A Bittersweet Victory: The Ninth Circuit Reaffirms DMCA Protection
In 2007, Universal Music Group (UMG) brought a lawsuit against Veoh Networks (Veoh), a video hosting website, alleging that Veoh facilitated copyright infringement by providing a website that hosted videos containing music owned by UMG. On December 20, 2011, the Ninth Circuit Court of Appeals upheld a summary judgment in favor of Veoh and held that Veoh was protected by the Digital Millennium Copyright Act’s (DMCA) “safe harbor” provisions. In other words, it found in order to be protected by the safe harbor provisions of the DMCA, sites making files uploaded by users publicly available are required to remove infringing content only when the site becomes aware of the specific infringing content, for example, by means of a DMCA takedown notice.
While Veoh’s website was found to be perfectly legal, its victory is bittersweet; the small startup company filed for bankruptcy early in 2010 from the high cost of defending its case. Its victory, however, was an important victory for the Internet, as a whole, and may also have implications toward the outcome of the case between Viacom and YouTube.
The case also brings to light why the SOPA/PIPA bills before the House and Senate are cause for concern. The DMCA allows companies like Veoh to keep its business running while a case is being litigated. The SOPA/PIPA bills, however, would have immediately shut Veoh’s website down before it even had its day in court, thereby keeping Veoh from running its business which, in this case, was ultimately found to be perfectly legal. There is cause for concern when copyright holders abuse the law to stymie innovative new startups. The SOPA/PIPA bills will be back on Congress’ agenda when it reconvenes in January.
Excess Baggage: The Hangover’s New Woes
The first lawsuit was brought by a tattoo artist for copyright infringement. A second lawsuit was brought by a stunt man for damages he suffered while shooting a scene. A third lawsuit was brought by a man who alleged the movie was based on a script chronicling his Asian excursion. Continuing this string of lawsuits, Louis Vuitton now brings a fourth lawsuit against Warner Bros., for its movie “The Hangover Part II.”
The luxury brand filed its lawsuit in New York and alleges that a piece of luggage featured in one scene of the movie was a fake and contends that ithas been damaged by consumer confusion after dialogue used in the movie has allegedly became a catchphrase, of sorts. The scene in question involves the character Alan, played by Zach Galifianakis, saying “Careful, that’s a Louis…that is a Louis Vuitton,” and fails to silence the “s” in “Louis.” The company, suing for trademark dilution, false designation of origin, and unfair competition, is seeking damages and an injunction to stop Warner Bros. from distributing the movie on DVD as long as the luggage remains in the scene.
Tootsie Roll Tells Footzyroll to Roll Over
While consumers are not likely to confuse a rollable ballet slipper with candy, Tootsie Roll Industries contends that Rollashoe is trying to profit from the goodwill it has worked to establish since 1908. The lawsuit, which was filed in Illinois federal court, alleges that Rollashoe’s Footzyrolls brand infringes on the Chicago-based Tootsie Roll brand and that the Footzyrolls brand will likely confuse and deceive customers into believing that the Footzyrolls slippers are associated with Tootsie Roll’s products.
Tootsie Roll, which licenses the use of its “Tootsie Roll” trademark for use in connection with other items such as clothing; footwear; and accessories; states that both companies are targeting a similar class of consumers, and that these consumers are likely to believe that the Footzyroll slippers are affiliated with Tootsie Roll. The Caplan sisters, who founded Rollashoe, argue that the Footzyroll mark was not made with the intent to confuse consumers but was, rather, a simple description of the soft roll-up shoes that were made for women to carry in their handbags, if, and when, they should need instant relief from wearing high heels.
While Tootsie Roll may have a difficult time proving a likelihood of confusion considering the fact that Footzyrolls are marketed to women who may need an extra pair of shoes, rather than fans of the famous candy; and considering the differences in the respective brands’ design and packaging; Tootsie Roll may still have a convincing claim for trademark dilution. Trademark dilution is a concept that provides an owner of a famous mark, such as Coca-Cola; McDonald’s; and Pepsi; relief from the acts of another when the actions of the other party may water down, erode, or weaken the cachet of the famous mark.
While the Caplan sisters are prepared to fight to protect their brand, their plight underlines the importance for small businesses to understand the importance of trademarks, the protections they afford, and the importance of assessing whether there may be a likelihood that a trademark a small business intends to use may violate an already existing trademark. CNN Money provides an informative article regarding the importance of trademarks here.
Intellectual Property Protection at the Border
In order to simplify the process of recording federally registered trademarks and copyrights for right holders, the CBP has released the Intellectual Property Rights e-Recordation (IPRR) application system online.
Prior to beginning the e-Recordation application, the following items should be readily accessible:
- United States Patent and Trademark Office Registration Number or the United States Copyright Office Registration Number;
- Digital Images of the protected mark/work in “.jpg” or “.gif” format; and
- Familiarization with the applicable regulations for trademarks, 19 CFR 133.1, et seq.; and copyrights, 19 CFR 133.31, et seq.
It is important to remember that the right holders agree to supply all documents specified in 19 CFR 133.3, for trademarks; and 19 CFR 133.33, for copyrights; upon request. Failure to comply with such requests will result in the recordation being suspended, pending receipt of the documents, and prevent timely enforcement of the right holders’ intellectual property.
All applications will be processed in the order in which they are received and a separate application will be required for each recordation. The recordation fee for copyrights is $190, and the recordation fee for trademarks is $190 per International Classification of Goods. Upon completion of the recordation process, the CBP’s recordation database will allow CBP officers to monitor imports at each of the country’s 317 ports of entry.
For additional information on the Customs and Border Protection enforcement program, and how to obtain a recordation, please visit the CBP’s website or contact Maxey Law Offices.
Cyber Monday Seizures
The Monday after Thanksgiving, on November 28, better known to us as “Cyber Monday,” federal authorities seized 150 domain names for commercial websites that allegedly sold and distributed counterfeit goods and copyrighted works in an operation dubbed “In Our Sites.” Before seizing a domain, law enforcement officers purchased a variety of counterfeit products including DVDs; sunglasses; shoes; sports jerseys; and golf equipment from these websites to determine whether they offered counterfeit goods for sale, with most of these goods being shipped to the United States from foreign suppliers.
After a domain is seized, the federal authorities then post a banner on the site, as seen below, that notifies a visitor to the seized website of the penalties for willful copyright infringement.
The domain then becomes the federal government’s property if no challenges to the seizure arise. The National Intellectual Property Rights Coordination Center (IPR Center) of U.S. Immigration and Customs Enforcement has shut down 350 websites since its inception, in 2010. 116 of the 350 websites are now the property of the government.
Assistant Attorney General for the Justice Department’s Criminal Division, Lanny Breuer, stated that website operators, in most cases, do not challenge seizure of the domains.
A list of the seized websites can be found here.
The “Dutiful” China: A Proposal to Impose Duties on Merchandise from China
Congressman Steve King (R-IA) introduced legislation last week, H.R. 3375, that aims to punish China for failing to protect the holders of United States intellectual property rights. The legislation would accomplish this by directing the President to impose duties on merchandise from China in an amount equivalent to the estimated annual loss of revenue to holders of United States intellectual property rights as a result of violations of such intellectual property rights in China. Under King’s bill, the revenue raised by the imposition of duties on Chinese merchandise will be proportionally distributed to provide compensation to holders of United States intellectual property rights.
In his press release, Rep. King states that, “The creative genius of Americans, protected by our copyrights, trademarks and patents, is systematically being pirated by the Chinese whose government appears to be complicit” and that his bill “levies a duty on all Chinese imports in an amount necessary to both pay U.S. property rights holders for their stolen intellectual property and to administer the program.”
While Rep. King cites a Congressional Research Report to imply there has been some research performed, the facts and figures of this report are questionable. Most importantly, while the bill may be well-intentioned, the real question is: who will ultimately bear the burden of these imposed duties?
The Constitutionality of the ACTA
On October 1, 2011, in Tokyo, representatives from eight governments, including: the United States; New Zealand; Canada; Singapore; South Korea; Australia; Japan; and Morocco, signed the Anti-Counterfeiting Trade Agreement (ACTA). Proponents began negotiations back in 2008 with the hope of establishing international standards on the enforcement of intellectual property rights, particularly in response to the increase in counterfeit goods and piracy of copyrighted works. The negotiations were criticized for being classified as secret, in the United States, on the basis of that disclosure could pose “damage to the national security.” The Office of the U.S. Trade Representative (USTR), the government agency that negotiated and signed the agreement, has claimed ACTA will become “the highest-standard plurilateral agreement ever achieved concerning the enforcement of intellectual property rights.” The final text of the agreement, which was finalized in November, includes provisions on civil, criminal, border, and digital environment enforcement, and further includes provisions to assist participants to the agreement in their enforcement efforts and to establish best practices for effective enforcement of intellectual property rights.
The USTR has made claims that because the ACTA is consistent with current U.S. copyright, patent, and trademark laws, it “does not require the enactment of implementing legislation” and that “The United States may therefore enter into and carry out the requirements of the Agreement under existing legal authority, just as it has done with other trade agreements.” Critics, however, have expressed their doubts regarding the legality of the ACTA. For example, several law professors have voiced concerns that not only is the ACTA inconsistent with U.S. law, but that the president does not have the proper authority to bind the U.S. to the agreement. Senator Ron Wyden (D-Ore.) cites some of these legal experts and states that, “if the USTR ratifies ACTA without Congress’ consent it may be circumventing Congress’s Constitutional authority to regulate international commerce and protect intellectual property.”
Earlier this year, the USTR tried to keep a report by the Congressional Research Service (CRS) buried; in the report, the CRS concluded that “[d]epending on how broadly or narrowly several passages from the ACTA draft text are interpreted, it appears that certain provisions of federal intellectual property law could be regarded as inconsistent with ACTA…it is debateable whether these apparent inconsistencies are significant or whether they would require changes to federal law in order for the U.S. to be considered in compliance with ACTA’s general obligations.” The European Union, which represents 27 of the 37 parties to the ACTA negotiations, has declined to sign the ACTA at this time, despite its support. It too has concluded that the ACTA may indeed be, or possibly may not be, legal and in line with the existing legal framework of the European Union. However, unlike the U.S., the EU Commission has not asserted that it can implement the ACTA without parliamentary approval.
Congress’ New Target After Patent Law Reform: Legal Sites & Copyrights
With the recent and, perhaps hasty, overhaul of the patent law system in the United States through the America Invents Act signed into law by President Obama on September 16, 2011, it appears that Congress has now shifted its focus from patent legislation to copyright legislation. The shift to copyrights comes in the form of a bill called the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011 (also referred to as the “PROTECT IP Act,” “United States Senate Bill S.968,” or simply, “PIPA”) that was introduced and passed out of the Senate Judiciary Committee on May 12, 2011 by Senator Patrick Leahy (D-VT).
Several large firms and business groups in the entertainment industry, such as the MPAA and the US Chamber of Commerce, have expressed support for the legislation and claim that PIPA would help shut down “rogue” websites dedicated to infringing activities, such as the online sale of counterfeit products, and save U.S. jobs.
However, arguing that PIPA was an overreach that would imperil free speech and innovation on the Internet, Senator Ron Wyden (D-Ore.) placed the bill on hold and prevented the bill from going to the Senate floor for a vote. Senator Wyden exercised the rule allowing a single senator to place a hold on a bill, even though a hold may be overridden by a 60-vote majority. Senator Wyden is also known for blocking a similar bill, called the Combating Online Infringement and Counterfeits Act (COICA), after the Senate Judiciary Committee passed it in late 2010 which would have expanded the power of federal agencies to seize the domain names of allegedly infringing websites.
While the Senate version of PIPA allows the Department of Justice to seek court orders to force search engines and ISPs to stop sending traffic to websites accused of copyright infringement and allows copyright holders to seek court orders to require payment processors and online ad networks to cease any business with allegedly infringing websites, the House version may include new legal liabilities for websites and online services that rely on user-generated content, effectively destroying sites such as Twitter, Facebook, and YouTube.
Opponents to the Bill say it would allow rights holders to obtain temporary court orders against infringing sites without adequate judicial review. Several concerned groups, such as Web entrepreneurs like the co-founders of Twitter, foursquare, and LinkedIn additionally argue that the bill’s definition of what constitutes a “rogue site” dedicated to copyright infringement is vague. They argue that the bill could result in inadvertent “collateral damage” to both the Internet and the technology industry because the bill requires that “rogue sites” be removed from search engines, DNS servers, and other third parties. They have asked the House Judiciary Committee members to hold off on the legislation and consider input from the affected groups. While members of the House finally agreed to meet with groups representing the technology industry, it has been reported that the Representatives have ignored the technology industry’s concerns regarding the problems the Bill would cause for innovation and job growth and have decided to release the Bill it had been working on with an accelerated push to get the Bill approved. As the concerned groups have expressed, the stakes are high, and while the technology industry may be leading America out of the recession, “inadvertent damages to the tech sector could not happen at a worse time.”
The House of Representatives is expected to introduce their version of the bill this week.
UPDATE: October 26, 2011
A bipartisan group in the House today introduced the “Stop Online Piracy Act” (H.R. 3261). The House Judiciary Committee will hold a hearing on the “Stop Online Piracy Act” on November 16, 2011. The text of the bill can be found here.
America Invents Act Enacted into Law
On September 16, 2011, President Barack Obama signed the Leahy-Smith America Invents Act into law. The U.S. Senate voted on September 8, 2011, to reform U.S. patent laws by approving the Leahy-Smith America Invents Act, with identical provisions to H.R. 1249, which was met with overwhelming approval by the House of Representatives on June 23, 2011, by a vote of 304-117. Many of the provisions of the act will be implemented in stages over the next 18 months.
Several reforms such as those relating to litigation, new standards for the institution of inter partes reexaminations, best mode, fee setting authority, and the establishment of a micro-entity for purposes of reducing patent fees for inventors, took effect as soon as the Act was signed into law. A few other changes, including a 15% increase on most USPTO fees and provisions relating to false marking, took effect on September 26, 2011.
Most of the other patent reforms, i.e., the reforms that will have the most profound effects on how patents will be prepared, obtained, and enforced within the United States; are scheduled to take effect on September 16, 2012, one year from the Act being enacted into law. These include provisions relating to inter partes review, post-grant review. Finally, the provisions which change the United States from a first-to-invent to a first-to-file system, replace interference proceedings with derivation proceedings, and modify the definition of “prior art” take effect in 18 months, on March 16, 2013.
Patent Milestones
On August 16, 2011, the United States Patent and Trademark Office (USPTO) issued patent number 8,000,000! The patent was granted to Second Sight Medical Products, Inc., whose invention was for a visual prosthesis apparatus that is able to enhance visual perception for people having gone blind due to outer retinal degeneration. The invention, the Argus® II, works by electrically stimulating the retina to produce the visual perception of patterns of light and is currently in clinical trials in the U.S. and has received marketing approval in Europe. The signing and presentation to celebrate the milestone of the 8 millionth patent took place at the Smithsonian American Art Museum on Sept. 8, 2011.
According to the USPTO, the first patent was issued in 1836. In August 1911, nearly 75 years later, patent number 1,000,000 issued. However, it took just under six years to get from patent number 7,000,000 to patent number 8,000,000. More information on these milestones are available online.
It should also be noted that as the USPTO celebrated this milestone, the controversial Leahy-Smith America Invents Act of 2011 was approved by Congress on September 8, 2011 and will soon be signed into law by President Obama. It is the first major reform that has been made to the U.S. patent system in nearly sixty years.
