Second Circuit - Copyright Law - Attorneys Fees To Prevailing Parties Where Copyright & Trademark Claims Not Adjudged

Can a "prevailing party" in a copyright or trademark action obtain attorneys fees even if the victory had nothing to do with the Copyright Act or Lanham Act?   The Second Circuit, in a pair of recent decisions involving alleged infringement of test preparation materials, says "yes."

Manhattan Review Test Prep

In Manhattan Review LLC v. Yun - 2019 WL 1319813 and 2019 WL 1326528 the Second Circuit divided its opinion into two decisions, one of precedential value limited to the question of whether a "prevailing party" could collect attorneys fees and one by summary order dealing with the questions of whether attorneys fees were appropriate under the Copyright Act and Lanham Act.  This federal action arose in the wake of a failed state action.  In the state action based on various state law claims, the litigation turned on the corporate status of Manhattan Review LLC because its corporate status had been cancelled by the State of Delaware.   Manhattan Review's loss of corporate status led to dismissal of copyright and trademark claims brought derivatively on its behalf.   Manhattan Review's principal obtained a certificate of good standing and moved to vacate the dismissal.  The state court denied the motion to vacate.


Manhattan Review LLC and its principal filed the federal action for copyright and trademark infringement, failing to mention the state court action.  The court found the certificate of good standing did not nullify Delaware's cancellation and ruled against the plaintiffs on the grounds of collateral estoppel, finding that plaintiffs had received a full and fair opportunity to litigate.


The defendants sought, and were awarded attorneys fees and costs pursuant to section 505 of the Copyright Act and section 35(a) of the Lanham Act.   Plaintiff objected, arguing that the copyright and trademark claims had not been considered on the merits, making statutory awards of attorneys fees inapplicable.


The Second Circuit rejected the argument as foreclosed by the U.S. Supreme Court's 2016 decision in CRST Van Expedited, Inc. v. EEOC which decided that the "defendant may prevail even if the court's final judgment rejects the plaintiff's claim for a non-merits reason."


The Second Circuit's summary order dealt with the questions of whether attorneys fees were properly assessed under the Copyright Act and Lanham Act which afford district court judges discretion - and boundaries on their discretion - in awarding attorneys fees.  The Second Circuit affirmed the finding that plaintiffs' litigation positions were "objectively unreasonable and frivolous" and that "the failure to mention a relevant prior action indicates a lack of candor".   Accordingly, the Second Circuit concluded that approximately $49,000 in attorneys fees were appropriately awarded under the Copyright Act and as an "exceptional case" under the Lanham Act.


Chapter 18 of Copyright Litigation Handbook covers Attorneys Fees and Costs.  This decision illustrates that persisting in pursuing unsuccessful theories in copyright and trademark matters can be a dangerous pursuit.


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 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd
 

Copyright Law & Sports: Football Players Can't Stop NFL From Distributing Films Of Performances

EIGHTH CIRCUIT - COPYRIGHT LAW - RIGHT OF PUBLICITY - PREEMPTION - LIVE PERFORMANCES - UNFAIR COMPETITION - LANHAM ACT

Do former NFL football players have the right to stop the NFL from distributing films that include their past performances?  The Eighth Circuit says "no."

In Dryer v. National Football League, ---F.3d --- (8th Cir. February 26, 2016) the Eighth Circuit Court of Appeals considered whether former players could use state law claims of rights of publicity and Lanham Act claims of false endorsement to stop the distribution of filmed materials in which the NFL had a copyright.

With respect to the rights of publicity claims, the 8th Circuit concluded that the state law right of publicity claims were preempted by the Copyright Act.   In my book Copyright Litigation Handbook (Thomson Reuters West 2015-2016) I devote a chapter to the concept of preemption because it is an important concept to understand.  "Preemption" exists where Congress has regulated to the point of displacing contrary state law.   "Complete preemption" is a rare subset of preemption, where Congress has regulated a subject matter so completely as to forbid state regulation even where Congress has chosen not to regulate.   Copyright law is an area of law in which the complete preemption doctrine may apply to knock down inconsistent or additional state regulations that may burden authorial rights under the Copyright Act.

To determine whether a state law claim is preempted by the Copyright Act, the court asks two questions.  First: is it a work within the subject matter of copyright?  Second, whether the state law created right is equivalent to any of the exclusive rights granted by the Copyright Act?

In Dryer, the Eighth Circuit concluded that the films in question fell within the subject matter of copyright.   Additionally, the court concluded that the works in question were expressive works and not commercial speech.   Because the former football players were trying to control dissemination of the films, they were exercising powers equivalent to those granted to copyright owners under the Copyright Act and thus were preempted.

The court distinguished commercial speech such as advertising and pointed out that if the players images were being used for advertising purposes or to promote unrelated products (like the voice recording in Facenda v. NFL Films), a state law grant of rights of publicity might not be preempted.

The Eighth Circuit also tossed out the former NFL players' claims of false endorsement under Section 43(a) of the Lanham Act, 15 U.S.C. Section 1125 since the plaintiffs could not show any false or misleading statements regarding the players' current endorsement (or lack thereof) of the NFL.

To find the Dryer decision and a related decision discussing the class action settlement that Dryer opted out of, click here.

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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
 

Copyright Law v. Trademark Law: Website Developer Can't Snooze On Cybersquatting Claims

Since the dawn of the commercial internet in the late 1990's, the relationships between website developers and corporations have progressed somewhat:  most parties have learned that healthy relationships grow out of  clear expectations and tight contracts.  In the beginning, however, commercial expectations of the parties differed wildly.  Over-aggressive web developers registered intellectual property claims to client IP that did not rightly belong to the developers as a means of locking in corporations to endlessly-escalating development contracts, on the one hand. On the other, corporations over-reached in asserting rights in code that developers intended to and should reasonably have been able to use to service other clients.   Over the years, web maintenance and development migrated in-house to a great extent and corporations hired counsel with greater intellectual property expertise.  Suddenly, even the smallest business enterprise became a publisher on the World Wide Web.  Websites are no longer as mysterious or intimidating as they once were.

A corporation's relationship with a web developer may involve trademark law issues:  trademark registration and logo design, copyright law related to logo creation and design, domain name registration and administration, and administrative and cost issues relating to how a website is modified and updated.  In creating such a relationship, a comprehensive contract is important.

However, there are still plenty of unclear situations where web developers pull out all of the stops and assert a law professor's fantasy hypothetical of intellectual property claims in order to get paid.  Whether the plaintiff is right or wrong, poorly-drafted or non-existent agreements can cause inhouse counsel an endless nightmare.

In D'Agostino v. Appliances Buy Phone, Inc.,  ----- Fed. Appx. --- (3d Cir. December 7, 2015) the Third Circuit dealt with a particularly thorny dispute.   The web developer went to state court in New Jersey and asserted a host of claims against a corporate client, including violations of the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. Section 1125(d)("ACPA").  He also brought fraud, contractual and copyright infringement claims.   And included Google as a defendant.

A litigant's choice of whether to go to federal or state court is an important topic in my book Copyright Litigation Handbook (Thomson Reuters West 2015-2016).  How claims are pleaded may determine the venue.  The cost and procedural implications are profound, since, as a practical matter, losing on initial procedural skirmishes may knock out the other party's claims or litigation budget, leading to settlement.

In D'Agostino, the web developer filed in NJ state court in 2010.  Because he had pleaded federal claims, Google removed the action to federal court.  "Removal" is a very simple, automatic procedure that I describe in Copyright Litigation Handbook.  Web developer then deleted his federal claims, stating that the deletion was "without prejudice" to filing a future federal action.   Web developer fully litigated his non-federal claims in state court an lost.   He then filed the federal D'Agostino action.

The Third Circuit found the web developer's cybersquatting claims to be barred by the doctrine of res judicata.   Under New Jersey law, a litigant must plead the "entire controversy" against a defendant or be barred from later litigation on that point.  Because federal courts do not have exclusive jurisdiction over claims arising under the Lanham Act such as trademark, unfair competition or cybersquatting, the Third Circuit found that the web developer could have and should have asserted the cybersquatting claims if he wanted to preserve them.  Thus, the web developer was barred from asserting cybersquatting claims in D'Agostino.

The web developer's copyright infringement claims had a different outcome.  New Jersey's "entire controversy" doctrine does not extend to claims arising under the Copyright Act, 17 U.S.C. Section 101 et seq.  The reason is that federal courts have exclusive jurisdiction over claims arising under the Copyright Act, and New Jersey law does not require a litigant to assert claims over which the New Jersey court would not have had jurisdiction.  

Thus the web developer's copyright infringement claim jumped the res judicata hurdle.  With respect to the defendant's statute of limitations defense relating to the copyright infringement claim, the Third Circuit found questions of fact as to when the copyright infringement claim accrued that could not be resolved at the pleadings stage and remanded for further findings.

In sum, five years after the initial complaint was filed in state court, the new federal case brings the corporation back to the beginning stages of an entire new litigation.   And the web developer is proceeding pro se.  Good reasons to pay attention to the procedural niceties at the outset of a litigation.

You can read the Third Circuit's D'Agostino opinion here.

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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
 

Federal Circuit On Slants and Redskins: Trademark and Copyright Registrations Versus The First Amendment

TRADEMARK REGISTRATION - COPYRIGHT REGISTRATION - FIRST AMENDMENT - FREE SPEECH - REGISTRATION OF SCANDALOUS MARKS


In 2006 when I was working on the first version of my book Copyright Litigation Handbook, I went to Washington, D.C. for a tour of the Copyright Office and to visit the former Register of Copyrights and her legal team.  It felt like the last scene of Indiana Jones and the Raiders of the Lost Ark: vast quantities of deposit materials: from telephone books to CDs to pornography, much of it being thrown away.  If deposit material is not selected for the Library of Congress's collection, the deposit material may be discarded.   A fact that sends evidentiary shivers down the spine of every litigator.


It was the pornography that surprised me most.  At the time it was videocassette and DVDs of pornography films stuffed into bookshelves that seemed to go on forever.  Why on earth were significant government resources being devoted to housing, storing and processing legal protections to these offensive materials?   A patient guide explained the whole system to me.


On December 22, 2014 the U.S. Court of Appeals for the Federal Circuit decided In re Simon Shiao Tam, 2015 WL 9287035 (Fed. Cir. December 22, 2015) which struck down as facially unconstitutional Section 2(a) of the Lanham Act which bars the United States Patent and Trademark Office from registering scandalous, immoral or disparaging marks.  15 U.S.C. 1052(a).  A number of en banc dissenters thought the statute should have been held unconstitutional as applied.   A cert petition is expected in March and the U.S.P.T.O. has put a moratorium on refusals of registrations of disparaging marks until the Supreme Court rules.  Until then, examiners have been instructed to simply suspend the applications according to IPWatchdog's report here.

The Slants - Misery Music Video

The plaintiff Simon Shiao Tam was denied registration of the trademark THE SLANTS.  Tam is an Asian-American musician who chose THE SLANTS to express an anti-racist message.


The decision is tremendously long and tremendously interesting.  The reason Copyright Litigation Blog is interested is that both the majority and leading dissenting opinions do a compare/contrast between the copyright registration and the trademark registration process that is highly instructive on the question of whether registration of a trademark implicates or subsidizes government speech.


As I noted above, copyright registrations are issued routinely for pornography.  I am aware of at least one federal case where a while back a judge in the SDNY refused to grant copyright protection to a pornographic work that he found immoral, although the name of the case escapes me now and I have long been skeptical of whether using the federal courts to threaten exposure of alleged downloaders of pornography was anything more than an extortion racket that violated public policy.   But I am not aware of any big moral controversies involving registrations of potentially offensive copyrighted works.   And, as the case explains, this is for good reason.   Copyrights subsist in offensive speech and have long been considered coextensive with the First Amendment.


But historically, trademarks have been treated differently. Trademarks have been considered commercial speech.   And the majority and dissenters differ on whether trademarks subsidize speech, regulate it, or promote certain types of speech over others.


When I read the media coverage of the case, I didn't think that the issue was so important.  But as I read the enormous decision, I listened to The Slants on Spotify.   Not bad!  I visited the Slants' website and found an impassioned discussion of the case by Mr. Tam here.


Tam says that the Federal Circuit hijacked his case in favor of the Washington Redskins, an interview here.


After having read the case, I am persuaded that the issues are of tremendous importance and that this case will have extraordinarily wide consequences for the future of the intersection of trademark and copyright law with the First Amendment.   Judge Dyk's dissent bears close watching.

In Re Tam the Slants - Trademark Registration

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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
 

Dunnington Partner & Copyright Litigation Handbook Author Raymond J. Dowd To Speak At Federal Litigation Conference In Washington DC

The Federal Bar Association's Federal Litigation Section is holding its annual Federal Litigation Conference in Washington D.C. starting tomorrow with a cocktail party hosted by Chip Molster at  Winston & Strawn.  This has been billed as the federal litigation networking event of the year and I am certainly looking forward to it.

If you are not yet a member of the FBA's Federal Litigation Section, now would be a great time to join.   Thanks to Chair Rob Kohn of the Kohn Law Group in Los Angeles and Vice Chair John McCarthy a New York partner of Smith Gambrell & Russell for all of the great work and vision in putting this event together.

The event has a superstar lineup of judges and attorneys from around the country. SCOTUS Blog Co-Founder Tom Goldstein's presentation will surely be a highlight.

I am bolding and highlighting the panel that I will be on so that it does not get lost in the shuffle of luminaries and dignitaries (and because we have to compete with the Supreme Court!), so if any IP practitioners or litigators with an interest in intellectual property litigation can make it, we would all enjoy meeting you and networking.

1:15-2:05 p.m.

CLE 3B - IP: Cease and Desist Letters: Ethics & Practice Raymond J. Dowd, Esq., Partner, Dunnington, Bartholow & Miller LLP; author of Copyright Litigation Handbook (Thomson Reuters 2014-2015) John G. Froemming, Esq., Partner, Jones Day Matthew T. Salzmann, Esq., Associate, Arnold &Porter LLP Moderator: Hon. Lisa Margaret Smith, U.S. Magistrate Judge, Southern District of New York

The full schedule below!  To register www.fedbar.org.

5:30-7:00 p.m.	Welcome Reception at Winston & Strawn LLP 1700 K Street, N.W. (Rooftop/12th floor) Washington, D.C. 20006
OCTOBER 27, 2015 - FHI 360 Conference Center
8:30-9:00 a.m.	Registration and Networking Continental Breakfast
9:00-10:20 a.m.	CLE 1 - Cyber Security & Data Breach Grey Burkhart, Esq., Principal, Booz Allen Hamilton Inc. Jeffrey T. Cox, Esq., Partner, Faruki Ireland & Cox Kevin Minsky, Esq., Associate General Counsel, Booz Allen Hamilton Inc. Michael Woods, Esq., Vice President and Associate General Counsel, Verizon Moderator: Charles B. Molster, III, Esq., Partner, Winston & Strawn LLP
10:30-Noon	CLE 2 - New "Magic Tricks" for Federal Practice John McCarthy, Esq. Partner, Smith, Gambrell & Russell LLP; Vice Chair of the FBA's Federal Litigation Section  Hon. Loretta A. Preska, Chief U.S. District Judge, Southern District of New York Hon. Gerald E. Rosen, Chief U.S. District Judge, Eastern District of Michigan; co-author of Federal Civil Trials and Evidence (Rutter Group) Hon. Suzanne H. Segal, Chief U.S. Magistrate Judge, Central District of California Moderator: James M. Wagstaffe, Esq., Partner and co-founder, Kerr & Wagstaffe; Faculty Member of the Orientation Seminar for Newly Appointed Judges ("Baby Judges School") of the Federal Judiciary Center; principal author of Federal Civil Procedure Before Trial (Rutter Group)
Noon-1:00 p.m.	Luncheon with Keynote Speaker Thomas C. Goldstein, Esq., Partner, Goldstein & Russell P.C.; co-founder of SCOTUS-blog.com
1:15-2:05 p.m.	CLE 3A - Supreme Court Preview: Experts Discuss the Term's Top Cases Michael A. Carvin, Esq., Partner, Jones Day Thomas H. Dupree Jr., Esq., Partner, Gibson, Dunn & Crutcher LLP Elizabeth Wydra, Esq., Chief Counsel, Constitutional Accountability Center Moderator: Steffen N. Johnson, Esq., Partner, Winston & Strawn LLP
1:15-2:05 p.m.	CLE 3B - IP: Cease and Desist Letters: Ethics & Practice Raymond J. Dowd, Esq., Partner, Dunnington, Bartholow & Miller LLP; author of Copyright Litigation Handbook (Thomson Reuters 2014-2015) John G. Froemming, Esq., Partner, Jones Day Matthew T. Salzmann, Esq., Associate, Arnold & Porter LLP Moderator: Hon. Lisa Margaret Smith, U.S. Magistrate Judge, Southern District of New York
2:10-3:00 p.m.	CLE 4 - In-House Hot Topics: Key Advice From the Experts - Yeats, Alice, Cyber and More Joseph Clark, Esq., Vice President & Associate General Counsel, Investigations, Hewlett-Packard Neuman Leverett, Esq., Senior Corporate Counsel, Compliance, Tyco International Rachel V. Rose, JD, MBA, Principal, Rachel V. Rose Attorney at Law, PPLC; Chair of the FBA's In-House Counsel Division Timothy Wilson, Esq., Senior Intellectual Property Counsel, SAS Institute Inc. Moderator: Karla Palmer, Esq., Director, Hyman, Phelps & McNamara, P.C.
3:15-4:10 p.m.	CLE 5 - Obtaining and Using Electronic & Social Media Evidence Mark H. Churchill, Esq., Partner, McDermott Will & Emery Daniel D. Mauler, Esq., Partner, Redman, Peyton, & Braswell LLP Mark J. McLaughlin, Computer Forensics International Mark K. Vincent, Esq., U.S. Attorney's Office, District of Utah; FBA President Moderator: Charles B. Molster, III, Esq., Partner, Winston & Strawn LLP
4:15-5:15 p.m.	CLE 6 - Wisdom From the Bench Hon. Gerald E. Rosen, Chief U.S. District Judge, Eastern District of Michigan; co-author of Federal Civil Trials and Evidence (Rutter Group) Hon. Suzanne H. Segal, Chief U.S. Magistrate Judge, Central District of California Hon. Lisa Margaret Smith, U.S. Magistrate Judge, Southern District of New York  Moderator: Robert E. Kohn, Esq., Principal, Kohn Law Group Inc.; Chair of the FBA's Federal Litigation Section
5:15 p.m.	Networking Cocktail Reception
*Agenda, CLE session and speaker information is tentative and subject to change
OCTOBER 28, 2015
11:00 a.m.	Golf Tournament & Reception at Army Navy Country Club 1700 Army Navy Drive Arlington, VA 22202 *If you have questions or would like more information, please contact Chip Molster at CMolster@winston.com or George Kostel at GKostel@Polsinelli.com

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 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2014-2015) by Raymond J. Dowd
 

Intellectual Property and Fashion Law: Be There February 7, 2014 NYC

 

Opening Remarks:   Hon. Loretta A. Preska, Chief Judge U.S. District Court for the Southern District of New York

Keynote Speaker: Stanley G. Sherwood   9:00 a.m. -10:00 a.m. Intellectual Property Protection Ashlee Froese, Gilbert LLP (Canada)-IP (International)Erica Klein, Kramer LevinHeather McDonald, Baker Hostetler Copyright, trademark, and patent protection of fashion designs, anti-counterfeiting, etc. Overview of latest cases involving fashion IP rights. 10:00 a.m. - 11:00 a.m. Marketing and Advertising Brian G. Murphy, Frankfurt Kurnit Klein & Selz PCAshima Dayal, David & Gilbert LLP IP and privacy concerns, FTC regulations and marketing guidelines (especially those on advertising green products, as sustainability seems to be huge in the fashion industry right now), sweepstakes/promotions laws. 11:00 a.m. - 12:00 p.m. Internet Law Barry Werbin, Herrick Feinstein LLP Sarah Feingold, In House Counsel at Etsy.com Website development and operation, terms of service and privacy policies, security (personally identifiable information, credit cards, etc.), COPPA, online taxes, CAN-SPAM, UDRP and cybersquatting. 12:00 p.m. - 1:00 p.m. Luncheon 1:00 p.m. - 2:00 p.m. Licensing a Brand into Cosmetics Rita M. Odin, VP and Trademark Counsel of The Estee Lauder Companies Inc.Anca Cornis-Pop, Senior Counsel, Global Marketing, Avon Licensing considerations; launching a cosmetic; FDA and FTC regulations; ingredients labeling. 2:00 p.m. - 3:00 p.m. Fashion Industry Employment Law Issues Tracy Agyemang, Attorney, Department of Labor (and Model) Employment Law PanelElisa Bloom, Proskauer The legal structure of modeling agencies as business entities, modeling agency contracts, employment status of models i.e. independent contractors v. employees, weight issues, intellectual property issues affecting models, photographers and the agency relationship, NY law regulating child performers. 3:00 p.m. - 4:00 p.m. Outsourcing, Manufacturing, Importing and International Issues Frances Hadfield, Grunfeld Desiderio Lebowitz Silverman & Klestadt LLP Michael Khorsandi, In House Counsel, Ross Stores Outsourcing agreements, import/export regulations, child labor, international issues, border control issues. FTC labeling requirements, complying with country of origin laws, laws related to children's apparel, monitoring the supply chain, licensing agreements, NDAs. 4:00 p.m. - 5:00 p.m. Business Law and Fashion Financing Donald L. Kreindler, Phillips Nizer LLP Gary A. Wassner, Hildun Corporation Setting up your entity, obtaining financing, factoring, working with suppliers, vendors, wholesale and retail customers, and sales agents, purchase orders, consignment agreements and the Uniform Commercial Code.

Cost: $250 $325 $25

FBA Members/Other Professionals Nonmembers* Law Students

To Register visit www.fedbar.org or click on the following link:

http://www.fedbar.org/Education/Calendar-CLE-events/Southern-District-of-New-York-Chapter-Behind-the-Scenes-of-Fashion-Style.aspx

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 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2012-2013) by Raymond J. Dowd