Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Why You Don’t Allow Assignment of Trademark License Agreements

    Here’s a case caption that gives you pause:  “Hard Rock Cafe International (USA), Inc. v. Hard Rock Hotel Holdings, LLC et al.”  Ryan Gile at the Las Vegas Trademark Attorney has done the heavy lifting on figuring out who sued whom and why.  It’s a license relationship gone sour: the original trademark owner sold the mark and became a licensee, then sold the license to another company that now stands accused of acts that harm the value of the brand.  That’s exactly the reason one normally wouldn’t allow the assignment of a trademark license without approval.

    But the plaintiff hasn’t argued that the defendants don’t have a license, only that they have breached the contract.  I didn’t see an express provision in the agreement regarding assignability and instead this provision looks like assignment was contemplated:

    But you can’t second guess what leverage anyone has in negotiation, particularly when licensing back to the original trademark owner.

    Hard Rock Cafe Int’l (USA), Inc. v. Hard Rock Hotel Holdings, LLC, Case No. 10-cv-07244 (S.D.N.Y.  Sept. 21, 2010).

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  • Burn the Drafts

    I previously blogged about a dispute between Bodum USA and La Cafetière over the sale of French press coffeemakers. Corporate entity Bodum bought out one of the shareholders, Martin.  The purchase agreement included future restraints on Martin’s use of the conveyed trademarks and, it argued, on the trade dress in the pot configuration itself.  Martin through La Cafetière nevertheless sold French presses in the same or a similar design to those sold by Bodum, albeit under a different trademark. These are some of the images from the appeals court opinion, the Bodum pot on the top and the La Cafetière pot on the bottom:
    Bodum sued for trade dress infringement but the trial court, construing the sales agreement under French law, ultimately held that the sales agreement did not restrict the defendant from selling the presses.
    The appeals court affirmed. Under French law, the court could look at prior drafts of the agreement. They clearly demonstrated that Bodum had wanted to restrict the sale of look-alike pots but was unsuccessful in the negotiation.
    The opinion is an interesting read for two reasons. First, it is a good primer for U.S. lawyers (at least this one) on how contracts are construed under French law. Second, it has a lengthy exposition on how U.S. courts are to go about applying foreign law. Chief Judge Easterbrook wrote the opinion of the court, Judge Posner wrote a treatise of a concurring opinion, and finally Judge Wood disagreed with Judge Posner in a second concurring opinion. It’s a must-read for anyone involved in a case involving the application of foreign law.
    Bodum USA, Inc. v. La Cafetière, Inc., No. 09-1892 (7th Cir. Sept. 2, 2010).

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  • Yes, I Might Have

    Petitioners, circa 1988

    John Welch at the TTABlog added a new category, “Would You Have Petitioned?” In the case of Augustine’s Spiritual Goods, Inc. v. Augustine’s Eternal Gifts, LLC, maybe I would have. The decision as argued and decided was a no-brainer, but it looks like there’s a disconnect between the case that was argued and the case that could have been.

    Briefly, in 2002 petitioner sold its Chicago business to the respondent.  The sale documents were prepared without the benefit of counsel, but referred to the sale of “Augustine’s Spiritual Goods.”  Here’s the description of what was sold:

    (click for larger image)

    The seller fairly shortly thereafter opened a business in the Upper Peninsula of Michigan called “Augustine’s Curious Goods.” 

    In 2007, the respondent/buyer filed an application to register the mark AUGUSTINE’S for “novelty items having a religious theme, namely, incense, perfume oils and scented oils used to produce aromas when heated” in International Class 3, which was duly granted on June 3, 2008.  The Michigan seller petitioned to cancel the registration three days later.

    The Board had no problem whatsoever finding that the petitioner sold the mark AUGUSTINE’S SPIRITUAL GOODS to the respondent:

    We find that there is no ambiguity in the terms of the agreement. For the consideration paid by Carolyn Hennes, she received “[t]he good name of Augustine’s Spiritual Goods, which has an 11 year reputation”; in other words, Hennes acquired the AUGUSTINE’S SPIRITUAL GOODS trademark.11 There are no restrictions or limitations ascribed to the sale of the name. In fact, petitioner, through Frank and Alice Pulaski, the drafters, made clear that although Hennes would be using the mark AUGUSTINE’S SPIRITUAL GOODS, Hennes was not acquiring the corporation, Augustine’s Spiritual Goods, Inc., or any of the licenses in that entity’s name.

    11     Frank Pulaski testified that the value in “[t]he good name of Augustine’s Spiritual Goods” “was in Alice’s and my reputation,” thereby corroborating that petitioner transferred the goodwill associated with the mark.

    But what mark?  The Board seems to have cruised right past the concept that a mark is always in association with goods, without remark. I read the Sale Agreement as a sale of a retail business – but the registration sought to be cancelled was in Class 3 for incense and oils.  Petitioner is using the mark for those goods:

    Was the AUGUSTINE’S mark in use in Class 3 at the time of the assignment? If so, was it transferred also?  We just don’t know; neither party mentioned it. I don’t think that a transfer of a retail store operation necessarily transfers the goods manufactured under the mark too.  Perhaps it was the same evidence in both cases, but I just find it odd that no one mentioned, even in passing, that the registration is for goods fairly distant from retail store services.

    At any rate, good advocacy on the part of respondent; it won by whole instead of half.  Petitioners perhaps didn’t use enough of its own products.

    Augustine’s Spiritual Goods, Inc. v. Augustine’s Eternal Gifts, LLC, Cancellation No. 92049453 (T.T.A.B. Aug. 26, 2010)

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  • A Contract Isn’t “Intellectual Property” Just Because You’ve Named It That

    Thanks to Bill Bryner at Kilpatrick Stockton for a report on a recent 4th Circuit decision.  It’s about copyright and furniture, which leads to discussion of some of the more unusual intellectual property legal theories. I’m interested in the challenge to ownership of the copyright in the furniture designs.

    In 1994, a predecessor company, Universal Furniture Industries, Inc. (Industries), entered into a one and one-half page design services agreement with Norman Heckler Design, Inc. for the design of furniture.  In 1998, through merger, Industries became Universal Furniture Limited (Limited). In 2001, Limited sold its assets to plaintiff Universal Furniture International, Inc. (Universal).  The assets included, in the court’s words, “all of [Limited’s] intellectual property rights, including the 1994 service agreement.”

    Norman Heckler Design designed  two lines of furniture that were in dispute, the Grand Inheritance Collection, available for sale in 2001, and the English Manor Collection, available for sale in 2003.

    In 2004, a company called Rhodes Furniture asked defendant Collezione Europa USA to create furniture collections based on the Universal Grand Inheritance and English Manor collections.  Collezione Europa did, believing that the furniture designs were not entitled to copyright protection and unaware of the registrations (practice tip – check the copyright register before making assumptions about copyrightability).

    One of Collezione Europa USA’s defenses was a claim that Universal did not own the copyrights in the furniture designs because the 1994 design services agreement didn’t succeed to Limited in the 1998 merger.  But this argument was a no-go; the copyright registrations in Universal’s name were prima facie evidence of its ownership and there wasn’t enough evidence to rebut it.  The 2001 transaction specifically referred to the 1994 agreement, one indication that Limited had obtained the agreement in 1998.  Further, although Universal offered no evidence that the 1998 merger conveyed the agreement, it wasn’t Universal’s burden. Finally, the court noted that while there typically is a writing requirement for a transfer of copyright, 17 U.S.C. § 204, that’s not the case when the transfer is by operation of law, which a merger is.

    I am baffled by this analysis, which confuses copyright and contract – calling a contract “intellectual property” does not make it so. Notably, at least the English Manor Collection was created by Norman Heckler Design after all the transactions were completed.  Since a copyright exists only upon fixation, there were no copyrights in the English Manor Collection to be conveyed in 1998 or 2001. Thus, the court had more complex issues than it dealt with: whether the copyrights in any existing works were conveyed, whether the 1994 agreement itself was conveyed and, if so, whether the 1994 agreement vested ownership of future copyrights in the hiring party.

    On the contract conveyance question, the answer lies in business org and contract law, not assignment of copyright.  The court may be correct that the burden was on Collezione Europa USA to show that the merger didn’t transfer ownership, but the answer will be in the merger documents or the law of corporate succession, not copyright.

    On the assignment of future copyrights question, this is the relevant provision in the contract about ownership of copyright – you be the judge:

    The district court had this to say on the matter:

    The1994 Design Service Agreement provided that any designs accepted by the manufacturer became the exclusive property of the manufacturer. Collezione asserts that the 1994 Agreement is insufficient to confer copyright rights, citing section 202 of the Copyright Act, which provides that “[o]wnership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material work in which the work is embodied.” 17 U.S.C. § 202.

    Collezione appears to be drawing a distinction between ownership of the furniture designs, which it asserts may have been transferred under the 1994 Design Service Agreement, and ownership of the copyrights associated with those designs, which it asserts was not transferred under the Design Service Agreements. In essence, Collezione asserts that the 1994 Agreement does not transfer copyrights because it does not contain the word “copyright.” This position has been rejected by other courts. . . .  At this point in the proceedings, Universal has presented sufficient evidence to defeat Collezione’s motion for summary judgment as to this “gap” in the chain of title.

    With respect to whether the 1994 agreement operated to convey future copyrights, the Court of Appeals called out this language in the agreement:

    The terms of the 1994 service agreement are not time-limited, and the 2001 asset agreement could therefore include future designs made by Hekler employees. Indeed, the 1994 service agreement provides that Hekler “shall apply its skill, knowledge, and expertise to the design of each item of furniture as [Universal] may, from time to time, request in writing.”

    But I would agree that the agreement probably meant to convey copyright ownership, with a reversion if the designs aren’t used. So no harm, no foul.

    A couple of interesting and more rarely-covered topics were also addressed in the opinion.  Copyrightability of useful articles an obvious one, although somewhat simpler here because the furniture designs had a significant amount of applied ornamental design.  More interesting was that Collezione Europa apparently showed Universal pieces as its own at the High Point Market, a large annual furniture trade show.  Reverse passing off is an uncommon claim, but a successful one for Universal here.

    Universal Furniture Int’l, Inc. v. Collezione Europa USA, Nos. 07-2180, 09-1437 (4th Cir. Aug. 20, 2010).
    Universal Furniture Int’l, Inc. v. Collezione Europa USA, No. 1:04CV00977 (M.D.N.C. April 26, 2007).

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  • Bona Fide Purchaser in Good Faith

    ZDNet reports that there will be a new “Commodore 64” computer. It’s being described in a press release (scroll to August 25, 2010 entry) as an updated computer in “an exact replica of the original beige chassis Commodore C64.”

    Original Commodore 64.  Photo: Bill Bertram (http://en.wikipedia.org/wiki/User:Pixel8).
    Photo licensed under CC-BY-SA

    But hat tip to whoever had to figure out who owned the rights to the trademark “Commodore.”  The Register runs it down for us:

    The Commodore name is controlled by an outfit called Commodore Licensing BV, now a subsidiary of a public corporation known as Asiarim, and Altman [of Commodore USA] says he signed an agreement with Commodore Licensing BV earlier this month.

    Which only begins to describe that labyrinthine history of the Commodore name. Neither Altman’s nor Asiarim’s company should be confused with the original Commodore International, the Jack Tramiel-run company that introduced the C64 in 1982.

    . . .
    Commodore International declared bankruptcy in 1994, and over the next several years, the rights to the Commodore name bounced across several European outfits. First, they went to a German retailer known as Escom. Then they moved to the Netherlands-based Tulip Computers. Then they were purchased by another Dutch outfit, Yeahronimo, which eventually changed its name to…Commodore International.

    This Commodore International lives on in the form of legal entities such as Commodore Licensing BV and Asiarim. At one point, BV licensed the name to a Dutch outfit calling itself Commodore Gaming, a company founded in 2005 with the intention of “re-launching the classic Commodore 64 experience on various platforms.” At first, Barry Altman attempted to license the famous name from Commodore Gaming, not realizing it was merely a licensee.

    Virtually none of these transactions are reflected in the PTO assignment database.

    Commodore USA LLC website.

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  • Numb Nuts

    Ok, so the only reason I’m blogging about this case is so I can show the logo for Orange County Choppers (OCC), of “American Choppers” fame.  As logos go, it’s one of the best ones out there.

    Which may explain why there’s a lawsuit revolving around OCC merchandise.  It all started in 2003, when OCC entered into a product license agreement with Olaes Enterprises, Inc. d/b/a ODM (ODM).   ODM created graphic designs for use on its licensed products, which were T-shirts, fleeces, jerseys, caps and beanies.  These were the terms for ownership of copyright in the designs – Licensor is OCC and Licensee is ODM:

    “Property” is defined this way:

    If you’re thinking this general description of copyright ownership is an invitation for trouble, you’d be right.  The concept of separability isn’t defined – it could mean whether the original OCC trademarks are set apart from the rest of the design, whether the designs have commercial appeal standing alone, or whether there is independent copyrightability once the trademarks are removed.  These are all concepts that were discussed in opinions in the case.

    OCC subsequently allowed other licensees to use the ODM designs, like these, on other types of goods:

    OCC then made the ill-fated decision to sue ODM in state court for non-payment of royalties.  ODM responded by filing a third-party complaint against two, and ultimately 25, of OCC’s other licensees, alleging copyright infringement of its designs.

    OCC had indemnified these licensees from claims for copyright infringement of designs that OCC either “owned or controlled.” For several years OCC paid for the defense of ODM’s claims against its licensees on the theory that OCC was the owner of the copyright in the designs. Then in October, 2009, OCC and ODM settled their cases against each other, after which OCC stopped paying for the licensees’ defense and claimed that it had no duty to indemnify for infringement of ODM’s copyrights.  The remaining four licensees (in a now-severed suit) moved for summary judgment asking the court to hold that OCC has to indemnify them on their still-outstanding claims for copyright infringement.  ODM also moved for partial summary judgment that it owns the copyright in the designs.

    On indemnification, the court found that, although OCC and ODM may have decided privately between themselves who owned what copyrights, that agreement was not binding on the licensees. Indemnification would therefore still depend on figuring out who owns what copyright under the agreement, which is a question for the fact finder, so summary judgment was denied.  The court seemed particularly amenable to an equitable estoppel argument, but the defendants hadn’t sufficiently argued it yet:

    I believe that what the Licensees are arguing here (even though they do not quite come out and say it) is that, even if OCC did not “own” or “control” the intellectual property rights to the graphic designs at issue within the meaning of their License Agreements, it should nonetheless be estopped from asserting that it did not own or control them–because it supplied the Licensees with the designs that contained ODM Property–and so it should be estopped from invoking the literal definitions of types of “property” contained in the Agreements as a ruse to escape its otherwise-applicable indemnity obligations.

    Based solely on the incomplete record presently before the Court, I can see considerable merit in such an argument. It is settled as a matter of undisputed fact that the Licensees were provided with drawings or designs that they were expected to incorporate into their products. The Standard Terms and Conditions attached to the Group I Agreement and the Group II Agreement plainly state that “all designs of the Licensed Product, including drawings, artwork, photographs, sketches, layouts, patterns and material compositions … are developed for the sole benefit of Licensor and any and all proprietary interests and ownership rights related to any design belong exclusively to Licensor.” That clause does not mention ODM, or suggest that portions of the proprietary interests and ownership relating to any “design” might not actually belong to OCC. Furthermore, the License Agreements also required the Licensees to place a copyright notice (© Orange County Choppers) on any products created using the Licensed Property. It does not require the Licensees to acknowledge any copyrights owned by ODM.

    Finally, and of critical importance, it is perfectly clear, from the position that OCC took from the outset of its litigation with ODM up until the moment when Judge Conner denied its motion to dismiss the counterclaims, that OCC did not believe that its intellectual property consisted only of the letters “OCC” or “ORANGE COUNTY CHOPPERS,” shorn of the vibrant graphics that were probably the principal reason why a customer would want to wear a licensed T-shirt or tattoo in the first place. OCC’s behavior through the first three years of this litigation demonstrates that it plainly believed, when it entered into the License Agreements with the Licensees, that it owned what may actually be ODM Property. This conclusion is reinforced by the fact that it provided for Licensees’ legal defense for more than two years.

    However, the record does not include all the information that would be necessary to dispose of the Licensees’ estoppel argument. . . .

    ODM’s motion for summary judgment on the copyright claim was also denied for essentially the same reason, that the fact finder has to decide who owns what copyright. 

    OCC’s position in all of this seems somewhat remarkable, even aside from the flip-flop on the indemnification.  The ODM agreement parses ownership of copyright, but not in an unusual way where pre-existing trademarks are involved.  As the trial court explained in response to a motion to dismiss early in the case:

    The apparent intent behind ¶ E of the Standard Terms and Conditions of the Agreement is to maintain OCC’s ownership of the OCC Property and, to the extent that the designs are inseparable from the OCC Property, to avoid effectively transferring ownership in the OCC Property by virtue of ODM’s ownership in the overall design. For example, if the design consisted merely of the words “OCC,” however depicted, ODM would not own the design. However, if the design included ornate drawings and the words “OCC,” OCC could not claim ownership of the complete design merely because its property was incorporated therein. In the latter case, OCC would retain its ownership of its property and ODM would retain ownership of the design unaccompanied by the OCC Property.

    Nevertheless, OCC appears to have believed that it had full rights to do as it pleased with the designs.  Indeed the agreement doesn’t forbid OCC from using the designs elsewhere, but as explained by the trial court:

    The Agreement’s failure to specifically prohibit the unauthorized use of ODM’s intellectual property is hardly surprising, however, as federal copyright law undoubtedly governs the matter.

    So OCC either couldn’t get the agreement it needed – full ownership of copyright – or broadly read all of ODM’s copyright ownership out of the agreement it did get.  It then went even further out on the limb by indemnifying its additional licensees.  Indemnification is undoubtedly a business necessity, particularly where OCC was providing the very designs to be used, but still an aggressive promise given the agreement with ODM.

    I can’t imagine this case won’t settle out.

    Orange County Choppers, Inc. v. Olaes Enter., Inc., No. 06 Civ. 7211 (WCC) (S.D.N.Y. July 27, 2007)
    Olaes Enter., Inc. v. A.D. Sutton & Sons, Inc., No. 09 Civ. 8680 (CM) (PED) (S.D.N.Y. Aug. 6, 2010)

    So, who knew that “Orange County” in “Orange County Choppers” meant Orange County, New York? 

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  • Awesome Job by Ryan Gile at Las Vegas Trademark Attorney

    Wow.  Ryan Gile at the Las Vegas Trademark Attorney has written a 3,700 word tome, with diagrams, on the convoluted and complicated (an understatement) ownership interest in the trademark “Tropicana” for hotels. I can’t begin to imagine how long it took to write it, much less understand all the transactions before being able to write about it.  I agree with his conclusion on the whole matter, though:

    While Tropicana LV’s claim of ownership to the Tropicana Trademarks by virtue of this conditional assignment right/reversionary interest is an interesting one, this latest attempt to lay claim to the ownership rights is more likely just a means for Tropicana LV to bolster its bargaining position in order to get the relief that it ultimately wants – basically, the ability to continue to use the name Tropicana for the Tropicana Las Vegas without having to pay a license fee. Of course, the fact that Tropicana LV might actually be able to stake a claim of ownership over assets that had an appraised value of approximately $200 million in 2007 could also have something to do with it.

    It’s a must-read for transactional attorneys.  What’s interesting here is that at various times there appeared to be very sophisticated efforts to deal with the trademark ownership, which in my several years of blogging is quite rare (generally no one thinks about it until it’s too late, which is why there’s a case about it).  It still went south, though, really because of one forgotten agreement.

    By the way Ryan, I thought it was messy long before “Here is where the situation starts to gets messy.” 

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  • Fraud is Very Popular

    John Welch at the TTABlog asks, would you have opposed? It’s another case where a claim of fraud was premised on the theory that the applicant wasn’t the owner of the mark.

    The applicant Galaxy Metal Gear, Inc. Direct Access Technology, Inc. (DAT) applied for METAL GEAR for hard drive enclosures.  It had them manufactured by a company, DataStor, that had not previously been making this type of enclosure.  DataStor breached its exclusive arrangement with Galaxy DAT and sold the same enclosures with the same mark to the opposer.  The opposer then alleged fraud in its opposition, claiming, unsuccessfully, that Galaxy DAT wasn’t the owner of the mark but simply a “mere importer and distributor” of the manufacturer’s goods.

    The TTAB referred to the relationship between Galaxy DAT and DataStor as “OEM,” a term commonly understood to refer to goods manufactured by one company and sold to another to be retailed under the purchasing company’s brand name.  Indeed, the relationship between the manufacturer and the trademark owner here looks like a standard OEM arrangement to me:

    Q: At the time the application was filed, do you believe that Metal Gear was DAT’s trademark?
    A: Yes.
    Q: How about today?
    A: Still is.
    Q: Why do you believe it’s DAT’s trademark?
    A: Because we came up with the brand name and we contact the manufacturer to manufacture product for us under the brand name.
    Q: Who set the specifications for the product?
    A: I did. DAT did.
    Q: Did you personally come up with the specifications for the product?
    A: Yes.

    Galaxy DAT also used several manufacturers and instructed them all to put the mark on the goods.

    So Galaxy DAT thought up the mark, spec’d the goods, and arranging for manufacturing with several companies – in other words, did what every brand name company who manufactures offshore does.  The opposer then bought unauthorized goods and had the nerve to claim that the cheating manufacturer owned the mark.  I should hope a fraud claim wouldn’t fly.

    * Thanks to Anonymous, commenting on the TTABlog, for catching the Galaxy-DAT error, now corrected. Whoops.  Teach me to blog too late at night.

    Galaxy Metal Gear, Inc. v. Direct Access Tech., Inc., Opp. No. 91184213 (TTAB August 10, 2010).

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  • Copyright Owner, Employee, or Both?

    Ashley Gasper has several hats.  He is an adult film star using the stage name Jules Jordan. (Not what you think, it’s a USPTO link.  Click away.)   He is the president and sole shareholder of Jules Jordan Video, Inc. (innocent too – Wikipedia), the creator of the videos in which Gasper stars.  He produces, directs and performs in the films (it’s ok – IMDb), writes the scripts, films the scenes, and draws a salary. The copyright registrations for the films listed Gasper as the owner.  (I leave it to you to find the registrations; none of the titles were ones I would link to.)

    JJV started getting a higher than normal rate of return on the videos, only to find that the returns were low quality counterfeit copies.  Gasper and JJV sued.

    A jury found that the defendants infringed the copyrights, but the trial court granted the defendants’ motion for judgment as a matter of law.  The court held that neither Gasper nor JJV had standing: it decided that Gasper’s work on the films was as a work made for hire so he had no standing, and since the registrations were in Gasper’s name the registrations were invalid and JJV also had no standing.

    In largely an exercise of common sense, the Ninth Circuit reversed.  There was no question that Gasper was an employee of JJV for some purposes, so the question was whether that portion of his labor in which the copyright inhered was within the scope of his employment.  Gasper testified at trial that he always intended for his “creative work” to be separate from his work as an employee of JJV.  The trial court nevertheless found that his testimony was “concocted at trial” and concluded that “JJV intended [Gasper] would hold the camera, light the set, write the screenplay, product and direct.”

    The Ninth Circuit reversed.

    The problem with the district court’s analysis is that JJV was a one-man shop. Gasper was the sole officer, director, and shareholder of JJV, exercised complete control over it, and made all decisions concerning JJV and production of the films. It was all Gasper all the time. JJV as employer and Gasper as employee could certainly agree as to the scope of the employee’s employment, and could agree that Gasper should retain all copyrights. Since JJV was Gasper, JJV intended whatever Gasper intended, and if Gasper intended that his creative work be outside the scope of his employment with JJV, there was no one to disagree.

    Further, even assuming JJV was the owner, listing Gasper as the owner of the copyright in the registration forms was an innocent mistake that did not invalidate the registrations.  Errors do not invalidate a copyright unless the infringer has relied to its detriment on the mistake or the claimant intended to defraud the Copyright Office.  The defendants here did not rely on the mistake and there was no reason to believe Gasper was trying to defraud the Office.  All that it would have taken to correct any error was an assignment of the registration, with Gasper signing it himself on behalf of JJV.  The fact that there was no writing, as required by section 204(a) of the Copyright Act, didn’t matter; that section is designed to resolve disputes between owners and transferees, to protect copyright holders from mistaken or fraudulent claims of oral transfers.  “When there is no dispute between the copyright owner and transferee, it would be unusual and unwarranted to permit a third-party infringer to invoke § 204(a) to avoid suit for copyright infringement.”  Gasper therefore had standing for the copyright infringement claim.

    The trial court indeed may have been honoring form over substance.  But the appeals court’s reasoning is a little loose for my taste.  Surely there was more evidence, albeit perhaps not elicited at trial, about who actually owned the copyright in the films.  If Gasper owned the copyright, was there no papering up of JJV’s right to reproduce and distribute his copyrighted work?  What was the tax treatment of the copyright in the films?  I find it hard to believe that there was no evidence other than Gasper’s self-serving testimony that was relevant to prove actual ownership.

    And I’ve never been comfortable with courts that say that faulty chain of title can’t be invoked by infringers to avoid liability.  If it is only the owner, legal or equitable, who has standing, how is it that the plaintiff gets to avoid a fundamental predicate to suit simply because the missing link is between related parties?  The court wades off into a discussion of assignments and writings, but no assignment would have corrected an actual fraud on the Copyright Office.  I don’t disagree that there was no fraud, but simply because there was no evidence of fraudulent intent, not because the plaintiffs could have played a shell game with the registrations.

    Right outcome, questionable reasoning.  For a discussion of the right of publicity and copyright preemption portion of the case, visit the Seattle Trademark Lawyer.

    Jules Jordan Video, Inc. v. 144942 Canada Inc., No. 08-55075, 08-55126, (9th Cir. Aug. 16, 2010).

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  • A House’s Right of Publicity

    Photo by Julian Walker, licensed as CC-BY-ND

    Robinson v HSBC Bank USA is a case I characterize as a harm in search of a legal theory.  You have some sympathy for the plaintiffs, but not every wrong suffered gets you legal relief.

    Plaintiff Douglass Robinson owns a much-photographed house in the Haight neighborhood of San Francisco.  It was photographed one time too many for plaintiffs’ taste; they filed a lawsuit because a photo of the house was used in a flyer distributed with the San Francisco Chronicle advertising defendant HSBC Bank’s “Premier Mortgage.” This was no incidental use; the house is the central focus of the front and back of the flyer. 

    After the ad was published, neighbors, local business owners, unknown realtors, and even the tenants in the house asked the plaintiffs about their financial condition and whether they wanted to sell the house.  The plaintiffs were offended by HSBC’s use, particularly in the “current economic climate where thousands of individuals nationwide are losing value in their homes, in part due to precisely the type of loan advertised in the HSBC flyer (Adjustable Rate Mortgage loans), when in fact Plaintiff Robinson owns the Property free of encumbrances.”

    But what right do the plaintiffs have to prevent this kind of use?  None, according to the court.  Seven legal theories, none left standing.

    Misappropriation under California Civil Code § 3344

    Section 3344 authorizes a cause of action for misappropriation where anyone “uses another’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent.”  This is pretty easy: “The Court finds that as the Ad did not use plaintiffs’ names, voices, signatures, photographs or likenesses–only the likeness of plaintiffs’ Property–their claim falls outside the protection of section 3344.”

    Misappropriation under California Common Law

    In order to sustain a common law cause of action for commercial misappropriation, a plaintiff must prove: (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.  The plaintiffs relied on Motschenbacher v. R.J. Reynolds Tobacco Co., 498 F.2d 821 (9th Cir.Cal.1974), where the plaintiff was successful in claiming that his race car was an attribute of his identity, so even though his face was not visible he had a claim for misappropriation.  This didn’t wash here, though:

    Plaintiffs’ allegation that their house is so recognizable that after the Ad ran they received inquiries from friends and strangers regarding their financial solvency and intentions with respect to the house because they were known as the owners of the home by neighbors and realtors, does not mean that plaintiffs’ identities were appropriated by HSBC. Plaintiffs do not cite any cases that support their argument that the Property–which was not constructed or designed by plaintiffs–is part of their identity. [FN2] They are, instead, simply the owner and occupants of a very distinctive building.

    FN2. As defendant noted at oral argument, if plaintiffs sold and moved out of the Property, the Property would still retain its notoriety but the Property would no longer be identified with plaintiffs. In Motschenbacher, by contrast, even if plaintiff race car driver sold his unique racing car, it would still be part of his identity. [ed: huh?  I guess I don’t see why the car would still be associated with Motschenbacher after he sold it.]

    Trade Libel

    Trade libel is an intentional disparagement of the quality of property which results in pecuniary damage to plaintiff.  The plaintiffs had to successfully allege: (1) publication, (2) absence of justification, (3) falsity and (4) direct pecuniary loss, but failed on both falsity and pecuniary loss.  The court entertained “falsity” by considering more generously whether there was a “false and disparaging ‘implication’ of fact,” but no luck for plaintiffs.

    There is nothing in the Ad, or its context, that states or implies a defamatory or disparaging fact about plaintiffs or their Property. Plaintiffs have cited no case that holds or even suggests that an allegation that someone has a mortgage, even an adjustable rate mortgage, is defamatory or disparaging. Moreover, the Ad was not a “for sale” ad, an ad for “foreclosure bargains,” or an ad which could have conveyed negative information about plaintiffs. The Ad is not susceptible to the meaning suggested by plaintiffs, i.e., that they are financially insolvent or their ambitions are disproportionate to their assets. Instead, the Ad simply advertises “premier,” albeit adjustable rate, mortgages.

    No pecuniary harm either; the plaintiffs alleged only contempt, ridicule and pity.  Attorneys’ fees and costs of suit don’t count, if they did “then each and every false statement would be actionable without a showing that the false statement caused damage to an individual’s trade or property.”

    Unjust Enrichment

    This one’s easy – California does not recognize a stand-alone cause of action for unjust enrichment.

    California Consumer Legal Remedies Act, Civil Code § 1761(d)

    This provides protection to consumers from damages suffered in connection with a consumer transaction.  The problem here?  No transaction between plaintiffs and HSBC Bank.

    California False Advertising Law, Cal. Bus. & Prof. Code § 17500

    This requires showing that the defendant knowingly made an untrue or misleading statement.  No luck again; even if the Ad was disparaging to the plaintiffs, there was nothing false or misleading about it that would induce the public to buy goods and services.

    California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200

    Here the plaintiffs had a standing problem–they had to have lost money or property to have standing.  There were no factual allegations that the plaintiffs had, only suffering ridicule (really?) and questions about their solvency.  Not good enough.

    HSBC Bank also made a run at a copyright preemption argument, but at least lost that one. Under § 301, a state common law or statutory claim is preempted if: (1) the work is within the scope of the “subject matter of copyright” and (2) the rights granted under state law are equivalent to any exclusive rights within the scope of federal copyright. The court found that since it is not an infringement of copyright to take a photograph of the house from a public place, the claims were not within the scope of the subject matter of copyright.  That’s a bit too literal and not consistent with the general understanding of preemption – “Although the Ninth Circuit has not addressed this issue, most circuits have held that for preemption, the ‘scope of the Copyright Act’s subject matter is broader than the scope of the Act’s protections.’” Blue Nile, Inc. v. Ice.com, Inc., 478 F. Supp.2d 1240, 1246 (W.D. Wash. 2007), citing Wrench LLC v. Taco Bell Corp., 256 F.3d 446, 455 (6th Cir. 2001). Clearly the Copyright Act meant to cover the act of photographing buildings from a public place.  Nevertheless the court got the second half right, that none of these claims are equivalent to a claim for copyright infringement.

    Seven theories, no winners.  As noted though, “the Court doubts HSBC is going to use another picture of plaintiffs’ Property in a future ad.”

    Robinson v. HSBC Bank USA, No. C 10-01494 SI (N.D. Cal. Aug. 9, 2010).
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