November 2011
From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH and Aspen Publishers intellectual property and computer law publications.

If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to john.arden@wolterskluwer.com.

COPYRIGHTS
Apple’s OS Software License Restrictions Were Not “Misuse”
Apple Inc. did not misuse the copyrights in its operating system software by requiring that licensees run their copies only on Apple-manufactured computers, the U.S. Court of Appeals in San Francisco has decided. Computer manufacturer Psystar argued that the license agreement accompanying retail DVD copies of Apple’s Mac OS X software was unduly restrictive.

The doctrine of copyright misuse is a judicially-crafted affirmative defense modeled on patent law, which prevents copyright holders from using conditions to stifle competition. Apple’s OS X license agreement neither restricted a competitor’s ability to develop its own software, nor precluded customers from using non-Apple components with Apple computers. Instead, Apple’s license merely restricted the use of Apple’s own software to its own hardware, the court said.
The court upheld the district court’s order permanently enjoining Psystar from infringing Apple’s OS X Operating System software and from future infringement of Apple’s copyrighted works—including Apple’s more recent Snow Leopard OS, which was the subject of later-filed litigation between the parties pending in a Florida district court. The court noted that the threat of harm through Psystar’s future infringement of the Snow Leopard OS was real (Apple Inc. v. Psystar Corp., 9thCir, CCH Copyright Law Decisions ¶30,137; CCH Computer Cases ¶50,273).

Unregistered Source Code No Substitute for Registered Code
A software developer’s updated, unregistered source code could not be used to establish the content of allegedly infringed copyrighted source code, the U.S. Court of Appeals in Boston has held.  

An employee of the software developer acted without authorization when he downloaded a unregistered, revised version of the developer’s copyrighted aircraft maintenance tracking software on a licensee’s computer system so that it would run on the licensee’s newer computers.
The developer argued that, by using the unlicensed version of its tracking software, the licensee infringed underlying source code contained in the earlier version of the software, which was registered with the Copyright Office.

Registration is a precondition to filing a valid copyright infringement claim. The updated, unregistered source code did not establish the content of the allegedly infringed copyrighted source codes, the court determined. The developer needed to directly compare and specifically show that its copyrighted source code was substantially similar to the revised code used by the licensee. A software designer’s conclusory declaration failed to do so. Accordingly, summary judgment in favor of the licensee was affirmed (Airframe Systems, Inc. v. L-3 Communications Corporation, 1stCir, CCH Copyright Law Decisions ¶30,133).

Assignment of Right to Sue Did Not Create Standing to Sue
A copyright holding company lacked standing to bring an infringement claim against an individual for displaying a journal article on a website because the holding company was not the beneficial owner of any exclusive right in the copyright, the federal district court in Las Vegas has ruled. Pursuant to Section 501(b) of the Copyright Act, only the owner or beneficial owner of an exclusive right under a copyright law has standing to sue for infringement.

The original owner of the article and the holding company had entered into a “Strategic Alliance Agreement,” which purportedly granted the holding company a right to sue for infringement of the owner’s copyrights. However, the right to sue is not one of the owner’s exclusive rights under copyright law, the court noted.  The parties amended their agreement in an attempt to cure its defects, but the revised version could not be applied to pending claims. Accordingly, the holding company’s amended complaint was dismissed for lack of jurisdiction (Righthaven LLC v. Newman, DNev, CCH Copyright Law Decisions ¶30,142).

TRADEMARKS
Stock Photos of Pine Tree Air Fresheners Could Infringe
Stock photo agency Getty Images (“Getty”) could have infringed and diluted common-law trademark rights held by a manufacturer of air fresheners in connection with its famous tree design marks (“Tree Marks”), according to the federal district court in Syracuse, New York. Getty allegedly promoted and licensed digital media for commercial use through its website that included one or more tree designs that were identical or confusingly similar to the Tree Marks.

Getty could have “used” the Tree Marks as trademarks in pictures, that is, to identify their source or to sell the images, the court said. For example, one of the images on Getty’s site was of a Tree Mark bearing the words “Car-Freshner” (the manufacturer’s name). Others showed a Tree Mark dangling from the rear view mirror of an automobile.

Getty’s alleged use of the Tree Marks would not constitute nominative fair use, in the court’s view. The manufacturer plausibly alleged that Getty’s use of the marks was likely to lead to confusion as to the source or origin of Getty’s images, specifically that consumers would incorrectly believe that the images were in some way affiliated with the manufacturer.

Getty allegedly licensed photographer’s images displaying the Tree Marks with the full knowledge of the value and fame of the marks and r receiving written notification of the manufacturer’s trademark rights. The manufacturer’s assertions plausibly suggested that Getty acted with the purpose of capitalizing on the popularity of the Tree Marks, the court concluded (Car-Freshner Corp. v. Getty Images, Inc., NDNY, CCH Trademark Law Guide  ¶61,880).   

Domain Name Re-registration Did Not Violate Cybersquatting Law
An individual, his brother, and a company they co-owned did not violate the Anticybersquatting Consumer Protection Act (ACPA) by re-registering a domain name that initially was lawfully registered in 1999, the U.S. Court of Appeals in San Francisco has held. A district court erred (CCH Computer Cases ¶49,577) in ruling that the defendants violated the ACPA when they transferred and re-registered “gopets.com” with the bad faith intent to profit from a Korean company’s registered GOPETS mark. The district court properly determined that the defendants violated the ACPA when they registered 18 additional domain names that were confusingly similar to GOPETS.

At the time of the initial registration in 1999, the defendants could not have registered gopets.com with a bad faith intent to profit from the GOPETS mark, because the mark did not yet exist.  They could have violated the ACPA only if their transfer and re-registration qualified as a “registration” under the ACPA.
The ACPA does not define the words “registration” or “register.” However, under general property law rules, a property owner is free to sell or transfer all of the title and interest he holds in property. There was no evidence that Congress intended that rights in domain names were lost when transferred. The district court’s order transferring gopets.com and its $100,000 maximum statutory damage award were reversed.

When the defendants registered 18 additional domain names containing the GOPETS mark, they did so with the bad faith intent of increasing the sale price of gopets.com, the court said. They threatened to use their domain names to confuse consumers and divert them from the Korean company’s website. The district court’s order transferring the 18 domain names, as well as its award of minimal statutory damages of $1,000 per domain name, were affirmed  (GoPets, Ltd. v. Hise, 9thCir, CCH Trademark Law Guide  ¶61,877, CCH Computer Cases ¶50,269 ).

TEACHBOOK Mark Could Infringe, Dilute FACEBOOK Marks
Social networking service provider Facebook could proceed with trademark infringement and dilution claims against an online networking service for teachers (Teachbook.com LLC), the federal district court in Chicago has determined. Facebook sufficiently alleged that TEACHBOOK was likely to cause consumer confusion and to blur the distinctiveness of the FACEBOOK marks.

Facebook’s claims were not subject to dismissal on the ground that “-BOOK” was generic, the court ruled. The suffix “-BOOK” standing alone was not generic for Facebook’s services. Even in the age of “e-books,” social networking services did not fall within the category of what one would traditionally call “books,” according to the court. Moreover, Facebook was not asserting blanket rights in the suffix “-BOOK,” but was relying on its conjoined mark as protectable.

Facebook sufficiently alleged confusion arising from the similarity of the parties’ marks. The textual and aural similarities between the two marks were obvious.  Both parties offered similar social networking services through the same channel of trade—the Internet.  Facebook also made a prima facie showing that Teachbook intentionally adopted a confusingly similar trademark. It was reasonable to infer that teachers searching the Internet for facebook.com could encounter teachbook.com and mistakenly believe that it was somehow affiliated with Facebook.

With regard to dilution, Facebook alleged that Teachbook’s use of the TEACHBOOK mark impaired the distinctiveness of the famous FACEBOOK marks and weakened the connection in consumers’ minds between Facebook’s marks and its services. Contrary to Teachbook’s contention, a trademark dilution claim does not require proof of consumer confusion (Facebook, Inc. v. Teachbook.com LLC, NDIll, CCH Trademark Law Guide ¶61,878; CCH Computer Cases 50,271).

COMPUTER AND INTERNET LAW
Amazon’s “1-Click System” Did Not Infringe Patent
A district court erred in granting a post-verdict judgment as a matter of law (JMOL) that certain claims in Cordance Corp.’s patent directed to an online purchasing system were valid, the U.S. Court of Appeals for the Federal Circuit has held.

Cordance charged that features of Amazon.com’s “1-Click” payment system infringed its ’710 Patent. Amazon argued that Cordance’s ’710 Patent was anticipated by Amazon’s 1995 Shopping Cart System. Cordance, on the other hand, claimed priority based on disclosures in a 1993 conception document.
The jury concluded that Amazon infringed certain claims of the ’710 Patent, but also that all of the claims of the ’710 Patent were invalid. The jury did not specify the basis of its invalidity finding. The district court granted Cordance’s JMOL request on the grounds that Amazon failed to provide sufficient evidence to support priority and invalidity.

A general jury verdict of invalidity should be upheld if there is sufficient evidence to support any of the alternative theories of invalidity, the Federal Circuit clarified. To establish an earlier effective date based on prior conception, Cordance was required to show what its alleged prior disclosures meant to a person of ordinary skill in the art. Cordance failed to provide evidence of what the disclosures in its priority document would have meant at the time to one skilled in the art or how that meaning supported or described the asserted claims of its ’710 Patent, the court determined.

The court also held that Amazon presented credible expert testimony that adequately satisfied its burden to show by clear and convincing evidence that each limitation of the ’710 Patent claims was anticipated by Amazon’s 1995 Shopping Cart System. The district court’s JMOL was reversed and the case remanded (Cordance Corp. v. Amazon.com, Inc., FedCir, CCH Computer Cases ¶50,270).

Apple Failed to State Antitrust Claims Against Rival Samsung
Apple Inc. failed to allege sufficient facts to support its claims that rival Samsung Electronics Ltd. violated the Sherman Act by abusing a private standard setting process for mobile wireless technology, the federal district court in San Jose, California has decided. The ruling was the first blow to Apple in the U.S. in its global war with Samsung regarding several utility and design patents related to both parties' mobile device technologies.

Apple contended that Samsung fraudulently induced the European Telecommunications Standards Institute (ETSI), a standard setting organization (SSO) for mobile wireless technology, to adopt a standard incorporating a Samsung patent as essential technology. Specifically, Samsung allegedly failed to disclose intellectual property rights in its patent and breached a promise to license its essential technology on fair, reasonable, and non-discriminatory (FRAND) terms.
Apple failed to allege sufficient facts to meet Fed.R.Civ.Pro. 9(b)’s heightened pleading standard in support of its monopolization claim under Section 1 of the Sherman Act, according to the court. Apple did not set forth facts to establish when the alleged false FRAND declarations were made, by whom, or regarding which patents.

In order to prove anticompetitive conduct for failure to disclose intellectual property rights, a plaintiff must show that the SSO would have adopted an alternative standard. Apple failed to allege facts to support a plausible inference that, had Samsung disclosed its intellectual property rights to the ETSI, a viable alternative technology performing the same functionality would have been incorporated into the standard. The court granted Apple leave to amend its Sherman Act Sec. 2 claims.

Apple’s restraint of trade claim under Section 1 of the Sherman Act was dismissed without leave to amend. Apple’s allegation that Samsung unilaterally subverted ETSI’s standard-setting process was not reconcilable with its allegation of a concerted action between Samsung and ETSI or its members (Apple Inc. v. Samsung Electronics Co., Ltd., NDCal, CCH Computer Cases ¶50,278).

GADGET Software Marks Not Valid, Registrations Cancelled
Google, Inc.’s use of the term “gadget” in connection with software applications did not infringe or dilute a web developer’s registered GADGET or WEBSITE GADGET marks because they were generic for a software application that could be embedded in a website, the federal district court in Lafayette, Louisiana has held. The developer’s Lanham Act claims were dismissed and its state and federal registrations for GADGET and WEBSITE GADGET were canceled.
Google presented sufficient evidence to overcome the presumption of validity, the court said. Evidence of genericness included: (1) use of the term “gadget” as a general class descriptor by numerous publishers and developers; (2) dictionary definitions of the term “gadget”; (3) the company’s failure to take steps against other companies, including Microsoft and Apple, that used the term “gadget”; and (4) survey evidence that only three percent of consumers identified the term “gadget” as a brand name.

Adding the generic word “website” to “gadget” did not overcome genericness, according to the court.  At most, the compound WEBSITE GADGET mark was a descriptive term without secondary meaning. Both “website” and “gadget” were indispensable and commonly used terms in the website industry. Of 200 consumers polled as to secondary meaning of the term “Website Gadget,” none identified the developer as the source of products or services (Firefly Digital, Inc. v. Google, Inc., NDLa, CCH Computer Cases ¶50,274; , CCH Trademark Law Guide ¶61,880).

Wolters Kluwer Law & Business Publications
Scott on Information Technology Law, Third Edition, by Michael D. Scott
The 2011-2 Supplement for Scott on Information Technology Law, Third Edition, has been added to Wolters Kluwer IntelliConnect in the Intellectual Property practice area. Scott on Information Technology Law offers a real-world perspective on how to structure transactions involving computer products and services such as software development, marketing, and licensing. To help you quickly identify issues, the book also includes practice pointers and clause-by-clause analysis of the most common and often troublesome provisions of IT contracts.

Scott on Information Technology Law covers the substantive areas that affect technology law practice, including torts, privacy, cybercrime, constitutional issues, software licensing, technology outsourcing, business method patents, and the full range of intellectual property protections. 

Highlights of new material in the 2011-2 Supplement include: (1) expanded sections on the Electronic Communications Privacy Act of 1976; (2) an updated section on copyright infringement, including analysis of the latest cases; (3) new sections on the cybercrimes of online impersonation and online threats; (4) recent cases interpreting what qualifies as “copyright management information” under the DMCA; (5) a new section on jurisdictional issues in online trademark infringement cases; (6) an updated contract chapter with the latest state and federal decisions interpreting online contracts; (7) analysis of the recent efforts by state governments to apply sales tax laws to e-commerce companies such as Amazon.com; (8) analysis of judicial decisions construing Section 230 of the Communications Decency Act; (9) a discussion of recent cases on the limits of anonymity online; and (10) a new section on recent court decisions analyzing whether a driver has a reasonable expectation of privacy in the data contained in a vehicle event data recorder.
For more information on Scott on Information Technology Law, visit the Wolters Kluwer Law & Business eStore.

Patent Disputes: Litigation Forms and Analysis by Gregory J. Battersby and Charles W. Grimes
The 2012 Supplement for Patent Disputes: Litigation Forms and Analysis recently went live on Wolters Kluwer IntelliConnect in the Intellectual Property practice area.  This immensely practical resource saves time by providing the practitioner with a broad range of forms that can be used in the preparation, negotiation, and settlement of patent disputes.

 The book offers a multitude of different pleadings related to the patent litigation process — from complaint to appeals. Patent Disputes: Litigation Forms and Analysis also contains checklists and commentary covering virtually every area of patent litigation in federal courts and before other administrative bodies. The companion CD-ROM contains fully customizable versions of all of the forms and documents in the book.

The 2012 Supplement features new and revised sample forms, including the new forms for ex parte proceedings: (1) Request for Oral Hearing in Ex Parte Patent Reexamination, (2) Appellate Brief in Ex Parte Patent Reexamination, and (3)  New Reply Brief in Ex Parte Patent Reexamination.
 For more information on Patent Disputes: Litigation Forms and Analysis, visit the Wolters Kluwer Law & Business eStore.