J. Michael Keyes

Section 411(a) of the Copyright Act provides, in pertinent part, that "no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title." For many years, this provision has spawned a debate throughout the federal circuit courts as to the meaning of "registration."  On one side of the debate are the courts that adhere to what is referred to as the "application approach."  These courts require a copyright plaintiff to plead facts sufficient to establish that an application to register the infringed work has been properly submitted to the Copyright Office before filing a suit for infringement.   See, e.g., Cosmetic Ideas, Inc. v. IAC/Interactivecorp, 606 F.3d 612, 619 (9th Cir. 2010) (concluding that registration occurs when the owner files an application); Positive Black Talk Inc. v. Cash Money Records Inc., 394 F.3d 357, 365 (5th Cir. 2004), abrogated in part by Muchnick, 559 U.S. 154. On the other side of the debate are those courts that embrace the "registration approach," which requires the copyright plaintiff to plead facts sufficient to show that a certificate of registration has issued. La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1197 (10th Cir. 2005) (concluding that registration occurs when the Register approves an application).  The 7th Circuit has issued seemingly conflicting opinions on the issue. Compare Chi. Bd. of Educ. v. Substance, Inc., 354 F.3d 624, 631 (7th Cir. 2003) (“[A]n application for registration must be filed before the copyright can be sued upon”) with Gaiman v. McFarlane, 360 F.3d 644, 655 (7th Cir. 2004) (“[A]n application to register must be filed, and either granted or refused, before suit can be brought”).  Other circuits have acknowledged the ongoing debate but have declined to decide the issue.  See, e.g., Alicea v. Machete Music, 744 F.3d 773, 779 (1st Cir. 2014) and Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 125 (2d Cir. 2014). The 11th Circuit recently jumped into the fray in Fourth Estate Public Corporation v Wall-Street.com, LLC.  It embraced the registration approach.  In essence what the court held is that the path to registration is a three-step process.  Step 1 requires an application to be filed. Step 2 requires the Register of Copyrights to examine whether "the material deposited constitutes copyrightable subject matter."   Assuming the Register decides that the material is protectable, "the Register shall register the claim and issue to the applicant a certificate of registration," which is Step 3.  Under the "application approach," only Step 1 is completed without regard to the remaining steps.  Thus, the 11th Circuit believed the “text of the Copyright Act makes clear that the registration approach” is correct. For those keeping track, the circuit breakdown on this issue is something like this: 2-2-2-1. Two circuits for the application approach; two circuits for the registration approach; two circuits that aren't sure; and one conflicted circuit. Perhaps it is time for SCOTUS to break this three-way tie?

Does a demand letter from a music rights holder that alleges “millions of instances of infringement” create a case in controversy with the recipient?  You may be inclined to answer with an emphatic “of course!”    But think again, or so says a recent ruling by the U.S. District Court for the Southern District of New York in Windstream Services LLC v. BMG Rights Management LLC et al.  If you are rushing off to the federal courthouse to get that declaratory judgment action on file, you should read on first to make sure your DJ complaint hits all the right notes. This case represents a familiar theme and variation: music copyright holder vs. ISP.  (We previously blogged about a similar dispute where an ISP was hit with a $25 million jury verdict).  In this number, BMG owns scores of musical compositions and Windstream provides internet access to scores of subscribers.  On April 1, 2016, BMG sent a demand letter to Windstream alleging “ongoing infringement” by Windstream’s subscribers.  While the demand letter did not cite to specific copyrights or specific acts of infringement, BMG did allege it has “identified millions of instances of infringement involving thousands of BMG copyrighted works using the Windstream network.”  Windstream did not take this letter as a mere April Fool’s Day prank.  Far from it.  Windstream filed a declaratory judgment action.  The music stopped for Windstream when the Court ruled this week there was no “case of actual controversy” between the parties.  The Court also made it clear there would be no encore in the form of an amended DJ complaint because the clerk was ordered to “close the case.” Why did the Court find this DJ action so hopelessly out of tune?  The key is in the factual allegations and the scope of the relief requested by the Plaintiff.  As the Court observed, the complaint did not reference “any specific copyright held by BMG” nor did it reference “any specific act of direct infringement by any Windstream subscriber.”  Instead, Windstream sought a “blanket approval of its business model” by asking for a judicial declaration that it was a “mere conduit for the transmission of Internet services.”   Due to the lack of specifics on any copyright or act of infringement, the Court concluded the complaint was simply seeking an “advisory opinion that apprises Windstream as to whether or how it should respond to Defendants’ notices and whether Windstream qualifies for DMCA’s safe harbor provisions.” If you are representing a DJ copyright plaintiff, make sure your complaint contains allegations regarding the specific work of authorship at issue and the specific act of infringement of which your client is accused.  Also, you should carefully consider what relief you are seeking.  Are you asking for judicial approval of your client’s business model in general, or for specific relief with respect to a specific act of alleged infringement?  It better be the latter if you want your client to sing your praises.  Otherwise, you may be facing some unpleasant music.

As the sun set on 2016, the 9th Circuit Court of Appeals in Sunearth, Inc. v. Sun Earth Solar Power, Co.  embraced a new standard for awarding attorneys' fees in Lanham Act cases.  Adopting the U.S. Supreme Court's rationale in Octane Fitness, the 9th Circuit held that an exceptional case no longer required “malicious, fraudulent, deliberate or willful” conduct.  Instead, the Court held that an exceptional case would now be gauged by a less stringent “totality of the circumstances” test.  This test focuses on two considerations: (i) “the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case)”; and (ii) whether the vanquished party litigated the case in an “unreasonable manner.” This new standard was brought to bear in a recent trademark dispute between DropBox and Thru, Inc.  It all started when Thru petitioned the USPTO to cancel the trademark registration for "DropBox," which resulted in DropBox filing a declaratory judgment action in the U.S. District Court for the Northern District of California.  Thru filed counterclaims for infringement and also moved to dismiss DropBox's DJ action, which the Court denied.  Discovery proceeded, and the Court ultimately granted summary judgment to DropBox on all of Thru's counterclaims.  Seeking to box Thru in even further, DropBox sought recovery of its attorneys' fees and costs. Perhaps Thru believed its petition to cancel at the USPTO and subsequent counterclaims in federal court were just clever episodes of thinking outside the box, but the Court thought otherwise.  In fact, the Court found that Thru's conduct--both before and during the federal litigation--showed "bad faith," supporting an award of attorneys' fees and costs to DropBox in excess of $2,000,000. How did Thru get boxed in like this?  Here's what troubled the Court: Thru's counterclaims were barred by laches. The evidence developed during discovery showed that Thru knew of the allegedly infringing use of the DropBox mark as far back as 2009--earlier than Thru initially represented to the Court-- and there was no valid justification for waiting several years until 2014 before pursuing the infringement claims. The evidence showed Thru intentionally delayed asserting its claims. The Court also found that Thru's delay in asserting the infringement claims was motivated by bad faith.  Internal emails showed that Thru wanted to "slow walk" its infringement claims and would wait until DropBox's initial public offering.  Once the IPO was announced, Thru would "be prepared to file suit that day and make as much noise as we can about it."  The Court did not look favorably upon such tactics. Thru's motion to dismiss was brought in bad faith. At the outset of the litigation, Thru moved to dismiss DropBox's claims for declaratory relief by asserting there was no "case in controversy."  The Court denied the motion to dismiss, and ultimately found that Thru's assertions "we're not credible" because "[b]oth emails and deposition testimony show that Thru had been contemplating litigation for years, opting to wait until DropBox was closer to its IPO." Based on the above, the Court closed the lid on Thru's claims and awarded DropBox a sizable fee award. What are the take-aways from this decision?  Three things:  First, the new Octane Fitness standard for awarding fees in Lanham Act cases is alive and well in the 9th Circuit.  Second, an exceptional case can be found based on a party's litigation conduct as well as its pre-litigation activities.  Third, counsel should be careful to not just check the box in bringing infringement claims, but should also carefully consider whether pre-filing evidence exists that may undermine the party's litigation stance.  Failure to consider these types of things may get counsel and client boxed into a corner.  

The NCAA has a well-deserved reputation for being quite zealous when it comes to protecting its registered trademark “March Madness.”  We previously blogged about this here at TheTMCA.com.  But a recent opposition filed by the NCAA at the TTAB takes “zealous advocacy” to new heights. About a year ago, the Big Ten Conference filed an intent-to-use application for “MARCH IS ON!” for a variety of television transmission and entertainment services related to athletic events and contests.  The examiner found “no conflicting marks that would bar registration” under the Lanham Act and MARCH IS ON! was published for opposition.  The NCAA received extensions of time to oppose the application, presumably for the purpose of exploring a possible resolution with the Big Ten or at least finding out more about how the Big Ten intends to use the MARCH IS ON! mark.  On February 13, the clock ran out on any further extensions of time, so the NCAA decided it was “game on” and filed an opposition to MARCH IS ON! The NCAA cites three registrations for “March Madness” as the basis for the opposition and concludes as follows: Use by Applicant of MARCH IS ON! for the services set forth in the Application is likely to result in confusion, mistake, or deception with Opposer, or the goods and services marketed in connection with Opposer’s MARCH MADNESS Mark, or in the belief that Applicant or its MARCH IS ON! Services are in some way legitimately connected with, or licensed or approved by, Opposer. The only basis for this alleged "confusion" between the two marks would be that they both contain the word “March,” which is, of course, the month when college basketball hits its zenith. So, what are we to conclude from the NCAA’s opposition? A reasonable take-away is that the NCAA believes it can exclude others from using the word “March” in conjunction with any sort of sports-related entertainment services. That may be a stretch. Unless the case settles, the TTAB will get to decide whether the NCAA can claim such expansive rights to the name of a month of the year. But the TTAB officials may conclude that this latest filing at the USPTO can be summed up in one word: Madness.

In a previous post we discussed what SpongeBob SquarePants can teach us about trademark licensing.  Now, more IP lessons are bubbling up from the fathoms below thanks to our absorbent, yellow and porous friend.  This time, we learn about how fictional places—such as the famed underwater greasy spoon, “The Krusty Krab”—can be protected under the Lanham Act.  Nautical nonsense, you say? Before you tell me to drop on the deck and flop like a fish, let me explain. Viacom owns various copyrights and trademarks associated with “SpongeBob SquarePants,” the wildly popular animated TV series that airs on the Nickelodeon Network.  In 1999, “The Krusty Krab” was introduced in one of the espisodes as the fast food restaurant owned and operated by Mr. Krabs, the thrifty crustacean and slave driver employer of SpongeBob, who serves up Krabby Patty Burgers as the fry cook. Fifteen years after The Krusty Krab made its splash into the watery, whimsical world of Bikini Bottom, a real company located here on dry land, IJR Capital Investments, LLC, filed a service mark application with the USPTO for “The Krusty Krab” for “restaurant services.”  Viacom objected, IJR persisted, and the whole dispute landed in the U.S. District Court for the Southern District of Texas with Viacom suing for various claims including trademark infringement and dilution.  Viacom moved for summary judgment, which the Court granted faster than you can ask, “Who lives in a pineapple under the sea?”  How did Viacom best this real world imposter?  In several ways. First, even though Viacom did not have a registration for “The Krusty Krab,” that did not sink its infringement claim.  Far from it.  The Court noted that “The ‘Krusty Krab’ backdrop is regularly featured in the television show and was also depicted in two SpongeBob SquarePants feature films released in 2004 and 2015, that had total gross receipts of over $470 million.”  Further, Viacom established rights in the name “through its sales and licensing of consumer products.” Second, the Court observed that trademark protection extends to “specific ingredients of a successful T.V. series,” including such things as symbols, design elements, and characters that the public directly associates with the plaintiff or its products.  The Court cited a previous case where the terms “Kryptonite” and the “Daily Planet” were imbued with trademark protection because they had been a “staple of the Superman character and story.”  The Viacom Court had little trouble finding that The Krusty Krab was a protectable trademark, even though there had never been a single Krabby Patty served under that name in real life. Third, the Court found The Krusty Krab had acquired secondary meaning given its long, storied history as part of the immensely popular TV series.  Finally, there was little doubt consumers would likely be confused into believing that the real-world Krusty Krab was somehow affiliated with its fictional brother down in Bikini Bottom.  In this regard, the Court was persuaded by the results of a nationwide survey showing that thirty percent of the respondents (restaurant goers) believed Viacom was the source of the Defendant’s restaurant. So, the lesson from many leagues down under is that in certain scenarios fictional locations can be protected by the Lanham Act.  The Krusty Krab is one such location given its longevity and popularity as an under the sea eatery in the iconic TV series SpongeBob SquarePants.  The Court got it right.  The faux Krusty Krab should now sleep with the crustaceans.

          You know Green Eggs and Ham, and the Cat in The Hat, Horton, the Lorax, and others like that. But a new book is coming, although now a bit slow, It’s called “Oh, The Places You’ll Boldly Go!” Sure it sounds like the book already penned by Doc Seuss, But it’s not, oh it’s not, an infringer’s on the loose! Or so claims the estate of the author of Grinch, Bring on the lawyers, this case is a cinch! So the lawyers lined up and formed quite a roster, All hands on deck to take down this imposter. They filed their suit for the Green Eggs writer, And sought an injunction to make things a bit brighter. Who is this villain, this dastardly soul? Who dares to infringe "Oh, The Places You'll Go!?" The main culprit's a company called ComicMix, And its VP and others are in quite a fix. It is claimed they have copied a work of great fame, And created confusion in the market for same. They may ask, "what's the problem, say, what the heck?" "It's simply a mash-up with a touch of Star Trek." "We know about fair use and its factors of four," "We're sure to prevail, at the courthouse door." But fair use is tricky, as the defendants may see, It's not quite as simple as A, B, and C. Who will prevail, say, who will win? The defendants' chances appear quite dim. An injunction is likely, perhaps damages too, And fees for the lawyers, after all, they had to sue. For what appears to be a very good reason, Dr. Seuss sues in Sue-ville this holiday season. We will keep you all posted, it should be quite a sight, Happy holidays to all, and to all a good night!

In the immortal words of the most recent Nobel Laureate in literature, “the times they are a changin.’”  Section 35(a) of the Lanham Act provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”  Until just last week, the Ninth Circuit had historically interpreted that provision to mean that a plaintiff must prove that the defendant engaged in “malicious, fraudulent, deliberate or willful” infringement.  Further, the Court reviewed fee awards de novo, instead of for an abuse of discretion.  That test for an award of fees and the de novo standard of review are now officially blowin’ in the wind, compliments of the Ninth Circuit’s  en banc decision in Sunearth, Inc. v. Sun Earth Solar Power, Co.  Thus, successful litigants in Lanham Act cases in the Ninth Circuit should now find it a bit easier to recover an award of attorneys’ fees. This all came about as a result of the U.S. Supreme Court’s 2014 decision in Octane Fitness, LLC v. Icon Health and Fitness, Inc.  In that case, the Court interpreted the identical “exceptional cases” language from the Patent Act’s attorneys’ fee provision, 35 U.S.C. § 285.  The Court rejected the notion that “exceptional” required a showing of bad faith or other culpable conduct before fees could be awarded in patent cases.  Instead, the Court held that “exceptional” simply meant “uncommon,” “rare,” or “not ordinary.”  Accordingly, an exceptional case is “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”  The Court also rejected the heightened “clear and convincing” burden of proof, in favor of a preponderance of the evidence standard. On the same day the Supreme Court handed down its decision in Octane Fitness, it also decided that a district court’s award of fees under the Patent Act should be reviewed for abuse of discretion. Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748–49 (2014). Because the fee-shifting provision in the Patent Act is identical to its Lanham Act counterpart, several lower courts began holding that the Octane Fitness standard should be applied in Lanham Act cases, too.  In fact, the Third, Fourth, Fifth, and Sixth Circuits have all adopted the Octane Fitness approach in Lanham Act cases.  The Ninth Circuit has now joined the chorus and held that: (i) “district courts analyzing a request for fees under the Lanham Act should examine the ‘totality of the circumstances’ to determine if the case was exceptional” based on the nonexclusive factors set forth in Octane Fitness; (ii) exceptionality need only be established by a preponderance of the evidence; and (iii) review of district court fee awards will now be for abuse of discretion. The jury is still out, though, on how district courts within the Ninth Circuit will deal with this new standard.  We will keep you apprised of any worthy developments, including whether any additional circuit courts join the Octane Fitness family.

Life may not be bowl of cherries for Mr. Trump’s presidential campaign these days.  It’s more like a bowl of Skittles, as that is exactly what landed Team Trump in a copyright infringement suit filed in Chicago federal court on Tuesday. It all started last month when Donald Trump Jr. tweeted this picture on behalf of the Trump campaign: As it turns out, the copyright in the photograph is apparently owned by Mr. David Kittos, a U.K. photographer who posted the photo to his Flickr account back in 2010. (In a rather bitter twist of irony, Mr. Kittos was a child refugee from the Republic of Cyprus).  He obviously soured on the tweet and submitted a DMCA "take down" to Twitter, which complied with its obligations and removed the Skittles pic.  By that point, though, Mr. Kittos' photograph had been liked and retweeted thousands of times. He registered his work with the U.S. Copyright Office, and asserted claims for direct and indirect copyright infringement against Donald J. Trump for President, Inc., Donald Jr., Donald Sr., and even Veep Candidate Michael Pence.  Mr. Kittos seeks actual damages, disgorgement of Defendants' profits, and injunctive relief.  (There is no claim to statutory damages or attorney’s fees because Mr. Kittos registered his work after the act of infringement occurred). The Complaint raises a number of potentially interesting issues. First, it’s not entirely clear whether Plaintiff has viable copyright claims against Donald Sr. or Governor Pence.  Neither candidate appears to have directly participated in the act of infringement.  Moreover, there does not appear to be facts to suggest that the running mates had the right to control how Donald Jr. used or operated his personal twitter account. Second, is the photograph sufficiently original to receive copyright protection?  Plaintiff explains how he exercised artistic judgment in selecting the angle, lighting, and "randomly placed" the candies into the bowl thereby "allowing their bright and boastful colors to become the centerpiece of the image."  Given that a "dash" of creativity suffices for copyright purposes, the Court is unlikely to be bowled over by a lack of originality argument. Finally, what about fair use?  There is a recent case out of the Northern District of California where the Court held that reproducing a candidate's "head shot" photograph in a blog post was fair use as a matter of law, even at the pleading stage.  That Court's analysis turned largely on the fact that: (1) Defendant used the Plaintiff's head shot photo in a blog post that was "critical" of Plaintiff's politcal views; and (2)  the Plaintiff had no evidence to suggest the market value of her head shot photograph was adversely affected.  Here, Trump Jr. did not use the picture to criticize or comment on Skittles.  Moreover, Plaintiff has alleged that he licenses his photographs, so there is a potential argument that the market value of Mr. Kittos' work could be adversely affected.  Thus, it seems unlikely that fair use will win the day, at least at this early stage of the pleadings. This tweet of sweets has come back to haunt Team Trump this Halloween season.  They will likely answer or file a motion to dismiss sometime this holiday season.  With any luck, we might know where this case is headed by Presidents' Day.