Intellectual Property

Every practitioner should teach law school at least once. This year I am teaching Entertainment Law at the University of California at Davis. (Although flying up from and back to L.A. once a week can be a bit of a drag, so far it is a good experience.) Finding issues to trigger discussion and debate in class is forcing me to look at cases much differently. Since I already know the general holdings of the cases I am teaching, I find myself spending more time analyzing the dissenting opinion and loosing party’s position, looking for points that can foster robust in-class discussion. This week, in preparing for a class session on right of publicity, I re-read the recent 9th Circuit case of Keller v. Electronic Arts and found myself questioning whether the courts have changed the Transformative Use test set forth by the California Supreme Court and used to analyze a conflict between right of publicity and First Amendment protected speech.

The facts of Keller are straight forward. Electronic Arts produced an NCAA Football series of video games which allowed users to control avatars representing college football players and participate in simulated football games. In NCAA Football, EA replicated each school’s entire team as accurately as possible and every football player avatar had a jersey number and virtually identical height, weight, build, skin tone, hair color and home state as each real life player. EA’s player avatars reflect all of the real life attributes of the NCAA players; the only exception is that EA omitted the real life player’s name from the corresponding avatar and assigned the avatar a hometown that is different from the real player’s hometown.

Keller was the starting quarterback for Arizona State University in 2005. The 2005 edition of EA’s NCAA Football video game featured an avatar that was the starting quarterback for Arizona State University, wore the number 9, as did Keller and had the same physical characteristics, facial features, play style, and home state as Keller.

Objecting to EA’s use of his likeness in the video game, Keller filed a class action complaint alleging that EA violated his right of publicity under California Civil Code section 3344. EA moved to strike the complaint as a strategic lawsuit against public participation (“SLAPP”) under California’a anti-SLAPP statute. The case came to the 9th Circuit from the District Court’s denial of EA’s motion.

Having found that EA made a prima facie showing that Keller’s suit arises from EA’s production and distribution of video games — activities that are Constitutionally protected as free speech — the court spent most of its time evaluating whether Keller had established a reasonable probability that he would prevail on his claim. Since EA did not contest that Keller stated a right of publicity claim, the court’s focus was on the affirmative defenses advanced by EA and EA’s claim that in light thereof, it is not reasonably probable that Keller would prevail on his right of publicity claim.

In California, the test used to evaluate an 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. Comedy III involved a charcoal sketch-work by artist Gary Saderup of The Three Stooges reproduced on lithographs and T-shirts . This 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 upholding the plaintiff’s right of publicity claim, the California Supreme Court found that the work in question contained “no significant transformative or creative contribution” and that the artist’s “skill is manifestly subordinated to the overall goal of creating literal, convenient depictions of The Three Stooges so as to exploit their fame.”

In analyzing Comedy III, the 9th Circuit explained that it provides “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.

After setting forth the five factors, the court then reviewed the major right of publicity cases following Comedy III and applying the Transformative Use test. In Winter v. DC Comics, villainous half-worm, half-human offspring named Johnny and Edgar Autumn were found not to violate the rights of rockers Johnny and Edgar Winters. Not only did the court find that the comic books contained significant expressive content other than plaintiffs’ mere likeness, but also that the brothers are “cartoon characters…in a larger story, which itself is quite expressive.”

The court also discussed the 6th Circuit case of ETW Corporation v. Jireh Publishing, Inc. which involved a painting entitled “The Masters of Augusta” which commemorates Tiger Woods’ victory at the Masters Tournament in Augusta, Georgia in 1997. Woods became the youngest player ever to win the Masters in that tournament. In assessing Woods’ right of publicity claim, the 6th Circuit applied the Transformative Use test and found the artwork contains significant transformative elements. The 6th Circuit specifically noted that the work consists of a collage of images in addition to Woods’ image, and that they are all combined to describe, in artistic form, a historic event in sports and convey a message about the significance of Woods’ achievement in that event.

Next the 9th Circuit analyzed the California Court of Appeals’ application of the Transformative Use test in Kirby v. Sega of America, Inc. In that case, the work in question was a video game that featured “Ulala,” a reporter from outer space allegedly based on a well known singer whose “signature” lyrical expression is “ooh la la.” The court noted the video game character’s physical characteristics, costume, dance mores and role as a space age reporter, and found the video game character to be more than a mere literal depiction of the singer. The court noted that Ulala is a “fanciful, creative character who exists in the context of a unique and expressive video game.”

And finally, the 9th Circuit reviewed No Doubt v. Activision Publishing, Inc. in which the California Court of Appeal addressed Activision’s “Band Hero” video game. In Band Hero, users can choose from a number of avatars, some of which represent actual rock stars, including the members of No Doubt, and are able to simulate performing in a rock band. Activision had licensed No Doubt’s likeness, but allegedly exceeded the scope of the license. 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.”

After review of these cases, the 9th Circuit found that EA was not entitled to judgment as a matter of law on the Transformative Use test. The court stated that “No Doubt offers a persuasive precedent that cannot be materially distinguished” from the case at hand.

In almost the exact same case in the 3rd Circuit, Hart v. Electronic Arts, Judge Ambro dissented and disregarded No Doubt and Kerby on the grounds that they were not decided by the Supreme Court; the court that established the Transformative Use test. In his dissent, Judge Ambro stated his belief that Kirby and No Doubt were wrongly decided. The Ninth Circuit acknowledged Judge Ambro’s position, but stated its belief that No Doubt is consistent with the California Supreme Court’s relevant decisions and will not disregard a well reasoned decision from a state’s appellate court.

The question I posed to my students was whether the California Court of Appeals had properly applied the holdings of Comedy III and Winters in deciding Kerby and No Doubt. In Winters, the court clearly considered the comic book in its entirety when determining whether the work met the Transformative Use test. Why did the Appeals Court specifically state that it did not matter that the No Doubt avatars appear in the context of a video game containing other creative elements. I asked my students whether it is fair to say that the California Court of Appeals added two additional factors to the Transformative Use test – (i) without regard to the context in with the celebrities’ likeness appears, is that likeness a literal recreation of the celebrity; and (ii) is the celebrity featured performing the same activity by which he/she achieved and maintains fame. If this is now the test for determining transformative use, the 6th Circuit Tiger Woods case – which I believe was correctly decided – may very well have been decided differently.

By James Kachmar

A recent decision in the case Jobscience, Inc. v. CVPartners, Inc. (N.D. Cal. Jan. 9, 2014) shows the interplay between the various theories of intellectual property claims. There, the plaintiff asserted claims for both copyright infringement and trade secret misappropriation arising out of the alleged theft of its software code. The court was required to deal with the issue of whether plaintiff’s trade secret claim was preempted by its claim for copyright infringement.

Jobscience develops and licenses recruiting software applications, including its JS 2 Jobscience Recruiting Package. In 2010, Jobscience entered into a master agreement with defendant CVPartners that contained an End User License and Agreement, which provided the defendant with a license to use plaintiff’s job recruiting software application. The license was renewed in 2011.

In November 2011, defendant Brandon Metcalf, who was formerly the Senior Director of Technology at CVPartners, was alleged to have assisted with the formation of defendant Skipan SAAS LLC and within months, defendants were alleged to have recreated and began marketing a software application that was similar to that of Jobscience. In August, 2012, defendant CVPartners notified Jobscience that it was terminating the license agreement and plaintiff alleged that shortly thereafter it discovered a “replica of the Jobscience job board” on defendant’s website. Plaintiff claimed that the job board was one of the “functional elements” of its own software and that defendant’s job board “was so similar to Jobscience that Jobscience’s own employees were fooled to believe that the Jobscience job board was still up on the CVPartners website.” Plaintiff sued the defendants for numerous claims, including copyright infringement and trade secret misappropriation. The defendants moved to dismiss all of plaintiff’s claims.

The Court began by examining plaintiff’s copyright infringement claim. The defendants argued that plaintiff’s complaint failed to state a claim. The Court recognized that a plaintiff must plead the following to state a copyright infringement claim: “(1) ownership of a valid copyright; and (2) copying of protected expression by the alleged infringers.” The Court noted that a plaintiff could establish the second element “by showing that the works in question are substantially similar in their protected elements and that the alleged infringers had access to the copyrighted works.” Defendants did not dispute that plaintiff had a valid copyright in its Jobscience software application. The defendants argued that the complaint failed to plead the second element, specifically there were no allegations as to what any defendant allegedly did to infringe on plaintiff’s copyright, that defendants had access to the works entitled to copyright protection or that there was virtual identity of works entitled to copyright protection. They also argued that because plaintiff had alleged that the job board “was one of the functional elements of plaintiff’s software solution,” it was not entitled to protection as a functional element under the Copyright Act.

The Court rejected these arguments and found that there were sufficient allegations in the complaint that defendants had developed an application called Talent Rover which was alleged to have infringed on plaintiff’s Jobscience software program. The Court also noted that plaintiff had alleged that one of the defendants’ websites allegedly contained a “replica” of plaintiff’s job board and that this was sufficient to allege the “virtual identity of works entitled to copyright protection.” Thus, the Court denied the motion to dismiss plaintiff’s copyright infringement claim.

However, given the survival of the copyright infringement claim, the Court then turned to the issue of plaintiff’s trade secret misappropriation claim and whether it was preempted by plaintiff’s copyright infringement claim. The Court noted that section 301(a) of the Copyright Act provided the “exclusive rights” within the general scope of copyright law and that “no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any state.” The Court noted that copyright “preemption” applies if the content of the protected right falls within the subject matter of the Copyright Act and the rights asserted under state law are equivalent to those protected by the Copyright Act.

The Court then considered the nature of plaintiff’s trade secret misappropriation claim to see whether it was “based on the same nucleus of facts as the copyright infringement claim.” Plaintiff had alleged that defendant Metcalf “gained access to plaintiff’s trade secrets consisting of software code and other proprietary information” and that plaintiff had made substantial investments of time and money “in developing its proprietary software application software code methods and other trade secrets.”

The Court noted the definition of a trade secret under California’s Uniform Trade Secret Act, which requires the following to state a claim: (1) the existence of a trade secret; and (2) misappropriation of the trade secret. The Court observed that plaintiff’s complaint did not plead the separate existence of a trade secret but instead simply referred to “proprietary software applications” that it noted were the basis of plaintiff’s copyright infringement claim. The Court further found it significant that plaintiff could not show that it had taken reasonable steps to maintain the secrecy of its alleged trade secret “because it received copyrights for its software applications.”

Given that plaintiff’s claim for trade secret misappropriation was based on the “same nucleus of facts” as its copyright infringement claim, the Court found that plaintiff’s trade secret misappropriation claim was preempted by the Copyright Act. It therefore granted defendants’ motion to dismiss this trade secret claim.

The Jobscience decision demonstrates that while a plaintiff may plead multiple claims of liability in an intellectual property case, a defendant has several important defenses at its disposal such as preemption. A defendant in such a case should carefully examine the interplay between the various claims to determine whether certain of the claims can be dismissed under preemption doctrine.

The Federal Circuit has loosened the standard for recovering attorneys’ fees in patent infringement cases, making it easier for winning defendants to obtain their fees from plaintiffs.

The case is Kilopass Technology, Inc. v. Sidense Corp. (Fed. Cir. Dec. 26, 2013), 2013 U.S. App. LEXIS 25671. Kilopass and Sidense were competitors in the market for memory cells used in transistors. Kilopass obtained several patents on its technology. After reviewing a published patent application of Sidense for its memory cells, Kilopass embarked on an interesting course of conduct.

First, Kilopass engaged counsel to determine whether Sidense infringed Kilopass’ patents. Based on the product described in Sidense’s patent application, Kilopass’ counsel believed that there might be an infringement case, and sent Sidense a letter inviting Sidense to license Kilopass’ patents or explain why Sidense’s products did not infringe Kilopass’ patents. Sidense replied with a specific explanation of why its products did not infringe Kilopass’ patents. Sidense also offered to subject its products to a confidential infringement analysis by a third party expert to prove its position. Kilopass then obtained a diagram of Sidense’s product and provided it to Kilopass’ counsel.  Counsel then concluded that Sidense had designed around Kilopass’ patents and that its products probably did not literally infringe the patents. In response, Kilopass retained a second counsel to analyze infringement. The second counsel made a preliminary finding that Sidense’s products probably did not literally infringe the patents, but might infringe under the doctrine of equivalents, and said that further investigation was needed to confirm this. Kilopass did not conduct further investigation with this counsel, but instead engaged a third counsel to analyze infringement. Then, based primarily on Kilopass’ own engineer’s findings, Kilopass concluded that Sidense infringed under the doctrine of equivalents.

In 2010, Kilopass sued Sidense in the Northern District of California for patent infringement. Kilopass alleged claims for both literal infringement and infringement under the doctrine of equivalents. During the litigation, the district court admonished Kilopass for making claim construction arguments in the case that contradicted its arguments in a concurrent reexamination of the patent before the United States Patent and Trademark Office. The court also found that Kilopass had improperly attempted to assert different infringement contentions than it had disclosed to Sidense in discovery.

Sidense moved for summary judgment of noninfringement. The district court granted the motion. Kilopass appealed to the Federal Circuit Court of Appeals, who affirmed the district court’s decision. Sidense then moved for attorneys’ fees under 35 U.S.C. §285. The motion was denied on the grounds that Sidense had not shown by clear and convincing evidence that Kilopass had prosecuted its case in bad faith.  In denying the motion, the district court relied on its prior 2005 decision in Brooks Furniture Manufacturing v. Dutailer, Inc. (Fed. Cir. 2005) 393 F.3d 1378.

Sidense appealed to the Federal Circuit. The Court of Appeals held that the district court had not applied the correct legal standard, vacating and remanding the case.

The appellate court explained that an award of attorneys’ fees under 35 U.S.C. §285 requires two steps: (1) the prevailing party must show by clear and convincing evidence that the case is “exceptional;” and (2) the court must decide whether it is appropriate to award attorneys’ fees. The court discussed its Brooks Furniture decision. There, the court had held that a case could be found to be exceptional if there was inappropriate conduct by the losing party, such as willful infringement, or misconduct during the litigation, such as a violation of Rule 11. If there was no misconduct in the litigation, the court had held that fees could be awarded only if: (1) the case had been brought in subjective bad faith; and (2) the case was “objectively baseless.” In ruling on Sidense’s motion, the district court had applied this standard and found that Sidense had not proved that Kilopass had acted in subjective bad faith.

On appeal, Sidense argued that it had proved that Kilopass had acted in subjective bad faith or that, alternatively, the legal standard should be changed.

The appellate court first clarified that prior Federal Circuit cases that suggested that a defendant had to prove that a plaintiff had actual knowledge of the objective baselessness of its suit were dicta, and not the law.

“[S]ubjective bad faith only requires proof that the ‘lack of subjective foundation for the claim “as either known or so obvious that it should have been known” by the party asserting the claim’ [Citations omitted.]”

Id.  at *19. This finding was necessary to make the burden on a defendant seeking fees the same as that on a plaintiff seeking fees: that the other party acted willfully or recklessly.

Next, the court held that subjective bad faith need not be proved by direct evidence, but may be inferred from the objective baselessness of the case. Id.  at *23-25. The court stated “[l]ack of direct proof of subjective bad faith should not alone free a party from the threat of assessment of attorneys’ fees under §285…” Id. at *22. The court held that district courts should consider the totality of the circumstances, especially the objective merits of the case. Id. Because direct evidence of subjective bad faith is so rare, district courts should consider circumstantial evidence of bad faith, including objective evidence of baselessness, as well as factors such as failure to perform a proper pre-litigation investigation, vexatious litigation tactics, or an oppressive purpose. Id. at *24.

According to the court, at *23:

“The totality of the circumstances does include an evaluation of subjective good faith, but mostly as a negative. If a smoking gun is found, revealing that a patentee knew that he had no chance of winning a lawsuit, then subjective bad faith is easily shown. But one’s misguided belief, based on zealousness rather than reason, is simply not sufficient by itself to show that a case is not exceptional in light of objective evidence that a patentee has pressed meritless claims.”

The appellate court declined to adopt Sidense’s request that it eliminate the subjective bad faith prong of the standard for an exceptional case. However, the court emphasized that its new interpretation of subjective bad faith was not the “obstacle to fee shifting that the district court…believed.” Id.  at *33.

“[A] wide variety of proofs can provide the requisite showing of bad faith under § 285, which must be assessed in light of the totality of the circumstances. Objective baselessness alone can create a sufficient inference of bad faith to establish exceptionality under § 285, unless the circumstances as a whole show a lack of recklessness on the patentee’s part. [Citation omitted.] Thus, the retention of the subjective bad faith requirement may prove to have little effect on this case, as well as many that follow.” Id.

The court also considered, but chose not to alter, the moving party’s burden of proof from clear and convincing evidence to a preponderance of the evidence. Id. at *38. In addition, the court did not accept Sidense’s argument that the objectively baseless standard should be lowered.

The court remanded the case to the district court to determine whether Kilopass’ theories of infringement were objectively baseless, and, if so, whether the totality of the circumstances supported a finding of subjective bad faith. If both prongs were met, then the district court should determine, in its discretion, whether to award fees to Sidense.

This case is significant in that the standard for awarding attorneys’ fees to a successful defendant has been relaxed and the importance of the objective test of merit has been elevated. Subjective bad faith, although still required, has been loosened to allow inferences to be drawn from an objective analysis of the merits of the case. Patent infringement defendants should be encouraged, while plaintiffs should be careful in analyzing infringement and deciding to file suit.

On July 31, 2012, the Ninth Circuit issued its ruling protecting the right of privacy held by collegiate athletes against the use of their likeness in connection with video games. (Keller v. Electronic Arts, Inc. (2013) 9th Circuit Court of Appeals 10-15387. This decision joins the Third Circuit’s decision in Ryan Hart v. Electronic Arts, Inc., U.S. App. LEXIS 10171 (3d Cir. 2013), finding that the collegiate athletes’ right to publicity outweighs Electronic Arts’ First Amendment rights.

Sam Keller was a starting quarterback for Arizona State in 2005, before joining Nebraska in 2007. Electronic Arts (“EA”) is the producer of a series of video games known as NCAA Football, in which EA seeks to replicate a school’s entire team as closely as possible. NCAA Football is an interactive game that allows the video gamer a wide range of playing options including modification of a player’s size and abilities as well as for which team he plays. Keller sued EA and the NCAA in a putative class action. EA filed a SLAPP motion (“Strategic Lawsuit Against Public Participation”), claiming that this conduct was protected by the First Amendment. The District Court denied the SLAPP motion, and EA appealed.

The Ninth Circuit recognized that video games, like books, plays, and movies, are entitled to the full protections of the First Amendment. (Brown v. Entm’t Merchs. Ass’n, 131 S.Ct. 2729, 2733 (2011). However, the First Amendment rights are not absolute, and states may recognize the right of publicity to a degree consistent with the First Amendment. (Zacchini v. Scripps-Howard Broad Co., 433 U.S. 562, 574-75 (1977).)

California’s right of publicity is codified in Civil Code section 3344 as well as common law. Civil Code section 3344 prevents the use of another’s likeness “in any manner on or in products, merchandise, or goods, or for purposes of advertising or selling . . . without the person’s prior consent.” EA raised four First Amendment privileges as defenses. The first, and most viable, potential defense is the “transformative use defense” as formulated by the California Supreme Court in Comedy III Productions, Inc. v. Gary Sandrup, Inc., 25 Cal.4th 387 (2001). The transformative use defense is “a balancing test between the First Amendment and the right of publicity based on whether the work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation.” (Id.) The protected economic interest in a celebrity’s right of publicity diminishes when the work contains substantial transformative elements.

The court in Comedy III set forth five factors to consider in determining whether a work is sufficiently transformative. First, if the celebrity likeness is just one of many elements from which the work is developed as compared to whether the likeness is the “very sum and substance of the work in question.” Second, the work is protected if it is primarily the defendant’s own expression so long as that expression is something other than the likeness of the celebrity. This element has been described to examine whether the consumer is purchasing the work primarily because it is a replicate of the likeness of the celebrity or is purchasing the work because of the creative elements added by the defendant. Third, each of the five factors is to be applied more quantitatively than qualitatively in order to avoid debates over artistic expression. In other words, do the creative elements predominate over the likeness of the celebrity? Fourth, the court is to consider whether the economic value of the work is primarily due to the likeness or fame of the celebrity. Lastly, there is no transformative work if the overall goal is to create a traditional likeness or portrait of the celebrity so as to exploit his or her fame.

In addition to Comedy III, the Ninth Circuit examined three other California decisions applying the transformative use defense: Winter v. DC Comics, 30 Cal.4th 881 (2003); Kirby v. Sega of America, Inc., 144 Cal.App.4th 47 (2d Dist. 2006); and No Doubt v. Activision Publishing, Inc., 192 Cal.App.4th 1018 (2d Dist. 2011). Applying the five factors, the Ninth Circuit found that EA’s depiction of Sam Keller was not protected by the transformative use defense. Although all players, including Mr. Keller, could be modified by the video gamer, such control did not outweigh Mr. Keller’s right of publicity. The Court found that, just as in the No Doubt v. Activision Publishing, Inc., the characters in the EA NCAA Football video series were literal recreations of the collegiate players engaging in the same activities, and in the same settings, in which they gained their fame. The transformative elements of the overall video game that allowed the video gamer to manipulate certain elements of the characters, settings, and plays did not overcome the literal recreation of the collegiate players.

Judge Sidney R. Thomas issued a dissent, finding that a “holistic” examination of the video game established that the “transformative and creative elements” of the work “predominate over commercially based literal or imitative depictions.” Judge Thomas criticized the majority decision, focusing on a single athlete’s likeness rather than examining the video game as a whole.

The majority, and dissenting Judge Thomas, gave little weight to the other three First Amendment defenses argued by EA.

The Ninth Circuit was now joined by the Third Circuit in finding that the transformative use defense did not protect EA against claims for violation of the collegiate players’ right of publicity. The Third Circuit denied EA’s petition for a hearing en banc. One can only assume EA will make the same request for the Ninth Circuit. Unless overturned by the United States Supreme Court, these two decisions affirm substantial rights for collegiate athletes to protect the use of their likeness for commercial purposes without their consent. The economic consequence to EA and the NCAA will undoubtedly be substantial.

In April, we published an article about Fox Broadcasting Co. v. Dish Networks, LLC, where Fox Broadcasting was requesting a preliminary injunction against Dish Network, claiming that were engaged in copyright infringement by offering their Auto Hop on Dish Networks’ DVRs. As of that date, a judge declined to issue a preliminary injunction and Fox had appealed to the Ninth Circuit Court of Appeals. On July, 24, 2013, the Ninth Circuit rejected Fox’s appeal, and affirmed the district court’s refusal to enjoin Dish Network’s features. It affirmed the lower court’s reasoning that the consumer is the party causing a copy to be made, and not Dish Network. So if you subscribe to Dish Network and have the Auto Hop and “PrimeTime Anytime” features, no need to panic and switch cable/satellite providers, you can still watch your favorite television shows, commercial-free, without even touching the fast-forward button.

The Ninth Circuit confirmed that DVR recording is protected fair use, and since Fox did not have any copyright interest in the advertisements (the only content that was being skipped), it could not show that it was irreparably harmed by the features. However, it may be a bit premature for Dish Network to break out the champagne, despite Dish’s executive vice-president’s statement that, “This decision is a victory for American consumers.” That is because this decision was made using the very high legal standard required to justify a preliminary injunction, and the deferential standard of review applied to denials of preliminary injunctions.

A preliminary injunction is a remedy that requires a defendant to take, or refrain from taking, a specific action, prior to a trial on the merits, but based on an underlying lawsuit. It is often referred to as an “extraordinary remedy” because you are essentially granting relief to a party pre-litigation, without giving the enjoined party the chance to conduct discovery, put forth their side of the case, etc . . As a result, a party seeking a preliminary injunction has a pretty high bar to meet.

Before an injunction can be granted, a plaintiff must prove a few things, including (1) there is no adequate remedy at law (meaning that money compensation is not sufficient), (2) there is a serious risk of immediate irreparable harm absent injunctive relief, (3) a likelihood that he or she will prevail on the merits of the underlying controversy, and (4) the plaintiff is more likely to be harmed if an injunction is not issued, than defendant would be if the injunction is granted (the so-called “balance of hardships”). The plaintiff essentially has to try a mini-version of the case in front of the judge and courts often apply all these factors on a “sliding scale.” In other words, if the plaintiff can prove that the likelihood of success is very high, their showing of irreparable harm does not need to be as strong. Likewise, if the injunction’s burden on the defendant is low, but the plaintiff would be greatly harmed without the injunction, the plaintiff would only need to show a fair ground for litigation.

It is not easy to get an injunction and logically this makes sense because sometimes an injunction gives the plaintiffs the exact remedy they wanted (if they’re not interested in money). Accordingly, the law sets a high bar for granting “extraordinary” equitable remedy and typically a bond is required so that if the injunction is wrongfully granted, the defendant has some kind of redress.

Given the above factors, it’s not surprising that the judge denied Fox’s appeal for a preliminary injunction. The questions of law are by no means a “slam dunk” for Fox, complicated copyright questions rarely are, especially when they involve a new technology like this one. In addition, the harm to Dish Network and its subscribers would be great as the injunction could force Dish Network to disable the AutoHop and “PrimeTime Anytime” features and affect millions of its customers and lose millions of dollars. So for now, Dish Network and its subscribers can continue “hopping” their way through prime time.

Currently pending before the United States District Court for the Northern District of Illinois is a case that will determine whether the Estate of Sir Arthur Conan Doyle has any remaining copyright interest in the iconic character of Sherlock Holmes, and his friend and companion in sleuthing, Dr. John Watson.

The fictional detective and his sidekick first made their appearances in “A Study in Scarlet,” published in 1887. By 1923, Doyle had written and published some fifty-six short stories and four novels wherein Holmes and Watson solved numerous cases through Holmes’ unique analytic and deductive methods, all the while interacting with various supporting characters, including Scotland Yard’s Detective Lestrade, their landlady Mrs. Hudson, Holmes’ brother Mycroft, and his arch-nemesis Professor Moriarty. Each of those pre-1923 works is now in the public domain in the United States. Approximately ten Sherlock Holmes stories, published after 1923, remain protected by copyright.

Malibu lawyer, and Sherlock Holmes aficionado, Les Klinger, is the author of numerous books and articles regarding the Sherlock Holmes canon. In 2011, he published, as co-editor, a collection of new short stories by contemporary writers featuring Sherlock Holmes and some of his supporting characters, titled “A Study in Sherlock.” In connection with that publication, the Doyle Estate demanded, and Klinger’s then-publisher paid under protest, a license fee for the use of Holmes and the other characters in the story collection.

Klinger recently compiled and edited, and is ready to publish, a second collection of new Sherlock Holmes stories by contemporary writers, tentatively titled “In the Company of Sherlock Holmes.” The Doyle Estate has once again demanded a license fee, but Klinger’s new publisher would not agree to pay it. Neither would it publish the new story collection while the Doyle Estate’s claim of copyright ownership remained unresolved.

Accordingly, Klinger has filed a single cause of action complaint against the Estate, seeking a declaration that the Sherlock Holmes character, as well as the other characters that first appeared in the pre-1923 works, are in the public domain, and can freely be used by Klinger or anyone else in new literary or audio visual works without infringing on any of the Estate’s copyrights.

Klinger’s position is that Holmes and Watson (as well as the other supporting characters) were fully delineated characters, with all of their respective well-known characteristics, by 1923, and accordingly the characters fell into the public domain along with the works in which they first appeared. The Estate’s position, as expressed by its attorney to the New York Times shortly after the filing of the lawsuit, is that “Holmes is a unified literary character that wasn’t completely developed until the author laid down his pen.” Since Doyle included the Sherlock Holmes character in ten stories published after 1923 – that are still within the term of copyright protection – the Estate apparently is arguing that the copyright in the character will remain with the Estate until the last of those post-1923 works falls into the public domain.

This case highlights an interesting issue – that of the copyrightability of a character as separate and distinct from the work in which that character appears. It was first addressed in 1930 by Judge Learned Hand in Nichols v. Universal Pictures, and Judge Hand’s description of the issue remains to this day the touchstone for determining when a character becomes copyrightable:

“If Twelfth Night were copyrighted, it is quite possible that a second comer might so closely imitate Sir Toby Belch or Malvolio as to infringe, but it would not be enough that for one of his characters he cast a riotous knight who kept wassail to the discomfort of the household, or a vain and foppish steward who became amorous of his mistress. . . . It follows that the less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly.” 45 F.2d 119, 121 (2d Cir. 1930).

In 1954, in a case involving Dashiell Hammet’s Maltese Falcon, the Ninth Circuit applied a rigorous test for granting copyright protection to a character – namely, whether the character “constitutes the story being told.” If so, then he is protected by copyright. If, on the other hand, “the character is only the chessman in the game of telling the story he is not within the protection afforded by copyright.” Warner Bros. Pictures, Inc. v. Columbia Broadcasting System, Inc., 216 F.2d 945 (9th Cir. 1954).

The factual circumstances of that case – which no doubt influenced the court’s conclusions – were unusual: Warner Bros. had been assigned the copyright in the Maltese Falcon in order to produce a motion picture based on the novel. When Hammett then assigned the Sam Spade character to CBS for use in different stories, Warner sued for copyright infringement. The Court found that Hammett – the original author – had the right to put his characters in other works and assign them to other parties, notwithstanding the fact that Warner had the rights to the original story, because the character was not itself copyrightable:

“We conclude that even if the Owners assigned their complete rights in the copyright to [Maltese Falcon], such assignment did not prevent the author from using the characters used therein, in other stories. The characters were vehicles for the story told, and the vehicles did not go with the sale of the story.” Id.

Cases from other Circuits, and later Ninth Circuit cases, have applied a less stringent test, requiring only that character in question be sufficiently distinctly delineated, with consistent, identifiable traits, in order to warrant copyright protection independent of the story in which he appeared. See Walker v. Time Life Films, Inc., 784 F.2d 44, 50 (2nd Cir. 1986); Rice v. Fox Broadcasting Co., 330 F.3d 1170, 1175 (9th Cir. 2003).

Under any analysis, however, it would appear that at least the great Sherlock Holmes was, within the first handful of stories, highly delineated, perhaps even to the point of constituting “the story being told.” As noted by another court, “[i]ndeed, audiences do not watch Tarzan, Superman, Sherlock Holmes, or James Bond for the story, they watch these films to see their heroes at work.” Metro-Goldwyn-Mayer, Inc. v. American Honda Motor Co., Inc., 900 F.Supp. 1287, 1296 (C.D. Cal. 1995).

If the Sherlock Holmes and Dr. Watson characters in fact reached copyrightable status in the earlier works, then it should follow that when those works fell into the public domain, so did the character. Accordingly, it will be interesting to see how the Estate defends the action, and what the ultimate ruling of the Northern District of Illinois will be. Given the significant number of Sherlock Holmes works currently being produced and distributed, it is undoubtedly a matter of substantial financial import to the Estate.

In Association For Molecular Pathology v. Myriad Genetics, Inc., decided on June 13, 2013, the United States Supreme Court held that isolated natural genes (DNA) are not patentable. Thus, genes that exist in a living organism, such as the human breast cancer genes BRCA1 and BRCA2 at issue in this case, are not made patentable because the inventor isolates them from the other genomic DNA. The Court was careful to explain that other inventions related to genes, however, are patentable. In particular, the Court held that the synthetic copy of a gene known as “complimentary DNA” (cDNA) is patentable, as well as methods of isolating genes and methods of using cDNA.

The decision was not surprising. The law has long been that naturally occurring biological compositions are not patentable subject matter. The Court applied that rule logically to find that a gene as it exists in a living organism is not patentable just because someone discovers it. In contrast to natural DNA, cDNA is not found in the living organism. The Court found that cDNA is a copy of the natural gene, synthesized in the lab; it is different from the natural gene in that it does not include the non-coding portions of the DNA that are present in the natural gene. The Court concluded that the cDNA is therefore patentable as a man-made composition.

BRCA1 and BRCA2 genes are associated with an increased risk of breast and ovarian cancer. A woman with specific mutations in these genes has a 50% to 80% chance of having breast cancer, compared with 12% to 13% risk for women without these mutations, and a 20% to 50% chance of having ovarian cancer. Myriad discovered the location of these genes and sequenced the most common mutations. They used this information to develop a screening test to determine if a woman has a high risk of cancer due to the presence of the BRCA1 and BRCA2 gene mutations.

Myriadobtained patents on the natural genes and on the cDNA. Other companies developed genetic tests to determine the presence of the BRCA1 and BRCA2 mutations, and offered genetic services to the public. Myriad then threatened its competitors with patent infringement suits. In response, all of the other test providers ceased offering their tests, and Myriad became the sole provider of BRCA genetic testing.

After several years, a group of cancer patients, physicians, and patient advocacy groups sued Myriad for a declaratory judgment of invalidity under 35 USC § 101 on the grounds that the patents on the genes covered products of nature. The district court granted summary judgment for the plaintiffs, finding that the claims were not valid. On appeal, the Federal Circuit Court of Appeals reversed the district court. The Supreme Court granted the plaintiffs’ petition for certiorari, vacated the judgment, and remanded the case back to the Federal Circuit. The Federal Circuit then decided that both natural DNA and cDNA were patentable. Plaintiffs again appealed to the Supreme Court. In this decision, the Court affirmed in part and reversed in part.

The Court described Myriad’s discovery as follows:

“The location and order of the nucleotides existed in nature before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. “

Myriad argued that the Supreme Court’s decision in Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) was controlling. Chakrabarty was the Court’s leading case holding that phenomena of nature and products of nature are not patentable, but that a man-made bacterium was patentable. The Court correctly pointed out that the invention in Chakrabarty was man-made, as it was not a naturally occurring bacterium, while the genes that Myriad had patented were not man-made and exist in nature. The Court acknowledged the importance of Myriad’s discovery, stating that “groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the section 101 inquiry.” The Court held that the genes that Myriad had discovered are clearly products of nature, and therefore not patentable.

The Court reached the opposite conclusion with respect to Myriad’s claims directed to the cDNA it had synthesized. Because the cDNA is not naturally occurring, the Court held that it is patentable.

The Court emphasized the limitations of its holding, pointing out that it was not ruling on the patentability of methods of making genes, method of applying the discovered knowledge, or natural DNA whose sequences had been altered by the inventor.

Even though the Court’s decision was well reasoned, the reaction in the biotechnology community has been mixed. Some experts are concerned that biotechnology companies have lost significant value because their gene patents can and will be invalidated. Others believe that most biotechnology companies will not really be affected because they have also patented their cDNA compositions and methods of using those genes. What is certain is that the Court has made a clear rule, even if narrow: if you want to patent a gene, it had better not be the naturally occurring DNA.

The reaction of the public has been favorable. Many scientists view the decision positively because it confirms that genes (as they exist in nature) do not belong to anyone, but are in the public domain, giving them the freedom to conduct basic genetic research. Patients and doctors are happy because the BRCA genetic test should now be less costly and more accessible to patients.