The Antitrust side of IP Litigation

Antitrust counterclaims are once again viable options for defendants involved in Intellectual Property (IP) litigation.  Often a Plaintiff is utilizing a patent infringement suit as a method of interfering with the business relationship of a competitor. 

However, if the patent was obtained by knowing and willful fraud or the lawsuit is a sham for interfering with competitors’ business relationships, then the patent may be invalid and subject the Plaintiff to an antitrust violation.  Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177 (1975);  In re Independent Service Organizations Antitrust Litigation, 203 F.3d 1322, 1326 (Fed. Cir. 2000); and Hazelquist v. Guchi Moochie Tackle Co., 2004 U.S. Dist. Lexis 13991 (W.D. Wash. May 12, 2004). 

The risk of an antitrust violation and counterclaim is not limited to sham patent litigation.   Plaintiffs attempting to utilize trademark infringement suits to maintain a monopoly (price control) or restrict competition face a similar risk of an antitrust violation.  In Marketing Displays, Inc. v. TrafFix Devices, Inc., 200 F.3d 929, (6th Cir. 1999), the court permitted an antitrust counterclaim against a plaintiff asserting trade dress infringement after the expiration of patent. 

If the litigation is objectively baseless in the sense that no reasonable litigant could expect success on the merits, then it may be the basis for a antitrust violation.  Professional Real Estate Investments, Inc. , v. Columbia Pictures Industries, Inc. , 508 U.S. 49, 60 (1993).  However, this does not mean that a product’s different qualities cannot be protected simultaneously, or successively by more than one statutory means for protection of intellectual property.  Kohler Co. v. Moen, Inc. , 12 F.2d 632, 638-39, (7th Cir. 1993). 

Understanding the nuances of the scope of intellectual property protection that can be obtained for a product is crucial to your ability to protect your market and your investments.

Collaborators, Joint Authors and Copyright Infringement!

Generally, joint authors own an undivided interest despite any differences in the authors contributions.  Erickson v. Trinity Theatre Inc., 13 F.3d 1061, 1071 (7th Cir. 1994).   A movie, song, book, computer program, picture will qualify as a joint work if two or more authors collaborated and/or contributed interdependent parts with the intention to a create a unitary whole.  17 USC 101. 

Traditionally, this requires the following: 1) the intent to create a joint work; and 2) contribution of independently copyrightable work.  Erickson, at 1068.  The intent requirement only requires that the parties wanted to work together to create a single product, nothing more.  Janky v. Lake County Convention and Visitors Bureau, 07-2350 (7th Cir. 2008) (see attached).  In performing this analysis the court must look to the parties intent at the time that the work was created. Id.

Moreover, crediting another person as a co-author is strong evidence of the intent to create a joint work. Id.  The second element requires that the contribution is something that is more than general ideas or suggestions, but concrete expressions meriting copyright protection.  Id.  The Seventh Circuit’s refinement and restatement of the joint author analysis heightens the need for collaborators to clearly define their roles and rights to intellectual property ownership. 

Whether you are working with an other individual, consultant, company, independent contractor or a employee, if you fail to clearly define the roles and rights between the collaborators, then you take the risk of allowing another to own your intellectual property. 

See:  Janky v. Lake County

The Safe Harbor for ISPs. What is it?

The safe harbor is not a tranquil body of water, but a section in the Digital Millennium Copyright Act (DMCA) that protects Internet Service Providers (ISPs).  The ISP is an entity offering transmission, routing or providing connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.  512 (A)

Or, an ISP is a provider of online services or network access or the operator of such facilities. 512 (B).  The ISP is immune from liability for monetary, injunctive or equitable relief for copyright infringement for storage of such material at direction of user on its systems.  512 (c).  However, the ISP must meet the following elements to acquire such immunity:

1) not have actual knowledge that the material or an activity using the material on the network is infringing;

2) is not aware of circumstances or facts from which the infringing activity is apparent; or

3) upon acquiring such knowledge or awareness, removes or disables access to the material;

4) does not receive a financial benefit directly attributable to the infringing activity, where the ISP has the right and ability to control such activity; and

5)    upon notice of claimed infringement responds expeditiously to remove or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

Website Immunity for Defamation under the CDA!

The Communications Decency Act (CDA) of 1996, is still alive and protects many internet service providers (ISPs) and website hosts from liability for statements and actions made by others using their services.  The goal is to promote the free exchange of information and ideas over the internet.

Many individuals have received information or posts from individuals that defame or paint them in a bad light.  Sometimes there is false or misleading information that is posted on a website are the basis of tort, contract and intellectual property claims against the ISP or website host. 

The CDA shields these individuals from liability, because they are not considered the speaker.  Moreover, they are shielded from liability if they act in good faith and restrict access to false or misleading information.   Most of the cases dealing with these issues have been in the defamation context, but there is some crossover with contract and intellectual property matters. 

The ISP and the website host is immune as long as they are not the author or creator of the post or statement.  In other words, they are just a means of commnication.  It remains to be seen how the CDA, particularly, section 230, will be interpreted in the context of an breach of contract or violation of intellectual property rights claims.

Registration of Music with the U.S. Copyright Office.

Musical compositions or songs can be registered with the U.S. Copyright Office.  Under 35 U.S.C. 102 (a) (2) musical works, including accompanying works may be registered for copyright protection.  However, as soon as the work is fixed (sheet music, written lyrics, video, cd or dvd format) the work is entitled to copyright protection. 

Registering provides the following: 1) benefit of notice to others of your registration; 2) the right to sue in Federal Court under the U.S. Copyright Act; 3) statutory damages; and 4) attorney’s fees for an infringement law suit.  The key to properly registering a musical work  is to comply with the deposit requirement.  The U.S. Copyright Office will utilize the “best edition” of the musical composition for registration purposes. 

The “best edition” for printed copies is determined based on the following: 1) fullness of score ( including vocal music, orchestral accompaniment, instrumental music, etc…); 2) printing and paper; and 3) binding and packaging (special editions, bound rather than unbound, protective folders, etc…). 

The “best edition” for phonorecords is determined based on the following: 1) cd rather than vinyl; 2) vinyl rather than tape; 3) special enclosures; 4) open reel rather than cartridge; 4) cartridge rather than cassette; etc… The deposit requirement is key to determining the copyrighted material and the scope of the registered copyright. 

See Attached Publication from the U.S. Copyright Office: Musical Works Brochure

If you have any questions relating to registering your musical works, then please feel free to contact us.

Proposed Local Rules for Patent Cases in the Northern District Court of Illinois!

On March 19, 2009 the full court met and approved local rules for patent infringement cases for the Northern District Court of Illinois.  These local rules are designed to stream line the patent litigation process to help reduce costs, fees and the time it takes to get to a jury trial. 

Currently, the average time to get to a jury trial is about 4.7 years.  However, the proposed local rules hope to cut this time down to about 2 years.  The local rules require an Answer to a Complaint within 7 weeks and build in a one time extension of 28 days to Answer or otherwise plead.  The local rules require initial disclosures similar to 26.1 (a) (1), but are particularized for patent litigation.

The rules set a deadline to get to final contentions regarding infringement, non-infringement, and invalidity.   In addition, the rules provide a schedule for claim construction or markman briefs and hearing.  After the court’s claim construction or markman ruling, the rules permit an additional 42 days to conduct fact discovery.  

Upon completion of fact discovery the rules set deadlines for expert discovery, dispositive motions and the trial is supposed to take place within 23 months from the date the Complaint was filed.  (See rules below for specific deadlines or time periods).  The proposed rules were a collaborative effort by the local bar and judges to make the practice of patent litigation more efficient. 

Through the hard work of many lawyers and judges these rules do not seem to  favor either Plaintiffs or Defendants.  This is not the rocket docket, but a balancing of interests to provide an efficient litigation process.  However, it remains to be seen how the local rules will be adopted or modified for counter-claim or third party practice. 

Attached is a copy of the local rules for patent infringement claims in the Northern District of Illinois for your consideration:   Proposed Local Rules for Patent Cases

Stem Cell Research and Government Funding

Recently, President Obama signed new legislation that will mean that government funds may be used for private stem cell research efforts.  Bio-tech researchers, patent law practitioners and bio-ethicists fall on different sides of the myriad of issues involving stem cell research. 

Stem cells are thought to hold potential cures for many of humankind’s ailments.  However, the use of stem cells for research raises many concerns such as selling embryos and killing potential human beings.  Without commenting on any of these issues, here is what the new legislation requires to enable use of government funds for private research efforts. 

The Act requires the following to use stem cells in research: 1) the stem cells must be obtained from in vitro clinics and have to be in excess of the stems cells need for in vitro; 2) after consultation with the individual seeking fertility treatment it was determined that the stem cells would not be implanted and would otherwise be discarded; and 3) the individual donating the stem cells must have provided written informed consent to use the excess stems cells in research without receiving financial inducements.

The National Institute of Heath (NIH) is supposed to enact guidelines to carry out the Act and the Secretary of Health and Human Services is supposed to prepare annual reports describing the activities carried out under this Act.

Design Patents: Rejection of Point of Novelty Test and Adoption of a Uniform Hypothetical Ordinary Observer Test!

The Federal Circuit made an important ruling in Egyptian Goddess Inc. v. ADI Torkiya, for determining infringement in design patent cases.  The Court rejected and abolished the Point of Novelty Test as a second or additional test for determining whether an accused device infringes the claimed design. 

The Court stated that the test is the same as the Supreme Court’s formulation in Gorham:  whether or not a hypothetical ordinary observer would find or be deceived into believing that the accused device is the same or substantially the same as the Patentee’s claimed design, in light of, the prior art within the Patentee’s field?  Id.  This test accounts for greater protection in areas where the Patentee’s field is less crowded and less protection in areas where the Patentee’s field is more crowded. 

The Court went on to state that the Patentee retains the burden of proof with respect to demonstrating substantial similarity for design patent infringement.  However, the Accused Infringer bears the burden of production for providing prior art references that it wants to be considered by the trier of fact.  Id. 

This is an important ruling clarifying the often confusing area of design patent infringement and proper application of the Ordinary Observer Test should lead to better results for both Patentees and Accused Infringers.  

Attached is a copy of the decision for your consideration:   egyptian-goddess

Quarterly Newsletter: September 2008

This is the first of our quarterly newsletters.  This newsletter is designed to provide updates on business, employment and intellectual property law.  It also includes various tips to help manage business and legal risks, as well as, ways to grow your business.  We hope that you find it useful in your business, life and practice.

Should you have any questions or concerns, please contact our office.

quarterly-newsletter_09081

Trademark Valuation and Strategies for Increasing Value

This is a simple question and answer session regarding how to value a trademark as part of businesse’s portfolio of assets.  This is a presentation that I did in conjuction with Corporate Creations. 

The topics include the follwing: using a trademark to test out a new product line, exploring expansion into a new market segment, creating a family of trademarks, licensing a trademark to others to increase value and many other strategies for individuals, entrepreneurs, small business owners and mid size companies.

In addition, the presentation covers avoiding using a trademark in a manner that decreases its value.  For example, using a trademark that creates a genericness problem, failure to police others, and avoiding a naked license problem.

The file is currently being formatted and will be available shortly.