10/5/2010. Copyrights, Patents, and the Danger of Mislabelling. Randall Moeller Newman & Newman, LLP October 7, 2010

Transcription

1 Copyrights, Patents, and the Danger of Mislabelling Randall Moeller Newman & Newman, LLP October 7,

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4 17 U.S.C. 1202(c): What is CMI? As used in this section, the term copyright management information means any of the following information conveyed in connection with copies or phonorecords of a work or performances or displays of a work, including in digital form, except that such term does not include any personally identifying information about a user of a work or of a copy, phonorecord, performance, or display of a work: (1) The title and other information identifying the work, including the information set forth on a notice of copyright. (2) The name of, and other identifying information about, the author of a work. 4

5 What is CMI? (cont d) 17 U.S.C. 1202(c): (3) The name of, and other identifying information about, the copyright owner of the work, including the information set forth in a notice of copyright. (4) With the exception of public performances of works by radio and television broadcast stations, the name of, and other identifying information about, a performer whose performance is fixed in a work other than an audiovisual work. What is CMI? (cont d) 17 U.S.C. 1202(c): (5) With the exception of public performances of works by radio and television broadcast stations, in the case of an audiovisual work, the name of, and other identifying information about, a writer, performer, or director who is credited in the audiovisual work. (6) Terms and conditions for use of the work. What is CMI? (cont d) 17 U.S.C. 1202(c): (7) Identifying numbers or symbols referring to such information or links to such information. (8) Such other information as the Register of Copyrights may prescribe by regulation, except that the Register of Copyrights may not require the provision of any information concerning the user of a copyrighted work. 5

6 17 U.S.C. 1202(b) No person shall, without the authority of the copyright owner or the law (1) intentionally remove or alter any copyright management information, (2) distribute or import for distribution copyright management information knowing that the copyright management information has been removed or altered without authority of the copyright owner or the law, or (3) distribute, import for distribution, or publicly perform works, copies of works, or phonorecords, knowing that copyright management information has been removed or altered without authority of the copyright owner or the law, knowing, or, with respect to civil remedies under section 1203, having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any right under this title. 17 U.S.C. 1202(a) No person shall knowingly and with the intent to induce, enable, facilitate, or conceal infringement (1) provide copyright management information that is false, or (2) distribute or import for distribution copyright management information that is false. Statutory damages You do not have to register the work as a prerequisite to filing a lawsuit for CMI violation (although you do for copyright infringement) You can obtain statutory damages for CMI violations without registering a copyright in the relevant work (but you cannot obtain them for copyright infringement) Protects more defendants court filing fee would likely offset license fee for unregistered work if actual damages had to be proven 17 U.S.C. 1203(c)(3): a complaining party may elect to recover an award of statutory damages for each violation of section 1202 in the sum of not less than $2,500 or more than $25,000 6

7 Targeted to digital media? Early view: Congress intended to limit CMI provision to automated copyright management systems functioning within a computer network environment. Congress viewed 1201 and 1202 together as preventing circumvention of the technological measures referred to in 1201 IQ Group, Ltd. v. Wiesner Publishing, LLC, 409 F.Supp.2d 587, 596 (D.N.J. 2006) Targeted to digital media? More recent view: the statute does not mention automation, and could apply to the manual removal of CMI. IQ Group and Textile Secrets relied heavily on the DMCA's legislative history in reaching their conclusions about the goals and purpose of the DMCA and limiting its reach. As the plaintiff notes, the Second Circuit has held that legislative history should not be considered as a first resort, and that statutory language should be applied as written The defendants have cited no textual support for limiting the DMCA s application to "the technological measures of automated systems" -- a phrase that appears nowhere in the statute. Associated Press v. All Headline News Corp., 608 F.Supp.2d 454, 462 (S.D.N.Y. 2009) What would the Ninth Circuit do? Probably follow AP v. All Headline News: When interpreting a statute, we look first to the plain language of the statute, construing the provisions of the entire law, including its object and policy, to ascertain the intent of Congress. If the plain meaning of the statute is unambiguous, that meaning is controlling and we need not examine legislative history as an aid to interpretation unless the legislative history clearly indicates that Congress meant something other than what it said. If the statutory language is ambiguous, we consult legislative history. Zuress v. Donley, 606 F.3d 1249, (9 th Cir. 2010) 7

8 What forms can it take? Watermarks (related to copyright ownership, not exclusively to tracing the user, e.g., forensic watermarks) Metadata Signatures on paintings Comments in source code ISBN Does removal of a trademark qualify? No. [A] very broad interpretation of 1202(c) might conceivably include a logo, but this would allow[] a trademark to invoke DMCA protection of copyrights, making the DMCA an extension of trademark law. IQ Group, Ltd. v. Wiesner Publishing, LLC, 409 F.Supp.2d 587, 592 (D.N.J. 2006) Recent N.D.Ill. case: Affixed or adjacent? Cable (photographer) took pictures of houses for a real estate firm s (Garrison s) website Parties agreed images must be attributed with a credit line identifying Cable as the source, which Garrison did Cable alleged AFP deliberately removed the photo credit Court denied 12(b)(6): under the plain language of the statute, the plaintiff's name and hotlink fall within the scope of copyright management information, in the absence of evidence to the contrary Cable v. Agence France Presse, 2010 U.S. Dist. LEXIS 73893, *10 (N.D.Ill. Jul. 20, 2010) 8

9 Affixed or adjacent? No definitive ruling in this jurisdiction Plaintiff argues Defendant violated 1202(b) by displaying thumbnails of Plaintiff s images without displaying the corresponding copyright management information consisting of standard copyright notices in the surrounding text Because these notices do not appear in the images themselves, the Ditto crawler did not include them when it indexed the images... As a result, the images appeared in Defendant s index without the copyright management information... Section 1202(b)(1) does not apply to this case. Based on the language and structure of the statute, the Court holds this provision applies only to the removal of copyright management information on a plaintiff's product or original work. Kelly v. Arriba Soft Corp., 77 F.Supp.2d 1116, (C.D.Cal. 1999), rev d on other grounds, 336 F.3d 811 (9 th Cir. 2003). Plead it early District court did not abuse its discretion by holding the inclusion of CMI claim in pretrial order was insufficient. Neither the original nor the amended complaint mentioned a copyright management information claim the first time these claims appeared was in the pretrial order. Polar Bear Productions, Inc. v. Timex Corp., 384 F.3d 700, 719 (9 th Cir. 2004). Who has standing? Nothing in the DMCA limits standing to the copyright owner. Instead, the statute states that [a]ny person injured by a violation of section 1201 or 1202 may bring a civil action in an appropriate United States district court for such a violation. 17 U.S.C. 1203(a). EchoStar alleges that it contracts and purchases the distribution rights of copyrighted programming from the copyright owners... Because EchoStar contracted and purchased the distribution rights of the programming, it is reasonable to infer that EchoStar also has the authority to control the measures protecting the programming. Echostar Satellite, L.L.C. v. Viewtech, Inc., 543 F. Supp. 2d 1201, (S.D.Cal. 2008) 9

10 Exceptions for media Broadcast stations and cable systems are exempt if avoiding the activity that constitutes such violation is not technically feasible or would create an undue financial hardship and there s no intent to facilitate infringement (17 U.S.C. 1202(e)(1)) Propet USA, Inc. v. Shugart Photographer counterclaimed against licensee for 1202(b) violation Case involved removal of embedded CMI from over 200 digital images Court determined the evidence provided sufficient support for the jury s damages award of $500,000 (removal of CMI from over 200 images, and a permissible range of damages for each violation of between $2,500 and $25,000) Propet USA, Inc. v. Shugart, 2007 U.S. Dist. LEXIS 94635, *10-15 (W.D.Wash. Dec. 13, 2007) Lack of knowledge as affirmative defense Defendant s counterclaims are barred in whole or in part because Plaintiffs and Counterclaim Defendants were not aware and had no reason to believe that their acts constituted a violation of 17 U.S.C Answer and Affirmative Defenses of Plaintiffs and Counterclaim Defendants at 30 (Dkt. No. 21), Fairey v. Associated Press, U.S.D.C. S.D.N.Y. Case No. 1:09-cv AKH 10

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15 35 U.S.C. 287(a): Marking Requirements (a) Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word patent or the abbreviation pat., together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice. Benefits of marking Constructive notice to infringers damages Possible evidence of willful infringement increased damages Evidence of innovation Leverage in negotiations 35 U.S.C. 292: False marking statute (a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words patent, patentee, or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word patent or any word or number importing that the same is patented for the purpose of deceiving the public; or 15

16 False marking statute (cont d) 35 U.S.C. 292: Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words patent applied for, patent pending, or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public Shall be fined not more than $500 for every such offense. (b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States. Damages caused by false marking Disincentive to enter the market Deters some research and development Unnecessary investment in costs to design around Analysis of enforceability of an invalid patent Standing As a qui tam relator, the plaintiff effectively is an assignee of the government s interest in enforcing the statutory penalty, and therefore has standing. Pequignot v. Solo Cup Co., 640 F.Supp.2d 714, 719 (E.D.Va. 2009). 16

17 Two elements A successful false-marking plaintiff must prove: (1) That the defendant marked an unpatented article as patented (2) The false marking was done with the intent to deceive Clontech Labs. Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005) What must be marked? 35 U.S.C. 287(a) requires articles to be marked as a prerequisite to recovery of damages You do not have to mark a process or method. Bandag, Inc. v. Gerrard Tire Co., Inc., 704 F.2d 1578, 1581 (Fed. Cir. 1983). There is nothing to mark. American Medical Sys. v. Medical Eng g Corp., 6 F.3d 1523, 1538 (Fed. Cir. 1993). But whenever there s an article, the safe choice is to mark it [O]nce marking has begun, it must be substantially consistent and continuous in order for the party to avail itself of the constructive notice provisions of the statute. American Med. Sys., 6 F.3d at Deceptive Intent Because Solo admits that it knowingly marked its lids with expired patents, a weakened presumption of intent to deceive applies. However, this presumption is definitively rebutted by evidence that Solo acted not for the purpose of deceiving the public, but in good faith reliance on the advice of counsel and out of a desire to reduce costs and business disruption. Pequignot v. Solo Cup Co., 646 F.Supp.2d 790, 798 (E.D.Va. 2009) 17

18 Deceptive Intent (cont d) Solo has provided considerable actual evidence -- far more than mere assertions -- showing that it did not intend to deceive the public. It has provided unrebutted, sworn testimony by Diehl, Kuczma, and Smith that Solo, pursuant to counsel s advice and due to concern over the costs and disruption from replacing all of the mold cavities at once, formulated a policy under which cavities with expired numbers would be replaced as they wore out or were damaged. It has provided additional unrebutted evidence that this policy was implemented and followed, including the sworn testimony of Banach and Chauhan, numerous s and updated tool drawings, and testimony by Eveleigh that he reviewed and re-approved the policy after being hired as Solo s IP counsel in 2006 There is not a scintilla of evidence that Solo ever ignored its counsel s advice or, more importantly, manifested any actual deceptive intent. There is also no evidence that Solo had any desire to keep the expired numbers on the lids for any reason other than to avoid the costs and disruption of a wholesale replacement. Pequignot v. Solo Cup Co., 646 F.Supp.2d 790, 798 (E.D.Va. 2009) How do you measure damages? Early 2009 The parties disagree as to what constitutes an offense under 35 U.S.C. 292; however this is an issue of law, not fact. 35 U.S.C. 292 requires a that a violator shall be fined not more than $ 500 for every such offense. While there is no binding precedent on this Court, the Plaintiff argues persuasively that only one continuous offense, if any, occurred. Plaintiff contends that while the patent pending label was affixed to at most 15,000 lanterns between the dates in question, the offense occurred only one time as a single continuous offense. As the Plaintiff notes, other courts have found the continuous offense interpretation proper under similar facts when applying 35 U.S.C. 292 A.G. Design & Assocs., LLC v. Trainman Lantern Co., 2009 U.S.Dist. LEXIS 8320 (W.D.Wash. Jan. 23, 2009) 18

19 Early 2009 (cont d) Plaintiff's interpretation logically makes sense when considering other violations in our legal system. For example, counterfeiting laws do not apply to every bill counterfeited; rather only to the act of illegally producing or tendering the counterfeit bills. Moreover, theft of one thousand dollar bills from a man s wallet would only constitute a single offense of theft. Because the affixing of the patent pending label occurred as a continuous offense, the Plaintiff can only be found to have violated 35 U.S.C. 292 once. The Plaintiff's motion for summary judgment on this issue [of the number of false marking violations] is therefore GRANTED. A.G. Design & Assocs., LLC v. Trainman Lantern Co., 2009 U.S.Dist. LEXIS 8320 (W.D.Wash. Jan. 23, 2009) Forest Group: The Game-Changer Forest sues Bon Tool for infringement of Forest s spring-loaded parallelogram stilt, which is marked with a patent number Bon Tool counterclaims for false marking, and obtains SJ of noninfringement; in a related case, the court determines Forest s product is not covered by the patent After SJ but before bench trial on counterclaims, Forest commissions another production run, and has the new products marked with the patent number District court determines false marking because Forest knew its product was not covered, but holds there was only one continuous offense. Damages = $500. Forest Group, Inc. v. Bon Tool Co., 509 F.3d 1295 (Fed. Cir. 2009) Forest Group (cont d) The plain language of the statute does not support the district court's penalty of $ 500 for a decision to mark multiple articles. Instead, the statute's plain language requires the penalty to be imposed on a per article basis. The statute prohibits false marking of any unpatented article, and it imposes a fine for every such offense. Id. (emphasis added). The statute requires a fine to be imposed for every offense of marking any unpatented article. The act of false marking is the offense punished by the statute. The phrase for the purpose of deceiving the public creates an additional requirement of intent but does not change the relationship between the act of marking an article and the penalty. We conclude that the statute clearly requires that each article that is falsely marked with intent to deceive constitutes an offense under 35 U.S.C Forest Group, Inc. v. Bon Tool Co., 509 F.3d 1295, 1301 (Fed. Cir. 2009) 19

20 Forest Group (cont d) Forest would like us to hold, as the First Circuit did a century ago in London v. Everett H. Dunbar Corp., 179 F. 506 (1 st Cir. 1910), that the false marking statute should be interpreted to impose a single fine for continuous false marking. However, the statute at issue in London differs from the current statute in critical ways Congress affirmative change of the statute s penalty from a minimum to a maximum fine eliminated the policy consideration expressed by the court in London of not imposing disproportionate fines for the false marking of small and inexpensive articles. Forest Group, Inc. v. Bon Tool Co., 509 F.3d 1295, (Fed. Cir. 2009) Forest Group (cont d) Although a number of district courts followed London, imposing fines for continuous marking of multiple articles, they have generally done so without analyzing the effect of the 1952 amendment on the false marking statute. See, e.g., A.G. Design & Assocs., LLC v. Trainman Lantern Co., No. C RBL, 2009 U.S. Dist. LEXIS 8320, at *9-10 (W.D.Wash. Jan. 23, 2009) (finding the marking of up to 15,000 lanterns over two years as constituting a single offense ) Forest Group, Inc. v. Bon Tool Co., 509 F.3d 1295, 1302 (Fed. Cir. 2009) Forest Group (cont d) Forest argues that interpreting the fine of 292 to apply on a per article basis would encourage a new cottage industry of false marking litigation by plaintiffs who have not suffered any direct harm. This, however, is what the clear language of the statute allows As noted by Forest, an amicus brief was filed in this case by an individual who created a holding company to bring qui tam actions in false marking cases. Commentators have discussed a surge of such actions in recent years, noting the possible rise of marking trolls who bring litigation purely for personal gain. Rather than discourage such activities, the false marking statute explicitly permits qui tam actions Penalizing false marking on a per decision basis would not provide sufficient financial motivation for plaintiffs--who would share in the penalty--to bring suit. It seems unlikely that any qui tam plaintiffs would incur the enormous expense of patent litigation in order to split a $ 500 fine with the government. Forest Group, Inc. v. Bon Tool Co., 509 F.3d 1295, (Fed. Cir. 2009) 20

21 Forest Group (cont d) This does not mean that a court must fine those guilty of false marking $ 500 per article marked. The statute provides a fine of not more than $ 500 for every such offense. 35 U.S.C. 292(a) (emphasis added). By allowing a range of penalties, the statute provides district courts the discretion to strike a balance We hold that the plain language of 35 U.S.C. 292 requires courts to impose penalties for false marking on a per article basis. Forest Group, Inc. v. Bon Tool Co., 509 F.3d 1295, 1304 (Fed. Cir. 2009) Forest Group on remand Following a non-jury trial on Bon Tool's various counterclaims, the Court found that Forest's S2 series stilts were falsely marked with the 515 Patent number. The Court found that Forest genuinely believed that the S2 stilts were covered by the 515 patent, but also found that as of November 15, 2007, Forest had sufficient information that it could no longer maintain a reasonable belief that its S2 stilts were properly marked as covered by the 515 patent... Bon Tool seeks to reopen discovery in this case based on nothing more than its assumption that, because it recently obtained an S2 stilt from Forest that was falsely marked, Forest has been falsely marking S2 stilts since trial. Bon Tool's assumption is unsupported and contrary to Forest's explanation that Bon Tool obtained, erroneously, an S2 stilt that had been falsely marked prior to trial but remained in existence. The Court concludes that Bon Tool's assumption is an insufficient basis for the reopening of discovery on remand. Forest Group, Inc. v. Bon Tool Co., 2010 U.S. Dist. LEXIS (S.D.Tex. 2010) 21

22 Forest Group on remand (cont d) It is undisputed that the trial record establishes that there were 38 falselymarked S2 stilts. The trial record also establishes that Forest sold the falsely-marked stilts at prices between $ and $ The Court finds that the appropriate fine in this case is $ per article, the highest point of the price range. This will deprive Forest of more than it received for the falsely-marked stilts, fulfilling the deterrent goal of 292 s fine provision. Based on the $ per article fine for the 38 falsely-marked stilts of which there was evidence at trial, the Court imposes against Forest a fine of $ 6, pursuant to 292. Forest Group, Inc. v. Bon Tool Co., 2010 U.S. Dist. LEXIS (S.D.Tex. 2010) Purpose of Deceiving the Public The bar for proving deceptive intent here is particularly high, given that the false marking statute is a criminal one, despite being punishable only with a civil fine... Because the statute requires that the false marker act for the purpose of deceiving the public, a purpose of deceit, rather than simply knowledge that a statement is false, is required As the Supreme Court has explained in distinguishing the mental states of purpose and knowledge in criminal statutes, a person who causes a particular result is said to act purposefully if he consciously desires that result, whatever the likelihood of that result happening from his conduct, while he is said to act knowingly if he is aware that that result is practically certain to follow from his conduct, whatever his desire may be as to that result. United States v. Bailey, 444 U.S. 394, 404, 100 S.Ct. 624, 62 L.Ed.2d 575 (1980)(quotation marks omitted). Thus, mere knowledge that a marking is false is insufficient to prove intent if Solo can prove that it did not consciously desire the result that the public be deceived. Pequignot v. Solo Cup Co., 608 F.3d 1356, 1363 (Fed. Cir. 2010) Violation of the Statute is Sufficient Injury Stauffer is a patent attorney who has purchased some of the marked bow ties In December 2008, Stauffer brought a qui tam action under 35 U.S.C. 292 alleging that Brooks Brothers had falsely marked its bow ties The district court held that Stauffer had not sufficiently alleged that the United States had suffered an injury in fact from Brooks Brothers false marking. According to the court, Stauffer's allegations of Brooks Brothers' conduct wrongfully quelling competition were too conjectural or hypothetical to constitute an injury in fact. Stauffer v. Brooks Brothers, Inc., 2010 U.S.App. LEXIS 18144, *2-4 (Fed. Cir. Aug. 31, 2010) 22

23 Violation of the Statute is Sufficient Injury (Cont d) Under Vermont Agency, a qui tam plaintiff, or relator, can establish standing based on the United States implicit partial assignment of its damages claim, 529 U.S. at 773, to any person, see 35 U.S.C. 292(a) As the government points out, Congress has, by enacting section 292, defined an injury in fact to the United States. In other words, a violation of that statute inherently constitutes an injury to the United States. In passing the statute prohibiting deceptive patent mismarking, Congress determined that such conduct is harmful and should be prohibited. The parties have not cited any case in which the government has been denied standing to enforce its own law. Because the government would have standing to enforce its own law, Stauffer, as the government's assignee, also has standing to enforce section 292. Stauffer v. Brooks Brothers, Inc., 2010 U.S.App. LEXIS 18144, *10-11 (Fed. Cir. Aug. 31, 2010) Res judicata the government would not be able to recover a fine from Brooks Brothers if Stauffer loses, as res judicata would attach to claims against Brooks Brothers for the particular markings at issue. See United States ex rel. Mergent Servs. v. Flaherty, 540 F.3d 89, 94 (2d Cir. 2008)( [T]he United States might become bound by res judicata or collateral estoppel as a result of the actions of a pro se in bringing and losing a qui tam action.") (citing Stoner v. Santa Clara County Office of Educ., 502 F.3d 1116, (9 th Cir. 2007)( [Q]ui tam relators are not prosecuting only their 'own case' but also representing the United States and binding it to any adverse judgment the relators may obtain. )). Stauffer v. Brooks Brothers, Inc., 2010 U.S.App. LEXIS 18144, *21-22 (Fed. Cir. Aug. 31, 2010) Rules of thumb for expiration Earliest priority date > 20 years ago? Issue date > 17 years ago? Look for patent no. < 5,300,000 23

24 Minimizing liability Reasonable reliance on advice of counsel (Solo Cup) Make sure each marked product is covered by at least one claim of all patents in the marks Try to correct numbers before shipment, even with a temporary marking Minimizing liability (cont d) Conduct regular audits Maintain evidence of lack of deceptive intent If sued for patent infringement, immediately check patent s validity; if invalid, counterclaim for false marking Sites for keeping track