Intellectual Property

One of the requirements for obtaining a patent is enablement. As set forth in 35 U.S.C. §112, ¶1, the specification of the patent must teach a person skilled in the art how to make and use the invention without undue experimentation. The enablement requirement must be satisfied at the time the patent application is filed for each claim. If a claim in a patent is not enabled, it is invalid.

In In re ‘318 Patent Infringement Litigation (Janssen Pharmaceutica N.V. v. Teva Pharmaceuticals USA, Inc. and related cases) (2009 U.S. App. LEXIS 21166, September 25, 2009), the Federal Circuit Court of Appeals addressed the issue of enablement. Janssen’s patent covered a method to treat Alzheimer’s disease with a chemical compound called galanthamine. Claim 1 of the patent was:

“A method of treating Alzheimer’s disease and related dementias which comprises administering to a patient suffering from such a disease a therapeutically effective amount of galanthamine or a pharmaceutically-acceptable acid addition salt thereof.”

The patent application was filed on 1986. The specification was slightly longer than one page and contained brief summaries of six scientific articles which discussed the use of galanthamine on humans or animals for various purposes. None of the six articles addressed the treatment of Alzheimer’s or dementia or the potential of galanthamine to treat those diseases.

The PTO examiner rejected the original claims on the grounds of indefiniteness and obviousness. The claims were found to be indefinite because they covered a method of “treating and diagnosing” Alzheimer’s and the examiner stated that diagnosis was not related to treatment. The obviousness rejection was based on several of the scientific articles disclosed in the specification which addressed the treatment of memory loss in animals.

In response to the office action, the inventor deleted the word “diagnosis” so that the claims covered only the treatment of Alzheimer’s, which overcame the indefiniteness rejection. The inventor overcame the obviousness rejection by asserting that the scientific studies on memory loss had no relevance to Alzheimer’s because they were conducted under unrelated circumstances. The inventor also stated that experiments on animal models related to Alzheimer’s had begun.

The patent was allowed and issued in 1987. The research on the animal models was not completed by the time the patent issued and was not provided to the PTO.

The inventor later licensed the patent to Janssen. Janssen then obtained FDA approval to treat Alzheimer’s with galanthamine. Shortly thereafter, several drug companies filed abbreviated new drug applications for generic versions of galanthamine. Janssen sued these companies for patent infringement.

At a bench trial, the defendants admitted infringement, but asserted that the patent was invalid as anticipated, obvious, and not enabled. The district court found that the patent was not anticipated or obvious but was invalid on the grounds that it was not enabled. The court held that the specification lacked utility, as the animal tests were not done, and that it was not enabled because it did not describe the dosage to be used.

Janssen appealed. The Federal Circuit Court of Appeals affirmed the trial court’s decision.

The Court of Appeals discussed both the enablement and utility requirements:

“The utility requirement prevents mere ideas from being patented. As we noted in Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1366 (Fed. Cir. 1997), ‘patent protection is granted in return for an enabling disclosure of an invention, not for vague intimations of general ideas that may or may not be workable…Tossing out the mere germ of an idea does not constitute enabling disclosure.’”

The court further stated:

“The utility requirement also prevents the patenting of a mere research proposal or an invention that is simply an object of research. Again as the Supreme Court stated in Brenner ‘a patent is not a hunting license. It is not a reward for the search, for compensation for its successful conclusion.’ [Citation omitted.] A process or product ‘which either has no known use or is useful only in the sense that it may be an object of scientific research’ is not patentable. [Citation omitted.] As we observed in Fisher, inventions do not meet the utility requirement if they are ‘objects upon which scientific research could be performed with no assurance that anything useful will be discovered in the end.’”

The court explained that patent applications for methods of treating diseases usually include test results to satisfy the utility requirement. The test results need not be Phase II (human trials), but rather may be from animal tests or in vitro research.

The court found that the patent application, however, did not include any test results. The six scientific articles clearly did not provide evidence of utility because the inventor had stated during the prosecution of the patent that those references did not relate to the method of the invention and did not render it obvious.

Janssen argued that utility was demonstrated by analytic reasoning and that test results were not necessary. The court noted that Janssen’s suggested reasoning was not included in the specification and was therefore irrelevant.

The court concluded:

“Thus, at the end of the day, the specification, even read in the light of the knowledge of those skilled in the art, does no more than state a hypothesis and propose testing to determine the accuracy of that hypothesis. That is not sufficient. [Citation omitted.] ‘If mere plausibility were the test for enablement under §112, applicants could obtain patent rights to “inventions” consisting of little more than respectable guesses as to the likelihood of their success. When one of the guesses later proved true, the “inventor” would be rewarded the spoils instead of the party who demonstrated that the method actually worked.’”

Missouri teenager Jimmy Winkelmann grew weary of his high school classmates’ blind and materialistic infatuation with The North Face products, and decided something had to be done. Mr. Winkelmann’s answer was to come up with his own competing apparel line to mock the ubiquitous North Face fleece jackets found on his high school campus. He called his line “The South Butt” and designed a suspiciously similar logo to that of The North Face.

According to ABC news, Winkelmann said the idea for The South Butt was born a few years ago when he and his high school pals were poking fun at the kids at their private high school who satisfied their need to belong by buying the exact same jackets and vests. “People thought it was so cool to wear The North Face fleeces,” he said. “Everybody had to have them.” The term “South Butt” started as a joke, he said, and “then it just, like, escalated.” Winkelmann turned to his uncle, who owned a business printing marketing items like T-shirts and pens, for help in manufacturing the first South Butt T-shirts. Ultimately, The South Butt clothing line expanded to include T-shirts, ladies’ track shorts, both $19.99 each, and fleeces, which retail for $75.29. Winkelmann claims the entire company was founded not to rip-off The North Face, but to get people thinking about the alternatives.

The North Face apparently does not want people thinking about alternatives. In August, lawyers for The North Face sent Winkelmann a cease and desist letter requesting that Winkelmann stop using The South Butt name, and The South Butt logo. There are undoubtedly similarities between the two logos. Both logos are red squares with white lettering and design. The North Face logo features a half-dome with three ridges. The South Butt logo uses a similar design, but upside down, and with two ridges that Winkelmann confirmed are meant to infer “butt cheeks.”

The North Face’s counsel wrote to Winkelmann that the companies’ logos are similar enough to possibly cause “consumer confusion as to the source, sponsorship or affiliation of particular promotions and services that could dilute or tarnish the distinctive quality of the famous and distinctive [The North Face] marks.” The North Face requested that Winkelmann stop sales, production and promotion of his product, and also asked him to drop his trademark application for The South Butt LLC and its logo.

To respond to The North Face’s missive, Winkelmann enlisted attorney Albert Watkins, who is a friend of Winkelmann’s father and reportedly traded his services for a good bottle of red wine. Mr. Watkins wrote to The North Face: “I am compelled to respectfully disagree with the posture or assertion that ‘The South Butt’ would in any way give rise to confusion on the part of any person. In fact, the sense of parody employed by Jimmy within the context of his South Butt undertakings clearly demonstrate a respectful, if not flattering ‘anti-North Face’ posture designed in all respects to distinguish itself from any and all North Face products.”

Mr. Watkins’ letter invokes a primary affirmative defense raised by defendants in response to trademark infringement claims. Winkelmann’s defense rests on his claim that The South Butt represents a protected parody of The North Face’s trademark rights. Trademark parody involves the appropriation of another’s mark as a well known element of popular culture, and then building on it to contribute something new for humorous effect or social commentary. The Fourth Circuit’s decision in Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252 (“Louis Vuitton”) is an important trademark parody decision because it provides a detailed analysis of the parody defense to trademark infringement claims.

Haute Diggity Dog, LLC was a company that sold a number of parody pet products including products named Chewnel No. 5, Jimmy Chew, Dog Perignonn, Sniffany & Co., and Dogior. The product which was the subject of the Louis Vuitton lawsuit was Haute Diggity Dog’s parody pet toy called CHEWY VUITON. The toy mimicked the shape, design and color of a Louis Vuitton handbag, but was intended as a chew toy for dogs. Unfortunately for Haute Diggity Dog, Louis Vuitton was not amused by such haute couture for dogs. In fact, Louis Vuitton was so doggone incensed, it filed a lawsuit against Haute Diggity Dog alleging trademark infringement of its Louis Vuitton mark.

The first question facing the Court was whether or not CHEWY VUITON was a trademark parody. As stated by the Court, a trademark parody is a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark’s owner. It must convey two simultaneous and contradictory messages: that it is the original, but also that it is not the original and is instead a parody. This latter message not only differentiates the parody from the original but must also communicate some articulable element of satire, ridicule, joking or amusement.

The Fourth Circuit found Haute Diggity Dog’s use of CHEWY VUITON was a parody. The CHEWY VUITON toy was found to be similar in its name, monogram, design and coloring, which clearly indicated to the Court that the toy was an imitation. The Court also noted that all of the design and name elements were different. (e.g., Chewy/Louis, Vuiton/Vuitton). Each of the design elements Haute Diggity Dog selected to create the parody was close, but not identical to the design elements of the Louis Vuitton handbags

The Court then turned to the question of whether Haute Diggity Dog’s parody infringed upon Louis Vuitton’s trademark rights. The Court found that the strength of the Louis Vuitton mark was a factor that weighed in favor of Haute Diggity Dog. Normally, a strong mark favors the senior trademark owner, but, in the case of a parody, the fame of the mark allows consumers to readily perceive the target of the parody. Similarity of the marks themselves also favored Haute Diggity Dog. The Court found that the parody was sufficiently blatant so as to easily invoke the famous Louis Vuitton trademark in the mind of consumers, yet still distinguish the products. The similarity, or in this case dissimilarity, of the products also was in Haute Diggity Dog’s favor as one product was a $20 dog chew toy and the other was an expensive designer purse. With respect to similarity of facilities and advertising channels, the Court found it relevant that Haute Diggity Dog’s products generally were sold at pet stores with other pet products, including other parody products, while Louis Vuitton handbags generally were sold in Louis Vuitton boutiques or department stores and advertised in high-end fashion magazines. Based upon these circumstances, the Court found that Haute Diggity Dog did not infringe upon Louis Vuitton’s trademark.

Will Mr. Winkelmann’s “The South Butt” brand prevail against The North Face’s infringement claim? The question is difficult to answer with certainty. Undoubtedly, The South Butt was intended by Winkelmann to invoke The North Face brand in the minds of consumers for the purposes of mocking blind consumer allegiance to The North Face brand. However, unlike the facts in Haute Diggity Dog, Winkelman’s products do not seem to be readily distinguishable from The North Face products. Winkelmann sells a South Butt fleece jacket, just like the North Face does. Winkelmann apparently markets his South Butt apparel to the same consumers that the North Face does. These facts tend to support The North Face’s position, and may cause trouble for Winkelmann.

What can be said with certainty is if you intend to use a trademark parody in your business, you must be prepared to be sued, or at minimum, harassed by a larger and more well-known company. By definition, the more famous a trademark, the more likely a parody will be effective. Is your trademark important enough to be on the other side of a large and presumably well-funded adversary like Louis Vuitton? Unless you are lucky enough to have counsel like that of Mr. Winkelmann who will conduct your defense for a good bottle of wine, you must be prepared to expend a considerable sum in legal fees to prove that your mark is a parody and does not infringe upon the rights of another company

This is about a birthday card. Not just any birthday card mind you. This birthday card, produced by Hallmark Cards, depicts a cartoon waitress, dressed in an apron, serving food to a restaurant customer. However, not just any waitress could create such a controversy requiring an appeal to the 9th Circuit. This waitress has, for her head, an oversized photograph of Paris Hilton’s head, and is engaged in witty banter with the customer wherein the cartoon waitress with the oversized Paris Hilton head states Paris’ trademarked (yes, she did file for Federal trademark protection) phrase, “That’s Hot.” What’s all the fuss about? Apparently Hallmark forgot to ask the young heiress if they could use her picture on their card.

Hilton sued Hallmark for misappropriation of publicity under California common law as well as other causes of action. Hallmark defended against Hilton’s right of publicity claim based on the First Amendment. Hallmark also brought a unique defense to the table, one that isn’t usually seen in standard right of publicity cases. Hallmark moved to strike Hilton’s right of publicity claim under California’s anti-SLAPP (“Strategic Lawsuit Against Public Participation”) statute.

California’s anti-SLAPP statute is designed to discourage lawsuits that are brought to deter common citizens from exercising their political or legal rights. The language of the statute explains that “it is in the public interest to encourage continued participation in matters of public significance, and…participation should not be chilled through abuse of the judicial process.” Usually the anti-SLAPP statute arises in connection with litigation relating to the defendant speaking out about an important public issue. In past cases, such matters have included union elections (Macias v. Hartwell, 55 Cal. App. 4th 669); political campaign statements (Conroy v. Spitzer, 70 Cal. App. 4th 1446); homeowner protests (Foothills Townhome Ass’n v. Christiansen, 65 Cal. App. 4th 688); and investigations into the use of charitable funds (Dove Audio, Inc. v. Rosenfeld, Mayer & Susman, 47 Cal. App. 4th 777). My research did not uncover any anti-SLAPP litigation involving a birthday card – until now.

California’s anti-SLAPP statute provides that a complaint which arises from the defendant’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. The terms, “act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue,” include:

1. any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law;
2. any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law;
3. any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest;
4. or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.

Hallmark’s unique defense focused on the fourth element. The court recognized the birthday card qualified as free speech, and Hallmark claimed that because the card was a parody of Hilton, it was in connection with an issue of public interest. Hilton argued that the birthday card was commercial speech and that such speech cannot, as a matter of law, raise a public issue under the anti-SLAPP statute.

The court disagreed with Hilton’s position and found that the card itself was not commercial speech. Commercial speech is speech that merely advertises a product or service, and the card is not advertising for a product – it is the product. The court stated that although the card is sold for profit, that does not make it commercial speech for First Amendment purposes.

Concerning whether or not the Paris Hilton card is in connection with an issue of public interest, the court agreed with Hallmark. Paris Hilton is a person in the public eye and a topic of widespread public interest. Arguably not the same as a union voting controversy, but the court stated that the statute is to be interpreted broadly.

Although Hallmark made a threshold showing that Hilton’s suit falls under the anti-SLAPP rubric, that did not prevent Hilton from litigating her right of publicity claim. Even though Hilton’s claim arises out of Hallmark’s free speech, as long as Hilton can substantiate a legally sufficient claim, the anti-SLAPP statute would not prevent her bringing such claim.

Addressing Hallmark’s First Amendment defense, the court cited to Comedy III Prods., Inc. v. Saderup and noted that “when an artist is faced with a right of publicity challenge to his or her work, the artist may raise as an affirmative defense that the work is protected by the First Amendment inasmuch as it contains significant transformative elements or that the value of the work does not derive primarily from the celebrity’s fame.” If the celebrity likeness is the “very sum and substance” of the work in question, then it is not transformative – it has not become primarily the defendant’s own expression rather then the celebrity’s likeness.

Ultimately the 9th Circuit did state that Hallmark’s card is not transformative as a matter of law. The court also clearly identify the two ends of the spectrum: “literal, conventional depictions of the Three Stooges drawn in charcoal and sold on t-shirts” – not transformative as a matter of law; half human/half worm cartoon characters incorporated into a larger story – transformative as a matter of law. The oversized head of a blond “celebra-heiress” superimposed on a cartoon body on the front of a greeting card – for the trial court to decide.

In a recent case from the Eastern District of Missouri, Cornelius v. DeLuca (E.D. Aug. 18, 2009), the district court addressed whether a fitness website and online retailer was liable for negative comments and reviews posted by users concerning plaintiffs’ dietary supplements. In Cornelius, plaintiffs Cornelius and Syntrax Innovations, Inc. alleged that its competitors were posting on defendants’ website “libelous statements” about the plaintiff and had “tortuously interfered with plaintiffs’ business expectancies.” Further, plaintiffs alleged that Ryan Deluca and Bryna Mathews DeLuca, principals of the website in question, Bodybuilding.com, had engaged in a “civil conspiracy” with the competitors to “post libelous statements and to tortuously interfere with plaintiffs’ business expectancies.” Specifically, plaintiffs alleged that the internet website bodybuilding.com was an online retailer for the sale of nutraceuticals, including those manufactured by plaintiffs, and that the website allowed representatives of plaintiffs’ competitors to post “libelous statements regarding plaintiffs and their products” in the public forums and comments. Finally, plaintiffs alleged that the defendants assisted the competitors by posting the libelous statements which were false and open to the public.

Claiming immunity under the Communications Decency Act, 47 U.S.C. § 230 (“CDA”), defendants moved to dismiss the civil conspiracy count of plaintiffs’ complaint. The defendants argued that as operators of bodybuilding.com they were merely a provider of an interactive service, and thus, could not be held liable for civil conspiracy in connection with the allegedly libelous statements posted on their site.

The CDA was enacted in 1996 with the “primary goal . . . to control the exposure of minors to indecent material” over the internet. Courts have recognized that “an important purpose of the CDA was to encourage internet service providers to self regulate the dissemination of offensive materials over their services.” (Zeran v. America OnLine, Inc. (4th Cir. 1997) 129 F.3d 327, 331, cert. denied (1998) 524 U.S. 937.) Courts have also noted that a second goal of the CDA was to avoid the chilling effect upon internet free speech that would be occasioned by imposing tort liability upon companies that do not create harmful messages, but rather, are intermediaries for their delivery. Thus, CDA immunity is available to an interactive computer service provider or user who undertakes good faith efforts to restrict access to objectionable material. In order for immunity to apply, a plaintiff must establish three elements: (1) the defendant is a provider or user of an interactive computer service; (2) the cause of action treats the defendant as a publisher or speaker of information; and (3) the information at issue is provided by another information content provider.

In determining liability under the CDA, the court stated that while a provider cannot be liable for the statements of others, it can be liable for its own statements. In reviewing plaintiffs’ complaint, the court found that plaintiffs did not make any specific allegations as to how the defendants “conspired” with the plaintiffs’ competitors to post these allegedly libelous statements other than through their operation of the website’s message board. Significantly, the court concluded that “not a single statement [posted on the website] is alleged to be attributable to the defendants.” As a result, the court granted the defendants’ motion to dismiss because the plaintiffs’ complaint did not set forth any facts that could make the defendants liable for statements made by others, in light of the CDA.

This is just one of many cases where the courts have strictly construed section 230 as providing full immunity to internet providers whose users – not the providers — post defamatory information or commit other tortuous conduct. See e.g., Zeran v. America Online, Inc., 958 F. Supp. 1124 (E.D.Va. 1997), aff’d., 129 F.3d 327 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998) (Court held AOL not liable pursuant to the CDA for defamatory statement posted by an AOL subscriber in numerous AOL bulletin boards); Doe v. GTE Corp., 347 F.3d 655 (7th Cir. 2003) (Court held that the CDA protected Internet Service Provider (ISP) from liability to college athletes for the ISP’s customer’s use of service to post images of athletes who were unknowingly recorded while in a locker room setting).

The Federal Circuit Court of Appeals has overruled a 2005 decision which addressed the liability of exporters of components of patented inventions for infringement of method patents. Under 35 U.S.C. §271(f), anyone who exports a component of a patented invention that is combined outside the United States is an infringer. The Court of Appeals, in Union Carbide Chemicals & Plastics Technology Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005), held that §271(f) applied to method patents. In Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc. 2009 WL 2516346 (Fed. Cir. 2009), an en banc decision on August 19, 2009, the Court of Appeals reversed its holding in Union Carbide.

The court’s decision focused on subsection (1) of §271(f), although the court noted that its holding applies to subsection (2) as well. Section 271(f)(1) provides that:

“Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”

Cardiac Pacemakers, Inc. (“CPI”) owned several patents, including the ‘288 patent, which covered a method of using a device, an implantable cardioverter defribillator. CPI sued St. Jude Medical for patent infringment in 1996. After several appeals on various issues, the case was remanded to the district court.

The district court denied St. Jude’s motion for summary judgment limiting damages to U.S. sales of the device. The district court held that under §271(f), CPI was entitled to recover damages for the devices sold by St. Jude from the U.S. to foreign customers. St. Jude appealed.

A panel of the Federal Circuit affirmed the district court’s decision, based on Union Carbide. St. Jude petitioned for a rehearing en banc. The en banc court reversed the panel’s decision, holding that §271(f) does not apply to method patents.

The court reviewed the legislative history of section §271(f). That section was enacted to change the existing case law that held that manufacturers who shipped components of a patented device overseas, where the device was then assembled, were not infringers.

The court also reviewed its prior decisions under §271(f). In Eolas Technologies, Inc. v. Microsoft Corp., 399 F.3d. 1325 (Fed. Cir. 2005), the court had found Microsoft liable under §271(f) for infringement of a product claim based on its exportation of master discs with software code that were copied to hard drives and sold overseas. The component was the computer readable code in the product claim. In NTP, Inc. v. Research in Motion, Ltd., the court had analyzed §271(f) in connection with a method patent. The court had held that the sale of BlackBerry devices by RIM in the United States, when used with a network in Canada, did not infringe NTP’s method patent under §271(f). There, the court stated: “it is difficult to conceive of how one might supply or cause to be supplied… the steps of a patented method.”

In Union Carbide, the court had held that the exportation of a chemical catalyst that was used in performing a patented method overseas constituted infringement under §271(f). The catalyst was a component of the patented invention.

The court also discussed AT&T Corp. v. Microsoft Corp., 414 F.3d. 1366 (Fed. Cir. 2005). In that case, the Court of Appeals had reached a similar result to that of Eolas, again finding that software code was a component of a patented invention under §271(f). The court explained that the Supreme Court had reversed the Court of Appeals’ decision, in Microsoft Corp. v. AT& T Corp, 550 U.S. 437 (2007). The Supreme Court held that Microsoft had not supplied a component from the United States because the software code was supplied from outside the United States. The Court of Appeals stated that: “the Court sent a clear message that the territorial limits of patents should not be lightly breached.”

In analyzing §271(f) as it applied to CPI’s device, the court said that the words of the statute should be giving their ordinary meaning. CPI argued that the term “patented invention” in §271(f) referred to all categories of inventions. The court disagreed.

The court held that process or method inventions consist of a series of steps and that the components of those inventions are the steps. The court further held that the steps of a method patent are not the same as the physical components used in performing the method.

The court noted that §271(c) refers to components of a machine or article of manufacture as being distinct from a material or apparatus used in practicing a patent method. Thus, the court found that Congress distinguished between components of a patented invention and the materials used in practicing a patented method. The components of a patented method are its steps, not the materials used to perform the method.

The court held that because the steps of a method cannot be “supplied,” as is required by §271(f), that section cannot apply to method patents. According to the court, it is impossible to supply an intangible step. The court specifically overruled the Union Carbide case.

In concluding, the court emphasized that its decision was consistent with the legislative history of the statute and with the Supreme Court’s presumption against the extraterritoriality of patents.

Earlier this year, I wrote of an impending legal battle between Shepard Fairey, the artist of the iconic Barack Obama “Hope” painting and the Associated Press who owns the photograph upon which the painting was based. I questioned whether any artist could commandeer the President’s likeness, and whether President Obama could stop the use of his likeness if he was so inclined. As discussed in my previous article, the answer likely depends on how “transformative” of President Obama’s likeness the work of art is.

A similar issue recently emerged in the context of political advertising created by the National Organization for the Reform of Marijuana Laws (“NORML”). As reported in the The Washington Post earlier this month, photographer Lisa Jack is upset with NORML’s use of her photograph of a young President Obama, taken in 1980 when he was a freshman at Occidental College. The photo taken by Ms. Jack depicts a teenaged Obama decked out in a Panama hat, coolly drawing on a cigarette (presumably of the tobacco variety).

NORML apparently decided that a young cigarette smoking Obama could lend support its marijuana legalization cause. Recalling a vintage 1960’s psychedelic rock poster, NORML used Ms. Jack’s picture as the centerpiece of its annual conference poster distributed to NORML members and sold to the general public. The original photo was shaded green, altered to make it appear that Obama was puffing on a marijuana joint, and placed amidst a swirl of psychedelic graphics, bubble lettering, and a marijuana leaf. Above the picture appears NORML’s Obama inspired slogan — “Yes We Cannabis.”

According to the Washington Post story, NORML readily acknowledges copying Ms. Jack’s photo for use in its annual conference poster and says its artist, Sonia Sanchez, made few alterations to the photo itself:

“With very little adulteration, she placed what appears to be a cannabis cigarette” in the president’s hand, [NORML’s executive director] said. But she made few other changes: Obama “almost made the photograph for us.”

Despite the admission that Obama “almost made the photograph for us,” when asked about potential copyright liability, NORML’s executive director told the Washington Post “our lawyers thought it was adulterated enough to comply with the fair use laws.” The question remains whether NORML’s lawyers were right.

As with Shepard Fairey’s “Hope” painting, a court’s fair use analysis of NORML’s poster would likely hinge on how “transformative” the poster is deemed to be of Ms. Jack’s photo. Of critical importance is whether the allegedly “transformative” use by NORML imbues the original Jack picture with “‘new information, new aesthetics, new insights and understandings.'” Blanch v. Koons, 467 F.3d 244, 253 (2nd Cir. 2006) (quoting Castle Rock Entm’t v. Carol Publ’g Group, 150 F.3d 132, 142 (2d Cir. 1998)). In Koons, visual artist Jeff Koons used a fashion photograph in one of his collage paintings to comment on “the social and aesthetic consequences of mass media.” The court found that his use of the photograph was fair use, emphasizing its highly transformative quality. The court explained that “[w]hen, as here, the copyrighted work is used as ‘raw material’ in the furtherance of distinct creative or communicative objectives, the use is transformative.” Id; see also Bill Graham Archives v. Dorling Kendersley Ltd., 448 F.3d 605, 609 (2d Cir. 2006) (finding that use of concert posters as “historical artifacts” in a biography was transformative).

Putting aside NORML’s likely view of the “new insights and understandings” to be gained through marijuana legalization, the NORML poster would appear to sufficiently “transform” the original Jack photo. NORML used the photo as “raw material” to create a communicative statement with 1960’s psychedelic aesthetics, and a new meaning and purpose than the original photo by Ms. Jack. Regardless of the popularity of NORML’s goal of marijuana legalization, NORML’s fair use argument is enhanced because of the clear political purpose associated with the poster. The more an accused infringer such as NORML can raise First Amendment arguments, the more likely its use of the copyrighted work will be deemed to be a “transformative” fair use. See generally Eldred v. Ashcroft, 537 U.S. 186, 219-20 (2003) (characterizing fair use as a “First Amendment safeguard” within copyright law).

Furthermore, Courts sometimes view a copyright holder’s unwillingness to license the particular use in question as weighing in favor of fair use. See, e.g., Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792, 805-06 (9th Cir. 2003) (Mattel unlikely to license artistic photographs of Barbie in absurd and sexualized positions). After learning of NORML’s use of her photo, Ms. Jack told the Washington Post:

These photos “are absolutely not to be used in this way. … I really made a grand effort to do this properly, and I’m very irritated. If I’d wanted these to be used for political purposes, I’d have sold them to Hillary years ago.”

Ms. Jack may be confusing a “political campaign” use by would-be president Hillary Clinton with a “communicative political use” protected under the First Amendment. NORML has clearly drafted the Occidental College era Obama in support of its underlying political cause to legalize marijuana. This is entirely different than a hypothetical use of the photo by Hillary Clinton during the 2008 presidential campaign to support a campaign argument that, unlike Bill Clinton, Barack Obama did in fact inhale. Although Ms. Jack’s may not approve of the use of her photo in NORML’s annual poster, as a practical matter, there may not be much that Ms. Jack can do about it.

In Cristoff v. Nestle USA, Inc., the California Supreme Court issued guidance in determining when the statute of limitations runs on a claim for appropriation of likeness. Russell Cristoff, the plaintiff, was a professional model who posed in 1986 for a photo with him gazing at a cup of coffee. Cristoff was paid $250 for the photo shoot which was arranged by Nestle (Canada).

In 1997, Nestle decided to redesign its label for Taster’s Choice instant coffee but had difficulty locating the artwork that had been used for the original “taster” on its existing label. Nestle decided to use Cristoff’s image because he looked distinguished and similar to the original “taster”. Nestle believed that it could use the image because it had been widely used in Canada. Nestle did not, however, investigate the scope of Cristoff’s consent nor did it ask Cristoff if he would consent to Nestle’s use of his image.

Nestle began using its redesigned Taster’s Choice label with Cristoff’s image in 1998. The label was used on several different Taster’s Choice products. Labels bearing Cristoff’s photo were also used internationally and the image appeared in multiple advertising campaigns, including newspaper coupons, and magazine and internet advertisements.

In 2002, while standing in line at a hardware store, a person remarked to Cristoff that he “looked like the guy on my coffee jar.” Cristoff saw a jar of Taster’s Choice instant coffee on a store shelf approximately one month later and recognized his photograph on the label.

Nestle redesigned its label again in 2003 and used another model for its “taster” photo. Cristoff nevertheless sued Nestle in 2003 and alleged claims for unauthorized commercial use of another’s likeness, common law appropriation of likeness, quantum meruit and unjust enrichment.

The trial court denied Nestle’s motion for summary judgment based on the statute of limitations and ruled that the Single Publication Act (Civil Code §3425.3) did not apply to Cristoff’s claims because they were not “based on defamation.” The trial court applied a two year statute of limitations and instructed the jury that because Cristoff filed his complaint on February 7, 2003 he could “claim damages that took place at any time on or after February 7, 2001.” The trial court also instructed the jury that it should apply the “delayed discovery” rule and that Cristoff could seek damages that took place from the time Nestle first used his image on its labels if Cristoff proved that “prior to his discovery of the facts he did not previously suspect, or should have suspected, that his photograph was on the Taster’s Choice label.” After the presentation of evidence, the jury found in Cristoff’s favor and ruled that Nestle knowingly used his likeness without his consent and that, prior to 2002, Cristoff did not know nor should he have known that his photograph was being used for commercial purposes. The jury awarded Cristoff damages of more than $15 million.

The Court of Appeal reversed the judgment and remanded the case for a new trial. The Court of Appeal concluded that the single publication rule did apply to a claim of appropriation of likeness. The Court also held that the lower court should determine whether the discovery rule delayed the accrual of the cause of action based on whether Nestle hindered Cristoff’s discovery of the use of his photograph on the Nestle label.

The California Supreme Court held that the Court of Appeal properly found that the single publication rule did apply to Cristoff’s claim for appropriation of likeness. The Court held, however, that to determine when the statute of limitations was triggered for Cristoff’s action, a court must decide whether Nestle’s unauthorized use of Cristoff’s image, including its production of the label, constituted a “single publication” under the single publication rule. The California Supreme Court held that the record before it was insufficient to allow it to answer this question.

The California Supreme Court recognized that the language in section 3425.3 is quite broad and that the California Legislature intended the single publication rule to apply to “libel or slander or invasion of privacy or any other tort …,” which should include appropriation of likeness. In determining the application of the single publication rule, the California Supreme Court reasoned that a Court “first must identify what constitutes a “single integrated publication” within the meaning of the rule, such as the printing and distribution of a particular issue of a newspaper, magazine or book.” The Court held that the primary issues to be determined was whether the printing of the Nestle label over a five year period constitutes a single integrated publication and whether Nestle’s use of Cristoff’s likeness in other forms, including coupons, and magazine and internet advertisements also constituted a “single integrated publication.”

The California Supreme Court recognized that “[t]he single publication rule was created to address the problem that arose with the advent of mass communication from the general rule in defamation cases that “each time the defamatory statement is communicated to a third person … the statement is said to have been `published,’” giving rise to a separate cause of action.” Eventually, “courts recognized that the advent of books and newspapers that were circulated among a mass readership threatened unending and potentially ruinous liability as well as overwhelming (and endless) litigation…”. The California Supreme Court recognized that the single publication rule was fashioned to avoid these problems and provided that “for any single edition of a newspaper or book there was but a single potential action for a defamatory statement contained in the newspaper or book, no matter how many copies of the newspaper or book, were distributed.”

The California Supreme Court concluded, however, that it was “not clear whether the production of a product label over a period of years is a `single integrated publication’ that triggers the running of the statute of limitations when the first such label is distributed to the public.” The California Supreme Court declined to resolve that issue without the benefit of additional facts from the parties that would reveal “the manner in which the labels were produced and distributed, including when production of the labels began and ceased.” The Court also instructed the trial court to determine on remand, that if the production of the label constituted a single integrated publication, then the court “should further consider whether the statute of limitation began anew when the label was `republished’ within the meaning of the single publication rule.” Furthermore, the Supreme Court recognized that the trial court would also have to resolve the issue of whether the advertisements using Cristoff’s image were also part of a “single integrated publication”. The Court recognized that Nestle “may be able to show that the production of some or all of these items were single integrated publications and that the statute of limitations was triggered as to that item when it first was distributed to the public.”

Finally, the California Supreme Court rejected the application of the delayed discovery rule in this case. The Court reasoned that “[c]ourts uniformly have rejected the application of the discovery rule to libels published in books, magazines and newspapers, pointing out that application of the discovery rule would undermine the protection provided by the single-publication rule.” The California Supreme Court concluded that the same logic applies to a product label as in the Nestle case that is “not published in an inherently secretive manner,” but is distributed widely to the public.

In remanding the case to the trial court, the California Supreme Court established that the single publication rule is applicable in cases involving appropriation of likeness and that the delayed discovery rule will not apply in such cases where there has been mass distribution of offending image to the public.

Those in the wine industry regularly traverse a vast array of statutes, rules and regulations in an effort to get their grape from the vine into your glass. One set of regulations all wine producers deal with are those governing wine labeling. The federal government, which regulates wine labels through the Alcohol and Tobacco Tax and Trade Bureau (the TTB), imposes rules which state what must and what may not be included on a wine label. A winery or wine producer must obtain federal approval of each wine label before bottling wine in the United States. In addition to federal approval, some states have their own wine label approval process wine producers and or distributors must go through prior to a wine being sold within that state. Most of the time the federal and state wine label approval process is straight forward. However, every so often a situation arises which shows the process can be complex and subjective.

A recent example is Hann Family Wines and the problem they have had with their Cycles Gladiator label. The label (shown below) is a reproduction of a circa 1895 poster ad for a bicycle featuring the side view of a nude nymph. The Alabama Alcoholic Beverage Control Board rejected the label on the grounds that it violated regulations which prohibited wine advertisement and labels featuring “any person(s) posed in an immodest or sensuous manner.” Similar to some states, Alabama requires wineries and distributors to submit wine labels to the Alabama ABC for approval prior to distribution and sale within Alabama.

Should Hann Family Wines have anticipated this problem with the Alabama Alcoholic Beverage and Control Board? Probably not. Prior to submitting the label to the Alabama ABC the label was submitted to and approved by the TTB. Federal wine labeling regulations also prohibit “[a]ny statement, design, device, or representation which is obscene or indecent.” However, it appears the TTB did not consider the Cycles Gladiator label either obscene or indecent.

Like Alabama, other States that regulate wine labels have similar prohibitions against obscene or indecent labels. (Some States, such as California and Texas do not require an independent review of wine labels but merely require that the label have been approved by the Federal government.) Based on the number of States where Cycles Gladiator is available, (according to Hann Family Wines website), it appears that most if not all of the other States that also regulate wine labels did not find the Cycles Gladiator label obscene.

Hann Family Wines also applied to Federally register the label as a trademark. Federal law regulating trademarks prohibits the registration of a mark that “consists of or comprises immoral, deceptive, or scandalous matter.” However, the examining attorney assigned to the Cycle Gladiator application did not refuse registration of the mark on those grounds. (California’s trademark act contains similar language: “A mark by which the goods or services of any applicant for registration may be distinguished from the goods or services of others shall not be registered if ….[i]t consists of or comprises immoral, deceptive, or scandalous matter. Cal. B&P Code §14205(a).)

The determination of what is and isn’t obscene has always been based on “contemporary community standards.” This certainly allows the Alabama ABC to impose its subjective assessment of whether the label is obscene. However, when the Cycles Gladiator wine is available in 49 other States, one can’t help question whether the Alabama ABC’s assessment fell short.

Section 505 of the Copyright Act provides that the court may, in its discretion, award full costs, including reasonable attorneys’ fees, to the prevailing party in a claim arising under the Copyright Act. 17 U.S.C. § 505. In 1941, the Ninth Circuit ruled that when a party voluntarily dismisses her claim without prejudice after the court ordered a more definite statement, the defendant is the prevailing party, and therefore entitled to attorneys’ fees. Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575, 576 (9th Cir. 1941). The Corcoran court expressly rejected the plaintiff’s contention that the dismissal without prejudice does not confer prevailing party status on the defendants.

Last month, the Ninth Circuit changed its mind and overruled Corcoran after 68 years. In Cadkin v. Loose, 569 F.3d 1142 (9th Cir. 2009), the Ninth Circuit held that a voluntary dismissal without prejudice does not confer prevailing party status for a claim brought under the Copyright Act.

Emil Cadkin filed his complaint in federal court alleging several claims, including a claim for copyright infringement. Nearly four years later, Loose filed his motion to dismiss, which the district court granted with leave to amend. Cadkin filed his amended complaint, and again Loose filed a motion to dismiss. Cadkin filed a motion to remand, seeking to have the case transferred to state court, and attached a second amended complaint. The court denied the remand motion on the grounds that a case originally brought in federal court cannot be remanded to state court, and the parties treated the second amended complaint as the operative pleading. Notably, the second amended complaint did not include a claim based on copyright and in fact contained only state law claims.

Loose again moved to dismiss, claiming the state law claims were preempted by the Copyright Act. Cadkin both opposed the motion and filed his own notice of voluntary dismissal without prejudice. The district court entered the dismissal. The defendants then sought attorneys’ fees under Section 505 of the Copyright Act. Following the binding precedent of Corcoran, the district court granted the motions for attorneys’ fees, awarding $225,575 to the Loose Trust defendants and $63,151 to defendant May-Loo.

The ruling would have been simple for the Ninth Circuit to affirm based on Corcoran, which was directly on point and controlling authority. However, the Ninth Circuit used the opportunity to review Corcoran in light of a 2001 Supreme Court case, Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598. In Buckhannon, the Court ruled that “prevailing party” status turns on whether there has been a “material alteration of the legal relationship of the parties.” The Ninth Circuit had recently held that a dismissal without prejudice does not alter the legal relationship of the parties in a similar fee shifting statute. Oscar v. Alaska Dep’t of Educ. & Early Dev., 541 F.3d 978, 981 (9th Cir. 2008). Defendants here argued that neither Buckhannon nor Oscar were copyright cases, and should not be controlling. However, because the Supreme Court based its ruling on the definition of “prevailing party” found in Black’s Legal Dictionary, the fact that Buckhannon was not based on copyright did not prevent the Ninth Circuit from using it in that context.

Following Oscar, the Ninth Circuit explained that “because a dismissal without prejudice is not a decision on the merits and plaintiff was free to re-file his complaint in federal court, dismissal without prejudice does not alter the legal relationship of the parties because the defendant remains subject to the risk of re-filing.” Cadkin, 569 F.3d at 1148. A subtle distinction here is that the ability of a plaintiff to file a complaint in state court after the voluntary dismissal, but not federal court, does alter the legal relationship and establish the defendant as the prevailing party. This was the case in Miles v. California, 320 F.3d 986 (9th Cir. 2003). The key, then, is whether the plaintiff can re-file his complaint in federal court.

The defendants here argued that Cadkin was not free to re-file his complaint for copyright infringement, and so even after Buckhannon, they were prevailing parties. Defendants argued that when Cadkin filed his second amended complaint and omitted his copyright claim, he waived it, and was therefore precluded from re-filing his claim. The Court acknowledged that it has “consistently held that all causes of action alleged in an original complaint which are not alleged in an amended complaint are waived.” However, it went on to say that it has “never applied this waiver rule to a new lawsuit filed after a voluntary dismissal without prejudice.” Cadkin, 569 F.3d at 1149. The Court pointed to a past case in which it “squarely held waiver in one lawsuit does not carry over to a subsequent lawsuit following a voluntary dismissal without prejudice under Rule 41(a).” Id. Thus, while Cadkin would have been precluded from filing an amended complaint with a copyright claim, he was not precluded from filing a new complaint with a copyright claim.

There are some traps for the unwary here. First, while the Court made it more difficult to get attorney fees if the plaintiff voluntarily withdraws the case, it has not completely closed the door. Indeed, if the plaintiff dismisses with prejudice, the defendant is still the prevailing party and may seek fees. Similarly, it appears that if there was some other bar to plaintiff filing another lawsuit, such as the statute of limitations, then even a voluntary dismissal without prejudice may render the defendant the prevailing party. When in doubt, it is probably wise to ask defendants to stipulate to dismissal and include a provision that each side is responsible for its own costs and fees. On the other side of the coin, if you represent the defendant, think twice before agreeing to such a request.