Seattle Copyright Watch - Insight and Commentary on Copyright and other Intellectual Property topics and, occasionally, Dogs

Eastland Music Group owns the rights to Phifty-50, a rap duo.  Phifty-50 maintains a website and released a 2003 album and a t-shirt.  Eastland registered “PHIFTY-50” as a trademark and claims a trademark in “50/50.”  Lionsgate Entertainment and Summit Entertainment named their 2011 motion picture “50/50,” referring to the main character’s chance of surviving cancer. 

Eastland sued Lionsgate and Summit for trademark infringement.  The district court ruled that the movie’s title was descriptive and dismissed the complaint on a Fed. R. Civ. P. 12(b)(6) motion for failure to state a claim upon which relief can be granted.  The Seventh Circuit affirmed the district court’s ruling, holding that there was no confusion about origin.

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Rosetta Stone sued Google over Google’s keyword search and advertising trademark use policies, contending that those policies create both a likelihood of consumer confusion and actual consumer confusion.  Rosetta Stone asserted that the likelihood of confusion and actual confusion misleads Internet purchasers into purchasing counterfeit Rosetta Stone software.  Rosetta Stone claimed the Lanham Act (trademark law) claims of direct, contributory and vicarious trademark infringement and trademark dilution, and the state law claim of unjust enrichment.

The district court granted Google’s summary judgment motion on the Lanham Act claims and dismissed the unjust enrichment claim.  On appeal, the Fourth Circuit affirmed the district court’s rulings on the vicarious infringement and unjust enrichment claims, but vacated the district court rulings on the direct infringement, contributory infringement and dilution claims and remanded those claims to the district court for further proceedings.

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Skydive Arizona sued defendants collectively doing business as SKYRIDE, alleging trademark claims of false advertising, trademark infringement and cybersquatting.  The district court granted partial summary judgment in Skydive Arizona’s favor on the false advertising claim.  The jury awarded damages to Skydive Arizona:  $1 million for willful false advertising, $2.5 million for willful trademark infringement, $2,500,004 for lost profits and $600,000 statutory damages for six violating domain names.  The district court doubled the false advertising and trademark infringement awards.  SKYRIDE appealed the judgment against it to the Ninth Circuit Court of Appeals.  Skydive Arizona appealed the district court’s grant of an injunction against SKYRIDE limited to Arizona, instead of a nationwide injunction.

Skydive Arizona is one of world’s most well known skydiving centers.  It hosts 145,000 to 160,000 skydives within Arizona each year and provides planes and personnel for skydiving events in 30 other states.  SKYRIDE is a third-party advertising and booking service for skydiving centers, but does not own skydiving facilities.  Customers pay SKYRIDE for a certificate that can be redeemed at drop zones across the country.  SKYRIDE owned and operated a number of website referencing locations in Arizona, such as PhoenixSkydiving and TucsonSkydiving, as well as domain names such as skydivearizona.net.  Both Skydive Arizona and SKYRIDE promote their businesses extensively on the Internet.

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Louis Vuitton was awarded $21,000,000 in statutory damages for willful contributory trademark infringement and $600,000 in statutory damages for willful copyright infringement by the district court against two defendants following a jury trial.  On appeal in Louis Vuitton Malletier v. Akanoc Solutions, the Ninth Circuit affirmed the district court’s rulings on liability, but disagreed with the district court’s damages calculations and vacated and remanded the judgment.

Facts.  Louis Vuitton distributes luxury merchandise displaying its trademarks and copyrighted designs.  It discovered websites it believed were selling goods that infringed its trademarks and copyrights.  The websites listed email addresses that prospective customers could contact, but the websites did not sell merchandise directly.  Louis Vuitton determined that the Internet Protocol (IP) addresses used by the websites were assigned to Managed Solutions Group, Inc., (MSG) and Akanoc Solutions, Inc., based in San Jose, California. 

MSG leased servers, bandwidth and IP addresses to Akanoc Solutions, Inc.  Akanoc ran a web hosting business with these resources.  Both companies were managed by Steven Chen.  Louis Vuitton sent MSG, Akanoc and Chen at least eighteen Notices of Infringement, describing the trademark and copyright infringements and demanding the removal of the infringing content.  Louis Vuitton received no response and sued MSG, Akanoc and Chen for contributory copyright and trademark infringement.  Louis Vuitton determined that the direct infringers were in China.  From the court’s description of the facts, the website owners were the initial contributory infringers and the defendants were a second tier of contributory infringers.  The people who used their email addresses to conduct the infringing sales were the direct infringers.

The case went to a jury trial.  The jury found in favor of Louis Vuitton, awarding $10,500,000 against each of the three defendants for statutory damages for willful contributory trademark infringement of thirteen trademarks ($31,500,000 total on trademark) and $300,000 against each defendant for statutory damages for willful copyright infringement of two copyrights ($900,000 total copyright). 

Defendants moved for judgment as a matter of law following the verdict.  The district court granted MSG’s motion.  It concluded that the evidence did not show that MSG sold domain names or operated the servers.  The district court denied Akanoc’s and Chen’s motions, awarded statutory damages against them and permanently enjoined them from participating in similar conduct.  Akanoc and Chen appealed.  Louis Vuitton cross-appealed the district court’s order granting MSG’s motion for judgment as a matter of law.

The Ninth Circuit’s opinion addressed the cross-appeal, Akanoc’s and Chen’s motion for judgment as a matter of law, jury instructions and damages.  This blog post discusses the damages calculations.

Copyright Damages Calculation.    17 U.S.C. §504(c)(1) describes statutory damages:

[T]he copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just.

The statutory maximum for willful copyright infringement under 17 U.S.C. §504(c)(2) is $150,000, but the jury awarded $300,000 per defendant for willful contributory copyright infringement on two Louis Vuitton copyrights.  The district court did not think this award violated the statutory maximum, since it worked out to $150,000 per copyright per defendant.  The district court did not specify whether the defendants were separately liable or jointly and severally liable.

The Ninth Circuit stated:

[W]hen statutory damages are assessed against one defendant or a group of defendants held to be jointly and severally liable, each work infringed may form the basis of only one award, regardless of the number of separate infringements of that work.

(Opinion pdf page 15).

The Ninth Circuit pointed out that “there was no legal basis for multiplying the award by the number of defendants.”  (Opinion pdf page 16).  Copyright statutory damages maximums are calculated based on the number of protected works, not the number of defendants.  The district court’s award was $600,000 for two works, twice the $150,000 per work statutory maximum.

Trademark Damages Calculation.  15 U.S.C. §1117(c)(2) sets out the statutory maximum for willful trademark infringement involving counterfeit marks.

if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.

The statutory maximum changed from $1,000,000 to $2,000,000 while the case was pending and the parties agreed that the $1,000,000 maximum would apply.  The jury award of $10,500,000 per defendant was for the willful contributory infringement of thirteen marks.  The district court did not think this award violated the statutory maximum, either, as it worked out to $807,692 per trademark per defendant.

The Ninth Circuit applied the same reasoning to the trademark award as it did the copyright award, indicating that “15 U.S.C. §1117(c) entitles a plaintiff to anaward, not multiple awards.”  (Opinion pdf page 16).  The award of $10,500,000 per defendant exceeded the statutory maximum.

The Ninth Circuit determined that a new trial on the issue of damages was not necessary, as the jury intended each defendant to be liable for the same amount of damages.  The court ruled that the jury award should be enforced against Akanoc and Chen by making them jointly and severally liable for a single trademark damages award and a single copyright damages award.

This case is Louis Vuitton Malletier v. Akanoc Solutions, Inc., No. 10-15909.

Plaintiff Susan Tierney Cockburn filed suit (pdf) in the Western District of Washington against five out of state defendants – one manufacturing defendant and four retail defendants.  The defendants filed motions to dismiss the complaint for lack of personal jurisdiction and to dismiss plaintiff’s Lanham Act (federal trademark) and state law claims for failure to state a claim upon which relief can be granted under Fed. R. Civ.P. 12(b)(6).  The defendants also questioned whether plaintiff’s works were copyrighted, although that does not appear to have been part of the formal motion.  Judge Robert S. Lasnik granted the motion to dismiss in part and denied it in part.

Facts.  Plaintiff is a professional author and artist in Redmond, Washington.  She creates floral art with paper and three dimensional paper flowers for use in crafts and hobbies.  She “developed a unique line of paper punches to enhance her paper floral art and three dimensional paper flowers.”  (Order pdf page 2).  Plaintiff registered copyrights for two books:  Paper Bouquet and The Paper Garden – Summer Blooms.

Defendant SWS Industries, Inc. is an Illinois corporation that manufactures punches used in office products, industrial supply/hardware and crafts.  An SWS representative contacted plaintiff in 2009, asking whether plaintiff would work with it on augmenting its existing paper punches.  SWS later presented plaintiff with a contract to purchase and manufacture her floral designs, but the parties failed to come to an agreement.  Plaintiff alleges that SWS created infringing works which it sold to Internet and retail customers all over the United States.  Plaintiff alleges that the retail defendants sold SWS’s infringing products either online or through retail stores.  The retail defendants are Archiver’s, a Minnesota corporation, Notions, a Michigan corporation, Moore, a Florida corporation, and CreateForLess, LLC, an Oregon limited liability company.  The defendants are not licensed to do business in Washington state and do not have employees or a physical presence in Washington.

Plaintiff claimed copyright infringement, violation of the Lanham Act, 15 USC §1125(a), violation of Washington’s Consumer Protection Act, and violation of Washington trade dress and trade name protection.  She sought a constructive trust and an accounting, both of which are state law claims.

Personal Jurisdiction.  The court undertook the same analysis described in my June 1, 2011, post Personal Jurisdiction Found Lacking in Copyright Infringement Action.  Washington State’s long arm statute extends to the limit of the Due Process Clause. 

For a forum state to have personal jurisdiction over an out-of-state defendant, that defendant must have certain minimum contacts with the forum state, such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.

(Order pdf page 5).

The court set out the three-part test used in the Ninth Circuit to analyze specific jurisdiction:

1. The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
2. the claim must be one which arises out of or relates to the defendant’s forum-related activities; and
3. the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

(Order pdf page 5).

The court indicated that “[i]n tort cases, courts typically inquire whether a defendant purposefully directs his activities at the forum state, applying an ‘effects’ test that focuses on the forum in which the defendant’s actions were felt, whether or not the actions themselves occurred within the forum.”  (Order pdf page 6).  Tort claims include a claim for willful copyright infringement. 

The first part of the above three-part test, purposeful availment, has its own three part test:  “the defendant allegedly must have (1) committed an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.”  (Order pdf page 6). 

The Ninth Circuit has approved a sliding scale analysis in addition to the effects test:  “[T]he likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet.”  (Order pdf page 6). 

The court ruled that the defendant retailers conduct with Washington involved the sale of a small number of non-infringing products and was “insufficient to show that they directed their activity towards Washington in a substantial way.”  (Order pdf page 7).  The retail defendants’ conduct was also found not to have been expressly aimed at the forum, as the retail defendants did not previously know of plaintiff’s existence, her dispute with SWS or her residence in Washington state.  The court granted the retail defendants’ motion to dismiss for lack of personal jurisdiction.

SWS argued that exercising personal jurisdiction over it would be unreasonable.  “Defendant must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.”  (Order pdf page 8).  The seven factors for determining reasonableness are:

1. the extent of the defendants’ purposeful contacts;
2. the burden on defendant of having to defend in Washington;
3. the extent to which jurisdiction conflicts with the sovereignty of the defendant’s resident state;
4. Washington’s interest in adjudicating the dispute;
5. which forum is the most efficient for resolution of the dispute;
6. plaintiff’s interest in choosing the Washington forum; and
7. the existence of an alternative forum to adjudicate plaintiff’s claims.

The court discussed the factors one by one.  It found that factors one, three, four and six weigh in favor of the plaintiff and factors two, five and seven weigh in favor of the defendant.  SWS did not present a compelling case that jurisdiction in Washington State is unreasonable.  The court denied SWS’s request to dismiss for lack of personal jurisdiction.

Copyright.  The defendants questioned whether plaintiff’s works were copyrighted, but did not provide support for that argument.  Defendants next argued that plaintiff’s designs become a useful article when used with a paper punch.  However, the designs can be cut with scissors or drawn.  The court did not think they were useful articles.  Defendants also argued that plaintiff’s floral designs are scenes a faire, since their origins are objects of nature.  The court ruled that this doctrine is inapplicable, since plaintiff did not claim copyright protection for the shape of certain flowers, but only for the designs of those flowers as rendered in her books. 

Lanham Act claim.  Plaintiff argued that SWS’s products used a trade dress confusingly similar to her products, in violation of the Lanham Act, 15 U.S.C. §1125(a).  Defendants argued that plaintiff’s Lanham Act claims duplicated her copyright claims and failed as a matter of law.  The court stated that “parallel copyright and Lanham Act claims are not per se improper” and that courts limit the application of trademark law when copyright laws “provide an adequate remedy.”  (Order pdf page 12).  The court indicated that plaintiff’s Lanham Act claim includes other elements that are not necessarily compensable under copyright law, such as a false designation of origin and/or sponsorship and SWS passing off its products as plaintiff’s.  The court stated that “courts typically resolve the issue of whether the Lanham Act and copyright claims overlap at the summary judgment stage rather than on a motion to dismiss.”  (Order pdf page 13).  The court denied defendants’ motion to dismiss the Lanham Act claim.

State law claims.  The defendants argued that plaintiff’s state law claims are preempted by the Copyright Act.  Preemption was discussed in my May 10, 2011, post Ninth Circuit Upholds Script Writer’s Implied Contract Claim under California State Law.  The two part preemption test adopted by the Ninth Circuit is

• courts must first determine whether the subject matter of the state law claim falls within the subject matter of copyright as described by 17 U.S.C. §§102 and 103, and
• courts must determine whether the rights asserted under state law are equivalent to the rights contained in 17 U.S.C. §106.

To survive preemption, the state law claim must include an extra element that is not protected by the Copyright Act.  The court ruled that plaintiff’s Consumer Protection Act (CPA) claim does not include the required extra element and dismissed that claim as preempted.  Of note to attorneys practicing in the Western District of Washington, the court stated that

[P]laintiff’s response does not address her CPA claim, which the Court construes, pursuant to Local Rule 7, as a concession that defendants’ arguments regarding that claim have merit.

The court found that plaintiff’s Washington State trade dress claims are not preempted, for the same reason the Lanham Act claims are not preempted.

The court found that plaintiff’s state law trade name claim based on words used by plaintiff in her copyrighted works is preempted by copyright law. 

Plaintiff’s state law trade name claim based on the alleged misuse of her name by the defendants is not preempted by copyright law.  “A person’s name or likeness is not a work of authorship within the meaning of 17 U.S.C. §102.”  (Order pdf page 15).

Plaintiff’s state law constructive trust claim was dismissed as preempted, as it was based on defendants’ violation of plaintiff’s copyrights. 

This case is Susan Tierney Cockburn v. SWS Industries, Inc., et al., Case No. C10-1566 RSL, Western District of Washington at Seattle.

Controversy surrounds the 9^thCircuit’s ruling in the Betty Boop case (Fleischer v. A.V.E.L.A.).  I felt reluctant to do a post on this case because there are already some sagacious posts on this topic by highly respected commentators:  Betty Boop And The Return of Job’s Daughters by Marty Schwimmer, Who Knows Who Owns Betty Boop by Pamela Chestek, Betty Boop as a Material Girl by Rebecca Tushnet and An Opinion That Cries Out For A 9^th Circuit En Banc Review...Betty Boop and The Tangled Character Copyright and Trademark Chain of Title  by Kate Spelman.  I decided to take the plunge after realizing that my take is different from what I have read so far and because it’s such an intriguing topic.

I have a question and a comment about this case:

Question:  Does the court believe that trademarks should be limited in duration, like copyrights?

Comment:  The Betty Boop plaintiff loses because of the court’s completely inapplicable analogy.  The court generalized from a case in which the trademark owner failed to timely assert its rights in its mark to this case in which the trademark owner did timely assert its rights. 

Here is a brief summary of the case.  The Betty Boop cartoon character was created by Max Fleischer in the 1930s.  He sold the rights to her cartoon and character around 1946.  The Fleischer family revived the Fleischer cartoon business in the early 1970s, repurchasing intellectual property rights to the Betty Boop character.  A.V.E.L.A., the defendant, started selling Betty Boop merchandise sometime after the Fleischer family began to bring the Betty Boop character back into circulation.  Fleischer sued A.V.E.L.A. for copyright and trademark infringement.

The district court dismissed the case on summary judgment.  The 9^th Circuit affirmed.  The 9^th Circuit’s ruling on the trademark part of the case creates the most controversy.  The circuit court determined that the parties’ arguments were moot and that the controlling precedent was its decision in International Order of Job's Daughters v. Lindeburg, a case which neither party cited.

Job’s Daughters is an organization that used its name and emblem as trademarks.  Lindeburg manufactured jewelry with the Job’s Daughters emblem without a license.  Job’s Daughters sued for trademark infringement.  The 9^thCircuit held that Lindeburg did not use the Job’s Daughters name and emblem as trademarks, that consumers purchased the jewelry for its design and did not purchase it because it was sponsored by the organization the emblem signified.  Jewelry with the Job’s Daughter’s emblem was available from many different unlicensed sources and consumers did not ordinarily purchase jewelry from only “official sources.”  In addition, Lindeburg manufactured unlicensed jewelry with the Job’s Daughters emblem between 1954 and 1975 before Job’s Daughters finally took action.  Job’s Daughters did not police its trademark when it should have, and when it did try to enforce its exclusive rights in the mark, it was too late.

The Betty Boop court applied its Job’s Daughters ruling to the Betty Boop facts and determined “that A.V.E.L.A. is not using Betty Boop as a trademark, but instead as a functional product.”

It is true in Job’s Daughters that the consumers bought the unlicensed jewelry as a functional product.  This resulted from the failure of the trademark owner to enforce the mark, not because of the intrinsic functionality of the jewelry.  The court in Job’s Daughters should have determined that the trademark owner did not enforce the mark and let it go at that.  Instead, the court created a bad precedent which it used in the Betty Boop case.

This language from the Betty Boop case is particularly interesting for rights holders of properties that are subject to both copyright and trademark protection:

If we ruled that A.V.E.L.A.'s depictions of Betty Boop infringed Fleischer's trademarks, the Betty Boop character would essentially never enter the public domain.

This quote above is based on Dastar Corp. v. Twentieth Century Fox Film Corp. In Dastar, Fox neglected to renew its copyright on a television series it created under license and based on General Dwight D. Eisenhower’s book about the World War II allied campaign in Europe.  The television series entered the public domain.  Fox later acquired rights to Eisenhower’s book, including the exclusive right to distribute and sublicense the television series on video.  Dastar used footage from the television series to manufacture its own video set of the allied campaign, without attributing any of it to Fox.  Fox sued Dastar for copyright infringement.  Fox tacked on a Lanham Act §43(a) (a.k.a. §1125(a)) claim for “reverse passing off,” which is the infringer passing off the trademark owner’s goods as the infringer’s own goods.  Ordinary "passing off" is when the infringer passes off his goods as the trademark owner's goods.  Fox could not overcome the failure to maintain the copyright and tried to rely on a claim for an unregistered trademark to save the day.  Fox tried to regain its copyright in the television series, which it allowed to slip into the public domain, by using a trademark theory and the court didn’t buy it.  Dastar is another case with a very narrow range of supportable application.

Different types of intellectual property offer different protections.  Properly maintained trademarks do not enter the public domain.  Whether the expiration of a copyright causes a property that is also protected by a trademark to enter the public domain is hotly debated. Does the court mean to suggest that long time trademarks such as IBM and Sears should someday enter the public domain?

The court also failed to acknowledge that Betty Boop is essentially a cartoon character.  Cartoon characters differ from other trademarks in that the product, the cartoon, is the same as the trademark, the cartoon.  Thus, it misses the point to look at the functional aspect of a product derived from the cartoon.  I posted a paper on this subject entitled Trademark Protection for Cartoon Characters on my website.