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(This article was republished with permission by ABA Business Law Today on 6/2/2020, available here.)

Certain literary or graphic characters may, in some cases, enjoy copyright protection. Think James Bond – or Batman and even his Batmobile.  Recently, the Ninth Circuit was called upon to determine whether the Moodsters, “anthropomorphized characters representing human emotions,” are subject to the same copyright protection as Batman.  Sadly, the Ninth Circuit concluded they do not.

The Moodsters were created by an expert on children’s emotional intelligence and development, Denise Daniels. She created the Moodsters to “help children cope with strong emotions like loss and trauma.”  In 2005, Ms. Daniels and her team released an initial product called The Moodsters Bible.  The Moodsters Bible told the story of five characters who were “color-coded anthropomorphic emotions” that represented a different emotion: pink–love, yellow-happiness, blue-sadness, red-anger and green-fear. Two years later, Ms. Daniels and her team released a 30-minute television pilot featuring the Moodsters called, “The Amoodsment Mixup.”  In 2015, Ms. Daniels and her team had developed a line of toys and books featuring the Moodsters that were sold at Target and other retailers.

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Eventually, it was bound to happen. A patent application was filed by a machine. Well, not exactly. A human being filed a patent application naming a machine as the inventor.

The machine was an artificial intelligence machine described as a “creativity machine.” Its name was listed as “DABUS Invention Generated by Artificial Intelligence.” The invention was called “Devices and Methods for Attracting Enhanced Attention.”

The human’s name was Stephen L. Thaler. Mr. Thaler filed U.S. patent application no. 16/524,350 in the PTO on July 29, 2019. He also filed a statement acknowledging that because existing law does not allow a machine to own property, he was the assignee of DABUS’s invention. He said that he was the legal representative of DABUS, and was the applicant for the patent application. Mr. Thaler did not file the required oath or declaration, which is the inventor’s statement, signed under oath, that they believe they are the original inventor of the invention.

After the application was filed, the PTO sent the applicant a notice requiring that the missing oath or declaration be submitted. The applicant responded with a petition seeking to vacate the notice, which was denied. The applicant filed a petition requesting reconsideration.

In his petition, the applicant argued that inventorship should not be limited to natural persons. He said that DABUS was “programmed as a series of neural networks that have been trained with general informant in the field of endeavor to independently create the invention.” He further explained that DABUS was not created to solve a specific problem and was not trained on data relevant to the invention, but was able to “recognize” that the invention was novel.

In an unsurprising decision, the PTO denied the petition. The PTO relied on the patent statutes, which provide that “whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter… may obtain a patent….” (35 USC section 101) and define an inventor as “the individual… who invented or discovered the subject matter of the invention” (35 USC section 100(a)). The PTO found that these statutes indicate that inventors must be natural persons.

The PTO also cited a Federal Circuit case holding that the state cannot be an inventor. In University of Utah v. Max-Planck…., 734 F.3d 1315, 1323 (Fed. Cir. 2013), the court had held that conception of the invention determines inventorship, and that conception is the “formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention.” In other cases, the Federal Circuit has held that corporations cannot be inventors. Based on these decisions, the PTO concluded that only natural persons could be inventors.

So, DABUS will have to wait. Some day, the law might just allow machines to be named as inventors.

Listen to this podcast episode here.

The battle started almost six years ago. A Utah-based company known as Dan Farr Productions (“DFP”) decided to use San Diego Comic Convention’s (“SDCC”) registered trademark COMIC-CON in conjunction with its own comic and popular arts convention, resulting in SDCC filing suit in the Southern District of California. SDCC alleged in its complaint that it has the exclusive right to utilize its COMIC-CON trademarks and has done so in connection with its comic convention since 1970.

After years of litigation, which was apparently filled with gamesmanship on the part of DFP and its counsel, SDCC prevailed on a motion for summary judgment. DFP met SDCC’s claim for infringement with an affirmative defense that SDCC’s marks were “generic ab initio.” In other words, DFP argued that COMIC-CON was generic before SDCC’s first use. The district court disagreed, finding that the evidence tendered by DFP was insufficient to support the argument that COMIC-CON was generic before SDCC’s first use. The Ninth Circuit reviewed this decision de novo and found that the district court properly granted summary judgment in favor of SDCC.

The Ninth Circuit also addressed the district’s court attorneys’ fees and costs award. DFP appealed the district court’s order granting SDCC over $3.7 million for attorney’s fees and costs, claiming that the district court erred because the case was not “exceptional” as required by SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179 (9th Cir. 2016) (en banc) (per curiam). The Ninth Circuit reviewed the award, applying an abuse of discretion standard, and found that the district court did not abuse its discretion in awarding reasonable attorneys’ fees. The Ninth Circuit recognized that that district courts should analyze the “totality of the circumstances” to determine if a case is exceptional, using the preponderance of the evidence standard. SunEarth, 839 F.3d at 1181. The Ninth Circuit found that the district court properly applied the totality of the circumstances standard and focused primarily on the “unreasonable manner” in which DFP litigated the case. Specifically, the district court noted that DFP repeatedly failed to comply with court rules, re-litigated issues already decided, and engaged in gamesmanship. Given the district court’s findings and consideration of these factors, the Ninth Circuit held that the district court did not abuse its discretion deeming the case “exceptional” and granting attorneys’ fees under 15 U.S.C. § 1117(a).

As to the amount, DFP failed to challenge the hourly rates and reasonableness of timesheets for SDCC’s attorneys at the district-court level or on appeal. Instead, DFP argued that there must be a causal connection between the misconduct rendering the case exceptional and the particulars of the fee award. The Ninth Circuit found no authority supporting this argument, and stated that, regardless, the district court found that Defendants engaged in misconduct at every stage of the litigation, rendering an award of attorney’s fees related to the entire case proper.

The only portion of the district court’s fee and cost award that the Ninth Circuit took issue with was the award of $212,323.56 for expert witness fees. The Ninth Circuit found that although successful plaintiffs are entitled to “the costs of the action” under the Lanham Act, the Lanham Act does not provide the “explicit statutory authority” required to award litigation expenses beyond the six categories of costs set forth in the general costs statute. See 28 U.S.C. §§ 1821, 1920. Accordingly, because the general cost statute doesn’t reference expert witness fees, the district court erred in awarding such costs to SDCC under the Lanham Act. As such, the Ninth Circuit vacated that portion of the judgment.

Overall, the Ninth Circuit’s review was favorable to SDCC. The appellate court affirmed the summary judgment in favor of SDCC, finding DFP infringed SDCC’s COMIC-CON trademarks and that DFP’s “generic ab initio” argument lacked evidentiary support. And although the Ninth Circuit vacated the portion of the judgment awarding SDCC expert witness fees, it affirmed the remainder of the attorney’s fees award, leaving approximately $3.5 million of the award intact. SDCC certainly could have done worse.