Blawgletter®

Using Amateur Athlete's Avatar in Video Game Could Violate Right of Publicity, Third Circuit Rules

Electronic Arts, Inc., makes video games, including the NCAA Football series. EA put an avatar of Ryan Hart, an ex-quarterback at Rutgers, in the series. Hart sued EA for "violating his right of publicity as recognized under New Jersey law." Hart v. Electronic Arts, Inc., No. 11-2750, slip op. 5 (3d CIr. May 21, 2013). The district court granted EA summary judgment, holding that EA had a free speech right to use the likeness and biographical information -- the "identity" -- of Hart.

The Third Circuit, by a 2-1 vote, reversed. It balanced EA's first amendment rights against Hart's interest in not having others exploit his image for commercial gain. The panel settled on the "transformative use" test of copyright law and concluded that NCAA Football used too much of Hart's identity to obtain summary judgment on Hart's right of publicity claim.

The dissenting judge believed "that the creative components of NCAA Football contain sufficient expressive transformation to merit First Amendment protection."

$44.4 Million Trade Secrets Verdict Stands in Fifth Circuit

A Houston jury awarded Wellogix $94.4 million for Accenture's misappropriation of trade secrets in software that helped oil and gas companies track and manage costs of drilling wells. The judge cut the award to what Wellogix asked for -- $26.2 million in actual damages plus $18.2 million in punies. And today the Fifth Circuit affirmed. Wellogix, Inc. v. Accenture, L.L.P., No. 11-20816 (5th Cir. May 15, 2013).

The case might pass without remark except for the respect the panel showed for the jury's work on the case. In the opening paragraph, the court set the tone by quoting Supreme Court decisions from more than 60 years ago on the test for setting aside a verdict:

"Only when there is a complete absence of probative facts to support the conclusion reached does a reversible error appear." Lavender v. Kurn, 327 U.S. 645, 653 (1946).

"But juries are not bound by what seems inescapable logic to judges." Morissette v. United States, 342 U.S. 246, 276 (1952).

See Wellogix, slip op. at 1 & 2.

The panel went on to approve the jury's finding of misappropriation and its awards of actual and exemplary damages.

To which Blawgletter says "wow" and "way to go".

Reaping What You Sow Infringes Soybean Patent, Supreme Court Holds

Farmers plant seeds. Where do they get the seeds? Lots of places. Their own crops. Farmer Crawford up the road. Bean sellers. Monsanto. And so on.

What if the seeds use a technique that someone -- Monsanto, say -- has taken out a patent on? Can you use seeds from a crop that you or someone else grew with Monsanto seeds to make a new crop? Or would that infringe those nice Monsanto people's patent?

It would do the infringement thing. So a 9-0 Supreme Court held today in Bowman v. Monsanto Co., No. 11-796 (U.S. May 13, 2013).

Justice Kagan wrote for the Court. She noted that buying a product that uses a patentee's invention has never given the purchaser a right to make copies of the product. Sure, as a matter of patent law, the buyer can use the one he lawfully acquired any way he wants. He can run it, sell it, lend it, dress it in doll clothes, burn it, chop it into thousands of little pieces, worship it, bury it in his back yard, or say ugly things to it. We call that the "patent exhaustion" doctrine. But letting him copy it would give him a right that belongs only to the patent-holder.

Vernon Bowman, an Indiana farmer, had gotten some of Monsanto's Roundup Ready soybean seeds from a vendor (grain elevator) and used them to plant several crops. Monsanto sued him for patent infringement and won a judgment for $85,000. Farmer Bowman asked the Supreme Court to overturn the judgment, arguing that a mean old company like Monsanto shouldn't have the right to profit from generation after generation of Roundup Ready soybeans, over the 20 or so year life of the patent. Monsanto's entitlement to charge royalties, he urged, should end when it makes the first sale of the seeds, after which sale it will have exhausted its patent rights.

That approach didn't sell.

Neither did his "seeds-are-special argument: that soybeans naturally 'self-replicate or 'sprout' unless stored in a controlled manner,' and thus 'it was the planted soybean, not Bowman' himself, that made replicas of Monsanto's patented invention." Id. at 9. Deeming the point a "blame-the-bean defense", Justice Kagan observed that Bowman "devised and executed a novel way to harvest crops from Roundup Ready seeds without paying the usual premium" and grew "eight successive soybean crops" as a result. Id. "In all this, the bean surely figured. But it was Bowman, and not the bean, who controlled the reproduction (unto the eighth generation) of Monsanto's patented invention." Id. at 10.

The Court cautioned that its holding may not cover all things that make copies of themselves -- such as things whose self-replication "might occur outside the purchaser's control" or "might be a necessary but incidental step in using the item for another purpose", as in some computer software programs. Id.

Quote of the Day: Richard Clifton

Abraham Lincoln told a story about a lawyer who tried to establish that a calf had five legs by calling its tail a leg. But the calf had only four legs, Lincoln observed, because calling a tail a leg does not make it so. Before us is a case about a lawyer who tried to estalish that a company owned a copyright by drafting a contract calling the company the copyright owner, even though the company lacked the rights associated with copyright ownership. Heeding Lincoln's wisdom, and the requirements of the Copyright Act, we conclude that merely calling someone a copyright owner does not make it so.

Righthaven LLC v. Hoehn, No. 11-16751, slip op. at 34 (9th Cir. May 9, 2013) (Clifton, J.).

Knowing It When You See It

Who wrote "I know it when I see it"? Do you think:

a. Jon Stewart, about comedic talent;

b. Rod Stewart, on pulchritude;

c. Jeb Stuart, concerning military audacity; or

d. Potter Stewart, in reference to "hard-core pornography".

The Second Circuit wrote something like that when it ruled on April 25 that Artist A's reaping in Artist B's garden, where Artist A had not sown, counted, as a matter of law, as "fair use" under the Copyright Act of 1976. The panel thus tossed a district court's decision that went the other way. Cariou v. Prince, No. 11-1197-cv (2d Cir. Apr. 25, 2013).

The case dealt with a claim by Patrick Cariou that Richard Prince infringed Cariou's copyrights in photos he'd taken during close study of Rastafarian people in Jamaica. Prince copied the smallish images into mostly big works, which his lawyers deemed "transformative" and therefore satisfying a critical part of the test for a fair use defense to Cariou's infringement claim.

The district court granted judgment to Cariou, holding that Prince hadn't done enough to transform the Cariou output. They key consisted in Prince's failure to "comment on, relate to the historical context of, or critically refer back to" the efforts by Cariou, the court thought.

The Second Circuit begged to differ. It opined that an artist can transform someone else's work without meaning to say, or actually saying, anything about it. And at least 25 of the images at issue dropped anchor in the fair use safe harbor as a matter of law, the two-judge majority ruled. The third member on the panel -- a guest from the Ninth Circuit -- said he would have fixed the legal standard and sent the case back for findings and conclusions by the district court in the first instance rather than deciding the issue in the apeal.

All agreed that they know fair use when they see it.

Blawgletter wishes to offer a couple of thoughts.

One, while we don't disagree with the substance of the majority's reasoning and decision, we do see a lot of merit in the dissenter's view that trial courts ought to have the first shot at ruling on a question of what conclusion the evidence leads to. Trial judges do that very well. Appellate judges do it less well, not least because they do it seldom and, on account of their relative isolation and their lack of contact with juries and other ordinary people, have less sense of community standards and a stronger streak of elitism. Cf. "The frequent irrelevancy of the Supreme Court", Hercules and the Umpire, Apr. 24, 2013 ("In short, while the Supreme Court may exist at the 'center of the universe,' it frequently plies its trade in a 'galaxy far, far away.'").

Two, Prince made a terrible witness for himself. In his deposition, he testified that he had zero intention of making something "new" out of Cariou's Rasta photos -- an admission that forced the majority to say his mental process mattered almost not at all. We wonder whether Prince told his lawyers beforehand that he planned to torpedo his best defense or whether he simply came out with it in a spontaneous burst of artistic freedom.

Bonus: Will the dissenting visitor ever get another invitation?

Hat tip to ABA Journal.

Form and Substance and Twombly -- Oh, My!

To Blawgletter's eye, a complaint that alleges patent infringement bears itself with a certain elegance. Such a pleading often runs but several pages, and in substance it states that the Bad Guy defendant does some thing or things that infringe the Good Person plaintiff's patent. And Form 18 -- which appears with its brothers and sisters in the Appendix of Forms to the Federal Rules of Civil Procedure -- says that will do just fine.

But Form 18 predates the Supreme Court's rulings in Bell Atl. Co. v. Twombly and Ashcroft v. Iqbal. As you will recall, Twombly and Iqbal designed, built, and launched a "plausibility" standard for judging whether a pleading states a claim that can survive a challenge under Rule 12. Many objected that the Court had amended Rule 12(b)(6) -- to make it harder to satisfy -- while pretending not to.

In 2012, a district court granted a motion to dismiss under 12(b)(6) for failure to state a plausible patent infringement claim despite the fact that the complaint complied with Form 18. Today, the Federal Circuit reversed, holding that doing what Form 18 calls for suffices, even after (the Court's sub silentio amendment of Rule 12(b)(6) in) Twombly and Iqbal. See K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., No. 12-1425 (Fed Cir. Apr. 18, 2013).

Should the Court grant review in K-Tech? If it does, it could then repeat why it thinks plausibility does NOT imply any degree of probability, and it then could go on to explain whether the bare-bones of Form 18 either fails Twombly and Iqbal (thus proving the amendment theory) or doesn't (ergo making patent cases a favorite of the federal courts).

We love pretzels!

P2P Movie-Sharing Infringes Copyrights, Ninth Circuit Holds

If you've watched a new movie online without paying for it, you likely committed a bad copyright law thingy. You probably infringed.

Naughty, naughty.

How exactly the Internets enable you thus to Reap where you have not Sown, film-wise, may baffle you. It did us. Thanks to the Ninth Circuit, we wonder no more. Or at least less.

The court probes the online underbelly's innards in Columbia Pictures Industries, Inc. v. Fung, No. 10-55946 (9th Cir. Mar. 21, 2013) (http://cdn.ca9.uscourts.gov/datastore/opinions/2013/03/21/10-55946.pdf). The panel explains how "peer to peer" (P2P) networks enable users to view movies (and other material) gratis. A P2P network responds to a user's request by prompting servers that contain pieces of a movie to send the pieces to the user's computer. The torrent of distinct pieces reassembles fast enough that the requesting user can watch the movie without a lot of jitters. That's the plan, at least.

The defendant in Columbia Pictures, Fung, welcomed his sites' subscribers to use his P2P programming to grab and view popular movies without paying for them. He earned money not by charging for subscriptions but from ad revenue, which accrued when subscribers clicked on ads.

The Ninth Circuit held that Fung violated the Copyright Act by inducing his subscribers to infringe the copyrights of movie owners. It also ruled that none of the "safe harbors" in the Digital Millennium Copyright Act saved him. The court thus affirmed entry of a permanent injunction against Fung but sent the case back to the district court with instructions to make the injunction clearer.

Lord Coke Completes His Come-Back; First Sale of Works Anywhere Defeats Copyright Claim, Court Holds

Things go better with Coke.

Last October, as Blawgletter prepared to argue a case to the U.S. Supreme Court the following week, we noted that on the day before "we heard a . . . justice mention 'Coke on Littleton, 1628' -- and instantly knew what he meant." We went on:

The case before the Court on Monday involved the reach of the "first-sale" doctrine under U.S. copyright law. Does it let Amazon, say, buy in Singapore excess stocks of Harry Potter books that J. K. Rowling's publisher printed in, for instance, Shanghai and import them into the U.S. without fear of a copyright infringement claim by Ms. Rowling? Or does first-sale apply only to goods that the copyright owner made in the U.S.?

Justice Breyer cited Lord Coke's treatise for the notion, as he said, "if a man be possessed of a chattel and give or sell his whole interest upon a condition, that condition is no good." Supap Kirstaeng v. John Wiley & Sons, Inc., No. 11-687, Tr. at 49:10-12  (U.S. Oct. 29, 2012).  By which His Honor seemed to imply that he thinks the first-sale doctrine in the Copyright Act of 1976 allows you to purchase overseas and import into the U.S. any goods no matter where the copyright owner made or caused the making of the goods.

The 2007 case prompting the recollection involved an antitrust claim that for almost a century the Supreme Court treated as a per se violation of section 1 of the Sherman Act. In that case, Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), the Court overruled its decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911). The opinion cited the ancient treatise by way of explaining that Dr. Miles stood more on "'formalistic' legal doctrine" than on sound economic theory. Leegin, 551 U.S. at 888.

Lord Coke won in Dr. Miles and lost in Leegin. Will he stage a come-back by forming the crux of the decision in the first-sale doctrine case?

Today the Court decided the case. Justice Breyer wrote the 6-3 majority opinion, in which Chief Justice Roberts and Justices Thomas, Alito, Sotomayor, and Kagan joined. And, yes, he quoted Lord Coke in support of the Court's ruling that the first-sale doctrine does absolve works "lawfully made" overseas of copyright liability in the U.S. Kirtsaeng v. John Wiley & Sons, Inc., No. 11-687, slip op. 17 (U.S. Mar. 19, 2013) (quoting 1 E. Coke, Institutes of the Laws of England § 360, p. 223 (1628)).

Interestingly, as if to exorcise Coke's defeat in Leegin, Justice Breyer quoted from the Leegin majority opinion, to which he dissented. Id. 18.

The author of the Leegin ruling, by the way, joined the dissent in Kirtsaeng. Just sayin.

Marking Items with Patent Number, Paying Royalties Support Infringement Claim

Wilson Sporting Goods put the number of Jack L. Frolow's tennis racket patent on 14 models of its tennis rackets. It also paid Frolow royalties on 299 racket models. Yet the district court granted Wilson summary judgment on the theory that Frolow hadn't put forward any evidence that the rackets infringed his patent.

The Federal Circuit reversed. It held that Frolow's evidence raised an issue of fact on the infringement question. Wilson's marking and payment of royalties provided circumstantial proof of infringement, the panel ruled, although perhaps not enough by itself to defeat summary judgment. But the court declined to treat Wilson's conduct as a species of estoppel. Frolow v. Wilson Sporting Goods Co., No. 12-1185 (Fed. Cir. Mar. 15, 2013)

Circuit Judge Newman concurred, urging that on remand Wilson should have to negate infringement by the 14 racket models.

Quote of the Day: Stephen S. Trott

Charisma . . . is not copyrightable.

SOFA Entertainment, Inc. v. Dodger Productions, Inc., No. 10-56535, slip op. 10 (9th Cir. Mar. 11, 2013) (Trott, J.) (holding that fair use doctrine barred copyright claim for showing of seven-second clip from Ed Sullivan's really big show in musical play about Four Seasons, which launched Frankie Valli's singing and dancing career).

Bonus: The court upheld an award of attorneys' fees for SOFA, the producer of Jersey Boys, because Dodger had tried pretty much the same thing with clips involving Elvis Presley.