Women’s Wear Daily today reports on a matter that was covered on this blawg last August (Madonna’s Macy’s Material Met By Mark Lawsuit), namely an attempt by an LA company to put a stop to Madonna and Macy’s ‘Material Girl’ clothing line. The Plaintiff, L.A. Triumph, Inc, argues that it has the prior rights to the “MATERIAL GIRL” mark, though it appears that these rights are unregistered and therefore limited to the extent of its reputation. Continue reading »
With thanks to my good friend Dr. Michael Cohen, I came across an article in the New York Times about yesterday’s FTC report into the interplay of drug patents, litigation, business and competition. The report is some 270 pages long, so I’m not going to be reading it any time soon, but the central allegation is that some drug manufacturers are illegally distorting the post-patent market for generic medications. They do so, it is contended, by agreeing that both the patent holder and the generics maker will enter into a moratorium upon the expiry of a relevant patent, during which time neither party will bring their (competing) generic drugs to market. Continue reading »
A District Court in New York has become the latest to find that using a competitor’s trademark in Google’s AdWords program can be trademark infringement. District Judge Roslynn R. Mauskopf found that the Defendants’ selection of “PILLOW PETS” and similar marks as a trigger for Google Ads is likely an infringement of the Plaintiff’s registered trademarks “MY PILLOW PETS” and “IT’S A PILLOW, IT’S A PET”, and granted Plaintiff’s motion for a preliminary injunction. The case is CJ Products LLC v. Snuggly Plushez LLC, 11-CV-0715 (RRM)(SMG), NYLJ 1202512398696, at *1 (EDNY, Decided August 22, 2011). Continue reading »
Fashion designers, as a class, should gain only limited IP protection, according to Judge Victor Marrero of the Southern District of New York. Giving judgment in Christian Louboutin SA et al v. Yves Saint Laurent America, Inc et al., 1:11-cv-2381 (NYSD August 10, 2011), Judge Marrero acknowledged that the world famous Louboutin house has acquired extensive reputation and goodwill in their red soles – to the point that said soles have acquired a secondary meaning of designating Louboutin footwear only – yet ruled that this meant nothing because their goods are items of fashion.
The decision is curious since Judge Marrero relies, at least in part, on a comparison between apples and oranges. Continue reading »
In a decision that is already attracting plenty of controversy, comments, compliments and complaints, the Court of Appeals for the Federal Circuit has held that isolated human DNA molecules are patentable, and were validly patented by Myriad, under the (US) Patents Act. See Association for Molecular Pathology et al. v. Myriad Genetics, Inc et al. (Case No 2010-1406, Decided July 29, 2011). The decision reverses in part and affirms in part the decision of Judge Sweet, sitting in the District Court for the Southern District of New York (Case No. 09-CV-4515). Continue reading »
Microsoft’s recent (US) Supreme Court defeat at the hands of Canada’s i4i will cost them almost US$300m in damages for willful infringement of the latter’s XML patent. But in the longer term, the Court’s refusal to lower the burden of proof in challenges to a patent’s validity is good news for businesses with important patent portfolios.
At issue before the Court was section 282 of the (US) Patent Act, which reads, in part, as follows (my emphasis):
“35 U.S.C. 282 Continue reading »
If I told you that Robert Burck had had a haircut, you probably wouldn’t know what I was talking about. But if I told you that while in Times Square last week I noticed that the Naked Cowboy is back performing with a new look, you might even remember the lawsuit he filed last year against Sandra Brodsky, which I commented on here (case 1:10-cv-05539-VM).
Briefly, Burck sued Brodsky for trademark infringement over her use of the Naked Cowgirl label; and her counterclaims included an allegation that he had obtained some of his trademark registrations fraudulently. Continue reading »
YouTube’s recently revised copyright policy and video has been hammered by the copyleft and neutrals. The EFF describe it as “misleading” and “copyright propaganda”, Raymond Dowd says YouTube has “flunked” copyright school, and TechDirt calls it “myth perpetuating”, claiming that YouTube is “bending over backwards” to help copyright owners.
The new policy will require users accused of copyright infringement (but not those whose take down notices have been repudiated) to go to YouTube’s Copyright School and watch the video below, which purports to explain copyright law and the consequences of infringement. Continue reading »
On March 22, 2011, Judge Denny Chin handed down his Order rejecting the proposed settlement agreement (the ASA) between The Authors’ Guild et al. and Google (Case 1:05-cv-08136-DC). The Order is relatively short, despite the passage of over a year since the last hearing on the matter, and I thought it would be interesting to use extracts of Judge Chin’s words to create a reliable summary of the decision. The headings, and words, used are Judge Chin’s, except where a filing is indicated.
Comments on the Order itself may follow in a separate posting in due course. The Order is embedded below.
‘The question presented is whether the ASA is fair, adequate, and reasonable. I conclude that it is not.
While the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far. It would permit this class action … to implement a forward-looking business arrangement. … Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case. … [T]he motion for final approval of the ASA is denied.
A. The Facts and Prior Proceedings
Millions of the books scanned by Google … were still under copyright, and Google did not obtain copyright permission to scan the books … I entered an order preliminarily approving the ASA on November 19, 2009 (ECF No.772) …. [H]undreds of class members objected to the ASA. A few wrote in its favor.
B. The ASA
The ASA distinguishes between in-print (Commercially Available) and out-of-print (not Commercially Available) Books. (ASA §§ 1.31, 3.2, 3.3). Google may not display in-print Books at all unless and until it receives prior express authorization from the Books’ Rightsholders. … Google may display out-of-print Books without the prior express authorization of the Books’ Rightsholders, but its right to do so ceases when and if the Rightsholder directs Google to stop.
C. The Objections
The vast majority objected to the ASA. Some 6800 class members opted out.
A. Applicable Law
Under Rule 23(e) of the Federal Rules of Civil Procedure, a settlement of a class action requires approval of the court. Fed. R. Civ. P. 23(e). The court may approve a settlement that is binding on the class only if it determines that the settlement is “fair, adequate, and reasonable, and not a product of collusion.” Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000); see Fed. R. Civ. P. 23(e)(2).
In this Circuit, courts traditionally consider …. the [nine] Grinnell factors [City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974)]. … Public policy, of course, favors settlement.
As a preliminary matter, I conclude that most of the Grinnell factors favor approval of the settlement. … Only two of the Grinnell factors weigh against approval of the settlement: the reaction of the class and defendant’s ability to withstand judgment. … The former … is important. Not only are the objections great in number, some of the concerns are significant. Further, an extremely high number of class members — some 6800 – opted out. … I turn to the objections now.
1. Adequacy of Class Notice
I am satisfied that the class received adequate notice.
2. Adequacy of Class Representation
The adequacy of representation inquiry considers whether “1) plaintiff’s interests are antagonistic to the interest of other members of the class and 2) plaintiff’s attorneys are qualified, experienced and able to conduct the litigation.” Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 60 (2d Cir. 2000). … I conclude that there is a substantial question as to the existence of antagonistic interests between named plaintiffs and certain members of the class. … [T]he differences here are troubling.
3. Scope of Relief Under Rule 23
Certain objectors as well as the United States argue that the ASA will improperly use Rule 23 to shape a “forward looking” business arrangement that would release claims not before the Court.
The ASA can be divided into two distinct parts. The first is a settlement of past conduct and would release Google from liability for past copyright infringement. The second would transfer to Google certain rights in exchange for future and ongoing arrangements, including the sharing of future proceeds, and it would release Google (and others) from liability for certain future acts. (See, e.g., ASA §§ 10.1(f), 10.1(g), 10.2(a)). I conclude that this second part of the ASA contemplates an arrangement that exceeds what the Court may permit under Rule 23. As articulated by the United States, the ASA “is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation.” (DOJ Statement of Interest 2, Feb. 4, 2010, ECF No. 922 (“DOJ SOI”)). Moreover, the Rules Enabling Act provides that the rules of procedure “shall not abridge, enlarge or modify any substantive right.” 28 U.S.C. § 2072(b).
Although I am persuaded that the parties are seeking in good faith to use this class action to create an effective and beneficial marketplace for digital books, I am troubled in several respects.
a. A Matter for Congress
First, the establishment of a mechanism for exploiting unclaimed books is a matter more suited for Congress than this Court.
The questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties. Indeed, the Supreme Court has held that “it is generally for Congress, not the courts, to decide how best to pursue the Copyright Clause’s objectives.” Eldred v. Ashcroft, 537 U.S.186, 212 (2003); accord Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (“[I]t is Congress that has been assigned the task of defining the scope of the limited monopoly that should be granted to authors or to inventors in order to give the public appropriate access to their work product.”).
[T]he ASA would also raise international concerns, and foreign countries, authors, and publishers have asserted that the ASA would violate international law. For this reason as well, the matter is better left for Congress.
b. The Scope of the Pleadings
Second, the ASA would release claims well beyond those contemplated by the pleadings. … The case was about the use of an indexing and searching tool, not the sale of complete copyrighted works.
Google would have no colorable defense to a claim of infringement based on the unauthorized copying and selling or other exploitation of entire copyrighted books. Yet, the ASA would grant Google the right to sell full access to copyrighted works that it otherwise would have no right to exploit … And it would do so even though Google engaged in wholesale, blatant copying, without first obtaining copyright permissions. While its competitors went through the “painstaking” and “costly” process of obtaining permissions before scanning copyrighted books, “Google by comparison took a shortcut by copying anything and everything regardless of copyright status.” (Hr’g Tr. 43 (Thomas Rubin, counsel for Microsoft)). As one objector put it: “Google pursued its copyright project in calculated disregard of authors’ rights. Its business plan was: ‘So, sue me.'” (Objection of Robert M. Kunstadt to Proposed Settlement 3, ECF No. 74).
[Footnote 13: “The Google Book Search (GBS) initiative envisioned in the [ASA] is not a library. It is instead a complex and large-scale commercial enterprise in which Google — and Google alone – will obtain a license to sell millions of books for decades to come.”(Letter from Pamela Samuelson to Court (Jan. 27, 2010) (ECF No.893) (“Samuelson Letter”)).]
Applying Firefighters, I conclude that the released claims would not come within “the general scope of the case made by the pleadings.” 478 U.S. at 525. Applying Wal-Mart Stores, I conclude that the released conduct would not arise out of the “identical factual predicate” as the conduct that is the subject of the settled claims. 396 F.3d at 107 (citation omitted).
c. The Interests of Class Members
While it is true that in virtually every class action many class members are never heard from, the difference is that in other class actions class members are merely releasing “claims” for damages for purported past aggrievements. In contrast, here class members would be giving up certain property rights in their creative works, and they would be deemed – by their silence – to have granted to Google a license to future use of their copyrighted works.
4. Copyright Concerns
“Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials.” Sony, 464 U.S. at 431. … Yet, the ASA proposes to expropriate rights of individuals involuntarily. … [T]he notion that a court-approved settlement agreement can release the copyright interests of individual rights owners who have not voluntarily consented to transfer is a troubling one.
A copyright owner’s right to exclude others from using his property is fundamental and beyond dispute. … As counsel for Amazon argued: “[T]he law of the United States is a copyright owner may sit back, do nothing and enjoy his property rights untrammeled by others exploiting his works without permission.” (Hr’g Tr. 46-47 (David Nimmer)). Under the ASA, however, if copyright owners sit back and do nothing, they lose their rights. (See id. at 47). Absent class members who fail to opt out will be deemed to have released their rights even as to future infringing conduct. “Copyright owners who are not aware that the [ASA] affects their interest unknowingly leave Google to decide how their books are used.” Glorioso, supra n.3, at 992. … [I]t is incongruous with the purpose of the copyright laws to place the onus on copyright owners to come forward to protect their rights when Google copied their works without first seeking their permission.
5. Antitrust Concerns
Certain objectors oppose the ASA on antitrust grounds, arguing that (1) certain pricing mechanisms would constitute horizontal agreements that would violate the Sherman Act; (2) the ASA would effectively grant Google a monopoly over digital books, and, in particular, orphan books; and (3) such a monopoly would further entrench Google’s dominant position in the online search business.
The ASA would give Google a de facto monopoly over unclaimed works … [and] … would arguably give Google control over the search market. … The seller of an incomplete database — i.e., one that does not include the millions of orphan works – cannot compete effectively with the seller of a comprehensive product.
6. Privacy Concerns
The privacy concerns are real. Yet, I do not believe that they are a basis in themselves to reject the proposed settlement.
7. International Law Concerns
I need not decide whether the ASA would violate international law. In light of all the circumstances, it is significant that foreign authors, publishers, and, indeed, nations would raise the issue. … The fact that other nations object to the ASA, contending that it would violate international principles and treaties, is yet another reason why the matter is best left to Congress.
In the end, I conclude that the ASA is not fair, adequate, and reasonable.’
In his January 25, 2011 decision in the Central District of California, District Court Judge George H. King held that the targeted use of a third party’s trademark in a Google AdWord advertising campaign can constitute trademark infringement and can also leave advertisers open to an award of enhanced damages, attorneys fees and costs. (Binder v. Disability Group, Inc., Case no. cv 07-2760-GHK)
The holding is a warning to advertisers that Google’s (current) placement and color of ads is insufficient by itself to avoid trademark infringement. Accordingly, care must be taken to ensure that such ads are carefully worded, particularly since it appears that the infringed trademark in Binder was not even in the text of the offending ads.
In relation to the trademark infringement claim under 15 U.S.C. § 1114(1)(a), the Court noted:
“Moreover, ‘[i]n the context of the Web in particular, the three most important Sleekcraft factors [the ‘Internet trilogy’] are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the simultaneous use of the Web as amarketing channel.’ GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9thCir.2000).”
The Court found a “strong” likelihood of confusion due to the strength of Plaintiff’s mark, identity of the marks, identity of services and identity of commercial channels (i.e. the Internet). Accordingly, the Plaintiff’s registered marks were found to have been infringed by the Defendants’ AdWords ads. There was also evidence of actual confusion among users viewing Google’s search results (which the Court described as the result of the Defendants’ “deception”), though the Court notes that evidence of actual confusion was not necessary.
The Court also held that the Defendants’ use of Plaintiff’s trademarks as part of their AdWords campaign meant they were also liable for false advertising under 15 U.S.C. §1125(a), saying:
“Defendants used Plaintiff’s mark in their advertising campaign through Google to market their business in a manner that was likely to confuse potential clients and that decieved potential clients into thinking they were being led to Plaintiff’s website”. [Emphasis added.]
The indication is that the Defendants’ wrongful act was the very leading of users to their website, and was not in any way dependent on what appeared on said website.
The Court held that the Defendants’ intentional use of their competitor’s registered marks amounted to willful misconduct and a “deliberate intent to deceive”. Accordingly, the Court awarded enhanced damages under 15 U.S.C. § 1117(a) in the amount of double the Plaintiff’s lost profits.
Furthermore, the Court held that this type of trademark infringement is the sort of “exceptional” infringement referred to in the Lanham Act, and awarded the Plaintiff additional orders of attorneys’ fees and costs. The Court also found one of the Defendants’ officers personally liable since he had “directed, authorized or participated in” the infringement. In a small victory for the Defendants, the Court declined Plaintiff’s claim for prospective corrective advertising costs, citing the passage of time (the judgment came a little over four years after the last infringement) and a lack of specificity in Plaintiff’s pleadings. So make sure to start claims sooner rather than later.
Finally, the Court left the door open for a future litigant to argue that the failure of a mark owner to preemptively register their mark with Google (to prevent its selection as an AdWord) meant the owner has failed to mitigate its losses. The argument failed in Binder partly because the evidence presented by the Defendant was vague, but the Court didn’t completely rule out the possibility that it could apply on different evidence (though it seems unlikely).
The full decision can be read below.
Binder v. Disability Group