Intellectual Property

In 10x Genomics, Inc. v. Celsee, Inc., 1-19-cv-00862 (DDE 2020-12-04, Order) (Colm F. Connolly), the District Court ordered the defendant to produce documents and give testimony about communications between defendant and its new corporate owner concerning the litigation and the provisions in the acquisition agreement that concern the litigation.

Specifically, during the pendency of the litigation, nonparty Bio-Rad Laboratories had acquired 100 percent of Defendant Celsee, Inc.’s stock pursuant to an acquisition agreement. The acquisition agreement had disclosures and provisions related to the litigation. At two depositions, Celsee refused to let witnesses answer questions about documents Celsee disclosed to BioRad and communications it had with Bio-Rad during the negotiations that resulted in the acquisition agreement. The disclosures and communications occurred after Celsee and Bio-Rad had signed a non-binding letter of intent to engage in the acquisition negotiations. Celsee cited the common interest privilege and the attorney work product doctrine as the bases for its refusal to allow the witnesses to answer the questions posed to them.

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In 2019, Carnival Corporation, the owner of the Carnival Cruise Line, attempted to register KING JAMES in connection with a wide variety of services, including retail store services, various retail goods, cruise-ship services, sports, entertainment, banquet services, beauty and health care, and much more. According to Carnival, it planned to name its newest ship King James, and the application seems to indicate that Carnival also planned to use the KING JAMES mark in connection with various other goods and services onboard the ship. As you can imagine, a prominent figure took issue with Carnival’s plan. That figure was none other than LeBron James, or as those in the sports world have known him for over a decade, King James.

On November 18, 2020, James filed an opposition proceeding before the Trademark Trial and Appeal Board seeking to preclude Carnival’s registration of KING JAMES with respect to “sport bags, gym bags, sports bags,  . . . gymnastics and sporting articles . . .”, and “providing sports facilities; organizing of sports competitions and sports events; providing facilities for recreational activities; . . . providing facilities for recreation.” James’s attorneys argued that Carnival’s use of KING JAMES in connection with those goods and services would create a false suggestion of connection with LeBron James due to James’s “reputation as a world-famous basketball player, and [because] the use of ‘King James’ as an identification of LeBron James, [is] so well[-]known[.]” Eight days later, Carnival expressly abandoned its application with prejudice, presumably as a result of a settlement with LeBron James.

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In the past few years there has been a number of libel claims based on an unfavorable portrayal of a real person in either a television program or motion picture that is based on real life events.  To name a few, there is the currently pending Mossack Fonseca & Co., S.A. et al v. Netflix Inc., which is based on the streamer’s portrayal of Panamanian lawyers in the feature The Laundromat which was about the “Panama Papers” leaked documents scandal, and there is also the currently pending  Fairstein v. Netflix, Ava Duvernay and Attica Lock involving a defamation claim over the portrayal of Linda Fairstein, a former NYC prosecutor, in the Netflix series, When They See Us which was about the trial of the Central Park Five.  There was also the now resolved Green v. Paramount Pictures that was discussed in a previous article, and there was the false light claim made in Olivia De Havilland v. FX Networks LLC over De Havilland’s portrayal in the FX docudrama Feud: Bette and Joan.

These cases are primarily based on a claim of defamation, usually liable which is a written defamation.  In California, libel is defined by Civil Code Section 45 as “a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.”  In most states, libel is defined similarly.  In order to establish libel, a plaintiff will have to establish: that the statements were defamatory; that the statements were published to third parties; that the statements were false; and that it was reasonably understood by the third parties that the statements were about the plaintiff.

In Olivia De Havilland’s lawsuit against FX, she alleged that the producers of Feud portrayed her in a false light.  A false light claim is a type of invasion of privacy, based on publicity that places a person in the public eye in a false light that would be highly offensive to a reasonable person, and where the defendant knew or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the aggrieved person would be placed.  A false light claim is equivalent to a libel claim, and its requirements are the same as a libel claim, including proof of malice.  In order to prevail on her claim, De Havilland had to demonstrate that FX broadcasted statements that were (1) assertions of fact, (2) actually false or create a false impression about her, (3) highly offensive to a reasonable person or defamatory, and because she was a public figure, that the statements, and (4) made with actual malice. In order to establish “actual malice” De Havilland had to prove by “clear and convincing evidence” that the producers of Feud knew the statements at issue were false, or that they had serious doubts about the truth of such statement.

In the opinion rendered by the California Court of Appeals in De Havilland, the court first questioned whether a reasonable viewer would interpret Feud as entirely factual. The court noted that “[v]iewers are generally familiar with dramatized, fact-based movies and miniseries in which scenes, conversations, and even characters are fictionalized and imagined.”  Next, the court concluded that Feud’s depiction of De Havilland is not defamatory nor would it highly offend a reasonable person.  Granting an interview at the Academy Awards, the court noted, is not conduct that would cause offense to reasonable persons.  Further, the court found the producer’s substitution of the word “bitch” for “dragon lady” in a statement actually made by De Havilland was an un-actionable substantial truth – a statement that would not have a different effect on the mind of the reader from that which the truth would have produced.

Lastly, because De Havilland is a public figure, she had to show that the statements made by FX were made with actual malice.  This means more than showing that the statements were not true.  Fiction is by definition untrue and “[p]ublishing a fictitious work about a real person cannot mean the author, by virtue of writing fiction, has acted with actual malice.”  Rather, the court said that “De Havilland must demonstrate that FX either deliberately cast her statements in an equivocal fashion in the hope of insinuating a defamatory import to the [viewer], or that [FX] knew or acted in reckless disregard of whether its words would be interpreted by the average [viewer] as defamatory statements of fact.”  The court concluded that De Havilland would be unable to meet this burden.

The court’s opinion in De Havilland will likely affect the way the court analyzes the claims in Fairstein v. Netflix, Ava Duvernay and Attica Lock, which was recently transferred to the Southern District of New York.  The plaintiff in that case is a former New York City prosecutor who ran the sex crimes unit and oversaw the prosecution of the Central Park Five, five African American men who were wrongly accused and imprisoned for a near fatal rape in Central Park.

Fairstein alleges that she was incorrectly portrayed by actress Felicity Huffman as having a larger role in the five’s fate than was factually accurate.  Fairstein claims she is portrayed “in a false and defamatory manner in nearly every scene in the three episodes in which she appears…” and that such portrayal “cannot be justified as the mere use of artistic license or dramatization.”  The complaint claims that the Series “depict Ms. Fairstein — using her true name — as a racist, unethical villain who is determined to jail innocent children of color at any cost.”

Netflix promoted the Series as being “based on the true story of the [Five],” and that the Series would show people “[t]he truth [they] haven’t heard.”  The producers touted that the Series essentially depicted the “real story,” and that it was based on exhaustive research and interviews.  Also, the producers also indicated that the negative treatment Fairstein in the Series was—like the rest of the narrative—based on fact.  During an interview with Oprah Winfrey, Ms. DuVernay stated that she wanted to hold Ms. Fairstein “accountable” for her actions in prosecuting the Five

Assuming the Southern District of New York adopts a similar approach as the California Court of Appeals in De Havilland, these are the issues they will confront:

• Would viewers interpret the program as entirely factual? The Producers and Netflix held the Series out as being a truthful work.  As such, it would be difficult for the defendants to argue that the Series is a fictionalized dramatization and all viewers would understand that.
• In determining actual malice, did the producers deliberately cast Fairstein’s character in an equivocal fashion in the hope of insinuating a defamatory import to the viewer? Did the Producers know or act in reckless disregard of whether its words would be interpreted by the average viewer as defamatory statements of fact?  If the statements made by the Producers end up being false, it would seem that Fairstein was deliberately portrayed in the hope of insinuating a defamatory import to the viewer.

It seems that the lawyers for Netflix are acutely aware that they may be facing these issues once the case recommences in New York.  In their motion to dismiss filed with the transferring court they argued both that the Series is an artistic dramatization of controversial historical events and that Fairstein’s claims run afoul of the First Amendment’s protection for dramatized, opinionative speech.  The lawyers also argue that Fairstein’s claim reflects revisionist history; basically, Netflix argued that Fairstein’s portrayal, while including some flourish, is basically truthful.

With live events cancelled during the pandemic, content creators are increasingly dependent on merchandise sales.  Creators from podcasters to YouTubers to musicians are reliant on merch to bolster their revenue and their brands.  Subscribers stuck at home are watching more video and listening to more podcasts and music.  Apart from advertising and sponsorships, merch is the only way for creators to monetize their increased profile during the pandemic.

However, 2020 has seen an explosion of counterfeit products including branded merchandise by content creators.  An analysis from the New York Times in February 2020 found that the sale of counterfeit items represents more than 3 percent of global trade, corresponding to $1.4 billion in value in the U.S. alone.  Reviews on Amazon containing words like “fake” and “counterfeit” have doubled since 2015.

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One way to challenge the validity of a patent at the United States Patent and Trademark Office (“USPTO”) is through a petition for inter partes review (“IPR”).  The USPTO Director has delegated responsibility to the Patent Trial and Appeal Board (“PTAB”) to evaluate such petitions to determine whether to institute review of the challenged patent.  The PTAB will only institute review of petitions that show a reasonable likelihood of success on the merits.  However, even if the petition meets that threshold for review, the PTAB may still deny institution.  In fact, the PTAB did just that when denying Cisco Systems Inc.’s (“Cisco”) petitions for IPR challenging the validity of two U.S. Patents owned by Ramot at Tel Aviv University (“Ramot”).  Cisco appealed the denial to the Court of Appeals for the Federal Circuit.

In June 2019, Ramot sued Cisco in the Eastern District of Texas for allegedly infringing its patents.  The case is set to go to trial in December 2020.  Cisco filed petitions for IPR of the asserted patents in November 2019.

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One of the first elements that a plaintiff must prove to succeed on a trade secret claim is that it is the owner of a valid trade secret.  To do so, the law generally imposes a burden on plaintiffs to identify its trade secrets with sufficient particularity in order to succeed.  As the Ninth Circuit recently recognized, this burden allows courts and litigants to navigate “the line between the protection of unique, innovative technologies and vigorous competition.”  In InteliClear, LLC v. ETC Global Holdings, Inc. (decided October 15, 2020), the Ninth Circuit addressed the issue of whether a plaintiff had satisfied the “sufficient particularity” burden and whether the trial court erred in granting summary judgment to a defendant when its motion was filed after just one day of discovery.

In the early 2000s, InteliClear created an electronic system for managing various stock broker and securities services called “InteliClear Systems,”  which used a structured query language relational database to process millions of trades a day.  In 2008, ETC Global Holdings (through its predecessor and later a subsidiary) licensed the InteliClear System and signed a Software License Agreement.  Within the terms of that agreement was an acknowledgment that the InteliClear information that was being provided “was confidential, proprietary and copyrighted” and that ETC agreed to maintain that confidentiality.

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In Impact Engine, Inc. v. Google LLC, 3-19-cv-01301 (SDCA 2020-10-20, Order) (Cathy Ann Bencivengo), the District Court for the Southern District of California recently considered whether litigation funding documents could be withheld from production by plaintiff Impact Engine because the documents were work product protected.  In the case, defendant Google had propounded a request on Impact Engine for the production of “[all] Documents Regarding any contracts or agreements between Plaintiff and any Third Party concerning (1) This Litigation and/or (2) any Asserted Patent or Related Patent.”  Impact Engine indicated it would produce non-privileged responsive documents except for potential agreements related to litigation funding because Impact Engine asserted work product protection over the documents.

Generally speaking, when documents are protected by the work product doctrine, a party may not obtain discovery of “documents and tangible things that are prepared in anticipation of litigation or trial by and for another party or its representative (including the other party’s attorney, consultant, surety, indemnitor, insurer or agent).”  Fed.R.Civ.P. 26(b)(3)(A).  As the court explained, “[a] document should be deemed prepared ‘in anticipation of litigation’ and thus eligible for work product protection under Rule 26(b)(3) if ‘in light of the nature of the document and the factual situation in the particular case, the document can be fairly said to have been prepared or obtained because of the prospect of litigation.”  Further, the work product protection is not necessarily waived just because it was shared with another person or entity, such as a potential funder or investor.

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Jack Daniel’s Properties, Inc. has petitioned the Supreme Court of the United States for certiorari following an unfavorable ruling from the Ninth Circuit in the matter of VIP Products LLC v. Jack Daniel’s Properties, Inc. In that case, VIP Products sued Jack Daniel’s after receiving a cease-and-desist letter concerning its Bad Spaniels Silly Squeaker dog toy. The toy is intentionally similar to the famous Jack Daniel’s Old No. 7 whiskey bottle, but is clearly intended to be a joke.

Instead of saying Jack Daniels, the bottle says Bad Spaniels and includes a cartoonish cocker spaniel. Below that, where the Jack Daniel’s bottle usually says “Old No. 7,” the toy says “The Old No. 2” above “on your Tennessee Carpet” where the real bottle says Tennessee Whiskey. The squeaky toy is clearly intended as joke for dog owners, and I don’t believe it would confuse consumers into believing the product is actually associated with Jack Daniel’s. Jack Daniel’s apparently felt differently.

The district court agreed with Jack Daniel’s. While ruling on a motion for summary judgment, the district court held that the Rogers test, which is used to balance the interests between trademark law and the First Amendment, was inapplicable because the toy is not an expressive work. Later, after a four-day bench trial, the District Court ruled against VIP Products and found it had infringed Jack Daniel’s IP.

VIP Products promptly appealed the matter to the Ninth Circuit, arguing that the district court erred in finding that the toy wasn’t expressive. The Ninth Circuit agreed with VIP and held that a “work need not be the expressive equal of Anna Karenina or Citizen Kane” to be considered expressive. The Ninth Circuit recognized that the Bad Spaniels Toy is “not the equivalent of the Mona Lisa,” but found that it is still expressive. The Ninth Circuit therefore remanded the matter to the district court to apply the Rogers test, which requires the mark holder to show the putative infringer’s use of the mark either (1) is “not artistically relevant to the underlying work” or (2) “explicitly misleads consumers as to the sources or content of the work.”

Of course, Jack Daniel’s was displeased with the Ninth Circuit’s ruling and petitioned the Supreme Court for certiorari. In its petition, Jack Daniel’s framed the relevant question presented as follows:

Whether a commercial product using humor is subject to the same likelihood-of-confusion analysis applicable to other products under the Lanham Act, or must receive heightened First Amendment protection from trademark-infringement claims, where the brand owner must prove that the defendant’s use of the mark either is “not artistically relevant” or “explicitly misleads consumers.”

It’s clear from the question presented that Jack Daniel’s is upset that the Ninth Circuit directed the district court to apply the Rogers test instead of simply considering the humorous nature of the product as one of the Sleekcraft factors applied to determine likelihood of confusion. In fact, Jack Daniel’s said exactly that in the petition and stated that “[e]very court of appeals confronting a similar case has exercised common sense and applied the traditional likelihood-of-confusion test under the [Lanham Act].”

I hope the Supreme Court grants certiorari. It would be interesting to see the matter briefed again and argued before The Nine. Although, given the intersection between dogs, whiskey, and intellectual property, I may be biased.

In a dramatic Sunday morning hearing (conducted remotely via telephone), lawyers for TikTok and the Trump Administration battled over whether the government’s order banning TikTok from the Apple and Google app stores would take effect that night.

The Trump Administration has argued for months that TikTok is a threat to national security because its corporate owner, ByteDance, is a Chinese company. Most recently, the Commerce Department issued rules, which were to take effect on September 27 at 11:59pm, banning the app from U.S. app stores and prevented any further software updates. TikTok filed a lawsuit earlier this month challenging the Trump Administration’s actions. On September 23, it filed a motion for preliminary injunction, essentially asking the Court to stop the Commerce Department’s ban from taking effect.

Judge Carl J. Nichols of the United States District Court for the District of Columbia issued an order granting TikTok’s injunction. The ban did not go into effect, and TikTok remains available in the Apple and Google app stores.

The most interesting part of the opinion granting the injunction is the Court’s analysis of the government’s claims that TikTok presents a threat to national security. The government’s ban is based on the International Emergency Economic Powers Act (the “IEEPA”), which gives the federal government the right to ban certain economic transactions which threaten national security. For example, the government has designated the Islamic Republic of Iran a state sponsor of terrorism, and has blocked all financial transactions with the Iranian state and members of the Iranian government. Millions of dollars per year are seized from Iranian officials who attempt to route transactions through U.S. banks.

However, the IEEPA contains express exceptions for the transfer of information and personal communications. The Court found that TikTok users were trading films, photographs, art, and news across international borders, which fall squarely within the informational and personal exceptions to the IEEPA. The Court drew a parallel to news services, which can contain information and even propaganda from blocked entities, but cannot be banned through the IEEPA.

In short, it was not sufficient for the federal government to argue that information shared through TikTok might be accessed by China, because the sharing of information and personal correspondence cannot, by itself, establish a threat to national security under the IEEPA.

Although the Court’s order is almost certainly going to be appealed and the issue will be litigated for some time, TikTok’s has overcome a major hurdle in winning this preliminary injunction. It seems, for the time being, that TikTok is here to stay.