Legal Commentary

Ninth Circuit weighs in on the dispute regarding copyright to Eisenhower war memoirs

On November 18, 2005, the Ninth Circuit issued an opinion upholding a finding of copyright infringement by Dastar Corporation, 20th Century Fox v. Dastar.  The issue in this appeal is what constitutes work for hire, for the purpose of the copyright law, and whether Pres. Eisenhower's memoirs should be considered such work for hire.

I think the dissent by D.W. Nelson is more persuasive.    The key inquiry is whether the agreement Eisenhower reached with a publisher in 1948 (who then sold the rights to 20th Century) intended to create a "work for hire" situation.  As things stood in 1948, the work for hire doctrine applied only to employer-employee situation.  That state of the law is relevant to determine the parties' intent, particularly when coupled with the fact that Eisenhower executed a separate contract assigning his rights in the book to the publisher.  If the parties intended to have a "work for hire" relationship, they would not need a separate assignment of copyright, as the publisher would have automatically become the copyright holder.

The majority's extensive discussion regarding the fact that the current 9th Circuit law permits independent contractors to be in a "work for hire" situation misses the mark.  The change in the law occured in the 1960s, years after the 1948 contract between Eisenhower and the publisher.  The new law would have no bearing on the parties' intent in 1948.

This is one lawsuit the defendant should want to lose

Associate Press reports (thanks to How Appealing for the tip) that Anheuser-Bush won the latest court battle with Czech beer-maker Budejovicky Budvar for the right to use the "Bud" trademark.  A Hungarian court ruled that the Czech beer-maker was not entitled to use the name as a reference to the city Ceske Budejovice - where the Czech version of the beer is made.  Apparently, courts in various countries have gone back and forth on this issue, some siding with the Czech beer-makers and some with Anheuser Bush.  WTO also weiged in on this issue on the side of AB.

For my money, this is a lawsuit the folks from the Czech Republik were lucky enough to lose.  Why would they (or anyone else) want to have their beer confused with Bud Light?????  Not even a clever commercial could help Bud pass for an actual beer.

MGM v. Grokster - notes and observations

After some struggle and re-reading, here is my basic understanding of this case:

A.  All 9 Justices agree that a P2P company, like Grokster, may be liable for contributory infringement when it actively markets to the infringing customers and encourages infringement through its sales of banner ads.  The majority opinion identified three particularly notable features of Grokster's intent to infringe: (1) Specifically aiming to satisfy infringing customers; (2) Lack of attempt by Grokster to develop filtering tools to reduce infringing activity; and (3) Making $$ by selling ad space in such a way that the more Grokster software is used, the more $$ it makes (profits flow from high-volume use, which the record shows to be infringement)

2.  There are presently no votes to abandon the Sony standard completely.

3.  Only Ginsburg and Kennedy seem inclined to balance protection of artistic rights vs technological innovation in favor of protection of artistic rights.  These justices would read Sony narrowly by requiring  the defendant to show a realistic present possibility of substantial noninfringing uses.  On the other hand, three justices (Breyer, Stevens, O'Connor) would resolve that balance in favor of new technologies.  They would temper the analysis of present non-infriging uses with the possibility of the technology being used lawfully, even if not by the defendant.

Overall, this decision does not mean the end of P2P technology.  All three opinions provide a good road map for a P2P company how to avoid secondary infringement liability - have a business plan that is not directed exclusively to infringing uses, make at least an attempt to filter out infringing uses, etc.

As for the recording industry, their "victory" is pyrric.  While they may have taken down Grokster / Streamcast, at least in their present form, they failed to take out P2P technology or get any modification of the Sony standard.  In the process, they've lost the PR battle and a lot of good will with the consumers.

As far as my personal preferences, I think that Breyer's concurrence is probably the closest to my view.  In theory, the balance between the interests of artists and innovation should be addressed through modifications of the Copyright Act in Congress.  But given the partisan tone in D.C., and the President's current priorities, a bi-partisan reform of the Copyright Act seems unlikely.  So, the Court may have to referee this issue again, in the future.  If so, the appointment of any new Supreme Court justice may tilt the balance either in favor of expanding Sony or ruling it out of existence.

9th Circuit trademark battle betwen makeup companies

KP Permanent Makeup v. Lasting Impression is trademark infringement battle between permanent makeup companies.

The dispute is whether KP’s use of the words MICRO COLOR on its products infringes on Lasting Impression’s registered uncontested trademark MICRO COLORS (which is a design and word mark that consists of a solid black rectangle, with the words “micro” and “colors” in reverse white lettering). For those of us who (like me) lack imagination, the Court includes pictures of both marks as an illustration.  But this picture does not tell a 1,000 words.

The parties filed motions / cross-motions for summary judgment / summary adjudication. The district court granted KP’s motion for summary judgment, ruling that the term “micro colors” is generic and / or descriptive and thus not entitled to protection; incidentally, it denied Lasting Impression’s summary adjudication motion re: “micro colors” being a generic phrase. The district court also ruled that KP can continue to use the words “micro colors,” as it had since 1991, while Lasting Impression can continue to use its trademark logo.

After the case went all the way to the Supreme Court on the issue of applicability of likelihood of confusion to the fair use defense, the case comes back to the 9th Circuit, which reverses. As to the question of MICRO COLORS trademark being generic, the Court finds that KP failed to overcome the presumption against genericness, which attached when MICRO COLORS became a registered trademark, so no summary judgment for KP. The Court also found that triable issues of fact remained regarding KP’s Fair Use and Likelihood of Confusion affirmative defenses.

One issue of some note is that the Court holds that the likelihood of confusion is inversely proportional to the fair use doctrine - the more confusion exists, the less likely is that the use is fair.  This analysis appears to take the likelihood of confusion / fair use interplay a bit further than the Supreme Court did here, but the Supreme Court did leave room for the 9th Circuit to operate on this issue.

"While we thus recognize that mere risk of confusion will not rule out fair use, we think it would be improvident to go further in this case, for deciding anything more would take us beyond the Ninth Circuit’s consideration of the subject. It suffices to realize that our holding that fair use can occur along with some degree of confusion does not foreclose the relevance of the extent of any likely consumer confusion in assessing whether a defendant’s use is objectively fair. "I recommend this opinion as a very decent overview of the law regarding trademark infringement. 

In Bosley Medical Institute v. Kremer, the 9th Circuit affirms the district court's denial of the plaintiff's trademark infringement claim, but reverses as to the cybersquatting claim.  It also reverses a grant of the anti-SLAPP motion (motion to strike complaint brought primary to chill the defendant's First Amendment rights and increase the cost of future litigation).

This one arises out of a dispute between Bosley Medical Institute (which offers hair restoration / treatment) and one of its dissatisfied customers.  The customer (Kremer) set up a website with the domain name www.BosleyMedical.com.  In that site, Kremer severely criticized Bosley and provided a link to the 1996 DA investigative findings about Bosley.  Bosley Medical then sued Krmer for, among other things, trademark infringement and cybersquatting (1999 Anticybersquatting Consumer Protection Act).

The opinion itself is fairly straightforward.  But can you imagine a more cheesy introduction than the following:

Defendant Michael Kremer was dissatisfied with the hair restoration services provided to him by the Bosley Medical Institute.  In a bald-faced effort to get even, Kremer started a webside called www.BosleyMedical.com, which, to put it mildly, was uncomplimentary of the Bosley Medical Institute.  The problem is that "Bosley Medical" is the registered trademark of the Bosley Medical Institute, which brought suite against Kremer for trademark infingement and like claims.  Kremer argues that noncommerical use of the mark is not actionable as infringement under the Latham Act.  Bosley responds that Kremer is splitting hairs.  (emphasis is mine.)

I guess the Court is a fan of the latest version of the Wild, Wild, West (I prefer the original:)  Loveless is quadripledgic, while West is black.

Dr. Arliss Loveless: Mister West! How nice of you to join us tonight and add COLOR to these monochromatic proceedings!

Capt. James West: Well when a fella comes back from the dead, I find that an occasion to STAND UP and be counted!

Dr. Arliss Loveless: Miss East informs me that you were expectin' to see General McGrath here. Well, I knew him years ago, but I haven't seen him in a COON's age!
Capt. James West: Well, I can see where it'd be difficult for a man of your stature to keep in touch with even HALF the people you know.

Dr. Arliss Loveless: Well, perhaps the lovely Miss East will keep you from bein' a SLAVE to your disappointment!

Capt. James West: Well, you know beautiful women; they encourage you one minute, and CUT THE LEGS OUT from under you the next!

If you don't own the copyright itself, you cannot sue for infringment

In Silvers v. Sony Picture Entertainment, the majority of the Ninth Circuit en banc panel held that a mere assignee of a right to sue for copyright infringement, who does not own the copyright itself, lacks standing to sue for infringment.

Plaintiff Silvers wrote the script for made-for-television movie "The Other Woman."  Since this was a product of work-for-hire, her employer owned the copyright.  After Sony Pictures released the movie Stepmom (with Susan Sarandon and Julia Roberts, editorial: nothing special), the employer retained the copyright itsefl, but assigned Silvers any and all claims and causes of action against Sony and other appropriate entities in connection with "The Other Woman" and "Stepmom."

After Silvers sued Sony for copyright infringement, the district court denied Sony's motion to dismiss based Silvers' lack of copyright ownership.  The original 3-judge panel affirmed, but the majority of the enbanc panel reversed.  The majority holds that language of section 501 (b) of the 1976 Copyright Act limits the right to sue for copyright infringement to copyright holders at the time of the infringement.  To bolster its conclusion, the majority also relies on case law regarding patent law and on a 2nd Circuit decision. 

Each of the dissents would allow Silvers' infringement suit to go forward.  Both dissents agree that section 501 (b) does not limit assignment of infringement actions as clearly as indicated by the majority, but they part company when it comes to who is a permissible assignee.  Judges Bea and Kleinfield would allow any assignee to pursue an infringement claim.  But Judges Berzon and Reinhardt would limit it to Silvers, who is the work's original creator and the assignment to whom would be consistent with the purpose of the Copyright Act.

My quick take is that out of the three opinions, Berzon / Reinhardt dissent takes the appropriate middle ground.  I am not a specialist in the area, but it seems that neither sec. 501 of the Copyright Act nor the Act's legislative history clearly state, one way or the other, whether the Copyright Act prohibits or permits assignments of infringment claims.  Neither 2nd / 5cir nor patent law resolves the issue as well.  So, until the Congress clarifies the assignment issue, the appropriate compromise was to see if the particular assignment at issue should be allowed to stand in light of the purpose of the Copyright Act.

9th Circuit partially reinstates an intellectual property lawsuit against Miramax.

Gross v. Miramax is an opinion, which was originally filed in September of last year and which was amended yesterday.  The amendment itself simply stresses that the denial of a motion to dimiss one of the claims is not meant as an adjudication on the merits.  But the opinion has a nice little discussion on CA state law breach of implied contract claim, which is not preempted by the federal Copyright Act.

In the lawsuit, Plaintiff sued Miramax, alleging that Miramax stole the ideas and theme from his screenplay "The Shell Game" to make a movie called Rounders (starring Matt Damon, Edward Norton, John Malkovich, John Turturro and two very attractive female actresses - Gretchen Mol and Famke Janssen).  He asserted two causes of action - violation of the federal Copyright Act and a breach of an implied contract.  The district court granted Miramax' motion for summary judgment on the copyright claim and a motion to dismiss the state law claim (ruling it was preempted by the Copyright Act).

The Ninth Circuit had no trouble affirming the grant of summary judgment, noting only briefly that the two works shared nothing in common, except a poker setting and some common poker jargon.  But it reversed the dismissal of the state law claim, citing a 1956 Cal. Supreme Court decision in Desny v. Wilder, 299 P.2d at p. 257.  In Desny, the Cal. Supreme Court held that when one party furnishes an idea to another under circumstances in which the plaintiff can reasonably assume he or she would be compensated, a contract may be formed even despite lack of an express promise to pay.  Under existing Ninth Circuit law, such state law claims are not preempted by the Copyright Act if the state law right is distinct from the right created by the Copyright Act.  Here, the Ninth Circuit concluded the plaintiff's complaint mirrored a Desny claim and that such claim created a right distinct from any copyrights under federal law.