Copyright Infringement Online: New Report on Pleading Prima Facie Copyright Claims Under The Charming Betsy Doctrine

COPYRIGHT LAW - COPYRIGHT INFRINGEMENT - INTERNATIONAL LAW -PLEADING COPYRIGHT INFRINGEMENT - MAKING AVAILABLE RIGHT - PEER-TO-PEER FILESHARING - INTELLECTUAL PROPERTY - CHARMING BETSY DOCTRINE - MUSIC DOWNLOADS - WIPO COPYRIGHT TREATY

 

"Charming Betsy" Canon 

National statute must be construed so as not to conflict with international law. See Murray v. The Charming Betsy, 6 U.S. (2 Cranch) 64 (1804): "It has also been observed that an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains..."  https://en.wikipedia.org/wiki/Statutory_interpretation

I checked my copy of Reading Law: The Interpretation of Legal Texts by the late Justice Antonin Scalia and Brian Garner and found no reference to this case or this canon.

More on the Charming Betsy doctrine from the Constitutional Law Reporter (quoted below) here:

          As Chief Justice Marshall explained: “An act of Congress ought never to be construed to      violate the law of nations if any other possible construction remains, and consequently can never be construed to violate neutral rights or to affect neutral commerce further than is warranted by the law of nations as understood in this country.”



On February 22, 2016 Register of Copyrights Maria Pallante and the U.S. Copyright Office issued a report (embedded in this post below) to the House Committee on the Judiciary titled:  The Making Available Right in the United States.  The Report is very important reading for copyright litigators because it deals with basic questions of how much a copyright owner needs to investigate and prove in order to go into federal court and file a copyright infringement complaint.  Because the Report purports to provide guidance to resolve differences among federal district  courts, the Report is of tremendous practical import for litigators at the initial stages of a case.

The key question is:  If I represent a copyright owner, can I go to court and successfully plead a copyright infringement claim by showing that a defendant has made my client's copyrighted work available online without authorization, but with no evidence that the copyrighted work was actually downloaded or copied?

Jumping to the punchline, the Copyright Office says "yes."  As an administrative agency to which deference is owed, the Report is likely to be helpful fodder for a the plaintiff acting on shaky evidence.

Restating the practical issues:

1. what do I have to plead to establish a prima facie case of copyright infringement where a defendant has facilitated access to copyrighted works online?

2. what evidence do I need to support a claim for online copyright infringement against a motion to dismiss?

The Report was issued in response to a December 2013 letter from Rep. Melvin L. Watt, Ranking Member, Subcommittee on Courts, Intellectual Property & The Internet.   Rep. Watt had the following three main questions for the Copyright Office:

1. how the existing bundle of rights under Title 17 covers the making available right in the context of digital on-demand transmissions such as peer-to-peer networks, streaming services, and music downloads, as well as more broadly in the digital environment;
2. how foreign laws have interpreted and implemented the relevant provisions of the WIPO Internet Treaties; and
3. the feasibility and necessity of amending U.S. law to strengthen or clarify our law in this area.  Report at 4.

The Report concludes the following:

• 17 U.S.C. 106 already gives a right of action for "making available"
• U.S. law should be read to not require evidence that a copy has been disseminated or received as a condition for an infringement claim
• Offers of access to a copyrighted work implicate a copyright owners distribution right under 17 U.S.C. 106(3) and the U.S. courts ruling otherwise have gotten the law wrong
• Internet streaming or online display of an image are rights granted to copyright owners and thus covered by 17 U.S.C. 106 (4-6) - public performance and display.  17 U.S.C. 106(1) covers rights of digital reproduction.
• Changes to the U.S. Copyright Act "would likely prove more disruptive, not less, to the rule of law in this area.

The Report is a fascinating read, particularly since it involves an academic debate between Professor Menell and Nimmer, where Professor Nimmer was persuaded to change his copyright law treatise by the strength of Menell's arguments.  Nimmer had previously insisted that the Copyright Act required actual copies to be transmitted to have a claim for copyright infringement. but Menell persuaded him that the Copyright Act dictated otherwise.  Now that Nimmer's treatise is in line with the Copyright Office's thinking, the Report concludes that judges who relied on Nimmer's prior incorrect thinking will get things right.

The reason that this is important in the international law context is that the U.S. signed WIPO Internet Treaties (WIPO Copyright Treaty and WIPO Performance and Phonogram Treaty) prior to enacting the Digital Millenium Copyright Act of 1998 ("DMCA").  The argument is that in 1998 Congress thought that Title 17 already protected the "making available" right required by the WIPO Treaties.

The Copyright Office argues that a contrary reading would violate the  Charming Betsy doctrine.

The Report is thoughtful, but it is not without its critics.  Check out Techdirt's detailed post:  Copyright Office Decides To Rewrite Copyright Law Itself, Blesses A 'Making Available' Right That Isn't There.

Chapter 3 of my book Copyright Litigation Handbook is titled Client Interviews and Initial Investigations.  Chapter 7 is titled Drafting The Infringement Complaint.  Where it is financially and factually feasible to collect evidence of an actual download before commencing an action, it would appear prudent to do so, rather than relying on uncertain legal precedent, unclear statutory language, and the charm of the Charming Betsy doctrine.

The Report contains many instances of other countries working the "making available" right into their copyright legislation.  If having an effective "making available" right is so important to compliance with the WIPO Treaties, clarifying the Copyright Act might be the job of Congress, rather than the courts.

Copyright Infringement: Making Available Right Report of US Copyright Office

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Justice Scalia's Penguin, the Batmobile and the Death of Umberto Eco

NINTH CIRCUIT - COPYRIGHT LAW - COPYRIGHT INFRINGEMENT - DERIVATIVE WORKS - USEFUL ARTICLES - BATMOBILE - AUTOMOBILE DESIGN - JUSTICE SCALIA

Copyright Litigation Blog's Penguin Cocktail Shaker

On  the evening of Saturday, February 13, 2016  I learned on Twitter of the passing of Justice Scalia.   Shortly thereafter, I received the following tweet from @design_law :

I wondered why Professor Burstein had put an #RIP under a penguin-shaped cocktail shaker.  I went to verify that my penguin cocktail shaker was safe.    He was.  I tweeted Professor Burstein and asked why the #RIP.  She responded immediately Walmart v. Samara.  Recalling that the case involved children's frocks and too lazy to revisit it on a cozy Saturday night in front of the woodstove, I asked again what the connection was.   She told me that it was one of Justice Scalia's excellent analogies in that case.


I have since gone back to revisit Walmart v. Samara.   Below is Justice Scalia's language on behalf of a unanimous court, and the case is here.


 In the case of product design, as in the case of color, we think consumer predisposition to equate the feature with the source does not exist. Consumers are aware of the reality that, almost invariably, even the most unusual of product designs-such as a cocktail shaker shaped like a penguin-is intended not to identify the source, but to render the product itself more useful or more appealing.


Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205 (2000).  The holding


We hold that, in an action for infringement of unregistered trade dress under § 43(a) of the Lanham Act, a product's design is distinctive, and therefore protectible, only upon a showing of secondary meaning. The judgment of the Second Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.


Enter the Batmobile.    In D.C. Comics v. Towle, 802 F.3d 1012 (9th Circuit September 23, 2015), Judge Ikuta quoted the following:


As Batman so sagely told Robin, "In our well-ordered society, protection of private property is essential."  From Batman: The Penguin Goes Straight broadcast March 23, 1966.


In D.C. Comics v. Towle, the Ninth Circuit concludes that the Batmobile is a copyrighted character and thus protected from auto enthusiasts making replicas under copyright law.


Ron Coleman over at the Likelihood of Confusion blog has a good writeup of the case here.   There is a cert petition pending, Ron's post provides a link.   Ron seems to be on the fence about whether indeed an automobile is a "useful article" and thus not subject to  copyright protections. Eriq Gardner's take here.


  I read the cert petition and the author of the petition does not cite any difference of opinion among circuits and really does not point out that the Batmobile raises issues that may conflict with current Supreme Court precedent.  So it is unlikely the U.S. Supreme Court is likely to take up the case.

It seems to me that the Ninth Circuit's analysis is and will be problematic for copyright law and is in tension with Justice Scalia's opinion in Dastar Corp. v. Twentieth Centrury Fox Film Corp. in which he warned about creating a species of perpetual copyright and patent.  Opinion here.


Italian philosopher Umberto Eco just died, his NY Times obit here.   Eco was interested in semiology and semiotics, that is the study of signs, symbols meaning and communication.  He was accused of more high-minded colleagues of being interested in things that were "trivial" or low-brow.   His books In the Name of the Rose and Foucault's Pendulum were international bestsellers.


Eco would certainly have attributed great significance to Justice Scalia's finding - out of all of the possible things to convey his point - a penguin shape making a cocktail shaker "more useful and appealing".  With his passing, we are left to wonder whether a bat-shaped cocktail shaker would have survived a copyright challenge.


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 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) by Raymond J. Dowd
 

Books Books Books - Is The Google Books Case The Most Important Copyright Case In Our Lifetime?

GOOGLE BOOKS - COPYRIGHT LAW - FAIR USE DOCTRINE - TRANSFORMATIVE WORK - TRANSFORMATIVE PURPOSE - PETITION FOR CERTIORARI


At a reception at Fordham Law School in New York city an attorney friend from Germany shook the hand of Judge Denny Chin and said that it was an honor for him to shake the hand of the man who had decided the most important case in copyright history.


A petition for certiorari filed by the Authors Guild on December 31, 2015 (found here) seeks to undo all that.   The petition is assigned case number 15-849.  On February 1, 2016 various amici curiae filed briefs.


The petition seeks to overturn the Second Circuit's decision authored by Judge Pierre Leval
in Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. October 16, 2015)(opinion here) that affirmed the district court's grant of summary judgment in Google's favor based on the fair use doctrine of the Copyright Act 17 U.S.C. 107. The petition makes a compelling case that the circuit courts of appeals have taken different views of what constitutes "fair use" and that this case is an appropriate vehicle for the Supreme Court to give the circuit courts guidance.  When the U.S. Supreme Court takes on a case, it is less interested in whether a particular court of appeals got the case right or wrong, than whether the courts of appeals are divided or inconsistent on important questions of law.  For a good brief discussion of how to write a convincing cert petition, check out SCOTUS blog's Kevin Russell here.  As Russell points out, briefs of amici curiae can make a big difference in how the Court views the importance of the question presented.


The case has procedural twists and turns relating to class certification, summarized well here by EFF. Here is Copyright Litigation Blog's post on the 2013 decision vacating the class certification decision and remanding for a fair use determination.  Here is my post on Judge Chin's 3/23/2011 rejection of class certification.


Judge Pierre Leval is a famous copyright law scholar.  His opinion for the court is thoughtful, insightful, and breaks new ground in the fair use doctrine.  I may be mistaken, but I think Judge Leval's opinion provides the first distinction between "transformative work" and "transformative purpose" - a distinction that the petition takes him to task for.  It is a distinction that makes a lot of sense to me.   When reading the cases about video engines using low resolution images to enable searches, I never believed that the thumbnails were "highly transformative" in the way the Ninth Circuit posited, I just thought that the Ninth Circuit liked the very useful video search engines and found a reason to reach that result.


The Second Circuit's October 15 decision breaks new ground and makes sense of the video search engine cases.   The reason a video search engine or a Google books search is transformative is that it simply provides information ABOUT the copyrighted work, without providing a substitute for the work.   Important to the analysis was that folks using Google books could only get small snippets of the books and a total of 16%, but not the 16% that the user was trying to get.  In other words, just enough to enable the users to find useful books, eliminate irrelevant books, but not enough to be useable as a substitute for purchasing the entire book.  This is what the Second Circuit is calling a "transformative purpose".


In a digital world where making access to copyrighted works is extremely important, Judge Leval's analysis seems to make the most sense, whether or not you agree with the result.  There is a hot debate elsewhere about whether the first sale doctrine should apply in the digital world and whether technology upstarts should be at risk for billions in copyright infringement when pushing the technology envelope.   For a recent Department of Commerce White Paper that discusses the debate, visit here.  Although the Google Books case deals with legacy books, it has an impact on author's rights moving forward that the Authors Guild is deeply concerned with.


In the art law context, there has always been some debate about using high quality reproductions of artworks in auction catalogues.  In my estimation, Judge Leval's analysis would, for example, provide a meaningful rationale for auction houses to argue fair use in compiling visual information about artworks offered for sale.  The high quality digital reproductions themselves are not transformative "works" in my opinion, but the works are created or reproduced for a transformative purpose: i.e., there is no other way to convey information about those artworks to the relevant public for a limited purpose that does not displace the artist's market for the works and is not a substitute for the real thing.


Enough inside baseball.  What is the underlying that case about?  As the cert petition dramatically opens, Google backed up moving vans to the nation's greatest libraries in 2004, took all of the books, scanned them, gave scanned copies to the libraries, and kept copies for themselves.  All without the permission of the authors or publishers.  Google then created Google Books, a feature that permitted users to search snippets of books using Boolean word searches.


According to news reports at the time, most of the world's knowledge was under copyright and out of print.  Google was a bold upstart with an unproven business model.   In 2016, twelve years later, the Authors Guild's cert petition cites the over $36 billion in ad revenue that Google generates annually.  Along the way, Google permitted authors and publishers to opt in and opt out of the Google Books search feature.  My recollection is that there were many reports that authors were finally getting payments on books that had been long-forgotten by publishers.   The general public consensus was that publishers had failed to keep works in print, failed to support authors, and that Google was a savior to both authors and the publishing industry.


The Authors Guild's (well-written) take from https://www.authorsguild.org/authors-guild-v-google-questions-answers/


On October 16, 2015, the United States Court of Appeals for the Second Circuit reached a decision in our copyright infringement lawsuit Authors Guild v. Google. In holding that Google’s wholesale copying of millions of copyrighted books to develop its profitable Google Books program was fair use, the court failed to see the damaging effect that uses such as Google can have on copyright incentives and on authors’ potential income. We trust that the Supreme Court will see fit to correct the Second Circuit’s reductive understanding of fair use, and to recognize Google’s seizure of property as a serious threat to writers and their livelihoods, one which will affect the depth, resilience, and vitality of our intellectual culture.


A bit more from https://www.authorsguild.org/authors-guild-v-google-questions-answers/


I’m a writer and I like Google Book Search. I use it all the time. What’s the problem?Google Books itself is not the problem. We’re all writers here, and we generally like Google Book Search. Some of us use it for research all the time.
The problem is that Google used authors’ books for profit-making purposes without first getting permission from authors. It just went ahead and copied them many times over and extracted their value, without giving the authors any piece of it. There are lots of other great commercial uses of books; the difference is that most users abide by the law and get permission. If corporations are now free to make unauthorized copies of books for profit as long as there is some public benefit to the copying, then authors’ incomes will suffer even more than they have in recent years.
A truism of the digital age is: whoever controls the data owns the future. Google’s exclusive access to such an enormous slice of the world’s linguistic output cemented its market dominance and continues to this day to further its corporate profits.


And, pushing the fair use envelope, a bit more:


Does the Authors Guild want to shut down Google Books?No. A resounding no. We did not ask the court to shut down Google Books, we simply asked it to require Google to get permission from authors and pay them for the scanning and use of their works.


In my humble opinion, that "resounding" part lacks credibility.  Hidden in the decision and the controversy is whether the Authors Guild has associational standing to represent dead and unknown authors who are not necessarily around to complain or opt out.  As a practical matter if neither Google nor the Authors Guild can get permission, the books are unreachable by scholars I think this is something that both sides have basically conceded. If I am incorrect or unfair on this point, I would be happy to update this post.


In the wake of Justice Scalia's passing, it will be interesting to see whether an eight-justice court takes up this tremendously important copyright case and whether Justice Ginsburg writes the opinion.


My book Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) has a chapter on Class Actions.  Check out the full table of contents here.


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 nd

Copyright Law - Proposed Beijing Treaty Would Reverse Garcia v. Google (Innocence of Muslims)

On February 10, 2016 President Obama sent the Beijing Treaty on Audiovisual Performances to the Senate for ratification.   The Senate referred the treaty to the Senate Committee on Foreign Relations which is chaired by Senator Bob Corker of Tennessee Twitter handle: @senbobcorker .


Commenters have pointed out that the Beijing Treaty, which was executed on creates a new form of copyright for performers and would constitute a radical change in our copyright laws.  The Electronic Frontier Foundation opposes the Beijing Treaty here as does Techdirt here mainly on the grounds of restricting free expression/fair use and creating unnecessary copyright monopolies that will benefit Hollywood content owners, rather than performers.  Essentially, if you film anyone dancing, the person dancing would have the right to prevent you from publishing the film.


A Twitter search shows that actors unions are solidly behind the Beijing Treaty.


The Beijing Treaty would essentially reverse the Garcia v. Google case discussed here.  In that case, an injunction was issued against the film Innocence of Muslims.  The Ninth Circuit reversed, holding that the actress did not have a copyright claim in her performance.


Here is President Obama's message to the Senate:

The White House

Office of the Press Secretary

For Immediate Release

February 10, 2016

Message to the Senate -- The Beijing Treaty on Audiovisual Performances

TO THE SENATE OF THE UNITED STATES:
With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the Beijing Treaty on Audiovisual Performances, done at Beijing on June 24, 2012 (Beijing Treaty).  I also transmit, for the information of the Senate, a report of the Secretary of State with respect to the Beijing Treaty that includes a summary of its provisions.
This copyright treaty, concluded under the auspices of the World Intellectual Property Organization (WIPO), advances the national interest of the United States in promoting the protection and enjoyment of creative works.  The Beijing Treaty provides a modern international framework for the rights of performers in motion pictures, television programs, and other audiovisual works, similar to that already in place for producers of such works, for authors, and for performers and producers of sound recordings, pursuant to other WIPO copyright treaties the United States has joined.
The United States played a leadership role in the negotiation of the treaty, and its provisions are broadly consistent with the approach and structure of existing U.S. law.  Narrow changes in U.S. law will be needed for the United States to implement certain provisions of the treaty.  Proposed legislation is being submitted to both houses of the Congress in conjunction with this transmittal.
I recommend that the Senate give early and favorable consideration to the Beijing Treaty, and give its advice and consent to its ratification, subject to a declaration pursuant to Article 11 of the Beijing Treaty as described in the accompanying Department of State report.

BARACK OBAMA

It appears that the President's description of the Beijing Treaty is not consistent with its intent or language.  The Beijing Treaty appears to be a radical change from existing copyright law.  Congress ought to take a hard look at these issues and hold hearings before moving forward.

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 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) by Raymond J. Dowd
 

Books for the Blind? Tell Your Senators To Ratify the Marrakesh Copyright Treaty!

On February 10, President Obama finally submitted a very important treaty worthy of support to the U.S. Senate for ratification.  The Marrakesh Treaty would require that the U.S. Copyright Act 17 U.S.C. 101 et seq. be modified to permit non-profit organizations who have legal access to a copyrighted work to make that copy accessible to the blind and visually impaired.   If you read the Treaty (embedded below), you can see that this change is limited and has many protections for authors of copyrighted works.
According to the World Blind Union, only 1-7% of works in print are made accessible to the blind.  An international treaty known as the Marrakesh Treaty, agreed to in 2013, was recently proposed to the U.S. Senate for ratification.  Here is the analysis by the World Blind Union of how the Marrakesh Treaty would end the "book famine" facing the blind and how the treaty is designed to respect the rights of authors.
http://www.worldblindunion.org/english/news/Pages/The-Treaty-of-Marrakesh.aspx

According to the National Federation of the Blind:
Millions of Americans are being denied access to published works.[2] Despite the ability to convert print books into accessible formats like Braille, audio, and digital copies, over 95 percent of published works are unavailable to people with print disabilities.[3] Literacy and equal participation in society are critical elements of a fulfilling and independent life, but until uniformity is built into the international copyright system, blind Americans will be excluded from accessing works. A blind student seeking to learn Spanish will likely struggle to find an accessible format[4]; a work printed in English may have already been converted into an accessible format overseas, but because copies are not exchanged across borders, domestic entities might need to make a duplicate copy or just might deny access altogether by failing to reproduce the work.

Read more from the National Federation of the Blind Marrakesh Fact Sheet here.
Here is President Obama's message to the U.S. Senate seeking ratification:

The White House

Office of the Press Secretary

For Immediate Release

February 10, 2016

Message to the Senate -- The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled

TO THE SENATE OF THE UNITED STATES:
With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled, done at Marrakesh on June 27, 2013 (Marrakesh Treaty).  I also transmit, for the information of the Senate, a report of the Secretary of State with respect to the Marrakesh Treaty that includes a summary of its provisions.
This copyright treaty, concluded under the auspices of the World Intellectual Property Organization (WIPO), advances the national interest of the United States in promoting the protection and enjoyment of creative works.  The Marrakesh Treaty lays a foundation, in a manner consistent with existing international copyright standards, for further opening up a world of knowledge for persons with print disabilities by improving their access to published works.
The United States played a leadership role in the negotiation of the treaty, and its provisions are broadly consistent with the approach and structure of existing U.S. law. Narrow changes in U.S. law will be needed for the United States to implement certain provisions of the treaty.  Proposed legislation is being submitted to both houses of the Congress in conjunction with this transmittal.
I recommend that the Senate give early and favorable consideration to the Marrakesh Treaty, and give its advice and consent to its ratification.

BARACK OBAMA

Here is a copy of the Marrakesh Treaty:

Marrakesh Treaty For the Visually Impaired

Here is Techdirt's take.


Below is the take of the International Federation of Reproduction Rights Organizations (accessed here)

Analysis of WIPO Marrakesh Treaty to facilitate access to published works for persons who are blind, visually impaired, or otherwise print disabled

The WIPO Diplomatic Conference concluded successfully on 28 June 2013 with the adoption of the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or otherwise Print Disabled (available here).
This Memorandum aims at providing a first legal analysis from a rightholder perspective, and concludes as follows:

• The Treaty is an exceptional treaty, providing access to specifically defined beneficiaries.
• The Treaty is an access treaty rather than an exceptions and limitations Treaty.
• The Treaty leaves it to the individual country to decide whether to make the exception or limitation subject to remuneration.
• The Treaty reconfirms the role of Authorised Entities as a means to facilitate access to works in accessible formats for persons who are blind, visually impaired, or otherwise print disabled. This means that the WIPO-facilitated TIGAR and the EU-facilitated ETIN initiatives to create a network of authorised entities for the cross-border exchange of accessible format copies of works maintain their relevance.
• The Treaty includes many references to the “three-step test” and to obligations in other international treaties, providing assurance to rightholders that it will be applied, de facto, to all files that are exchanged internationally.
• Even though there is no mandatory reference to “commercial availability” in the Treaty, rightholders should be able to argue that the “commercial availability” requirement needs to be observed, based on the second limb of the “three-step test” (“normal exploitation”). The Treaty certainly has the flexibility to allow countries at different speeds or stages of development to take into account the level of commercially available offerings.
• Although there is a reference to “fair practices, dealings or uses” – in the specific context of exceptions and limitations in favour of blind, visually impaired, or otherwise print disabled persons, subject to international obligations – we do not interpret this as an explicit reference to the concepts of “fair use” or “fair dealing”.

For IFRRO members, the Treaty should not per se bring about changes. Countries in which RROs administer statutory licences in respect of accessible format copies are allowed to maintain such arrangements. We also continue to encourage RROs to respond positively to requests from authors and publishers to facilitate the making and cross-border exchange of accessible format copies, including participating in the TIGAR and ETIN projects. We would like to remind you that the IFRRO website has a specific page dedicated to these issues, which also includes tools to facilitate RRO engagement (here).


In sum, I urge my Senators Schumer and Gillibrand to please support the Marrakesh Treaty and to make ratification a priority.  Please let your Senators know that you support this important treaty.

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 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) by Raymond J. Dowd
 

Trade Secret Theft Versus Copyright Infringements: Beware of Differing Statutes of Limitations

COPYRIGHT LAW - TRADE SECRETS - STATUTES OF LIMITATIONS - ACCRUAL - CONTINUING WRONG DOCTRINE

Allied Erecting and Dismantling Co. in action http://www.aed.cc/gallery/index.html

Allied Erecting and Dismantling Co. v. Genesis Equipment & Manufacturing, Inc., 805 F.3d 701 (6th Cir. November 3, 2015).


Father & son have a fight.  Son leaves Allied with a laptop containing 15,000 pages of Allied documents including highly confidential documents relating to demolition machine attachments called the Allied MT.   Son goes to Genesis.  Genesis releases tools remarkably similar to Allied's products.   In a diversity case, Allied brings a claim under Ohio's Uniform Trade Secrets Act. After a 2006 litigation is successful following a jury trial in which Allied obtains over $3,000,000 in unjust enrichment damages but does not obtain injunctive relief (after requesting it from the district court).  District court determines that unjust enrichment covers the misappropriation. Sixth Circuit affirms.  Genesis releases another new and similar tool.  District court suggests that Allied needs to bring a new lawsuit to assert claims.   Allied brings new case in 2013.


 The OUTSA has a four-year statute of limitations.  The district court found that the second action was barred by the statute of limitations.


Analysis:  The Sixth Circuit determined that, unlike copyright infringement cases, trade secret cases use the "single claim" rule based on when the victim had knowledge of the misappropriation.   The Sixth Circuit contrasted copyright infringement claims based on the "continuing wrong doctrine" where each successive infringement gives rise to a new claim.   However, the Sixth Circuit determined that the doctrine of issue preclusion was the grounds for affirming the district court's dismissal.


Issue preclusion is the appropriate doctrine for analyzing successive federal lawsuits.  Allied's application for an injunction had already been denied in the prior action and the denial affirmed by the Sixth Circuit.


In my book Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016), Chapter 5: Calculating Dates Prior To Commencing Litigation deals with the issue of how to calculate statutes of limitations. Chapter 12: Injunctions and Seizures gives checklists and covers the case law relating to injunctive relief.   The full table of contents is here.


A successful plaintiff may nonetheless be left unhappy.  This case suggests that the jury instructions may not have been as clear as the plaintiff might have liked, with the district judge left to assume that an unjust enrichment award permitted future use of misappropriated materials.






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 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) by Raymond J. Dowd