only the most egregious cases."  Here, the First Circuit concluded that the trial court had "thoughtfully considered the question of fees, faithfully applied the lodestar method, and gave a plausible rationale for the amount of the award."  Attorneys' fee award affirmed.

The case cite is Spooner v. EEN, Inc., No. 10-2393 (1st Cir. July 5, 2011).

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As previously reported, in March 2011, Apple sued Amazon in federal court in California alleging various trademark related claims in connection with Apple's alleged APP STORE mark and Amazon's "Appstore for Android."  Apple's Amended Complaint in the action can be found here.

Apple later moved for a preliminary injunction to stop Amazon's use of Apple's alleged APP STORE mark.  After holding a hearing on the motion on June 22, the District Court yesterday denied the motion, concluding that Apple had not shown that it was likely to succeed on the merits of its trademark infringement and dilution claims.

With respect to the trademark infringement claim, one of Amazon's main arguments was that Apple's alleged APP STORE mark was generic for an online store where consumers can obtain apps and therefore was not eligible for trademark protection.  On the plus side for Apple, even though the Court found that it had not established a likelihood of success on the merits, it did not adopt Amazon's argument that Apple's mark was generic:

The court assumes without deciding that the "App Store" mark is protectable as a descriptive mark that has arguably acquired secondary meaning.  The court does not agree with Amazon that the mark is purely generic, for the reasons argued by Apple, but also does not find that Apple has shown that the mark is suggestive, as there appears to be no need for a leap of imagination to understand what the term means.

Nonetheless, using the multi-factor test applicable in the Ninth Circuit, the Court concluded that, based on the current record, Apple had not established that there was a likelihood of confusion resulting from the parties' respective uses of the APP STORE mark.

Similarly, the Court found that Apple had failed to demonstrate a likelihood of success on its dilution claim.

First, the Court concluded that Apple had not established that its APP STORE mark was famous, despite recognizing that Apple had spent "a great deal of money" on advertising, noting that there was evidence that others used "app store" as a descriptive term for their stores.

Second, the Court found that Apple had failed to demonstrate dilution by "blurring" or "tarnishment."

As to blurring, the Court concluded that

the marks are similar, but "App Store" is more descriptive than it is distinctive.  Apple did have substantially exclusive use of "App Store" when it launched its service a little over three years ago, but the term appears to have been used more widely by other companies as time has passed.  The mark does appear to enjoy widespread recognition, but it is not clear from the evidence whether it is recognition as a trademark or recognition as a descriptive term.  Moreover, there is no evidence that Amazon intended to create an association between its Android apps and Apple's apps, and there is no evidence of actual association.

No luck for Apple on its tarnishment claim either:  "Apple speculates that Amazon's App Store will allow inappropriate content, viruses, or malware to enter the market, but it is not clear how that will harm Apple's reputation, since Amazon does not offer apps for Apple devices."

In the end, although the Court's decision does not doom Apple's claims, it may indicate that Apple has a tough row to hoe.

The case cite is Apple, Inc. v. Amazon.com Inc., Case No. CV 11-01327 PJH (N.D. Cal. July 6, 2011).

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Warner Bros., owner of the copyrights to the films The Wizard of Oz and Gone with the Wind, as well as various animated Tom & Jerry short films, sued defendants, collectively referred to as AVELA, for copyright infringement, among other claims.

AVELA had obtained restored versions of publicity materials for these films such as movie posters and lobby cards.  From these materials, AVELA extracted images of the film characters and licensed the extracted images for use on a variety of items such as shirts, playing cards and three-dimensional figurines.  In some cases, AVELA modified the images extracted from the publicity materials and in other cases, combined images extracted from different publicity materials for use in a single product.

Warner Bros. claimed these uses of the extracted images from the publicity materials infringed its copyrights in the films.  AVELA in turn argued that because the publicity materials were distributed without copyright notice, under the 1909 Copyright Act (applicable under the facts), the materials were in the public domain.

In granting summary judgment in favor of Warner Bros. on the copyright infringement claim, the District Court did not decide the public domain question.  Instead, it concluded that even if the publicity materials were in the public domain, AVELA's modifications of the extracted images and use of the images on products infringed Warner Bros.'s copyrights in the films.  The District Court then entered a permanent injunction against all use of the images from the publicity materials except for exact duplication of those materials.

Unlike the District Court, in affirming in part the trial court's decision, the Eighth Circuit explicitly addressed the question whether the publicity materials were in the public domain.  The Court concluded that they were, rejecting Warner Bros.'s contention that the allegedly "limited publication" of the materials saved them from this fate.

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