Federal Circuit Holds “Computer Aided” Claims Unpatentable Under Bilski

February 3, 2012 in Uncategorized | No comments

On January 20, 2012 the Federal Circuit issues an important, precedent-setting opinion in Dealertrack v. Huber, Case No. 209-1566-1567 (Fed Cir. Jan. 20, 2012) concerning the issue of whether patentability of an otherwise abstract business method is salvaged by reciting in the claims that the method will be “computer aided”. The patent-in-suit, U.S. Patent No. 7,181,427, involved a “computer aided method” for managing automobile credit applications, involving receiving the credit application “from a remote application entry and device service,” “selectively forwarding” the credit application to one or more potential lenders (funding source) for review and analysis, and then providing reply data from the potential lenders to the first source.

Judge Linn’s opinion for the majority characterized the invention as relating to the abstract concept of processing information through a “clearinghouse”, which was compared to the abstract concept of “hedging” at issue Bilski. Bilski v Kappos, 130 S. Ct. 3218, 3231 (2010). The Court found that neither the patentee nor anyone else “is entitled to wholly preempt the clearinghouse concept.” Slip. Op. at 35. The recitation in the claims that the clearinghouse functions would be “aided” by a computer was not sufficient to limit the claims to a useful application of the “clearinghouse” idea. “The claims are silent as to how a computer aides the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method. The undefined phrase “computer aided: is no less abstract than the idea of a clearinghouse itself.” Slip. Op. at 35. Most importantly, the Court held that “[s]imply adding a computer aided limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible.” Id. at 36. Judge Lynn explained that the claimed process was similar to the unpatentable binary-coded decimal to pure binary conversion in Gottschalk v. Benson, 409 U.S. 63 (1972), since it covered a clearinghouse “using any existing of future-devised machinery”.

The Federal Circuit further explained that patent could not be salvaged merely by reciting that the use would be limited to consideration of applications for automobile loans. Limiting an abstract idea to one use does not salvage a patent that purports to cover the abstract idea. Slip op at 37.

The Federal Circuit distinguished this case from the situation in Ultramercial v Hulu, 657 F.3d 1323 (Fed. Cir. 2011) wherein the Court found that a process for monetizing copyrighted products using a computer was patentable. The claims in Ultramercial involved a specific application involving concrete steps requiring an extensive computer interface—far more than a mere recitation that the concept would be “computer aide.” However, the claims in Dealertrack did not require use of specific algorithms or other specific computer technology, rendering them close to the situation in CyberSour ce Corp. v. Retail Decisions, 654 F.3d 1366 (Fed. Cir. 2011), where the Court held that a method of verifying a credit card transaction over the internet constituted an unpatentable process.

Judge Plager dissented not on the substance of the majority’s ruling, but on the ground that the Court should not have addressed the Section 101 issue until it became absolutely necessary to do so after adjudicating all other non-infringement and invalidity issues. Judge Plager criticized the trial court for deciding the Section 101 patentability issue without deciding the issue of obviousness under Section 103. Judge Plager’s view that Section 101 issues should only be decided as a last resort, while attractive to some commentators, see Crouch and Merges, Operating Efficiently Post-Bilski By Ordering Patent Doctrine Decision-Making, 25 Berkeley Tech L.J. 1673 (2010) ultimately would do nothing more than add an unnecessary round of post-trial briefing in any case. In fact, the patentability issue can easily be decided at a very early stage of many cases—and where a patent is found to lack patentable subject matter, it would seem to be wasteful and unnecessary for the parties to incur the expense of litigating other issues of invalidity and infringement. One can imagine courts in some districts enacting local rules requiring that lack of patentable subject matter defense be litigated within a short time after the parties file their initial pleadings. This is almost always an issue of law that can be decided on the papers without the need for claim construction, discovery or expert reports. At the very least, however, Judge Plager’s assertion that the issue should be held in abeyance until all other issues in the case are resolved seems unlikely to become the prevailing perspective in the Federal Circuit or in District Courts.

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PTO States Its Position On Applicability of Fair Use Doctrine To Non-Patent Literature Used During Patent Prosecution

January 27, 2012 in Uncategorized | No comments

On January 19, 2012, the United States Patent and Trademark Office (“PTO”) issued a written paper explaining in detail the basis for its position that the fair use doctrine provides broad protection for the use of copyrighted non-patent literature (“NPL”) during patent prosecution. The PTO has concluded that under Section 107 of the Copyright Law, it is fair use (a) for patent examiners to provide patent applicants with copies of copyrighted NPL during the course of patent examination, (b) for the PTO to provided certified copies of file histories to the general public (containing NPL) for a fee, and (b) for an applicant to make a copy of NPL and submit it to the PTO.

The PTO supported this conclusion by providing a detailed analysis of the four “fair use” factors under Section 107 of the copyright law, including (a) the purpose and character of the use, including whether the use is of a commercial nature or for non-profit educational purposes, (b) the amount and substantiality of the portion used as compared to the copyrighted work as a whole, (c) the nature of the copyrighted work, and (d) the effect of the use on the potential market for or value of the copyrighted work. According to the PTO three of the four factors support its conclusion that the fair use doctrine immunizes use of copies of NPL during patent prosecution from claims of copyright infringement.

As for factor one, the PTO pointed out that these uses were for non-commercial, governmental purposes—-facilitating governmental review of patent applications. Further, according to the PTO, the use of the NPLs is transformative—it is to document whether and the extent to which the invention is novel and/or non-obvious when compared to the prior art reflected in the NPL. The PTO concluded that this factor strongly supports applicability of the fair use doctrine.

As for factor two, the PTO acknowledges that entire NPL’s are routinely copied, a fact which tends to undercut applicability of the fair use doctrine. However, the PTO points out that it instructs examiners and applicants to only copy so much of prior art references as is necessary in the circumstance. The PTO further points out that as a practical matter, copying less than a total NPL is often not an option. Since the use of the NPL’s is transformative, the PTO concludes that factor two is “neutral” with respect to whether the fair use doctrine applies.

As for factor three, the PTO points out that factual works generally receive less copyright protection than expressive works, and most NPL’s are works of non-fiction, not expressive works. Further, NPL’s are usually published works and, therefore, they do not involve the special concerns that exist for unpublished works. Therefore, the PTO asserts that factor three supports applicability of the fair use doctrine.

Finally, as for factor four, the PTO concludes that the uses of NPL’s during patent prosecution do not impair the marketability of the copyrighted NPL. NPL’s are generally published several years before they are used in patent prosecution and by the time they are used in patent prosecution, the NPL’s have only limited commercial value. The PTO points out that by not making copies of NPL’s available to the public in its PAIR system, it reduces the extent to which the copies of NPL’s used during patent prosecution will become available on the internet. As the PTO points out, by the time most NPL’s (primarily scientific papers) are used during patent prosecution, there is usually little commercial value left for them, since their only “market” is for use in patent prosecution. Thus, the PTO concludes that factor four also supports applicability of the fair use doctrine.

Based on this four-factor analysis, the PTO concludes that the fair use doctrine generally allows the PTO examiners and applicants to copy and use NPL’s for purposes of patent prosecution. The PTO concludes that the use of copies of NPL’s for purposes of patent prosecution has no meaningful impact on the marketability of value of such NPL’s—and this factor is recognized as the most important when analyzing the applicability of the fair use doctrine. Further, the PTO points out that the public interest strongly supports use of copies of NPL by the PTO and applicants because these uses support the PTO’s mission to advance the sciences and useful arts by reviewing patent applications and issuing patents. Members of the patent community and the general public certainly have a strong interest in the maintenance by the PTO of a complete record of the events that occur during patent prosecution, including inclusion in certified file histories copies of the prior art references that the applicant or examiner included in the record.

Some might argue that the analysis of the PTO on these issues is more academic than practical. Yet the issue of how copyright law applies to patent prosecution activities has been long the subject of significant debate among practitioners. The guidance provided by the PTO will come as a relief to many practitioners who have long worried that they might find themselves on the wrong end of a law suit for statutory damages by an enterprising author of an NPL and/or a law firm retained by him on a contingency basis to seek statutory damages. While Court’s are not obligated to follow the PTO’s analysis, without doubt they will give considerable deference to the PTO’s analysis in cases where copyright infringement is alleged for use of NPL’s during patent prosecution. Thus, in the final analysis there is now a strong likelihood that courts will find that the fair use doctrine allows applicants and the PTO to freely make and use copies of NPL’s for purposes of patent prosecution.

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New Proposed Tough European Privacy Law Covering Digital Information

January 27, 2012 in Uncategorized | No comments

The European Commission has proposed a new privacy law, revamping the outdated 1995 Data Protection Directive, that would have a significant effect on all companies that trade in, accumulate or publish personal data. The proposal, which is considered a breakthrough in protection of individual rights, would affect all 27 countries of the European Union, which currently offers no uniformity in privacy regulation. Internet users would be given the right to delete their personal information at request and online companies would have to ask express permission before using, selling or disseminating their information, as well as tell the users why they are requesting or storing their information and what they will be doing with it. Additionally, personal data could only be kept for a limited time, and users must be notified within 24 hours if their personal data is stolen. Most importantly, these new changes to privacy law, if enacted and ratified by EU member states, would address some of the more complicated and debated legal questions concerning digital privacy and commerce, such as who owns data once it is posted online and how to balance privacy rights of individuals with the right of online companies to profit by mining personal data for marketing and commercial purposes. If adopted, the law would have far-reaching international impact, and many leading U.S. companies such as Google and Facebook may be forced to comply with European standards, even with regard to their business activities outside of Europe.
While much of the world looks to Europe as a model when it comes to this type of far-reaching intellectual property legislation, Americans companies in so-called Silicon Valley tend to view these types of European mandates as a hindrance to innovation and a barrier to achieving the ultimate commercial potential of the internet. Without doubt, such privacy protections might impose significant financial burdens and commercial limitations on internet service providers, social networking web-site operators and almost all companies engaged in internet commerce. That being said, European Justice Commissioner Viviane Reding claims the new law would simplify regulations and help firms save over $3 billion a year by reducing the legal uncertainty resulting from contradictory data privacy requirements and procedures in multiple jurisdictions. It is not clear whether these savings will offset the loss of revenues that will result from restrictions on use of personal information. Nor can the behavior of individual consumers be predicted with certainty—but chances are that a substantial percentage of the population will elect to permit their personal data to be “mined”.
These new proposed rules still need to be approved by EU member states and ratified by the European parliament before taking effect. However, based on experience with similar proposals of the European Commission, there is a good chance that most EU member states will approve the proposal and that it will be ratified by the European parliament. It certainly will be fascinating to follow progress of this proposed legislation, especially because its impact on privacy law outside of Europe could be profound.

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Supreme Court Grapples With Constitutional Rights of Privacy in the Digital Age

January 24, 2012 in Uncategorized | No comments

          In a legal world facing what Justice Alito describes as “dramatic technological changes”, the Supreme Court has made a major decision about defining privacy in the digital era in yesterday’s unanimous decision United States v. Jones. This Monday, the country’s highest court ruled that GPS tracking by the police, without a warrant, violated Fourth Amendment Rights.
         Five years ago, cocaine drug trafficker Antoine Jones’ whereabouts had been monitored by a GPS tracking device on his car, without a warrant. Based on the information obtained by the covert GPS, the police were able to obtain surveillance photos of a suspected stash house in Maryland. Mr. Jones was later convicted, after the police recovered nearly $70,000 in cash in his car, large quantities of cocaine, firearms, and drug paraphernalia.
          Justice Antonin Scalia wrote for the majority, stating that using a GPS to track a suspect’s vehicle is akin to physically occupying private property for the purpose of obtaining information. He wrote, “We have no doubt that such a physical intrusion would have been considered a ‘search’ within the meaning of the Fourth Amendment when it was adopted.” In this case, a car was considered an “effect”, thus falling under the protection of the constitution, which protects trespasses in “persons, houses, papers and effects.” In Justice Alito’s concurring opinion, even if the officers had reasonable suspicion of Jones, or even probable cause, that long-term monitoring violated privacy expectations. Judge Alito’s concurring opinion is particularly illuminating because the normally “strict constructionist” approach that he takes was abandoned for a more realistic approach that recognizes that our founding fathers could not have imagined the threats to privacy imposed by modern technology, including not only GPS, but the internet, computers, telecommunications, social networking, and satellite imaging that can pinpoint not only an individual’s location, but his activities and movements moment by moment.
           The High Court’s ruling came to the same conclusion as the New York’s Court of Appeal’s decision in 2009 in People v. Weaver, which found that the surreptitious placement of a GPS tracker by police without a warrant was illegal. Justice Sotomayor, in her concurring opinion, pointed to GPS data as having an indisputably private character, using examples of trips to the psychiatrist, the plastic surgeon, the abortion clinic, the AIDS treatment center, strip clubs, and places of worship, as examples of personal information than can be discovered through tracking vehicles with GPS technology. Justice Sotomayor also addressed the larger problem of protecting privacy in today’s world of technology, saying that it may now be necessary to “reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties.” This is because such an approach, she states, is ill-suited to a time where a large quantity of personal information is revealed to third parties as a result of the most mundane interactions.
           Yesterday’s ruling was an important step in redefining our constitutional right to privacy in the digital age. The ruling leaves for another day, however, many important questions concerning the standards for obtaining a warrant that would allow use of this technology to track movements and activities of individuals. Likewise, the ruling leaves for another day the issue of the duties that will be imposed on internet service providers, social networking web-sites such as Facebook, telecommunications companies, and other companies who comprise the modern technology elite to provide tools and protections for individual privacy. The ownership and use of private information which is available at the touch of a computer keyboard to the companies we depend on for technology (wireless phone companies, search engines, social networking sites, ISP’s) will be one of the great battlegrounds at the intersection of intellectual property and privacy law.

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Supreme Court Ruling: Published Works Lacking Copyright Can Later Be Protected

January 23, 2012 in Uncategorized | No comments

In a 6-2 ruling on January 18, 2012, the Supreme Court held that Congress acted squarely within its power to extend copyright protection to works in the public domain, essentially protecting millions of works by foreign artists that had hitherto not been copyrighted, largely affecting masterpieces from early to mid 20th century artists, such as Pablo Picasso, H.G. Wells, Alfred Hitchcock and Frederico Fellini, as well as numerous classical musical works by early to mid 20th century composers.
The ruling allowed the United States to fulfill its international copyright obligations under the Uruguay Round Agreements Act of 1994, which brought the United States in line with the Berne Convention of 1989. Formerly, the U.S. only applied the rules of the Berne treaty to works published after March 1st, 1989. The 1994 Uruguay Round Agreement Act reversed this position, retroactively extending the Berne Convention to works published previous to 1989 and consequently obliging the U.S. to grant copyright on foreign works that until that time have never been copyrighted in the U.S.
The Golan v. Holder case was originally filed in 2001 by conductor Laurence Golan who wished to create a derivative work based on compositions by Russian composer Dmitri Shostakovich. He argued that the treaty violated the Constitution’s promise to “promote the progress of science and useful arts.” Justice Stephen Breyer, leading the dissent, agreed, claiming that the copyright would discourage the artist from producing new work and by definition bestows monetary rewards only on owners of old work. Because the law now requires artists to ask permission or pay royalties before they can copy, play, or refurbish a work, opponents of the ruling claim that community orchestras, academics and others who rely on the previously available works will now no longer be able to afford a perform them, including such classic pieces as “Peter and the Wolf” by Sergei Prokofiev.
The majority decision, led by Judge Ruth Bader Ginsberg was of a different opinion, stating, “Nothing in the text of the Copyright Clause confines the ‘Progress of Science’ exclusively to ‘incentives for creation’.” She claimed that a well functioning international copyright system would likely “encourage the dissemination of existing and future works.” The treaty also leaves undisturbed any fair uses of the copyrighted material.
In 2003, the Court ruled that Congress can extend a copyright term. Now the court has ruled that published works that were previously in the public domain could later be protected by copyright. Congress how has broad power to resurrect copyright protection for works in the public domain if Congress makes a rational determination that copyright protection will benefit creative arts and sciences. No doubt many in the media, entertainment, music and publishing worlds are enchanted by the prospect that they could convince Congress to resurrect copyright protection for works previously in the public domain, and the lobbyists are going to have a field day as they urge Congress to provide incentives to teach the public about the glories of long-forgotten works by composers and artists who plied their craft with overwhelming popularity—standards of the American songbook may soon regain protection on the theory that they deserve to be heard by a new generation of Americans.

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Federal Circuit Overturns Award of Sanctions and Attorneys Fees In Patent Case—Claim Construction was not “Objectively Baseless”

January 11, 2012 in Uncategorized | No comments

On January 11, 2012, the Federal Circuit issued a very important, precedential decision on the issue of when it is appropriate for a District Court to award sanctions and attorneys fees in a patent case on the ground that the case is “Exceptional”. In iLor, LLC v. Google (Fed. Cir. January 11, 2012), http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1117.pdf, the Federal Circuit overturned an award of sanctions and attorneys fees by the District Court on the ground that the claim construction presented by the losing party was not “objectively unreasonable”. Although the Federal Circuit had affirmed the District Court’s claim construction, it overturned the District Court’s finding that iLor had acted unreasonably by pursuing its proposed claim construction and otherwise acted in subjective bad faith.
Noting that issues of claim construction are often complex and difficult, the Court held that “exceptional case” damages under 35 U.S.C. Section 285 are appropriate only where the position taken by a litigant was “objectively baseless” “The objective baselessness standard for enhanced damages and attorneys’ fees against a non-prevailing plaintiff ….. is identical to the objective recklessness standard for enhanced damages and attorneys’ fees against an accused infringer for Section 284 willful infringement under In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir 2007)(en banc).” Slip Op. at 8-9. Exceptional case damages and attorneys’ fees can properly be awarded only when the District Court finds that the plaintiff’s claim construction was “objectively baseless” and the plaintiff engaged in subjective bad faith. The party seeking enhanced damages and attorneys’ fees must show by clear and convincing evidence both that the plaintiff’s claim construction was “objectively baseless” and that plaintiff engaged in subjective bad faith. The Court criticized the District Court for not taking into account that the Federal Circuit held oral argument and issued a precedential opinion on the claim construction issue on the plaintiff’s first appeal. Since the Federal Circuit obviously did not believe that plaintiff’s proposed claim construction was frivolous, the District Court could not reasonably have found that the claim construction was objectively baseless. As the Federal Circuit held, “simply being wrong about claim construction should not subject a party to sanctions where the construction is not objectively baseless.” Id. at 14.
This unanimous three decision by a three Judge panel that included Chief Judge Radar and Judges Lyn and Dyk should come as a relief for litigants who have become gun shy in view of the perception that District Judges have been increasingly willing to award exceptional case damages and attorneys’ fees in patent cases against the losing party. The message sent by this decision to District Court judges is loud and clear—lawyers are obligated to zealously represent their client and as long as the arguments they make are objectively reasonable, sanctions should not be awarded merely because the District Court disagrees. Even if the District Court concludes that the case was not “close”, this will not justify an award of enhanced damages and attorneys’ fees. The test is not whether a case was close, but whether the arguments made were objective reasonable—-an argument is objectively baseless only if no reasonable litigant could ever believe or hope that the argument would carry the day. If there is even a slim chance that the claim construction could be accepted by the District Court or Federal Circuit on appeal, the argument cannot be deemed objectively baseless (or reckless). Only arguments that are made recklessly and with no hope of success can give rise to an award of “exceptional case” damages and attorneys’ fees.
Importantly, the decision is predicated in part the First Amendment right to bring and defend litigation which allows sanctions to awarded only for law suits that are frivolous. If an argument is not frivolous, it cannot be deemed “objectively baseless” or “objectively reckless”. By making clear that awards of enhanced damages and attorneys’ fees are limited to cases where the arguments made were frivolous, Federal Circuit has taken a firm position against the increasing view of some trial court judges that they have broad discretion to award sanctions and attorneys fees in any case which the ultimately find was not close. Just because a case was not “close”, this does not mean that the case was frivolous or that the arguments made were objectively baseless.
Thus, patent litigants and their attorneys can breathe a sigh of relief. As long as they make non-frivolous arguments and have a good faith belief that their arguments could be accepted the Court, they will not be subjected to sanctions. This means that litigants need not be gun shy in making creative arguments, or in arguing to overturn existing legal precedent. The First Amendment gives our clients and counsel the right to prosecute and defend litigations using non-frivolous arguments, even if those arguments are ultimately rejected, and even if the case is not “close”.

Written By Maurice Ross

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Navigating Copyright Laws in Relation to Derivative Works

January 9, 2012 in Uncategorized | No comments

The practical problem that many artists face in the world of copyright law is navigating through legal ambiguity, often leaving the artist to face a legal “grey zone”. This could lead to perilous missteps on the part of artists who are unsure of the law, but willing to take legal and financial risks that the benefits of completing their work in the manner they want outweigh the legal and financial risks. While the best artists are “risk-takers”, when it comes to copyright law, a more conservative philosophy will best serve the artists’ professional financial interest.
One of the areas that often seems uncertain and confusing for artists is the distinction in copyright law between original works and derivative works. The boundaries that exist between original and derivative works often leads to serious misunderstandings among lay persons as to whether they face risk of suit for copyright infringement. Let’s use a common example to explore the intricacies behind this issue: An artist decides to use another person’s photograph as the starting point for preparing what the artist believes is an “original” painting. While from an artistic point of view this may be a splendid idea, from a copyright law perspective this is a risky affair. If the painting is deemed to involve copying substantially the entire photograph such that it is based on the original photograph itself, the painting constitutes a “derivative work,” since it is derived in part from someone else’s copyrighted work. The artist who creates the painting cannot legally create this derivative work without obtaining permission (or a license) from the owner of the original photograph.
On the other hand, depending on the nature of how the photography is used, there are at least some circumstances in which it may be possible for the artist to proceed without the permission of the original photographer. This is because copyright law does not protect mere concepts or ideas, but only protects original works set forth in tangible mediums of expression. A brilliant idea, no matter how original, isn’t protected unless it’s in a tangible form. For example, the idea of a beautiful red rose cannot be protected. But Robert Burns’ poem, “A Red, Red Rose” is protected by copyright, just as much as a photograph of said rose. If you create art based on a general concept or idea (i.e. a red rose), rather than making a painting that is substantially similar to the photograph, you might be able to proceed with your creative masterpiece without needing permission. However, if the photograph or its contents are used as a model for the painting and if the painting looks substantially similar to the photograph, then you would technically need permission for its use.
Many artists refer to the useful concept of the doctrine of fair use, which embodies our First Amendment values that allow “fair use” of someone else’s copyrighted work for purposes of genuine original artistic, journalistic, educational and/or scientific endeavors. Therefore, if your painting is merely based on the concept of a photograph, but is otherwise original and substantially different from the photograph, the doctrine of fair use may protect you against a claim for infringement if you used only a small portion of the elements of the photograph and did so for an appropriate artistic purpose. However, the fair use doctrine is quite limited in scope and requires an extensive analysis of many factors.
As the photograph example depicts, there is a certain lack of certainty regarding copyright law, which means proceeding without permission in most situations could lead to expensive law suits. When it is unclear where you fall on the line between fair use and derivative work, it would be best to take a conservative approach and seek permission. And here is a secret that most successful artists rarely share with the general public—because they face these difficult issues on a regular basis, they keep the number of their intellectual property lawyer on “speed dial”. A two or three hour consultation at a cost of less than $1,000 will likely safe the artist substantial money in the long term—not to mention the aggravation and embarrassment of being accused of copyright infringement.

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The Limitations On The Doctrine Of Fair Use When Making Films or Videos

January 6, 2012 in Uncategorized | No comments

One of the greatest and most common misconceptions among filmmakers is that the fair use doctrine provides broad protection that allows them to use works of others in the background in scenes in their films. Because digital technology is ubiquitous and editing easier to use, it has become more common for novice and aspiring film makers to jump into the business head first, cutting and pasting works available on the internet as part of the background in their films. If you’re a start-up film maker, it is important to remember to “watch your back” when designing your sets and creating background for the scenes in the film—if you use famous works of others such as posters, photographs, magazine or comic book covers, trademarks or logos or photographs of deceased celebrities, you may inadvertently buy yourself an expensive law suit—even if you use these materials only in the background to set the scene in historical context.. If you want to include media that is not your own work, such as posters, photographs, sample film clips, famous trademarks or photographs of celebrities, this most likely is not “fair use”, and you will need to receive a license to use each such work. The “fair use” analysis does not change depending on the nature of your film—whether your film is commercial, academic, educational or journalistic, the same base copyright law principals apply. There is no exception to copyright and trademark law for academic, educational or journalistic works or non-profit works. Film-makers need to recognize that the owners of copyrights and trademarks in works which filmmaker might want to use as background in various scenes may not want their works and trademarks to be associated with the film (and/or with the filmmaker), and many owners of famous trademarks or copyrighted works are extremely aggressive in enforcing their rights against unlicensed infringers. Unless a filmmaker obtain clearances (or licenses), any filmmaker who incorporates works or trademarks of others into the film risks an expensive and difficult to defend law suit. The “fair use” doctrine only rarely can be relied upon to justify a filmmaker’s use of other people’s works without their consent.

If you are a filmmaker, why not try to turn the situation around and make it a money-maker? “Product placements” are a major source of revenues in feature films. It might be a good idea to contact the publishers with copyright ownership in posters, comics, photographs, magazine covers and famous trademarks and ask them if they want to pay for a product placement in the film. Many inexperienced filmmakers are surprised to find that owners of intellectual properties will pay for “product placements”—the filmmaker will not only obtain the licenses which it needs to use the intellectual property, but it will get paid a fee for the “product placement.”
One thing is certain—if you are a filmmaker, you need to pay close attention to numerous potential intellectual property law issues. This means that anyone who is investing time, effort and money into creating a film should have a budget for retention of intellectual property counsel. Take a look at the credits on almost any major feature film, and you will see credit given to intellectual property counsel who advised the filmmakers and producers on the numerous intellectual property right issues that arise whenever a film is created. The budget for any film project should include a budget for intellectual property counsel—the investment in intellectual property counsel is sometimes just as important as the investment in actors, models, musicians, writers, and directors

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Intellectual Property Counsel Is Necessary For Most Start-Up Businesses

January 6, 2012 in Uncategorized | No comments

So you want to start a business, but you don’t have much experience? It’s a great idea, but make sure you take the right steps to protect yourself and avoid any major mistakes that will end up costing you grief and financial distress. No matter how experienced or talented the owners of a start-up business are in their industry or field of expertise, it is important for anyone who is starting a new business educate themselves concerning and proactively address the intellectual property law issues that the business is likely to face. Anyone who starts a business needs to build a team of trusted professionals which includes an intellectual property/business lawyer. I have met many bright and intelligent businesspersons who make the mistake of assuming they can do most of the necessary legal research and analysis on their own–using web-sites such as Avvo to generate kernels of information in order to avoid the cost of legal counsel. Here is the hard truth— legal counsel is needed to start up a business and a budget is needed for this. The intellectual property issues that any new start-up company will face (domain names, trademarks, branding, copyrights, non-disclosure agreements, software and web-site design, patents) are far more sophisticated than most people recognize. The new company needs to develop effective strategies for protecting its intellectual property rights (patents, trademarks, copyrights). Of equal importance, the new company also needs to make sure that it is free to operate its business without infringing IP rights held by others. The time to obtain this guidance from IP counsel is before the company opens its doors for business—if the company waits to lay the proper legal foundation, it will inevitably have made costly and potentially disastrous legal mistakes. If a start-up company does not have a budget for legal counsel, then it probably does not have sufficient resources to get off the ground successfully. Retention of business/intellectual property counsel should be one of the highest budgetary priorities for any start-up company. If a company’s budget is insufficient for this, then it needs to take creative steps to obtain the financing needs to lay the proper legal foundation. This includes partnering with lawyers who may be willing to work at discounted rates in hope of building a long term relationship with your company. In the final analysis, any start-up company needs to work closely with intellectual property counsel from the company’s infancy—the investment that a start-up company makes in laying the proper legal foundation will pay major dividends in the long run.

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ON LINE PIRACY LEGISLATION MOVES FORWARD AT A RAPID PACE

December 8, 2011 in Uncategorized | No comments

Under pressure from members of the entertainment industry and other content providers, Congress is expediting review of alternative legislative proposals to combat on-line piracy. The House of Representatives’ Stop Online Piracy Act (SOPA), H.R. 3261, has broad bipartisan support. Predicated on the recognition that the “takedown” scheme in the Digital Milleneum Copyright Act has not been adequate to protect against economically debilitating on line piracy of copyrighted and trademarked works, SOPA would create broad and sweeping new causes of action against a wide range of internet sites for facilitating copyright or trademark infringement.  The objective is to target foreign web-sites that have become vehicles for file sharing and other such mechanisms for illegally obtaining copies of copyrighted films, music, books, publications and other original works, or that have been used to market and sell counterfeit designer goods.

Sec. 102 of SOPA would allow the U.S. Justice Department to impose new obligations on a range of intermediaries to block access to sites that facilitate criminal copyright or trademark infringement. The U.S. Attorney General would be authorized to bring actions against a “foreign infringing site” or portion thereof. The Court can then issue injunctions against the site to cease and desist further activity as a foreign infringing site. Once an order has issued against a site, the Attorney Ceneral can serve a copy, with Court approval, on any of several intermediaries, who must take action specified in the bill within 5 days or as ordered, including the following: (a) ISPs must take measures designed to “prevent access” to the site,including measures designed to prevent DNS resolution of the siteʼs domain name; (b) search engines must take measures designed to prevent the site from being served as links in search results; (c) payment networks must take measures designed to prevent, prohibit, or suspend transactions between the site and US customers; and (d) ad networks must take measures designed to stop serving ads on the site, stop serving ads for the site (including sponsored links), and cease all compensation to or from the site. If the intermediaries do not promptly comply, the Attorney General can then bring actions against these intermediaries to compel compliance.

In addition to authorizing the attorney general to target “foreign” sites, SOPA would create new remedies for private parties. Specifically, Sec. 103 would create a notice-and-cutoff system that allows private parties to target a website’s financial resources This section creates a private cut-off system, modeled on the DMCAʼs notice-and-takedown system, for cutting off sitesʼ financial resources. It requires that payment and ad networks cease doing business with any site within 5 days of receiving an allegation by a rightsholder that the site is “dedicated to theft of U.S. property”. If the financial intermediary does not cease doing business with the site, either based on its own judgment or because it receives a counter-notice from the site, the rightsholder can initiate a lawsuit against the accused site. If the court agrees that the site has been “dedicated to theft,” the site can be enjoined from operating in its current manner and payment and ad networks can be compelled to stop doing business with the site.  These private remedies appear to be fair and balanced—if the web-site that receives notice from a copyright holder determines that the allegation of infringement is erroneous and provides a counter-notice to the financial intermediary, the copyright holder must undertake the burden of suing the web-site to establish entitlement to relief.  Thus, contrary to erroneous reports in the news media and assertions by some critics of SOPA, SOPA would not give copyright holders the automatic power to shut down an allegedly infringing web-site.  Instead, SOPA creates a reasonable system modeled after the takedown provisions of the DMCA which ultimately imposes on copyright owners the burden of proving their claims in a Federal Court prior to shutting down or “censoring” a web-site.

Moreover, the targets of SOPA are foreign web-sites, not U.S.-based web-sites. Under SOPA any site could be deemed a “foreign infringing site” if (a) its domain-name registration authorities are located outside the U.S.; and (b)  it “facilitates” the commission of criminal copyright or trademark infringement.  Any site could be deemed “dedicated to theft of U.S. property” if (a) it offers its service “in a manner that . . . enables or facilitates” infringement; or (b) its operator takes or has taken “deliberate actions to avoid confirming a high probability” of infringing activity on the site. Some have criticized SOPA as currently drafted because it appears to be no defense that the site has extensive lawful uses; that its operator has done nothing to encourage infringing use; or that the site has complied with the takedown provisions of the DMCA. Thus, for sites that qualify as “foreign” under SOPA, the safe harbor of the DMCA arguably would be rendered irrelevant by SOPA. It is possible that SOPA will be amended to address some of these concerns before it is enacted into law.

Two weeks ago, it seemed that passage of SOPA was inevitable as it was steamrolling through Congress. But within a short period of time, widespread opposition to SOPA has arisen. Nancy Pelosi, Ron Paul and a broad bipartisan group of lawmakers have signaled their opposition to SOPA as overly broad, with long-term unintended adverse consequences for internet service providers such as Google. Google and other major internet service providers, major companies in internet commerce, and free speech advocates have lined up on opposition to the bill, while major players in the entertainment industry continue to strongly support the bill. There is substantial concern that SOPA, in practical effect, will impose substantial new obligations on internet service providers to police infringing activity, the impact of which will be to substantially  interfere with rights of free speech—indeed, some argue that the SOPA might reach so far as to require shut-down of legitimate web-sites such as You-Tube and E-Bay. While that clearly is not the intent behind the legislation, the remedies available to the attorney general and content providers who target “foreign” web-sites are feared by some to have the potential of unreasonably disrupting the economic foundation of legitimate internet web-site operators.

A hearing of the House Judiciary Committe is scheduled for December 15 to “mark-up” the bill to address various technical concerns. Although the entertainment and publishing industries remain firmly committed to the bill, opponents of the legislation appear to be gaining some traction. In this regard, Senator Ron Wyden (D) and Rep. Darrell Issa (R) plan to introduce an alternative to SOPA known as the OPEN Act, which would utilize the International Trade Commission, a quasi-judicial federal agency, as the main vehicle for  taking action against foreign piracy. The Open Act would create an internet piracy court under the ITC. The ITC would be authorized to investigate complaints from copyright holders and, if it decides that Web-site in dispute is “dedicated to infringing activity”, it could issue a cease-and-desist order. The Attorney General (Justice Department) could then bring action for injunctive relief to enforce the cease and desist orders. The Open Act would attempt to avoid internet censorship of legitimate web-sites by targeting primarily only internet advertising networks and “financial transcastion providers” such as credit card companies. Hoping to avoid what it perceives to be the most draconian elements of SOPA including the obligations it imposes  for “web-blocking”, Google has already indicated that it will probably support the OPEN Act. However SOPA’s primary backers, including the Motion Picture Associatio of America and the Recording Industry Association of America believe that the “web-blocking” remedies available in SOPA are necessary for their industries to regain profitability and overcome more than a decade of frustration due to rampant on-line piracy. Further, many supporters of SOPA have expressed concerning that the already overburdened International Trade Commission will not have the resources and institutional experience necessary to assume responsibility for policing foreign infringers.

While the future of this legislation cannot be predicted with certainty, it still seems likely that Congress will enact SOPA, perhaps with some technical improvements to clarify that its intent is to target foreign web-sites dedicated primarily to piracy, but not legitimate internet service providers and internet web-sites. In this difficult economic environment, economic recovery and job creation may depend, to a significant extent, on the willingness of lawmakers and the Courts to honor and aggressively enforce intellectual property rights. Thus, it is welcome news that Congress is working toward enactment of legislation that will target foreign web-sites that encourage and induce copyright and trademark infringement.

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