Intellectual Property

The answer is “Yes” because the U.S. government has waived sovereign immunity for claims of patent infringement.  This means the U.S. government can be sued for patent infringement in at least some instances.  However, special rules and certain limitations apply as explained in 28 U.S.C. § 1498, which states, in part:

(a) Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

As a result, patent infringement lawsuits against the United States government, are not brought in Federal district courts but rather in the Court of Federal Claims, which is a special court “authorized to hear primarily money claims founded upon the Constitution, federal statutes, executive regulations, or contracts, express or implied in fact, with the United States.”  See https://www.uscfc.uscourts.gov/.  Further, a patent owner cannot sue a federal contractor who made the allegedly infringing product or performed the allegedly infringing method, but instead, must sue the U.S. government.  Note, however, the U.S. government’s contract with the federal contractor may require the contractor to indemnify the government for liability and costs.

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Under the Copyright Act, an owner of a copyright suing for infringement may elect to seek statutory damages instead of actual damages.  The amount of statutory damages under the Copyright Act are limited to $30,000 for innocent infringement and up to $150,000 for willful infringement.  In Desire, LLC v. Manna Textiles, Inc., et al. (decided February 2, 2021), the Ninth Circuit was confronted with the issue of whether a plaintiff is entitled to multiple statutory damage awards where some of the defendants are found to be jointly and severally liable with each other.

Desire is a fabric supplier that had obtained and registered with the Copyright office “a two dimensional floral print textile design.”  Shortly thereafter, a woman’s clothing manufacturing, Top Fashion, purchased a couple of yards of the fabric from Desire in order to secure a clothing order with Ashley Stewart, Inc., a woman’s clothing retailer.  Unfortunately, Top Fashion and Desire had a dispute over the fabric’s price.  Top Fashion then showed the design to Manna, a fabric designer, who in turn used a Chinese textile design firm to modify the design.  That designer changed approximately 30-40% of the original design, and Manna subsequently registered the “new” design with the Copyright Office.

Between late 2015 and Spring 2016, Manna sold this fabric to at least three manufacturers, who in turn created garments that were then sold to at least three retailers.  Desire then sued Manna, the manufacturing defendants and their retailer defendants, for copyright infringement.  Desire did not allege that the three manufacturing defendants acted in concert with one another or that the three retail defendants acted in concert with one another to infringe on Desire’s copyright.  (The Ninth Circuit’s opinion contains a diagram on page 8 showing the manufacturer/distribution chain if the reader is interested.)

The trial court granted summary judgment to Desire on the issues that it was the owner of a valid copyright and that Manna, and at least two manufacturing defendants, had access to the subject design.  The Court also concluded that Desire’s copyright design “was entitled to broad copyright protection.”  The Court then held that although the jury would determine whether copyright infringement had occurred, if it did so, the Court held that it would award up to seven statutory damages awards under a theory that some of the defendants were jointly and severally liable.

After a trial, the jury returned a verdict in Desire’s favor and found that Manna and two of the manufacturer defendants had willfully infringed on Desire’s copyright and that a third manufacturer and one retailer had innocently infringed on the copyright.  After totaling up the seven separate statutory awards, the trial court awarded Desire $480,000 in statutory damages, with 100% of that amount assessed jointly and severally against Manna.  The defendants appealed the ruling to the Ninth Circuit.  (This article will not address the issue of the copyright infringement liability that is discuss in the Court’s opinion.)

On appeal, the defendants argued that the district court had adopted “an erroneous view of joint and several liability” and the interplay with the Copyright Act’s statutory damages scheme.  The argued that because joint and several liability results where two or more defendants have contributed to the harm that the plaintiff suffered, even if they do so independently, “the Copyright Act permits only one award of statutory damages.”  Desire, on the other hand, argued that where the joint and several liability is only between some of the defendants as opposed to all of them completely, the Copyright Act should be read to allow for multiple statutory damage awards. The Ninth Circuit decided to adopt the defendants’ approach to statutory damages under the Copyright Act given the facts of the case.

The Ninth Circuit began by noting that the district court had properly apportioned joint and several liability between the upstream defendants, i.e., the manufacturers, and the downstream defendants, i.e., the retailers.  The Ninth Circuit did reject the defendants’ argument that joint and several liability should rest on a single indivisible injury, i.e., Desire’s loss of compensation.  The Ninth Circuit concluded that this view ignored that Desire’s damages were in fact divisible because each “upstream infringer” was a cause of the harm emanating from its chain of distribution because no downstream infringer would have received any infringing item “but for” the acts of the upstream infringers.  However, each downstream infringer, i.e., retailer, would have only been the cause of harm resulting from its own actions and not for those of the other retailer defendants in other distribution chains.

The Ninth Circuit then turned to the actual language of the Copyright Act that “permits a copyright owner to elect an award of statutory damages in lieu of actual damages and profits.”  Citing, 17 U.S.C. §504(c)(1).  This section allows the recovery of “an award of statutory damages for all infringements involved in the action with respect to any one work for which any one infringer is liable individually or for which any two or more infringers are liable jointly and severally.”  Thus, the number of awards for infringement do not focus on each separate infringement, but rather, on “(1) the number of individual `works’ infringed; and (2) the number of separate infringers.”  The Ninth Circuit found that there was no dispute that only a single work, i.e., the floral design, was alleged to have been infringed. Thus, the issue became whether multiple statutory damage awards can issue “where one infringer is jointly and severally liable with all other infringers but the other infringers are not completely, jointly and severally liable with one another.”  The Ninth Circuit concluded that this was not permissible.

The Court turned its attention to statutory interpretation, which holds that “when the statutory language is unambiguous, the plain meaning controls.”  The Court concluded that the plain language of section 504(c)(1) precluded multiple awards of statutory damages where there was only one work involved and the defendants have partial joint and several liability among them through a single tortfeasor, who is jointly and severally liable with all of them.

Desire argued that all of the defendants must be jointly and severally liable with each other for the infringement to constitute a single statutory damage award.  However, the Ninth Circuit held that such an approach would render the word “any” to be superfluous and essentially rewrite it as meaning “all.”  This would go against the intent of the statute.

The Ninth Circuit recognized that the whole purpose of a statutory damages award under the Act was to be an alternative to actual damages, and that the election always belonged to the copyright owner.  The Ninth Circuit concluded that Congress did not intend to create a windfall statutory award in cases such as the one before it.  For instance, although it is of dispute whether Manna’s actual profit on the subject design was no more than $5,000, the Ninth Circuit noted that adopting Desire’s result would result in an award “nearly 100 times its profits” if that were the case.

The Ninth Circuit also found that the statutory damage award in the Copyright Act had to fulfill the two remedial provisions of the Copyright Act, “to provide adequate compensation to the copyright holder and to deter infringement.”  It was not, as the Ninth Circuit had previously noted, to create a windfall for copyright owners.  The Ninth Circuit was mindful that, by adopting its approach, it might encourage copyright owners to file separate actions against various defendants to try to get around a single statutory damages award where there was joint and several liability.  The Court reasoned, however, that there were procedural mechanisms, such as consolidation or transfers, that would allow such attempts to be frustrated by having all the claims joined in a single action. Moreover, the Ninth Circuit concluded that it was their job to interpret the statutory language as opposed to weighing the possible benefits of alternative interpretations or policies.

Justice Wardlaw dissented and would have adapted Desire’s interpretation that would allow for multiple statutory damage awards.  Justice Wardlaw’s primary concern was that it would encourage copyright owners to bring actions that cut out the “common source defendant at the top of the chain” and seek multiple statutory damage awards against those lower on the chain of distribution through separate actions.

The Ninth Circuit’s decision in the Desire case is a reminder to copyright infringement plaintiffs of the availability to elect statutory damage, especially where actual damages are hard to prove or nominal.  However, the Desire ruling serves to place some restraint on a plaintiff’s ability to turn such an election into a windfall.

Is it possible to legally protect an idea?  The answer is: not really.

Intellectual property is intangible personal property.  There are four types of intellectual property that are protected by law:  patents, copyrights, trademarks, and trade secrets.  A separate set of laws governs each one.  Although ideas may be intangible personal property, ideas do not fit in any one of the types of intellectual property.

Patents protect inventions.  A utility patent covers a functional invention that is a machine, article of manufacture, composition of matter (such as a chemical or an isolated gene), or a process (a method of doing something).  A design patent covers an ornamental design for an article of manufacture.  A plant patent covers a new type of plant.  Some things cannot be patented: laws of nature, natural phenomena, and abstract ideas.

In order to get a patent a patent application must be filed in the United States Patent and Trademark Office.  A patent examiner reviews the application.  If the application satisfies certain requirements, a patent is granted.  First, the invention must be novel (new).  Second, the invention must be a nonobvious difference over what has been done before in the technological field.  From the time the application is filed, it may take several years before the applicant is granted a patent or the application is finally rejected.

The owner of a patent has the right to exclude others in the U.S. from making, using, selling, offering to sell, or importing the patented invention.  A patent is good from 20 years from its filing date.  If someone violates the rights of the patent owner, the owner may sue for patent infringement.  Patents are governed by federal law.

Copyrights cover original forms of authorship or expression fixed in a tangible medium.  They include books, film, computer programs or software, songs, plays, dance, photographs, sculpture, and other types of artwork.  Certain types of expression cannot be copyrighted.  For example, works that are not original because there is only way of expressing the work (such as phone books, forms, and instructions) cannot be copyrighted.  In addition, ideas, concepts, and discoveries are not protectable by copyright.

A copyright exists as soon as the work is created and fixed in a tangible medium.  The work can be registered in the U.S. Copyright Office.  The owner of a copyright has the exclusive rights to: reproduce and make copies of the work, distribute copies of the work, publicly perform and display the work, and create derivative works.  In general, a copyright is good for the life of the author plus 70 years.  If someone violates the copyright owner’s rights, the owner may sue for copyright infringement.  Like patents, copyrights are governed by federal law.

Trademarks are words, phrases, symbols, or designs used in commerce to identify the source of goods or services and to distinguish them from those of others.  A trademark (sometimes called a brand) provides the consumer with the knowledge the product or service they are purchasing comes from the source they associate with that mark.  Certain words cannot be trademarked, in particular, marks that are “merely descriptive” (i.e., marks that simply describe the product or service or its characteristics).  Ideas cannot be trademarked.

A person who uses a trademark in commerce has some common law rights.  A mark may also be federally registered in the PTO.  Some states also offer their own trademark registration systems, although federal registration provides the most protection.  In order to federally register a mark, an application must be filed in the PTO.  The application must contain a sample of the mark in use in commerce (unless the application is an “intent to use” application which reserves future rights), identify the goods or services for which the mark is being used, and list the date of first use of the mark in commerce.  The trademark examiner will review the application to see if certain requirements are met, including whether the mark is likely to be confused with other registered marks for the same or similar goods or services.  The registration process may take up to a year or possibly longer before the mark is granted registration or is finally rejected.

A trademark owner has the rights to prevent others from using the same or a similar mark in connection with the sale of the same or similar goods or services if the other mark is likely to confuse consumers as to the source of the goods or services.  If a trademark owner’s rights are violated, the trademark owner may sue for trademark infringement in federal court under the Lanham Act or in state court.  A federal registration for a trademark may be renewed every 10 years if the mark is in continuous use.

The fourth type of intellectual property is a trade secret.  Trade secrets are different from the other three types of intellectual property in that there is no federal registration system and the owner does not obtain any “monopoly” rights.  A trade secret is information that has economic value from being kept secret and that is the subject of reasonable efforts to keep it secret.  The owner of a trade secret may sue anyone who misappropriates (wrongfully acquires, discloses, or uses) the trade secret.

Trade secrets are governed by state law, although there are some federal statutes that also protect trade secrets.  Trade secret protection lasts as long as the information is kept secret.

Thus, none of the four areas of intellectual property law directly protects an idea.  While it may be possible to further develop an idea to make it into a patentable invention or to use the idea to create a copyrightable expression, trademark, or a valuable trade secret, the pure idea itself is not protected by these areas of law.

So, is there anything one can do to protect an idea?  If one wants to disclose an idea to someone else, the best choice is to enter into a nondisclosure agreement with the party to whom the idea will be disclosed.  A nondisclosure agreement prevents the receiving party from disclosing or using the idea without the discloser’s consent.  Of course, a nondisclosure agreement is only as good as the receiving party can be trusted.  If the receiving party breaches the nondisclosure agreement by disclosing the idea, the discloser has remedies for the breach, but cannot regain the idea’s secrecy.

In The Sherwin-Williams Company v. PPG Industries, Inc., 2-17-cv-01023 (WDPA 2021-01-21, Order), the court had to decide whether Plaintiff The Sherwin-Williams Co. (“Sherwin”) should be bound by its prior admission to the United States Patent and Trademark Office (“USPTO”) during vacated reexamination proceedings.  

During one of the reexamination proceedings, Sherwin admitted that certain prior art (“Perez”) disclosed a BPA-free coating, although it contended that its patents were valid for other reasons.  Subsequently, the entire reexamination proceeding was terminated without any action on the merits.  

Thereafter, in its invalidity contentions in the current litigation, Sherwin contended that Perez did not disclose a BPA-free coating and the admissions during reexamination did not admit that Perez disclosed or rendered obvious a certain limitation. In its initial expert report, Defendant PPG Industries’ (“PPG”) technical expert noted Sherwin’s admission to the USPTO that Perez disclosed a BPA-free coating.  In response, Sherwin’s expert opined that Perez did not disclose a BPA-free coating.  

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The Supreme Court recently denied petitions for certiorari in two of the most highly watched intellectual property cases before the Court. Those cases were Jack Daniel’s Properties Inc. v. VIP Products LLC and The Moodsters Company v. Walt Disney Company. Both cases were on petition from the Ninth Circuit and are summarized below for your convenience.

I.          Jack Daniel’s Properties, Inc. v. VIP Products LLC

In Jack Daniel’s Properties, Jack Daniel’s sued the maker of a dog toy, known as the Bad Spaniels Silly Squeaker, that was comedically modeled after the Jack Daniel’s Old. No. 7 bottle. The toy was a clear parody, but Jack Daniel’s alleged that the toy infringed its intellectual-property rights. VIP Products argued that their use wasn’t infringement because the toy was an expressive work entitled to First Amendment protection under Rogers v. Grimaldi. The district court rejected the argument and found VIP Products had infringed Jack Daniel’s trademark/trade dress.

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With the proliferation of social media and the ready access to images on the Internet and on any number of platforms, it’s just so easy to copy an image or video that moves you and post it on your social media accounts.  Easy to imagine how this can happen.  However, it’s important to remember that just because an image is posted on the internet or on a social platform doesn’t mean one can copy it and post it as your own.  Over the past two years, Justin Bieber, Emily Ratajkowski, Katy Perry, Gigi Hadid, Khloe Kardashian, LeBron James, Deshaun Watson and others have found themselves being named in lawsuits for copyright infringement arising out of just that; posting a photo of themselves on their social media accounts where the photo was taken by someone else.  While the majority of these cases settle, a few celebrities have decided to fight back.

In 2019 model and actress Emily Ratajkowski was sued over one of her Instagram stories featuring a photo of her that was taken by a paparazzi.  The photo showed her holding a vase of flowers covering her face while she was walking in NYC.  In October 2019, she filed a motion for summary judgement, attacking the plaintiff and his counsel, Richard Liebowitz, claiming that they “have brought this case in bad faith, attempting to turn a critical internet post that was available for only 24 hours into an unsubstantiated payday”, and raising a potentially viable defense – fair use.

The factors a court considers when determining whether a work is fair use are:

1. the purpose and character of the use, including whether such use is transformative, 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;
4. and the effect of the use upon the potential market for or value of the copyrighted work.

The purpose of this factor is to test whether the allegedly infringing work is “transformative”. A work is transformative when it adds something new to the work allegedly infringed, with a further purpose or different character, altering the original work with new expression, meaning, or message. A work is transformative if it does something more than repackage or republish the original copyrighted work. A transformative work is one that serves a new and different function from the original work and is not a substitute for it. As the Supreme Court noted in Campbell v. Acuff-Rose Music, Inc., “the more transformative the new work, the less will be the significance of other factors, … that may weigh against a finding of fair use.”

Ms. Ratajkowski contended that the modification she made to the image – adding the caption “mood forever” superimposed over the photo caused her Instagram post to be transformative.  She claimed that it created a new meaning and purpose by adding the caption which commented on Ms. Ratajkowski’s experience with constant paparazzi attention.  She further contended that her use was non-commercial, as Ms. Ratajkowski did not profit from the post in any way,

This is not the first time fair use has been used in these circumstances.  Artist Richard Prince (who is referred to as an “appropriation artist”) regularly relies on fair use to support his use of images created by others as a base element in his works.  Mr. Prince received a favorable ruling by the Second Circuit in Cariou v. Prince, 714 F. 3d 694 (2d Cir. 2013) which involved his “Canal Zone” art installation in which he used images from Cariou’s photography book on Rastafarians in creating collages and superimposing items like guitars over Cariou’s images.   Prince is presently relying on fair use as a defense to a number of lawsuits stemming out of his “New Portraits” art installation in which he printed various Instagram photos on large canvases and merely added his own Instagram style comments below them.

And then there is LeBron James who was sued by photographer Steven Mitchell over LeBron’s posting on Facebook an image taken by Mitchell showing James dunking against his former team, the Miami Heat.  James recently filed a counterclaim alleging that the photographer violated his right of publicity in using the image on the photographer’s website to advertise his services.  In his suit, LeBron claims that he never licensed or otherwise permitted the use of his image or likeness to Mitchell, and that the Mitchell exploited James’ image and likeness to promote his photography services.

James’ claim highlights the tension that sometimes occurs between an individual’s right of publicity – a right under state law – and First Amendment protected speech.  In California, the test used to evaluate a First Amendment affirmative defense to a right of publicity claim is to evaluate the “transformative use” of the new work. This test was formulated by the California Supreme Court in Comedy III Productions, Inc. v. Gary Saderup, Inc. which involved a charcoal sketch-work of The Three Stooges reproduced on lithographs and T-shirts. The “transformative use” test is a balancing of the defendant’s First Amendment rights and the plaintiff’s right of publicity. The Supreme Court explained that where a work contains significant transformative elements, it is not only especially worthy of First Amendment protection, but it is also less likely to interfere with the economic interest protected by the right of publicity.

In analyzing Comedy III, the 9th Circuit in Keller v. Electronic Arts explained that the test is comprised of “at least five factors to consider in determining whether a work is significantly transformative to obtain First Amendment protection.” These factors are as follows:

(i) is the celebrity likeness one of the “raw materials” from which an original work is synthesized, or is the depiction of the celebrity the very sum and substance of the work;

(ii) is the work primarily the defendant’s own expression or merely an expression of the likeness of the celebrity. This factor is determined by looking at whether a purchaser of the work is motivated to buy a reproduction of the celebrity or buy the expressive work of the defendant;

(iii) which elements predominate in the work? The literal and imitative reflection of the celebrity or the defendant’s creative elements;

(iv) in close cases, is the economic value of the work derived primarily from the fame of the celebrity depicted; and

(v) is the defendant’s skill and talent “manifestly subordinated” to the overall goal of creating a conventional portrait of a celebrity so as to commercially exploit his or her fame.

While the first of these factors tends to favor LeBron’s counterclaim – the depiction of LeBron is the very sum and substance of the work – the other factors are not so clearly in his favor. As to the second and third factors, Mitchell’s creativity in capturing a moment in time that is particularly noteworthy – a massive dunk on LeBron’s former teammates – is seemingly the dominant focus and key element of the photograph.   As for the fourth and fifth factor, this image is not just a conventional portrait of Lebron; its economic value is derived from what it captures and not just the fame of Lebron.

Notwithstanding the above, it is still no slam dunk for Mitchell.  The California Court of Appeals decision in No Doubt v. Activision Publishing, Inc., which was followed by the Ninth Circuit in Keller v. Electronic Arts, may very well help LeBron close out Mitchell.  This case addressed a claim by the members of No Doubt that the use of certain look-alike avatars in the Band Hero video game that simulate performing in a rock band violated their right of publicity.   The court held that No Doubt’s right of publicity claim prevailed over Activision’s First Amendment defense; the court concluded that the video game was not “transformative” under the holding of Comedy III. Specifically, the court reasoned that the video game characters were “literal recreations of the band members” doing “the same activity by which the band members achieved and maintain fame.” The fact that the avatars “appear in the context of a video game that contains many other creative elements…does not transform the avatars into anything other than exact depictions of No Doubt’s members doing exactly what they do as celebrities.”  Taking the court’s analysis in No Doubt into consideration, LeBron’s counterclaim against Mitchell may very well be a jump ball.

In my last column, I discussed the first argument that should be made in overcoming an obviousness rejection made by the patent examiner in a patent application.  If possible, the applicant should argue that the examiner has failed to establish a prima facie case of obviousness because the examiner did not make the required factual findings.  However, there are several additional arguments that may be applicable.

First, in relying on prior art references for the rejection, the examiner cannot pick and choose only one aspect of a prior art reference and exclude other aspects of the reference or ignore the central teaching of the reference.  “It is impermissible within the framework of section 103 to pick and choose from any one reference only so much of it as will support a given position, to the exclusion of other parts necessary to the full appreciation of what such reference fairly suggests to one of ordinary skill in the art.”  In re Wesslau, 353 F.2d 238 (CCPA 1965).

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One of the last books written by Dr. Seuss, “Oh, The Places You’ll Go” is one of the bestselling books during graduation season each year.  The copyright for this book, like all of the works of Dr. Seuss, belongs to Dr. Seuss Enterprises, LP, which issues licenses for the creation of new works under the Dr. Seuss brand.  It also works closely to oversee licenses of its work, which it carefully vets.  As any parent (and even non-parent) knows, there are tons of Dr. Seuss-licensed works such as toys, video games and books.

In 2016, a group attempted to produce and market a book that would be a “mash up” of Dr. Seuss’ “Oh, The Places” and Star Trek, in which the crew of the USS Enterprise would be sent through the world inhabited by the characters of “Oh, The Places You’ll Go!”  A “mash up” is essentially a work that is created by combining “elements from two or more sources,” such as having specific movie characters inhabit a literary world, etc.

The plan was to create a new work called, “Oh The Places You’ll Boldly Go,” a play on words from the old Star Trek series that the crew was “boldly going where no man had gone before.”

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Most patent applications are initially rejected on obviousness grounds by the patent examiner in the US Patent and Trademark Office.  That means that the examiner believes that the invention, as set forth in the claims in the application, would have been obvious to a person of ordinary skill in the art at the time the application was filed.   Usually, the rejection is based on one or more prior art references – documents that are publicly available as of the application’s filing date.  In making such a rejection, the examiner states that a person skilled in the art would have found it obvious to modify the teachings of the cited prior art references to achieve the claimed invention.

There are several ways to overcome this type of obviousness rejection.  The applicant can argue that the examiner is incorrect in the interpretation of the prior art references, and that those references do not teach or disclose what the examiner contends.  The applicant can also argue that, although the examiner may be correct in interpreting the prior art references, the examiner is incorrect in concluding that a person skilled in the art would have found the claimed invention obvious based on those  references.  Or, the applicant can amend the claims to add an element that is not taught or disclosed in the references.

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