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Intellectual Property Notes 01/13/2009
Patent Summaries    Trademark Summaries    Copyright Summaries
UDRP Summaries


Headlines

Patent Cases:
D Del - Declaration of unenforceability was appropriate sanction.
Trademark Cases:
SD NY - Use of mark in commerce had been adequately alleged.
Copyright Cases:
Fed Cir - Inmate was in "service" of U.S. when he created works.
MD Fla - Parties not entitled to benefit of home system defense.
CD Cal - Software functions fell within scope of safe harbor.
UDRP Decisions:
NAF - Domain name was being used for bona fide offering.  Top


Patent Cases

D Del - Declaration of unenforceability was appropriate sanction.
Micron Technology, Inc. v. Rambus, Inc. (1/9/09)  Full Summary  Decision
The court held a bench trial on the issues of Rambus' alleged spoliation of evidence and unclean hands, as well as the appropriate sanction arising from these allegations.  The record showed that as early as 1996, Rambus contemplated industry-wide adoption of its DRAM technology through an aggressive use of its intellectual property, characterized as its "patent minefield."  It was apparent from the record that Rambus, from its inception, was prepared to be an aggressive competitor.  Its patent portfolio was considered a weapon to be used, as necessary, in Rambus' chosen theater of operations, the DRAM market.  A duty to preserve potentially relevant evidence arose in December 1998 and any documents purged from that time forward were deemed to have been destroyed in bad faith.  The appropriate sanction was to declare the patents unenforceable.  Top

Trademark Cases

SD NY - Use of mark in commerce had been adequately alleged.
AARP v. 200 Kelsey Associates, LLC (1/6/09)  Full Summary  Decision
The court denied Kelsey's motion to dismiss, noting that the current dispute satisfied the case or controversy requirement.  AARP alleged that Kelsey was actively seeking licensees to publish a magazine called "Modern Maturity" and was conducting extensive analysis of the publishing industry.  While Kelsey also argued that dismissal was proper because it had not actually used the "Modern Maturity" mark in commerce, the court rejected this contention.  AARP had alleged that Kelsey was actively preparing to launch the magazine.  It was reasonable to infer that, in doing so, Kelsey had not only used the mark, but had done so through the channels of commerce.  Thus, AARP had alleged facts giving rise to a reasonable inference that Kelsey had used the mark in commerce.  Top

Copyright Cases

Fed Cir - Inmate was in "service" of U.S. when he created works.
Walton v. United States (1/8/09)  Full Summary  Decision
The Court of Federal Claims dismissed Walton's complaint for lack of jurisdiction and the Federal Circuit affirmed.  Walton was a federal prisoner seeking to recover from the United States for copyright infringement involving the government's use of calendars that Walton prepared as part of his assigned duties in prison.  It was clear that while preparing his calendar, Walton was in the "service" of the United States.  Walton developed and made the calendar at the direction of and with computers provided by the United States and was supervised by government employees in that work.  Walton performed the work at a government facility and the government paid Walton modest compensation for his efforts.  Pursuant to 28 U.S.C. 1498(b), Congress had not waived the government's sovereign immunity from such suits.  As a result, the suit was properly dismissed for lack of jurisdiction.

MD Fla - Parties not entitled to benefit of home system defense.
New World Music Co. v. Tampa Bay Downs, Inc. (1/6/09)  Full Summary  Decision
The court granted in part and denied in part NWM's summary judgment motion and granted in part and denied in part the summary judgment motions filed by defendants Thayer and Cassanese.  NWM had met its initial burden of proof in showing that the live performances of copyrighted musical compositions at the event in question were unauthorized.  TBD failed to produce any evidence to rebut NWM's assertion that Radio Disney's licensing agreement did not cover the performances at TBD.  As to the claims stemming from the musical compositions heard by ASCAP's private investigator in one of the clubhouse's rented carrels, this broadcast qualified as a public performance.  In addition, TBD's television system was of a commercial nature that barred application of the home system defense.

CD Cal - Software functions fell within scope of safe harbor.
UMG Recordings, Inc. v. Veoh Networks, Inc. (12/29/08)  Full Summary  Decision
The court denied UMG's motion for partial summary judgment, ultimately concluding that the four software functions at issue fell within the scope of the 17 U.S.C. 512(c) safe harbor because they were undertaken by reason of the storage at the direction of a user.  It was undisputed that all of the involved software functions were directed toward facilitating access to materials stored at the direction of users.  Further, it was clear that the statute extended to functions other than mere storage; it applied to infringement of copyright by reason of the storage at the direction of a user.  When copyrighted content was displayed or distributed by Veoh, it was "as a result of" the fact that users uploaded the content to Veoh's servers to be accessed by other means.  Congress clearly intended 512(c) to extend to functions directly involved in providing access to materials stored at the direction of a user.  Top

UDRP Decisions

NAF - Domain name was being used for bona fide offering.
Wheatcraft v. Reison, Inc. (12/22/08)  Full Summary  Decision
Reison was using the disputed domain name in connection with a bona fide offering of goods or services in that it offered personalized email services to individuals and companies.  In addition, the terms of the domain name were generic and of common use as surnames.  In addition, Wheatcraft failed to demonstrate that the domain name had been registered and used in bad faith.  There was no evidence that Reison was using the domain name in order to disrupt Wheatcraft's business.  Reison indicated that its purpose was to offer email services to individuals with the "Wheatcraft" surname.  This evidence was sufficient to prove that Reison did not register the domain name in bad faith.  Top


Micron Technology, Inc. v. Rambus, Inc. (D Del 1/9/09)  Decision  Short Summary
Micron sued Rambus for declaratory judgment.  The court held a bench trial on the issues of Rambus' alleged spoliation of evidence and unclean hands, as well as the appropriate sanction, if any, arising from these allegations.  The court held that the appropriate sanction was to declare the patents-in-suit unenforceable against Micron.

Rambus is a technology company employing semiconductor and system architecture technologies.  At the outset, Rambus focused on the "memory bottleneck" problem, a scenario in which the speed of microprocessors would outstrip the speed at which memory components (such as dynamic random access memory or "DRAM") transferred data to and from microprocessors.  In 1990, Rambus filed a patent application for a potential DRAM solution to this problem.  Rambus' plan was to license its technology to DRAM makers.  In 1991, representatives from chip technology owners, including Rambus, and chip buyers began meeting through the Joint Electronic Design Engineering Council ("JEDEC") to adopt industry standards for memory chips.  Rambus became concerned that DRAM makers were using its technology to develop competing DRAMs.  Rambus took information learned at JEDEC meetings and passed it along to counsel in an effort to extend the company's patent claims to cover competing memory types.  In 1998, Rambus implemented a document retention policy that allowed it to purge documents that might be discoverable.  Rambus decided that Hitachi was the most desirable litigation target that it could sue in order to set an example for other DRAM makers.  Rambus sued Hitachi, but the suit was settled and the parties entered into a licensing agreement for non-compatible DRAM products.

As early as 1996, Rambus contemplated industry-wide adoption of its DRAM technology through an aggressive use of its intellectual property.  By 1998, Rambus was commencing its plans for litigation in order to establish a royalty rate and validate its patents.  Specific to this litigation strategy, Rambus implemented its document retention policy, pursuant to which, the company destroyed documents.  By late 1999, there was a consensus among Rambus executives of the need to sue a DRAM company to set an example; by October, Hitachi was chosen.  It was apparent that Rambus, from its inception, was prepared to be an aggressive competitor in a very competitive industry.  Its patent portfolio was considered a weapon to be used, as necessary, in Rambus' chosen theater of operations, the DRAM market.  Litigation was reasonably foreseeable no later than December 1998 when the company's litigation strategy was implemented.  Because the document retention policy was discussed and adopted within the context of that strategy, Rambus knew that a general implementation of the policy was inappropriate because the documents destroyed would become material at some point.  A duty to preserve potentially relevant evidence arose in December 1998 and any documents purged from that time forward were deemed to have been destroyed in bad faith.  Micron had been prejudiced by Rambus' conduct and that prejudice had been compounded by Rambus' litigation misconduct.  Top


AARP v. 200 Kelsey Associates, LLC (SD NY 1/6/09)  Decision  Short Summary
AARP sued Kelsey and Reich (collectively "Kelsey") for trademark infringement, declaratory judgment, and related claims; the court denied Kelsey's motion to dismiss.

AARP is a non-profit organization dedicated to addressing the needs and promoting the interests of persons age 50 and older.  In 1958, AARP launched its flagship publication, Modern Maturity magazine.  In 1962, AARP obtained a federal registration for the "Modern Maturity" mark.  While AARP changed the name of its publication to AARP The Magazine in 2003, it owns and uses domain names containing the "Modern Maturity" mark and also uses the mark in connection with various other goods and services.  Kelsey seeks to launch a new magazine called "Modern Maturity," which is intended for senior citizens.  In preparation for this launch, Kelsey has contacted potential publishers, generated business plans concerning the design and sale of the magazine, and engaged in extensive market analysis.  Kelsey has also filed an intent-to-use trademark application with the PTO for use of the mark with a magazine in the field of mature lifestyles.  The PTO rejected the application on the basis that the mark was confusingly similar to AARP's registered mark.  Thereafter, Kelsey petitioned the PTO to cancel AARP's registration on the basis of abandonment.

Kelsey argued that because AARP had not alleged that it had actually published or begun selling the magazine, AARP could demonstrate neither the existence of a case or controversy sufficient to confer jurisdiction on the court, nor the use in commerce required to state a claim for trademark infringement.  The court ultimately concluded that the current dispute satisfied the case or controversy requirement.  Far from relying solely on Kelsey's mere intent to infringe, AARP alleged that Kelsey was actively seeking licensees to publish a magazine called "Modern Maturity" and was conducting extensive analysis of the publishing industry.  Although Kelsey may not have settled on a licensing partner, it had been actively searching for one.  AARP did not need to wait for Kelsey to actually secure that partner before filing suit.  While Kelsey also argued that dismissal was proper because it had not actually used the "Modern Maturity" mark in commerce, the court rejected this contention.  AARP had alleged that Kelsey was actively seeking licensees to publish its magazine and was preparing to launch the magazine.  It was reasonable to infer that, in doing so, Kelsey had not only used the mark, but had done so through the channels of commerce.  Kelsey's pitch to potential publishers would necessarily involve the transmission of ideas pertaining to magazine content, design, and layout, including the offending name.  Thus, AARP had alleged facts giving rise to a reasonable inference that Kelsey had used the mark in commerce.  Top


Walton v. United States (Fed Cir 1/8/09)  Decision  Short Summary
Walton sued the United States for copyright infringement.  The Court of Federal Claims dismissed Walton's complaint for lack of jurisdiction and the Federal Circuit affirmed.

While an inmate at a federal prison, Walton was assigned to work for a government owned corporation that produces various products for the federal government.  While working in this capacity, Walton developed and produced desk blotter calendars.  The calendars were distributed to General Services Administration warehouses throughout the country and were also sold to private purchasers.  In 2001, Walton filed suit against the United States for copyright infringement.  The Court of Federal Claims dismissed the complaint for lack of jurisdiction.  That court held that suit could not be maintained because 28 U.S.C. 1498(b) did not permit such suits by prisoners in Walton's situation.  The court also ruled that because Congress had not waived the government's sovereign immunity from such suits, it lacked jurisdiction to entertain Walton's complaint.

The statute at issue provided that a copyright infringement suit could not be maintained against the United States if the work was prepared while in the "employment or service" of the United States and as part of the official functions of the employee or in whose preparation government time, materials, or facilities were used.  It was not disputed that in the preparation of Walton's calendar, government time, material, or facilities were used.  Walton worked on the calendar on computers furnished by the government as part of his assigned duties at a government facility.  While preparing his copyrighted calendar, Walton was clearly in the "service" of the United States.  One could have a "service" relationship with the federal government that did not constitute an "employment" relationship.  Walton made the calendar at the direction of and with computers provided by the United States and was supervised by government employees.  Walton performed the work at a government facility and the government paid Walton modest compensation for his efforts.  Pursuant to 1498(b), Congress had not waived the government's immunity from such suits.  As a result, the suit was properly dismissed for lack of jurisdiction.  Top


New World Music v. Tampa Bay Downs (MD Fla 1/6/09)  Decision  Short Summary
NWM, Famous Music LLC, WB Music Corp., and others (collectively "NWM") sued TBD, Thayer, and Cassanese (collectively "TBD") for copyright infringement.  The court granted in part and denied in part NWM's summary judgment motion and granted in part and denied in part the summary judgment motions filed by Thayer and Cassanese.

TBD is a pari-mutuel wagering facility that holds live thoroughbred races during racing season; simulcast wagering is offered year-round.  TBD broadcasts its races through an extensive network of television sets.  Cassanese is TBD's vice-president of operations and Thayer is president of the company.  When ASCAP learned that TBD was using music at its establishment without a license, it sent a letter to Thayer and Flynn, vice-president of publicity, in 2004.  TBD ignored ASCAP's efforts to secure a licensing arrangement.  ASCAP then hired Busse, an independent investigator, to determine whether unauthorized performance of copyrighted songs was occurring at TBD.  Busse prepared a report detailing his observations during Busse's visit to TBD in February 2006.  That day, TBD was hosting a family day in its picnic pavilion.  According to Busse's report, three Radio Disney personalities presented interactive activities, played games, and promoted contests while playing music through a PA system.  At the conclusion of the event, Busse proceeded to a clubhouse television carrel that he had rented.  While watching the television, Busse saw two commercials that played musical compositions in the background.

NWM asserted that Radio Disney's licensing agreement authorized performances by way of simulcast or over-the-air broadcasting of its signal only.  Busse's report indicated that the Radio Disney disc jockeys were playing CDs, rather than broadcasting any live Radio Disney signals.  Thus, NWM had met its initial burden of proof in showing that the live performances of copyrighted musical compositions at the event were unauthorized.  TBD failed to produce any evidence to rebut NWM's assertion that Radio Disney's licensing agreement did not cover the performances at TBD.  As to the infringement claims stemming from the musical compositions heard by Busse in one of the clubhouse's rented television carrels, this broadcast clearly qualified as a public performance.  TBD was open to the public and the fact that the television broadcasts were viewed in individual carrels within the public space had no effect on their characterization as public performances.  In addition, the court rejected TBD's assertion of the home system defense.  TBD charged a fee to access the carrels, its system was not of a type commonly used in private homes, and TBD transmitted the television signal from the receiving room to numerous televisions throughout the premises.  Finally, while Thayer could be held individually liable, Cassanese could not because he was without authority to control the infringing conduct.  Top


UMG Recordings v. Veoh Networks (CD Cal 12/29/08)  Decision  Short Summary
UMG and others (collectively "UMG") sued Veoh and others for copyright infringement; the court denied UMG's motion for partial summary judgment.

UMG controls the rights to many copyrighted sound recordings and musical compositions.  Veoh operates an Internet-based service that allows users to share videos with others, free of charge.  UMG alleges that Veoh has benefitted from and is liable for infringement of its copyrights.  Veoh has asserted an affirmative defense under the safe harbor provisions of the Digital Millennium Copyright Act ("DMCA").  UMG moves for partial summary judgment that Veoh is not entitled to an affirmative defense under one of those safe harbors, codified at 17 U.S.C. 512(c).  Veoh asserts that its functions are covered by 512(c) because they occur by reason of storage at the direction of users and are meant to facilitate access to files stored by users.  The functions performed by Veoh are: 1) automatically creating Flash copies of video files uploaded by users; 2) automatically creating copies of uploaded video files that are comprised of smaller "chunks" of the original file; 3) allowing users to access uploaded videos via streaming; and 4) allowing users to access uploaded videos by downloading whole video files.

The court ultimately concluded that the four software functions at issue fell within the scope of the 512(c) safe harbor because they were undertaken by reason of the storage at the direction of a user.  It was undisputed that all of the involved software functions were directed toward facilitating access to materials stored at the direction of users.  The court agreed with Veoh that 512(c) did not require that the infringing conduct constitute storage in its own right.  Rather, the infringing conduct had to occur as a result of the storage.  In other words, the statute extended to functions other than mere storage; it applied to infringement of copyright by reason of the storage at the direction of a user.  The legislative history of the DMCA safe harbors supported the conclusion that Congress intended 512(c) to extend to functions directly involved in providing access to material stored at the direction of a user.  The DMCA could not achieve its goals if service providers that were otherwise eligible for limited liability under 512(c) were exposed to liability for providing access to works stored at the direction of users.  The software functions at issue were all narrowly directed toward providing access to material stored at the direction of users.  Both the conversion of uploaded files into Flash format and the "chunking" of uploaded files were undertaken to make it easier for uses to view and download movies.  Streaming and downloading were merely two technically different means of accessing uploaded videos.  Top


Wheatcraft v. Reison, Inc. (NAF 12/22/08)  Decision  Short Summary
Stephen Wheatcraft has earned an international reputation as an expert in the field of hydrology.  Wheatcraft offers his services for a fee, which include expert witness services in legal matters involving groundwater contamination and related consulting services.  Wheatcraft began offering such services in 1988; Wheatcraft offers these services under his personal name and also under the name "Wheatcraft & Associates, Ltd."  Wheatcraft applied to the PTO for registration of the mark "Wheatcraft & Associates, Ltd." in August 2008.  The PTO has not yet responded to the application.  Reison registered the domain name "wheatcraft.com" in May 2001.  The domain name resolves to a site featuring ads for third-party sellers of various goods and services.  Wheatcraft attempted to contact Reison regarding a possible transfer of the domain name, but never received a response.  Raison provides personalized email services to individuals and companies by allowing them to hold email addresses using the domain name.  Reison denied any knowledge of Wheatcraft at the time it registered the domain name.

As to the issue of confusing similarity, any common law rights held by Wheatcraft were in the mark "Wheatcraft & Associates" or "Dr. Stephen Wheatcraft, Ph.D." or variations thereof.  The disputed domain name was not identical or confusingly similar to a mark in which Wheatcraft had rights.  Concerning the issue of rights, Reison was using the disputed domain name in connection with a bona fide offering of goods or services in that it offered personalized email services to individuals and companies.  In addition, the terms of the domain name were generic and of common use as surnames.  In addition, Wheatcraft failed to demonstrate that the domain name had been registered and used in bad faith.  In this regard, the panel noted that Reison registered the domain name in 2001, more than seven years prior to Wheatcraft's application for registration of his mark.  There was no evidence that Reison was using the domain name in order to disrupt Wheatcraft's business.  Reison indicated that its purpose was to offer email services to individuals with the "Wheatcraft" surname.  This evidence was sufficient to prove that Reison did not register the domain name in bad faith.  Further supporting this finding was the fact that the domain name was comprised entirely of a common surname that had many meanings apart from use in Wheatcraft's mark.  Top


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