IP and Computer Law Update

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From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH and Aspen Publishers intellectual property and computer law publications.

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Dress Design Features Were Utilitarian, Not Copyrightable

A dress designer’s prom dress was a useful article with no features that were separable from its utilitarian aspect, the federal district court in New York City has determined. Therefore, the dress was not protected by a valid copyright. Accordingly, the designer’s infringement claim was dismissed.

Useful articles are explicitly excluded from copyright protection, except to the extent that their features are conceptually and physically separable from their utilitarian aspects. An element is conceptually separable if it invokes a concept separate from that of the clothing’s function. An element of a useful article is physically separable if it can be removed from the original item and sold separately without adversely impacting the article’s functionality.

It was clear that none of the elements of the dress were physically or conceptually separable from the dress as a whole. While elements such as the sequins, beads, and wire-edged tulles could be removed from the dress, they had no value in their freestanding form apart from the value of their constituent material. They were usable only as a component of the dress or similar item of clothing. The elements did not reflect the designer’s artistic judgment exercised independently of functional influences and did not have any likelihood of marketability. The individual elements of the dress were not copyrightable (Jovani Fashion, Ltd. v. Cinderella Divine, Inc., SDNY, CCH Copyright Law Decisions ¶30,194; IRN User Link).

Attorney Fees Not Limited by Rejection of Settlement Offer

A songwriter was properly awarded $98,745 in attorneys’ fees after prevailing on his claim that a media production company willfully infringed his copyright in a sound recording by producing a television commercial featuring the recording, the U.S. Court of Appeals in Boston has ruled.

While the production company acknowledged that the songwriter was the prevailing party, it argued that the fee award was excessive in relation to the $40,000 statutory damages award. It also contended that, even if an award was warranted, it should have been limited to work performed before the date on which the songwriter rejected the company’s settlement offer.

The district court thoughtfully considered the question of fees and gave a plausible rationale for the amount of the award. The law does not demand a strict proportionality between fees and damages. A rejected settlement offer made pursuant Rule 68 of the Federal Rules of Civil Procedure obligates a plaintiff to pay the defense costs incurred after the rejection. However, rejection of a “garden-variety” settlement offer does not limit entitlement to fees (Spooner v. EEN, Inc., 1stCir, CCH Copyright Law Decisions ¶30,095; IRN User Link).

Overt Acts Could Show Intent to Abandon Copyright

Outstanding issues of material fact precluded deciding on a motion for summary judgment whether the author of meditation workshop videos had abandoned his copyrights in the videos, the federal district court in Phoenix has held. The author claimed that meditation workshop facilitators made and distributed unauthorized copies of images from his copyrighted videos.

Abandonment of copyright occurs only if there is intent by the copyright owner to surrender rights in his works. The workshop facilitators argued that the author expressly abandoned his copyrights in the videos through three overt acts: (1) releasing a video to the world without any control on the copyrighted material; (2) publishing a letter stating that he did not care about copyrights; and (3) stating at a workshop in Germany that he did not care about copyrights. Abandonment of copyright protection in one work did not extend to later works. The intent of the statements in the letter could be resolved in favor of either party. The author argued that the remarks in Germany referred to an unpublished book, not the videos at issue. Thus, there were questions of fact as to whether the overt acts propounded by the facilitators were indicative of the author’s intent to abandon copyright protection in his copyrighted works (Melchizedek v. Holt, DAriz, CCH Copyright Law Decisions ¶30,105; IRN User Link).

Apple Denied Injunction Against Amazon “App Store”

Apple, Inc. was not entitled to a preliminary injunction barring online retailer Amazon.com, Inc. from using Apple’s asserted “App Store” trademark for its service offering mobile device applications, the federal district court in Oakland has decided. Amazon used the name “Amazon Appstore for Android” for its service offering software applications for Android mobile devices on the amazon.com website. Despite the similarities between the parties’ respective marks and services, Apple was not likely to succeed on the merits of its trademark infringement and dilution claims.

Assuming without deciding that “App Store” was protectable, Apple was not likely to succeed on the merits of its infringement claim because it did not show that confusion between Apple’s and Amazon’s “App Store” marks, the court said. “App Store” was not a conceptually strong mark, and Apple’s evidence of advertising expenditures was insufficient to show that the mark had achieved conceptual strength in the marketplace. It was unclear whether consumers recognized “App Store” as a mark or as a descriptive term.

While both companies used essentially identical marks to offer downloads of software applications for mobile devices, Amazon’s apps could be used only on Android devices, which suggested that the class of purchasers was not the same for each service. Other likelihood of confusion factors were neutral or did not clearly favor either side.

Apple was not likely to successfully establish at trial that Amazon’s mark blurred and tarnished Apple’s “App Store” mark, according to the court. Apple failed to establish that “App Store” had the requisite fame, in the sense of being “prominent” and “renowned.” Moreover, there was no evidence that Amazon’s service would allow inappropriate content or malware to enter the market, or how that would harm Apple’s reputation, since Amazon did not offer apps for Apple devices (Apple, Inc. v. Amazon.com, Inc., NDCal, CCH Trademark Law Guide ¶61,831; IRN User Link; CCH Computer Cases ¶50,216; IRN User Link).

Band Members Had Common-Law Rights in Name

The current members of the dance band “Exposé” were the common-law owners of trademark rights in the band’s name, the U.S. Court of Appeals in Atlanta has determined. An entertainment company that was the purported assignee of the trademark rights of the entity “Pantera” that created the original Exposé band in 1984 lacked rights in the name.

The current band members replaced the original members in 1986 and had recorded albums and intermittently performed as Exposé since then. In 2006, the current members obtained a license to use the Exposé mark from the entertainment company, but ceased paying licensing fees and informed the company that they planned to seek federal registration of the Exposé mark.

The entertainment company failed to establish that Pantera had appropriated the Exposé mark in a way sufficiently public to identify or distinguish the band prior to the time the current members joined the band, according to the court. Exposé had been consistently portrayed to the public as consisting of the current members. Alternatively, the current band members owned the mark under the “joint endeavors” test, the court said. The quality that the mark identified was first and foremost the band members, with their distinctive personalities and style as performers, according to the court. The entertainment company had not exercised control or over the current members or taken any active role in the band’s performances (Crystal Entertainment & Filmworks, Inc. v. Juardo, 11thCir, CCH Trademark Law Guide ¶61,830; IRN User Link).

Toy Maker’s Infringement Could Warrant Profits Award

An educational technology company could proceed with trademark infringement claims against toy manufacturer Mattel, Inc. and its Fisher-Price subsidiary and could seek equitable relief in the form of an award Fisher-Price’s profits, on an unjust enrichment theory, the federal district court in San Jose has ruled. The company alleged that Fisher-Price’s use of the mark “iXL” for a hand-held smart device learning toy infringed the company’s registered “IXL” service mark, used for its web-based math learning software and subscription service.

Fisher-Price’s online social media marketing— creating Facebook applications, developing YouTube “channels,” and fostering tie-ins with “mommy bloggers”—could be relevant to the issue of consumer confusion. Social media marketing could be considered akin to niche marketplaces, such as specialty retail outlets and trade magazines, according to the court.

The company’s infringement claim could be based on a “reverse confusion” theory, but was not “forward confusion.” The evidence of confusion in the record involved people who contacted the company under the mistaken belief that the company was affiliated with the Fisher-Price product. Forward confusion would require a showing that the company’s service was the probable source of consumer interest in Fisher-Price’s product.

The company could not seek compensatory damages because it failed to show lost profits or actual harm as a result of Fisher-Price’s conduct. The company was not entitled to Fisher-Price’s profits from its alleged infringement because the parties were not in direct competition. However, the company could seek an equitable award of Fisher-Price’s profits because there was evidence that Fisher-Price acted willfully in adopting its “iXL” mark after discovering the company’s “IXL” mark in a trademark search and by releasing its “iXL Learning System” after receiving a cease-and-desist letter from the company (Quia Corp. v. Mattel, Inc., NDCal, CCH Trademark Law Guide ¶61,837; IRN User Link; CCH Computer Cases ¶50,220; IRN User Link).

California Violent Video Sales Law Struck Down

A California law restricting the sale or rental of violent video games to minors and requiring their packaging to be labeled “18” imposed an impermissible content-based restriction on speech in violation of the First Amendment, the U.S. Supreme Court has ruled. The 7-2 opinion written by Justice Scalia affirmed a decision of the U.S. Court of Appeals in San Francisco. Justice Alito filed a concurring opinion, in which Chief Justice Roberts joined, while Justices Thomas and Breyer each filed dissenting opinions.

Adopting language from obscenity statutes that had passed constitutional muster, California sought to regulate a new category of content-based speech directed at children, according to the Court. “A legislature cannot create new categories of unprotected speech simply by weighing the value of a particular category against its social costs and then punishing it if it fails the test,” the Court admonished. The law failed to pass the strict scrutiny test—it was not narrowly drawn to advance California’s compelling interest in protecting minors, the Court held.

The psychological studies proffered by the state to justify the law failed to prove a demonstrable connection between exposure to violent video games and harmful effects on children. Violent video games’ harmful effects were small and indistinguishable from effects produced by other media the state chose not to regulate, such as Saturday morning cartoons. The need of parents to restrict their children’s access to violent games did not justify the law. The industry’s voluntary rating system already achieved that goal to a large extent and not all parents disapproved of their children’s purchase of violent video games. California’s contention that “interactive” video games presented special problems also was unpersuasive. “Whatever the challenges of applying the Constitution to ever-advancing technology, ‘the basic principles of freedom of speech and the press…do not vary’ when a new and different medium for communication is developed,” the Court instructed (Brown v. Entertainment Merchants Ass’n, USSCt, CCH Computer Cases ¶50,224; IRN User Link).

Claims Proceed Against Google for “Street View” Interception

Putative class action plaintiffs could pursue federal wiretapping claims against Google, Inc. for allegedly intercepting data from their wireless home networks during the course of its “Street View” mapping project, the federal district court in San Francisco has held. The court, however, dismissed claims under various state wiretapping statues as preempted and under California’s Unfair Competition Law for lack of standing.

Google deployed Street View vehicles equipped with custom-designed software that secretly captured data packets as they streamed across Wi-Fi connections and stored them on digital media. Google later decoded the data using crypto-analysis or other technology. The content of the data packets included Wi-Fi network names and ID numbers, usernames, passwords, and personal e-mails.

The Wiretap Act, enacted as Title I of the Electronic Communications Privacy Act (ECPA) of 1986, established a private right of action against interceptors of an “electronic communication,” but exempted “radio communications” and communications “readily accessible to the general public.” The term “radio communication” was not defined in the statute, but an unrelated provision stated that a “radio communication” that was not “scrambled or encrypted” was “readily accessible to the general public.”

Google argued that the plaintiffs’ Wi-Fi network transmissions were radio communications readily accessible to the general public because they were not “scrambled or encrypted.” The court disagreed. The various provisions within the ECPA, when read together, and the statute’s legislative history supported the conclusion that, unlike traditional radio transmissions, communications sent via Wi-Fi networks were not designed or intended to be accessible to the general public. The court, however, granted Google’s motion to stay the case pending interlocutory appeal of its interpretation of the term “radio communication” in the Wiretap Act. The case presented a novel question of statutory construction subject to plausible differences of opinion (In re Google, Inc. Street View Electronic Communications Litig., NDCal, CCH Computer Cases ¶50,215; IRN User Link CCH Computer Cases ¶50,221; IRN User Link).

Muslim Group Can Proceed with Claims Against Spying Intern

A nonprofit Muslim advocacy organization (CAIR) could proceed with Stored Communications Act (SCA) claims against a former intern, his father, and a national security advocacy group in connection with the intern’s unauthorized video and audio recording of conversations with CAIR employees and copying of electronic documents, the federal district court in the District of Columbia has determined. The court also allowed CAIR to proceed with federal wiretapping and state law claims alleging breach of contract, breach of fiduciary duty, conversion, and trespassing. The defendants were enjoined from using, disclosing, or publishing any documents or recordings obtained by the intern and were ordered to remove the documents and recordings from their websites and blogs.

The First Amendment did not bar CAIR’s claims, according to the court. Although the First Amendment prohibits the government from punishing publication of truthful information about a matter of public significance, this principle only applies where the publisher has “lawfully acquired” the information, the court noted. CAIR alleged that the intern acquired the recordings and materials in violation of his contractual, fiduciary, and other legal obligations.

The SCA provides a private right of action against a person who intentionally accesses without authorization a facility through which an electronic communication service is provided and thereby obtains a wire or electronic communication that is in “electronic storage,” 18 U.S.C. §2701(a). The defendants argued that CAIR’s computers were not “a facility through which an electronic communication service is provided” and that the documents copied by the intern were not in “electronic storage.”

“The SCA defines ‘electronic storage’ to include ‘storage of a communication by an electronic communication service for purposes of backup protection.’” Courts have held that communications stored on a service provider’s server after delivery to an end-user are in “electronic storage,” provided they are retained for backup protection. While liability under the SCA would not arise if the intern’s interception was limited to CAIR’s internal office computers, discovery was necessary to determine if CAIR’s systems qualified as an electronic communication service and whether the communications at issue were in “electronic storage” when accessed (Council on American-Islamic Relations Action Network, Inc. v. Gaubatz, DDC, CCH Computer Cases ¶50,210; IRN User Link).

Wolters Kluwer Law & Business Publications

Software Patents, Second Edition, by Gregory A. Stobbs

The 2011-2 Supplement for Software Patents recently went live on Wolters Kluwer IntelliConnect in the Intellectual Property practice area. Software Patents offers a comprehensive overview of the software patent application process. Software Patents is your authoritative source for expert guidance on: strategic software patent protection, prior art searches, drafting claims and specifications, U.S. Patent Office examination guidelines, international software patent protection, integrating software industry standards, and a host of litigation strategies, including invalidity defenses.

Highlights of new material included in the 2011 Cumulative Supplement include: (1) complete analysis of the U.S. Supreme Court’s Bilski v. Kappos decision rejecting the patent’s claims, but leaving the business method patent door open; (2) a closer look at the Bilski patent application; (3) discussion of U.S. Patent Office §101 Guidelines; (4) review of the Federal Circuit’s recent treatment of diagnostic methods; (5) analysis of post-Bilski Board of Patent Appeals decisions; and (6) examination of subject matter eligibility of computer readable media.

For more information on Software Patents, visit the Aspen Publishers Website.