Barefoot Architect, Inc. v. Bunge, (3rd Cir. Jan. 14, 2011)

Defendant’s dream of building a home in the Virgin Islands is the genesis of this dispute. Bunge retained an individual architect who, later and before the litigation, became employed by Plaintiff to create that dream house’s architectural plans. But there was the usual archetypal falling out after Bunge claimed to have paid the agreed value for the plans, but no plan set was delivered by Plaintiff; instead Plaintiff demanded further monies. Bunge hired another architectural firm to complete the plans. Architect’s new employer, Barefoot Architect, sued Bunge; and, Bunge challenged Barefoot being the proper owner of the copyright of the architectural plan in dispute.

The individual architect and his employer, Barefoot Architect, signed a document confirming that the oral assignment took place and pointed to cancelled checks as evidencing the consideration of that copyright transfer.

The Third Circuit affirmed the trial court’s granting of Bunge’s motions for summary judgement and dismissing Bunge’s counter claims. The court held that the idea of a memorandum validating an earlier copyright transfer depended on the original transferring event actually having transpired. The court went on to point out that the memorandum of transfer could not simultaneously serve both purposes of proving that an oral transfer occurred and giving legal effect to that otherwise unenforceable transfer. The court further held that the checks cited by Barefoot Architects carried little evidentiary weight. In sum, the court concluded that the record contained nothing to show that Barefoot Architect purchased the copyright at issue.

As the two cases below teach … it isn’t enough to assert copyright infringement when only the broadest themes are shared.

1. Estate of Adrian Jacobs v. Scholastic, 10. Civ. 5335, S.D.N.Y.

Paul Gregory Allen, Trustee of the Estate of Adrian Jacobs, sued Scholastic, Inc. in the Southern District of New York for copyright Infringement of expression of a 20-page book which included wizard competition. Jacobs authored the book “The Adventures of Willy the Wizard — No 1 Livid Land,” in 1987 in the United Kingdom. The differences between the two plots, tone and contextual points (‘look and feel’) cause the court to begin with analyzing the motion to dismiss with the FRCP Rule 12 standard of ‘plausibility’ as ‘more than a sheer possibility that the defendant has acted unlawfully.’
The court found ‘scant basis’ for finding substantial similarity; and that the allegedly infringing plot elements are not protectable elements. The court went on to find that the plaintiff had alleged similarities by selectively extracting various trivialities from each book, but random similarities scattered throughout the works do not amount to substantial similarities. Motion to dismiss granted ‘in its entirety’.

2. Buggs v. Dreamworks, CV 09-07070 C.D.Ca

A single copyright complaint alleging that defendant’s animated film “Flushed Away” is substantial similar to plaintiff’s screenplay, “Critter Island” a story of two cockroach gang leaders who occupy the same Harlem retirement home, but whose battle ends up in the sewer; love ensues; and the gang leader who falls in love, but finds his way with his love to paradise, Critter Island. In contrast, Flushed Away is the story of an entitled rat whose dream of privilege is foiled when he attacked by rats who come up from the sewer; the entitled rat is consigned to Ratopolis, a living hell, where that entitled rat falls in love, distinguishes himself and lives happily ever after with his new love.

The court found the two works are ‘substantially dissimilar’. Anthropomorphic pests who occupy the sewer at some point in the respective stories are not similar expressions but basic, unprotectable plot elements. The court went on to note that the plaintiff had asserted the assertions that the two works are substantially similar on other specific grounds, but the court finds that the plaintiff did not ‘demonstrate any concrete or articulable similarities’.

Motion for summary judgement granted in its entirety.

Amaretto Ranch Breedables v. Ozimals, Inc., 2010 WL 5387774 (N.D. Cal. Dec. 21, 2010).

The court in this case is also being asked to order Linden Research, the operator of Second Life, to stop complying with DMCA ‘Take Down’ demands (Section 512) until the merits of the case are determined by the court. But the real gravamen of the case is much more serious. On page one of the opinion, the court gives us a terse summary:

“The gist of the copyright dispute between the parties is whether Plaintiff’s virtual horses infringe on copyrights associated with Defendant’s virtual bunnies.”

Judge Charles R. Breyer granted the TRO and ordered Amaretto Ranch Breedables to post a $25,000 bond.

This case is a first to my knowledge where two copyright content claimants have engaged in serial DMCA Take Down demands so often that the take downs and re-postings are disruptive to the commerce of both. This is a strategy to watch how long the courts’ will have patience for this.

UMG Recording, v. Augusto (9th Circuit Opinion 0110104)

Troy Augusto d/b/a Roast Beast Music Collectibles did not infringe on copyrights held by Universal Music Group (UMG) when he sold promo “industry edition” CDs through the online auction site eBay, despite the presence of labels on the giveaway CDs warning that they should not be resold. Or so a three-judge panel of the 9th Circuit held today, affirming the trial court.

The opinion is an important one in helping us understand the metes and bounds of ‘consensual licensing operations’.

“UMG dispatched the CDs in a manner that permitted their receipt and retention by the recipients without the recipients accepting the terms of the promotional statements,” Judge William Canby wrote for the panel. “UMG’s transfer of unlimited possession in the circumstances present here affected a gift or sale within the meaning of the First Sale Doctrine, as the district court held.”

The court went on to distinguish this case from that of Vernor, making software a separate and distinct exception, in the otherwise generally enforceable First Sale Doctrine.

Two law professors, one at Case Western and one at U.C Hastings, intended to write a textbook about criminal law, but end up writing a lesson in misapplication of copyright law.

In McMunigal v. Bloch (N.D. Cal. 12/23/10), two law professors contract with Aspen Publishing to create a criminal law textbook, but the production of the manuscript for the book and the teacher’s manual becomes a process beleaguered with disappointment and missed deadlines.

After review of the counts to the complaint, Judge Susan Illston granted defendant’s motion to “the complaint with prejudice, finding after argument that leave to amend would be futile.”

The whole opinion is a great read, but the two relevant copyright points are how the court analyzes the parties’ tangle efforts to create separately copyrightable works; merge those into unity whole, a joint work; and then to attempt to separate the individual works back out into separable works.

Specifically, McMunigal and Bloch independently selected and edited cases, statutes, jury instructions, and scholarly excerpts and wrote original text, problems, and questions for their parts of the book. Once published, the book listed McMunigal and Bloch as the authors in alphabetical order and did not identify who authored which parts of the book. For that, the court found that a jointly authored work had been created, and not a collective work that the Plaintiff had asked that the court find.

The issue of dividing the separable works back out needed separate analysis as Aspen had taken an assignment of the work as a condition of the publishing agreement. In this, the court declined the invitation to partition joint copyright ownership into separable parts; and refused to give Plaintiff separate assignment based on a unilateral email to the defendant stating that he intended to own separate parts. The court admonished the plaintiff the he need to comply with the Copyright Statute to effect the separation; including getting a written assignment, in compliance with Section 204(a).

If that plaintiff wants relief, he’s got a considerable amount of homework to do before filing again, as the court commented that too much is missing in the allegation set to be cured easily, finding “leave to amend would be futile”.

Dear Mr. Olson,

We are in receipt of your letter (below) in which you demand that we cease or you will sue.

We are a law firm; and we are reporting news in our blog. Clearly is that stated under the category on ‘News’ as you acknowledge in paragraph two of your letter.

We acknowledge that your client has trademark rights. However, protection for trademark rights under the Lanham Act is limited to protection against another’s use of a designation to identify its business, or in marketing its goods or services in a way that causes a likelihood of confusion. Such trademark rights do not override First Amendment rights.

Wilcox v. Career Step (D. Utah 12/1/10)

Wilcox is the author of a medical coding course, and claims that Career Step (CS) is infringing Wilcox’s copyright. Career Step licenses the disputed medical coding course to various schools and colleges; and, in each instance Career Step requires that each student sign a contract that specifies that jurisdiction will be in Utah.

The court faced two motions one for lack of personal jurisdiction and another for a motion to dismiss on grounds of sovereign immunity from two of the schools which were also named as defendants.

The court granted the motion to dismiss for lack of personal jurisdiction stating that both WVS and Laramie knew the fact that CS was based in Utah. The agreement itself established several connections to Utah. First, the governing law of the contract was Utah law and the agreement arguably selected Utah as the venue of any suit involving the contract. Second, CS administered the Wilcox course from Utah. Third, the court concluded that Wilcox, a third-party to the relationship between CS and the moving defendants, could hale those defendants into a Utah court to litigate whether they violated Wilcox’s copyright in the course at issue. WVS and Laramie transacted business in Utah with CS and allegedly caused Wilcox injury in Utah. The moving defendants, two schools, reached into Utah to obtain the right to use the Wilcox course, which they knew was subject to claims of copyright and other intellectual property protection. Wilcox’s asserted harm related directly to defendants’ intentional choice of contracting with a Utah company to purportedly obtain a license to use the course. While the moving defendants may not have intentionally directed their activities toward Wilcox in Utah, they did intentionally make contact with Utah involving the Wilcox course. For these reasons, the court denied the motion to dismiss for lack of personal jurisdiction.

With regard to the state school’s motion to dismiss based on sovereign immunity, the court detailed the history of the law of sovereign immunity and then applied the facts of the case focusing particularly that the school is a state school with one hundred percent of that school’s funding coming from the state coffers. The court held that the 11th amendment doctrine of sovereign immunity applies in this case barring the copyright action against the school.

Leslie Nielsen died last week at 84. He has been for thirty (30) years the single most reliable bellwether of a derivative work being found to be a fair use of the underlying work. When clients really wanted to go the extra mile to ensure that their use would be found to be ‘fair use’, they would ask, what can we do? The answer was go hire Leslie Nielsen.

Of course, no one ever took that advice, but it was a sure bet. If Leslie’s dead panned face was beaming out of the work, you could be sure that fair use was going to be found.

The EverReady Bunny in the Duracell ad point and counterpoint ad series that morphed into a Coors beer parody of both, the Demi Moore’s pregnant portrait … and well, so much more. There were only about four cases, but in each one, the judge or the jury was immediately assured that the derivative work was one that was bent on humor. This Canadian was one fella who spent the last thirty years cueing the viewing public to know that if that saw Leslie’s deadpan persona, that something worthy of a good wholesome laugh was afoot.

We need a whole community of such characters. People whose face immediately communicates that humor is afoot. Such a jester class would be a most welcome sector.

Faulkner Press v. Class Notes, N.D. Fla 1:08cv49-SPM/GRJ

A copyright dispute arising from the university sector is always interesting and this one is no exception. Here we have a Dr. Michael Moulton who has assigned his two electronic textbooks on wildlife issue and biodiversity in the new millennium to Faulkner Press.

Faulkner Press has sued Class Notes, (formerly known as ‘Einstein’s Notes’, but that change was the result of a whole different dispute now resolved), which sells note packages to University of Florida students. There were eight counts of copyright infringement and DMCA copyright information management. The court dismissed three and a part of another; and allowed the remainder to go forward.

Specifically of interest are counts one, two and three which relate to the lecture outlines, exams and film study questions. The film study questions track information provided in the films that are shown during class. The questions are designed to demonstrate that the students were paying attention.

Class Notes sought to dismiss as the questions were merely calculated to generate ‘bare facts’ and ‘facts do not owe their origin to an act of authorship.’

The court held that ‘the film study questions complied by Dr. Moulton possess the minimum level of creativity required for copyright protection. Although the fact statements are taken from the various films Dr. Moulton showed in class and his questions track the sequence of the films, Dr. Moulton picked only a few facts from each film to include in his film study questions. There may be nothing innovating or surprising about his selection. His selection was possibly random and made solely to ensure that his students were paying attention to the films. Even so, the selection was original because it was not a mechanical or routine arrangement. Dr. Moulton’s selection was unique to him and unlikely to be duplicated by someone else tasked with compiling film study questions. Some creativity was involved. His selection therefore qualifies for copyright protection.’

We are living in a liminal time of copyright as we move from the non-networked world to the networked one. Big infringers are no longer sure they will be caught; little infringers worry that their small infractions will get hit with zillion dollar damages. The food chain is in flux; the metrics are dynamic by which the infringer worthy of copyright lawsuit is differentiated from the infringer not worth the effort. In this uncertain time, we are seeing a pattern of calculated risks taken. In this blog, we point to two ends of the spectrum which, in the end, come to the same place which means the two ends of this spectrum form a circle: copying content unencumbered by obligation or liability.

Project Gutenberg has declared many literary works from the 1940′s and ’50′s as being out of copyright, in the public domain. By declaring a work out of copyright, Project Gutenberg expands the works that it has available for the public to copy without consequence or monetary charge. In the opinion of many, these declarations of a work being out of copyright are based on erroneous and partial information. Project Gutenberg, through Dr. Greg Newby, CEO, has told people that it has amended its procedures for determining public domain status; and that it is putting on hold determinations of public domain status. These changes are not announced yet on the website.

In contrast, Houghton Mifflin Harcourt has a pattern of exceeding the agreed upon print run limits, sometimes by as much as a million copies in excess. One HMH executive, Donald Lankiwicz, said in a deposition that the publisher ignored print run limits in its photo licenses as meaningless numbers. In rejecting HMH’s motion to dismiss the Wood claim, the judge wrote: “The gist of Lankiewicz’s deposition testimony, in short, is that under his understanding of industry standards, a copyright license that specifies a print run of 40,000 copies simply does not limit publishers, which could reproduce over a million copies of the copyrighted work without seeking further permission from, or paying additional fees to, the copyright holder.”

The judge wrote off Lankiewicz’s testimony as “facially implausible and self-serving claims” and “perhaps even nonsense” on his way to ruling that no jury could dispute the meaning of a license limit of 40,000 copies.

The result was that the small amount of money for the agreed upon print run became a basis for an unlimited print run in practice. HMH has recently amended its licensing agreement to make explicit what had become implicit, namely that there is no print run limit. Once a license for any amount is made with HMH, HMH may print as may copies as it wants and there is no following obligation or payment.

That ruling quoted above was in 2008 in the Ted Wood v HMH case, and now there are over thirty (30) lawsuits that have been filed in federal courts in numerous states including Alaska, Florida, Pennsylvania, Massachusetts, New York, Arizona.

The news last week of Ireland’s bailout may impact this gaggle of cases. HMH was created by a series of mergers orchestrated by Barry O’Callaghan, who was a part of the ‘Irish Golden Circle’ that made loans to an Irish bank, backed by stock on the same bank. The people of Ireland and the EU now own that bank, or what’s left of it. The loans haven’t been paid back; perhaps the print overrun practice is consistent in that strategy of nonpayment.

Project Gutenberg’s aggressive reading of a work being out of copyright, and Houghton Mifflin Harcourt’s position of ‘one and done’ for unlimited print runs come to the same conclusion that content is commodity.

Oracle USA, Inc. v. Sap AG et al., No. 07-CV-01658 PJH (EDL) (N.D. Ca. 24)

An eight person jury in Oakland California awarded Oracle the largest copyright infringement judgement of 1.8 Billion Dollars, in U.S. history. This judgement exceeds even the largest patent infringement award of $1.67 billion in the 2009 patent case against Abbott Laboratories.

The jury was given the choice of making an award based upon a fair market value license or lost profits. If the jury had looked at lost profits then it is difficult to conceive how they could have awarded anything approaching this amount.

This case is related to the Rimini case that we reported here in the Cobalt News blog last week. SAP acquired TomorrowNow which was a third party support and maintenance service company, in 2007, as a way to attract business customers at companies acquired by Oracle, including others, to SAP. TomorrowNow is now out of business, but one of the goals when it was operational was to use software robotics to get the requisite information needed to perform third party support and maintenance on Oracle systems. Oracle objected to TomorrowNow getting that information on behalf of Oracle Licensees and claimed that the downloading itself as well as the means of accessing the information and copyrighted content constituted copyright infringement.

While some industry analysts are stating that this opinion will not impact the third party service provider market, we are less optimistic. This case is an emphatic effort by Oracle to preserve its most profitable part of its business. In 2010, Oracle in SEC filings reported that the profit margin on that service and maintenance sector of its business is over 80%.

An appeal is likely given the size of this award.

Softech Worldwide v. Internet Tech, (ED Va. 11/8/10)

Softech develops specialized software that facilitates streaming video onto the internet; and Softech accepted a sub-sub-subcontractor contract from Internet Tech (IT) which was a sub-subcontractor to Fedstore, a primary contractor to the U. S. Department of Veteran Affairs (VA). The project was to design and implement a platform for scaling electronic media to various electronic devices. Softech allegedly achieved its assigned goals and stood ready to continue; however, after Softech delivered relevant software, including source code, to IT, IT ceased payment to Softech.

After learning that the VA was continuing to use the Softech copyrighted code, Softech sued both IT and Fedstore for copyright infringement. Softech sued Fedstore as both a contributory and as a vicarious copyright infringer. Fedstore moved to dismiss itself as not a proper defendant under either theory of secondary liability.

After reviewing all the papers in support of the motion to dismiss, the trial court granted the motion as to Fedstore as a contributory infringer, and denied the motion to dismiss Fedstore as a vicarious infringer. The court’s analysis focused on knowledge and participation after reading the Complaint as a whole, and taking all the facts asserted as true.

With regard to granting dismissal of the contributory infringer theory, the court finds that Fedstore was without knowledge of Softech’s copyright ownership as IT claimed to the public that IT owned the copyright; and that, as IT was a rogue subcontractor, that Fedstore lacked the requisite participation to be a contributory infringer.

In denying the motion to dismiss the vicarious infringement theory, Fedstore is found by the court to have possessed the right and the ability to better supervise the subcontractor IT; and, that Fedstore financially benefited from IT’s alleged infringement.

The case goes forward and Fedstore remains in the case. Doubtless, there is an indemnification conversation happening between IT and Fedstore.

Sellify, Inc. v. Amazon.com, Inc., (SDNY 11/3/10)

Sellify, aka ‘One Quality’, went in and out of business minimally while buying and re-selling used electronics on eBay.

Cutting Edge Design (CED), an Amazon associate, purchased the keyword “onequality.com” and several close variants from Google, Inc. When a Google user searched for these keywords, the search results were accompanied by an ad stating “Don’t Buy from Scammers” or “Beware the SCAM Artists” and linking to Amazon’s website. CED alone and without the knowledge of Amazon designed, implemented and purchased these ads. After a second demand letter from Sellify, Amazon terminated CED’s account.

Sellify sued both CED and Amazon for false advertisement. Amazon moved for a dismissal of Amazon from the suit as it had neither direct or secondary liability. Amazon pointed to an absence of all knowledge plus demonstrated that there was no agency between CED and Amazon.

The court granted Amazon’s motion to dismiss finding no direct or secondary liability. The court noted that the mere act of allowing another to link to one’s website, even if undertaken for commercial gain, could not support a finding of apparent authority.

Forest River, Inc. v. Heartland Recreational, USDC Northern Indiana 3:10-CV-11-TS

Competitors in the travel trailer industry, Forest sued after Heartland copied the Forest floor-plan and did two separate things with the plans. First, Heartland used the Forest floor-plans to create Heartland travel trailers allegedly in violation of the Architectural Works Copyright Protection Act (AWCPA); and second, that Heartland copied into a Heartland advertisement the Forest floor-plan in violation of Section 106 rights (which Heartland defends as protected by the fair use doctrine).

With regard to the first copyright claim, the Court noted both that travel trailers are useful articles and that AWCPA explicitly excludes recreational vehicles from the definition of architectural works. 37 C.F.R. § 202.11(d). Moreover, the Regulations implementing the Copyright Act, as amended by the AWCPA, define the term “building” as “humanly habitable structures that are intended to be both permanent and stationary, such as houses.” 37 C.F.R. § 202.11(b)(2).

“The legal issue before the Court is whether a copyright in a technical drawing of a non-architectural useful article precludes another party from using copies of that drawing to construct the useful article.”

In dismissing the claim, the court held:

“The Court could locate no post-AWCPA decision that recognized the distinction the Plaintiff requests when referring to useful articles depicted in drawings protected under § 102(a)(5) as technical drawings. To the extent the Plaintiff’s Amended Complaint attempts to assert a claim for copyright infringement on the basis that the Defendant manufactured travel trailers using copies of its Floor Plan, that claim fails as a matter of law. The Defendant was entitled to manufacture and market its own travel trailer, even one with the same layout as the Plaintiff’s.”

While the court dismissed the first copyright claim, the second copyright claim, “Use of the Floor Plan in Comparative Advertising” is allowed to go forward toward trial. This travel trailer case is moving on down the road. Discovery and a fair use analysis will be just around the corner. Stay tuned.

Oracle v. Rimini Street, USDC D. Nevada 2:10-CV-00106-LRH-PAL

Oracle sued Rimini, a third party support and maintenance service provider, for having illegally downloaded Oracle’s software and support materials by logging on to Oracle’s password protected web-database using an Oracle customer’s individual login credentials, and downloading support materials in excess of that customer’s authorized license agreement. Rimini is owned by Seth Ravin, who is a top executive at TomorrowNow, another cut-rate provider of Oracle support services, until SAP acquired the company in 2007.

The much bigger issue here is whether the decades-old enterprise software model can hold up against the forces of upstart competition and price arbitrage; and, of course, copyright is the first beachhead in resolving that controversy. Really what has Oracle riled up is the challenge that Rimini and others (SAP for one) are threatening to eat the 80 plus percent profit margin that Oracle has in those yearly maintenance and support fees.

Rimini defended claiming that Oracle is using its existing software copyrights to unlawfully leverage a monopoly in its uncopyrightable after-market support services. Specifically, Rimini Street claims that Oracle prohibits the use of automated tools which effectively prevents customers from accessing large volumes of Oracle’s support materials which are integral to the licensee having the ability to make changes related to the technical design.

The court evaluated Rimini’s defense of copyright misuse; a powerful defense when effective as it halts the plaintiff’s case against that defendant. The equitable defense of copyright misuse “forbids a copyright holder from securing an exclusive right or limited monopoly not granted by the Copyright Office” by preventing “copyright holders from leveraging their limited monopoly to allow them control of areas outside the monopoly.”

Breaking the defendant’s claim into two parts, the court identified the two specific aspects of the alleged copyright misuse to be:

1) Oracle imposed limits on download, specifically the technical design of the Oracle website that licensees must access to get information, prohibits the licensee from accessing and differentiating the additional support information that is needed from that which is superfluous; and,

2) Oracle prohibits and literally stops any use of automated tools (bots) on its website with the result that customers are prevented from downloading large volumes of Oracle’s support material and collecting copyrighted content.

As to both aspects that Rimini claims comprised copyright misuse, the court “finds that the licensing restrictions alleged by Rimini Street are well within Oracle’s statutory rights as a copyright holder and therefore do not constitute copyright misuse.”

Stagecraft Costuming v. Househaunters Limited, Case No. 1:10-cv-197, Southern District of Ohio

Halloween is increasingly a national holiday of mega-proportions…. and here’s a case to prove that where there is a fabulous success, there also will be the flattery of imitation.

Stagecraft Costuming of Cincinnati Ohio took umbrage when it discovered that Househaunters, a competitor in the illusion costume market, had copied the most successful Stagecraft costume, “The Man in the Cage”. Stagecraft created the winning costume in 1985 and only registered it with the U.S. Copyright Office in 2010 after unsuccessfully persuading Househaunters to cease and desist their sales of the knock-off that rolled off the Househaunter’s design floor in 2008. Not surprisingly, Househaunters claims that the Stagecraft copyright registration is invalid as the costume is unprotectable under Section 102(b) of the Copyright Act as a useful article. The complaint includes counts of trade dress as well as copyright.

The motion for summary judgment that Househaunters filed in June appears to be still awaiting the judge’s ruling; and in the meantime, we were all free to wear our costumes of choice this past weekend.

Sandi Zimnicki v. General Foam Plastics Corp., USDC N.D. Illinois, October 4, 2010.

Sandi Zimnicki is an artist and a technical consultant for movies including “Home Alone 2″. She has a following of people who collect her holiday miniatures, including deer. Upon finding evidence that defendant, General Foam Plastics, was knocking off her deer designs in China, Zimnicki sued in Illinois.

General Foam noting that the infringement took place in China moved for summary judgement on the grounds that there was no subject matter jurisdiction.

The trial court ruled that “there is no indication that Congress intended extraterritorial limitations on the scope of the Copyright Act to limit the subject matter jurisdiction of the federal courts.” After finding that General Foam, a U.S. corporation domiciled in Virginia, is properly a party, the court ruled that the issue of where the infringement happened does not trigger jurisdiction issues but is to be a part of the infringement claim evidence. The court went on to explain that “It appears that the sale and delivery to the United States occurred in one seamless transaction – or a series of such transactions. Either way, we are not persuaded that we should parse the transaction in the technical way that Nixan has asked us to do. To rule otherwise would encourage gamesmanship.”

Doctor’s Associates Inc., V. Vinnie’s Smokehouse/Meat Specialty, LLC & Vincent Batiste, Civil Action No. 10-XXXX, D.C. Eastern District of Louisiana

It is surprising how proprietary restaurant interior designs are. Above, from the court record, is the plaintiff’s design which they describe as a uniquely identifiable subway-themed wallpaper, a brick-design wall paper, a mural of vegetables, menu boards, clocks with subway-themed art, and signs featuring the “Subway” logo”; and Plaintiff holds a copyright registration allegedly covering that composite. Plaintiff is Doctor’s Associates Inc (DAI), the owner of the SUBWAY sandwich franchise.

Defendant, Vinnie’s Smokehouse, took up business in space recently vacated by a SUBWAY franchisee. It seems that Vinnie’s Smokehouse likes the restaurant decor that they thought was a part of the leased unit. Vinnie’s Smokehouse likes it so well that they are loath to change it.

This case, filed on October 18th, is one that DAI was probably compelled to file to police its intellectual property; but it is one which is going to be especially interesting to watch for the copyright count. There are other counts, trademark and false designation, but the copyright count is going to be especially gnarly. Vinnie’s Smokehouse has not done anything apart from take up occupancy in a retail space that came with the interior design already installed, in place and through nothing that Vinnie’s Smokehouse copied, distributed, or otherwise created. Whether this amounts to copyright infringement is interesting; and that DAI would put their copyright registration in the vulnerable position of a federal action is an interesting litigation strategy.

This case is a layered mess of creative contribution. Zimmerman, an independent ad agency, submits his novel ad concept to the insurance company AFLAC in the theme of, “You Don’t Know Quack”. This is, from the court record, among the images that the little ad agency submitted:

AFLAC was interested, but wanted changes. Zimmerman calls another, independent creative, Frazier, and asks Frazier to contribute some more exploratory illustrations. Zimmerman sends images that include these (again from the court record):

Zimmerman likes Frazier’s work and asks what the prize would be to go forward. After Frazier says a quarter of a million dollars; Zimmerman counters at one hundred thousand; and the two reach no agreement. Zimmerman sends an email later saying that the ‘client has decided to go in a different direction.’

AFLAC and Zimmerman went forward in creating the ad campaign. Here are two the resulting ads that were shown in such places as Times Square New York and other high visibility locations:

Frazier sued for copyright infringement among other claims. Defendants moved for summary judgement on two grounds: first, that the Frazier work is derivative of the Zimmerman underlying work and therefore cannot be independently protectable as there was no additional independent creation; and, second, that the image of the duck is not protectable under copyright law. Citing every copyright defendant’s best chestnut in support of disposing of any claim in which something from reality is depicted, Satava v. Lowry, 323 F.3d 805 (9th Cir. 2003), defendants contend that a graphical representation of a duck is dictated by its natural appearance, and that there are no protectable elements in Frazier’s illustrations.

The judge, Sandra Brown Armstrong, in the Northern District of California, ruled on September 24, 2010 that this case is going forward as Frazier has stated sufficient grounds to sustain the action. This is going to be an interesting case to watch as these facts frame the issues particularly well for some clarity to result in the topic of derivative work and copyright-ability. This is a case to watch.

Brighton Collectibles v. Coldwater Creek, Southern District of California, Case No. 08-CV-2307-H(POR)

Brighton and Coldwater are competitors selling and women’s handbags and accessories into boutique and specialty stores. Brighton alleges in this case that Coldwater infringed the Brighton product line “Melanie” and “Laguna”.

In defense, Coldwater moved for summary judgement on the grounds that the Brighton copyright registration is unenforceable. Specifically, Coldwater demonstrated that the copyright registration on which Brighton’s lawsuit depended was on that the Copyright Office had rejected at least once before. Coldwater claimed that Brighton had a duty to tell the Copyright Office that the application had been rejected before; and that Brighton’s failure to disclose the prior rejection constituted ‘fraud on the Copyright Office’ with the result that the registration was unenforceable.

The court denied the motion for summary judgement, holding that “nothing precludes the filing of a copyright application a second time.” The court went on to say that if there is proof of intent to deceive that the evidence should come in as the case proceeds.

This issue of whether a party has an obligation to proactively disclose the prosecution history of the copyright application is beginning to be a chronic one. The defendant’s challenging of the validity of the plaintiff’s copyright registration is no longer a trend, but represents a fundamental part of any effective copyright defense.