Category Archives: Subject Matter

Judge Batts dismisses copyright and trademark infringement claims for lack of SMJ

0
Shourin Sen - 23 March 2009 – 9:00 am
Filed under Contract Rescission, Lanham Act, Subject Matter

Pot Luck, LLC v. Freeman, 06 cv10195 DAB, 2009 WL 693611  (S.D.N.Y. 2009)

Judge Batts issued a second copyright decision last week.  Pot Luck created a film High Times’ Potluck, for which it entered into two distribution agreements with Ardustry.   Pot Luck alleged that, subsequent to the release, Ardustry failed to distribute and promote the film as agreed under the licenses, and that it had yet to receive proper compensation.  Ardustry, at the time of the motion, continued to distribute the Film under the licenses.

Pot Luck brought an action for, among others things,  copyright infringement, and false designation & unfair competition under the Lanham Act.  Ardustry moved to dismiss the copyright and trademark claims for lack of subject matter jurisdiction.

Copyright Claim

Judge Batts dismissed the copyright action finding that Pot Luck must rescind the licenses before it could recover for infringement.   The Court found that the licenses “unambiguously” denied Pot Luck the right to rescind its agreement, and that similar limitations have been upheld under New York law (Cafferty v. Scotti Bros. Records, Inc., 969 F.Supp. 193, 198 (S.D.N.Y.1997)):

Both the License Agreement and the World Rights Agreement . . . explicitly limit Plaintiff’s right to rescind the licenses, stating under “Grant of Rights” that “[l]icensor hereby grants, sells, transfers, and assigns to Licensee the exclusive and irrevocable right[s]. . .

Because any claim for rescission is barred by the unambigious language of the licenses, and because Plaintiff must show a plausible claim that the licenses were rescinded in order to bring a cause of action arising under the Copyright Act, Defendants’ motion to dismiss Plaintiff’s copyright claim for lack of subject matter jurisdiction is GRANTED.

Lanham Act (trademark)

Pot Luck brought its trademark claim under Section 43(a), alleging that by distributing its film, Ardustry was likely to confuse as to the true origin of the film.  Judge Batts dismissed the claim, finding that consumers weren’t confused as to “the origin” of the film, because Ardustry was indeed “the origin” of the film, as the term is used in Section 43 of the Lanham Act:

[T]he Supreme Court has read the phrase “origin of goods” as it is used in § 43 to refer only “to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.” Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 37 (2003). The Court found that to “hold otherwise would be akin to finding that § 43(a) created a species of perpetual patent and copyright, which Congress may not do.” Id.

Therefore, under Dastar, “[t]he right to copy creative works, with or without attribution, is the domain of copyright not of trademark or unfair competition. The failure to credit the true author of a copyrighted work is not a false designation of origin, but a violation of copyright.”

Lanham Act (unfair competition)

Judge Batts dismissed the Lanham Act unfair competition claim finding that Section 43 does not provide a general action for unfair competition, but is instead a “category of claims consisting primarily of causes of action for false designation of origin and false advertising.”

Rebecca Tushnet provides more commentary on the trademark implications here.

Complaint for declaratory judgment dismissed due to lack of subject matter jurisdiction; prior lawsuits and defendant’s filing in another jurisdiction a week later didn’t create a case and controversy

0
Shourin Sen - 18 March 2009 – 9:45 am
Filed under Subject Matter

This past Wednesday, Judge Kenneth A. Marra of the federal district court in Miami, Florida issued a decision that addresses when a case and controversy arises for purposes of subject matter jurisdiction.

Breckenridge Pharmaceutical and Everett Laboratories  manufacture vitamin supplements.  The two corporations are currently engaged in patent litigation over a product (not at issue in this case) in the District of New Jersey.

On the same day that Breckenridge Pharmaceutical launched a new multi-vitamin named Nutravance, it filed a complaint seeking, among other things, a declaratory judgment that a number of Everett patents were invalid, or in the alternative, that Nutravance didn’t infringe the patents; and that the copyright for an Everett product insert was invalid, or in the alternative, that any copying by Breckenridge of the product insert was fair use.  At the time of the filing, Everett wasn’t aware that Breckenridge had began to market Nutravance.

Judge Marra found that a case and controversy didn’t exist and granted Everett’s motion to dismiss.

The standard for a case and controversy

Judge Marra set forth the standard for a case and controversy as follows:

Courts must determine whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.  The MedImmune Court emphasized that the dispute must be definite and concrete, touching the legal relations of parties having adverse legal interests; and that it be real and substantial and admit of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts. [citation and quotations omitted]

Prior lawsuits

Breckenridge further argued that Everett’s prior lawsuits against Breckenridge and other competitors show that an actual and substantial controversy existed between the parties.  Everett had, according to the complaint, filed five previous lawsuits.  Only one of the lawsuits was against Breckenridge and none of the suits concerned Nutravance.

Judge Marra agreed that prior litigious conduct is one factor to be considered but found that a prior suit premised on other patents is only given minimal weight, and cannot alone create a real and immediate controversy.

Everett’s filing of a suit a week after Breckenridge filed their action

Breckenridge argued that the fact that Everett filed a patent infringement suit against it (presumably in the D. N.J.) only a week after they filed their action supports a finding that there was a case and controversy.  Judge Marra agreed, noting that “the fact that Defendant did sue Plaintiffs . . . reflects the reasonableness of Plaintiffs’ belief that Defendant intended to initiate legal proceedings against them.”

The Court, however, found that subject matter jurisdiction must have existed at the time the declaratory judgment action was filed, and that later events may not create jurisdiction when none existed at the time of filing:

At the time Breckenridge initiated this lawsuit, it did not have an objectively reasonable basis to believe that Everett would sue it for infringement. The fact that Breckenridge chose to throw down the gauntlet without a valid basis should not inure to its benefit because Everett has since countered with a lawsuit of its own. To hold otherwise would impose a chilling effect on the right of a patent holder, who is prematurely sued in a declaratory judgment action, to initiate what it believes is a legitimate infringement action for fear that its suit will be used against it in a forum selection battle. Therefore, while the Court may use a subsequently filed suit to support its conclusion that a “substantial dispute” existed at the time the declaratory suit was filed, if the Court concludes, as it does here, that there was no “substantial dispute” at the time of filing, a subsequently filed suit should not affect the outcome.

Documents

Punk band Minor Threat asks Forever 21 to stop selling a shirt that features its album logo

2
Shourin Sen - 13 March 2009 – 7:45 am
Filed under Originality, Subject Matter

There is a fun little copyright dust up that makes me think of pink hair.  Forever 21 is chain of stores that targets teens and tweens.  The chain sold shirts that appear to contain an image that the punk band Minor Threat used on the cover of their 1983 album, Out of Step.  From a quick TESS search, it doesn’t appear that the band/label registered the image.

minor-threat1

minorthreatboot022

So is the manufacturer of the shirt and Forever 21 potentially liable for copyright infringement?  37 CFR 202.1 states the following:

The following are examples of works not subject to copyright and applications for registration of such works cannot be entertained:

(a) Words and short phrases such as names, titles, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering or coloring; mere listing of ingredients or contents; [emphasis added]

So, is the image of the phrase “minor threat” merely typographic ornamentation or does it possess sufficient originality to be granted exclusive rights as a “pictorial, graphical, or sculptural work”?  And, if the work is granted exclusive rights would it survive a fair use analysis?  Or, could there possibly be a viable common law trademark claim?

Looks like the answer to these questions is gray enough for the Dischord Records to send a cease-and-desist.  Says Alec Bourgeois who conducts publicity at Dischord:

This is an unauthorized shirt and it is still unclear whether the shirt was produced by Forever 21 or if it is a bootleg that they just happen to carry. Either way the members of Minor Threat are looking into it and Forever 21 will be asked to stop selling it.

In the beginning, Minor Threat did not license anything and any shirts you saw were screened by band member Jeff Nelson. But Jeff stopped screening shirts and over the years the band members realized that the shirts were going to be made with or without their permission, so they may as well authorize a couple friendly printers in order to better control the quality, content and revenue.

The band and the label tend to deal with bootleg shirts on a case by case basis, acknowledging the vast difference between kids screening shirts for friends and professional printing studios screening shirts for profit. Obviously this absurd Forever 21 shirt falls under the ‘unacceptable’ category.

Some of you may remember a similar 2007 t-shirt dispute between Minor Threat and Nike.