After filing over 275 lawsuits in almost 18 months, it seems as though Righthaven, LLC (“Righthaven”) may have run out of steam.

Righthaven, a Nevada holding company, was founded in early 2010, for the sole purpose of filing copyright lawsuits on behalf of its clients, news content owners (such as Stephens Media).  Its methods involved Righthaven scouring the Internet for republication of news articles and photos, suing the website hosting the infringing content (seeking monetary damages and the transfer of the infringer’s domain name), and then extending a settlement offer. Lawsuits filed by Righthaven have been brought against a wide variety of online publishers, including bloggers, political campaigns, nonprofits, and website operators — almost always without notice or DMCA takedown. Many cases settled swiftly, totaling an estimated $400,000 in aggregate settlement payment.  Righthaven’s founders claim they created the company in order to fight and deter “copyright theft” by bloggers and news aggregators online. Their aggressive enforcement strategies, including suing noncommercial bloggers and nonprofits who cannot afford to litigate, have also garnered much criticism, particularly from the Electronic Frontier Foundation. The critics have described the company as a “copyright troll” and a “settlement factory.”

In the past few months, Righthaven has suffered serious setbacks in the courts. In Righthaven v. Realty One Group, Inc. (D. Nev. Oct. 19, 2010), Righthaven sued a blogger for republication of 8 sentences from a 30-sentence Las Vegas Review-Journal article.  In a rare decision, the court granted the blogger’s fair use defense on a motion to dismiss.  The court noted that the blogger quoted a small percentage of the source article and his “use of the copyrighted material was likely to have little to no effect on the market for the copyrighted news article.” Another example is Righthaven v. DiBiase (D. Nev. April 15, 2011) in which Righthaven sought to have DiBiase’s domain name transferred to them.  In this case, the Court rejected transfer of the domain name stating that “Congress has never expressly granted plaintiffs in copyright infringement cases the right to seize control over the defendant’s website domain.”

Most notably, Righthaven suffered a particularly hard blow recently in Righthaven v. Democratic Underground (D. Nev. June 14, 2011).  In that case, the agreement between Righthaven and its clients, called a “Strategy Alliance Agreement,” was unsealed.  The agreement purported to assign copyrights to Righthaven for the purpose of filing infringement lawsuits, while exclusively licensing back all rights to the client, with Righthaven maintaining no rights, except the right to use. The judge dismissed the lawsuit on the ground that Righthaven had no standing to sue, stating that a “copyright owner cannot assign a bare right to sue,” essentially rejecting Righthaven’s business model. Over three-dozen other cases filed by Righthaven are being held up on appeal over the same issue.

Is it the end of Righthaven?  Most signs point to yes.  In the past two months, Righthaven has stopped filing new lawsuits, let cases lapse due to procedural defects and laid off a number of employees. Steve Gibson, CEO of Righthaven, stated they are awaiting the outcome of numerous appellate rulings in the Ninth Circuit Court of Appeals before resuming their efforts.

Regardless of what happens to Righthaven, this line of cases is particularly instructive in at least three ways:  first, they have allowed the emergence of blog-specific copyright cases and an expansion of the fair use doctrine, which Righthaven intentionally helped create (See Cobalt’s prior post on the topic: The Emerging Blog Specific Copyright Cases). Second, these cases are illustrative of how copyright owners from the traditional news world are continuing to struggle over how to best protect and monetize their content. Finally, the cases raise particularly interesting questions of copyright law relating to standing to sue and the validity of copyright assignments, for which we are awaiting clarification from the Ninth Circuit

In a decision handed down by the Court of Justice of the European Union on July 12, 2011, eBay has been found to be potentially jointly liable for trademark infringement along with individuals selling infringing goods on the eBay auction site because it had prior knowledge of the infringement.  Paris-based cosmetics company L’Oréal brought the complaint against eBay arguing that it is liable for trademark infringement because it is involved in the pre-sale, sale and after-sale processes of selling infringing products.  The Court agreed and held that an operator of an electronic marketplace that has provided active assistance in the sale of products rather than just taking a neutral position between the buyer and seller cannot be protected by the European Union’s e-commerce law exemption which applies only to parties playing a neutral online role.

eBay purchased keywords from online advertising services, such as Google Adwords, that included registered trademarks in order to direct potential customers seeking to purchase those goods to its website.   However, the goods being sold included both legitimate goods as well as counterfeit and unpackaged goods from non-European Economic Area (EEA) countries thereby infringing upon L’Oréal’s trademarks.  eBay implemented its own precautions against infringement by incorporating a take-down notification system and operating a Verified Rights Owner Program (VERO), however L’Oréal was not a member of the VERO program and rather turned directly to eBay for assistance with handling the infringing goods.  However, unsatisfied with eBay’s response, L’Oréal pursued its action before the High Court of England and Wales which referred several questions to the European Court.

In addition to joint liability, the Court considered the extent of injunctive relief that intellectual property owners could obtain against online intermediary websites, such as eBay, whose services are used as tools to infringe upon the IP of others.  The Court found that it could impose injunctions against online marketplaces requiring them to suspend accounts of those utilizing the site to sell fraudulently-marked goods or to employ measures which would make it easier to identify infringers.  However, the injunction would not require the website to actively monitor all activity of the website or prevent the sale of all goods bearing a particular trademark.

By finding eBay liable for joint liability, the European court differs from cases upheld in the United States.

In the Tiffany (NJ) Inc. v. eBay, Inc., cases in the federal district courts in New York, the federal courts rejected Tiffany’s argument that an intermediary website may have secondary liability thrust upon it if it has “generalized” information that its website was being used to sell infringing merchandise.  The court deduced in Tiffany that even though eBay had general knowledge of infringement by various sellers, it did not require eBay to prevent the same sellers from selling goods via their eBay accounts because general knowledge of infringement is insufficient to determine that actual infringement occurred.  eBay would have been liable, based upon Inwood Labs., Inc. v. Ives Labs., Inc. 456 U.S. 844 (1982) if it continued offering its services to sellers it knew or had reason to know were infringing on the mark’s holder’s marks.

Practical Considerations

What does this decision mean for clients who operate websites used or accessed from the European Union?

This decision suggests that, in the E.U., website owners might consider taking a more active role in addressing and preventing infringement upon learning of potential infringement from a trademark holder.  Indeed,  although an exemption from liability exists under the European E-Commerce Directive, any active role by the website owner in promoting items for sale by users may negate this exemption.

While the King of Pop has passed to his eternal resting place, he leaves behind more than devastated fans, mourning family members, legendary dance moves, and record breaking statistics. With his demise, we have learned that Michael Jackson amassed a substantial intellectual property portfolio, demonstrating a creativity well beyond his musical talents and leaving some to refer to him as an “Intellectual Property Goldmine.”

A little known fact about Jackson, he co-owned a patent for an invention he created that allows dancers to lean forward at a 45 degree angle beyond their center of gravity by wearing specially designed shoes. (U.S. Patent No. 5,255,425, titled “Method and Means For Creating Anti-Gravity”).

His famous gravity defying “lean” can be seen in the music video for the song Smooth Criminal.

Jackson also registering his name with the U.S. Patent and Trademark Office and owned numerous other trademarks for goods and services ranging from merchandise to fan clubs.

And, of course, let’s not forget about the copyrights. In addition to securing copyrights to his own works, Jackson famously outbid Paul McCartney and purchased rights to the Beatles song-copyright catalog for $47 million dollars in what many claim to be his best business decisions, later selling the rights to Sony for $90 million.

Although often maligned for his lifestyle choices and actions, Jackson’s dedication to creating and protecting his art and talents cannot be denied. Love him or hate him, he leveraged his superstardom (and that of others) into substantial intellectual property assets.

Commentary: “What do I care about what some narcissistic idiot had for breakfast? Twitter is the dumbest thing I’ve seen on the Internet so far.” That’s the response I got from an attorney after I mentioned how much I rely on Twitter.

His most recent exposure had been the friendly Twitter war between CNN host Larry King and actor Ashton Kutcher, but his grand daughters each had accounts, so he was all too familiar with inane comments about cute boys and lunchroom antics, and thought that’s all there was. He was shocked to discover many in the non-celebrity, over 40 crowd were actually using it, and reaping benefit.

I won’t go into detail about how Twitter works, except to say the site allows you 140 characters to micro-blog a single thought. Neither will I delve into the numerous macro-blogs that at least partially credit Twitter for successful political events done on short notice. I will say this: Increasingly, Twitter is being used by busy professionals to aggregate information in one place rather than spend time surfing the web to find it. The last thing I need is another website to check, but Twitter has become the ultimate lazy attorney’s reference, because other people do my research for me and serve it up in one place.

For instance, my first morning stop at work (after tea) is my Twitter page, where I follow legal bloggers (for case law updates), news tweets, sports, and grocery stores (for coupons – like I said, “one stop shopping”). Sure, I get the occasional “tweet” about what someone had for breakfast, but the benefit having what I need in one place outweighs the inconvenience – if any – of an occasional social tweet (and lightens my day).

Companies like Whole Foods use the micro-blog site to drive traffic to their own website and alert shoppers to specials. Organizations like CNN simply feed breaking headlines; the company does not even post a link (not enough room). I’m up to date in 5 minutes and spend more time on the articles and issues I really want to understand. If I wanted to, I could even find my congressperson (I don’t). Parents even get some benefit out of it (I’ll leave it to the reader to figure out why).

I’m not worried that Twitter is going to become a bastion of moral decay either. There are always bad actors in any environment (except of course the legal profession). Already, sites like Tweeting Too Hard and Curse Bird are curbing behavior. Moreover, because I pick and choose what I want to see, I don’t have to look at anything that offends me: unlike an RSS or other news feed, I can turn off and on who I follow at any time.

Social media still has some kinks to work out legally. For instance, should employers have policies about what people say on Twitter when they’re on or off the clock? Should an attorney representing a client try to “friend” an adverse party to get access to statements? Can service of process be affected on Facebook. To be sure, we’re in the gold rush phase of the technology. But the sky is not falling, and if Barbara Boxer can tweet, you’re late to the party.

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By now, most of the world has heard about this: The latest app on the Apple App-Store, which sold for $0.99 invited buyers to “See how long you can endure his or her adorable cries before you just have to find a way to quiet the baby down!” Shake your phone, and the baby stops crying. Almost as soon as it went up, it came down, and for good reason.

Outrage was swift and response was swifter. Apple removed the application from its store. Many bloggers and commentators wondered how such an application could get past the eagle-eye of the computer giant, who claims to review each applet uploaded to the App-Store.

The lessons here extend past the boundaries of good taste, or discussions about the state of moral decay in our society that we think a shaking baby game is funny (this harkens back to the “hot coffee” patch for Grand Theft Auto that allowed game players to rape and murder a prostitute). It underscores the importance of making clear what a company’s obligations are to match their public statements with their legal obligations.

Apple says it reviews each applet that goes into its App-Store, but for what, exactly? The public statement implies a general review for everything from operability to appropriateness. Its actual terms suggest a much more narrow scope of review, limited to profanity and operability. This is actually a reasonable limitation; what is not reasonable is to imply something else. The press seems to think that’s what happened here.

Whether Apple is guilty of giving the wrong impression or merely the victim of a witch-hunt is not important: the lesson for large companies is this: make a “terms of use” policy you can live with, and instruct marketing folks to stay within the lines of that policy.

It’s no secret: U.S. and international markets are in deep turmoil. Massive layoffs, historic stock market declines, and institutional failures remind us this no ordinary time. Even while companies look for ways to cut back and streamline institutional costs, now may be the best time to strengthen your intellectual property (IP) portfolio.

Although frequently overlooked, a company’s IP, including its trademarks, copyrights, and patents, is often its most valuable asset. There are several reasons why strengthening an IP portfolio now, even during the recession, not only makes good business sense but may be the key to a company’s future economic growth and recovery:

1. IP Assets May Be A Significant Source Of Revenue During (And After) The Recession.

Licensing or selling of IP assets has always been a way for companies to generate additional revenue. For example, during 2006 Neo-Magic recorded a $3.5 million gain on the sale of its unused patents, representing over 37% of the company’s total yearly revenue. A recent article in the Chicago Tribune reports “amid the recession, a growing number [of companies] are looking to generate cash by selling or licensing their dormant trademarks and patents.” If protected and maintained properly, your IP assets can offer significant revenue now and into the future. In fact, many lending organizations look to a company’s trademark portfolio as a means for determining the foundational strength of the organization.

2. IP Assets Are The Building Blocks To A Flexible Business.

The recession has brought significant restructuring and reorganizing of businesses. Mergers, acquisition, spin-offs, and new business units are a sign of the times, and strong IP portfolios are the building blocks for new business opportunities as companies transform their products and market positions. Perhaps this is why, historically, certain IP filings and litigation tends to increase during times of recessions (click here and here for historical figures). As a business continue to change, adapt and grow, so too must its IP assets.

3. IP Assets Will Set Companies Apart From The Competition.

Brand recognition by consumers not only increases product and service sales, but creates a significant barrier to entry for new competitors. Thus, the strengthening of a brand position in a downturn (through both IP filings and consumer marketing), provides an opportunity for companies to stand out when there is a smaller competitive market. Strong IP assets, such as trademarks, will help ensure brand recognition and differentiate companies from their competition.

4. IP Assets Have A Lifetime That Will Extend Well Beyond The Recession.

Perhaps the only thing we know about this recession is that it will end. Innovation, creation and entrepreneurism will continue to drive our economy forward, and as we emerge into the next profitable market cycle, IP assets will remain one of most valuable company assets. Failure to protect them now may have severe consequences for the future.

With U.S. President Barack Obama in the White House a change in U.S. – Cuba relations may be on the horizon. According to a recent Reuters story, U.S. companies have an estimated 5,000 products trademarked in Cuba, “waiting for the day they might finally land on the island separated from the United States by the Florida Straits and a vast ideological gulf.” Indeed, as recently as December 2008, the Cuban Office of Intellectual Property registered trademarks for new products for Coca-Cola, Google, and Ford Motor Co.

Hasn’t the United States imposed a commercial, economic, and financial embargo against Cuba since the early 1960s? Yes, but under the Clinton administration an exception was enacted exclusively for the protection of trademarks, patents, commercial names, copyrights belonging to U.S. individuals or corporations. Thus, U.S. trademarks and other IP is can be protected under Cuban law. Likewise, U.S. government will protect intellectual property assets belonging to the Cuban government.

While trademark applications filed in Cuba by U.S. companies fell by 36 percent during the George W. Bush administration, under Mr. Obama’s administration U.S. companies are sensing new market opportunities. Mr. Obama is the first U.S. president in half a century who has evidenced a willingness to talk with Cuba’s leaders, and he has promised to ease the trade embargo.

Right now, U.S. trade groups are trying to avoid a repeat of events that occurred in South Africa, following the end of apartheid. There U.S. companies found their trademarks had been registered by someone else. Fortunately, Cuban authorities have honored trademarks and awarded rights to legitimate owners.

For those U.S. companies believing “change” may involve a thawing of economic relations between the governments of Cuba and the U.S., then further discussions with your trademark counsel is warranted.

A little something from Doug:

I received a last minute call the other day from a boyhood friend inviting me to see the band AC/DC in concert at the Oracle Arena in Oakland, CA. Needless to say, I jumped at the opportunity. Why? On one hand, I’ve never seen AC/DC live. Say what you will, but any band that can sell out two shows at a modern basketball arena, some 35 years after their founding, must be doing something right. Indeed, since forming in 1973, AC/DC has achieved global sales totaling more than 150 million albums. Moreover, AC/DC is Sony BMG Music’s best-selling catalog act worldwide, selling nearly 70 million albums in the U.S. alone. On the other hand, I was also interested in AC/DC the “brand.” Would my interest have been as piqued if our seats were in, say, section 213, rather than in a catered club level luxury suite with preferred parking?? Does Angus Young wear corduroy shorts???

Arriving at the Arena parking lot the first thing I noticed was the T-shirts. Everyone seemed to have a unique AC/DC concert shirt. A badge of honor amongst concert veterans. Consistent, however, in these t-shirts was the prominent placement of the the recognizable AC/DC logo. Seeing that prominent AC/DC logo got me thinking about, and looking at, all of the band’s merchandise for sale, emblazoned with its unique logo.

It is evident that AC/DC understands the power of its logo and the goodwill associated therewith. In addition to T-shirts (designs for men, women, and children), on sale at the venue were: AC/DC posters and stickers, AC/DC jackets and outerwear, AC/DC hats, AC/DC magnets and key chains, AC/DC 2009 wall calendars, and AC/DC tour programs. Interestingly, AC/DC currently maintains U.S. trademark registrations in only International Classes 016, 025, and 026. These registrations are for the AC/DC Logo design mark, and not the standard word mark. While these registrations provide the band significant protection, and the band certainly has significant common law protection, there are some categories of goods and services the band could consider.

For example, AC/DC maintains a fairly elaborate website, yet does not maintain a U.S. registration in Class 041. The website offers streaming audio and video, but the band is not registered in Class 038. Of course, as their bread and butter, AC/DC sells CD, DVDs, and video game cartridges and discs, yet the band has no registration in Class 009. The band sells tote bags, luggage tags, and doggie sweaters in Class 18, and ashtrays in Class 034, all without U.S. trademark registrations. Big deal, you say . . . who’s gonna rip off AC/DC’s trademark? There’s an old saying, “an ounce of prevention is worth a pound of cure.” One need only look at AC/DC’s metal brethren METALLICA, and its numerous trademark registrations, to see what a few ounces of prevention is worth.

“Angus, baby, call me . . . we’ll do lunch. Have you thought about AC/DC air fresheners in Class 005?”

Note from Tsan: Except as related to information pertaining to the practice of trademark law and expansion of brand protection, the views expressed herein (including without limitation the reference to the band as legendary) do not necessarily reflect the position of Cobalt or Doug’s colleagues.