Influential Cases of 2010

By Juliet McNulty on January 26, 2011

Our group spends a significant amount of time working on issues relating to the transformation of copyright and trademark laws in the 21st century. I am particularly passionate about and interested in how the Internet and other new technologies challenge these dynamic areas of law. For my first blog post, I revisited a few of what I see as the most influential cases of 2010.

—————————-

2010 COPYRIGHT AND TRADEMARK CASE HIGHLIGHTS

Capitol Records Inc. v. Thomas-Rasset, No. 06-1497

This case had two major impacts on the realm of copyright in 2010.

(D. Minn. Jan. 22, 2010)

Opinion

First, in January U.S. District Court Chief Judge Michael Davis for the District of Minnesota remitted a 2009 jury award of statutory damages totaling $1.92 million by 97% to $54,000 against defendant Jammie Thomas-Rasset for willfully infringing plaintiffs’ copyrights by downloading 24 songs using the Kazaa peer-to-peer network. Judge Davis held that although Plaintiffs highlight valid reasons that Thomas‐Rasset should pay a statutory damages award, the Judge ruled that these facts simply could not justify a $2 million verdict in this case. He ruled that although this new award was still three times the statutory minimum, this reduced award remains “significant and harsh” and should sufficiently serves both the deterrent and the compensatory purposes of statutory damages.

JUDGMENT IN A CIVIL CASE: Civil File No. 06‐1497 (MJD/LIB)

Judgement

The plaintiffs rejected the reduced damage award and, instead, asked for a new trial on damages. On November 4, the jury returned a verdict awarding statutory damages in the amount of $62,500 for each of 24 songs for a total amount of $1.5 million. These file-sharing cases have a profound impact on the future of copyright in the United States as the damage awards have consistently shocked the public conscience.

Reed Elsevier v. Muchnick, No. 08–103 (U.S. Mar. 2, 2010)

Opinion

In one of the only copyright cases to reach the Supreme Court of the United States this year, the Supreme Court overturned a Second Circuit Court of Appeals decision which held that a Section 411(a)’s registration requirement is a precondition to filing a copyright infringement claim. The Supreme Court, however, ruled that a copyright holder’s failure to comply with this registration requirement does not restrict a federal court’s subject-matter jurisdiction over infringement claims involving unregistered works.

Tiffany Inc. v. eBay Inc., Case No. 08-3947 (2d Cir., Apr. 1, 2010)

Opinion

The Second Circuit for the United States Court of Appeals largely affirmed the holdings of the United States District Court for the Southern District of New York, holding that eBay, the proprietor of a website through which counterfeit Tiffany merchandise was sold — did not, on the facts presented, engage in trademark infringement, false advertising, or trademark dilution. The court ruled that for contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. For this reason, eBay itself could not be held liable for direct or contributory trademark infringement or for trademark dilution. The Court remanded the case, however, with respect to Tiffany’s claim of false advertising. This case begins to pave the legal precedent path with respect to liability of internet-based sales websites and counterfeit goods.

Viacom Int’l Inc. v. YouTube, Inc., No. 07 Civ. 2103 (S.D.N.Y. June 23, 2010)

Opinion

The United States District Court for the Southern District of New York granted summary judgment in favor of video-sharing service YouTube (owned by Google) on all of media company Viacom’s claims for direct and secondary copyright infringement. The court held that YouTube was entitled to the protections of the Digital Millennium Copyright Act’s (“DMCA”) “safe harbor” provisions, 17 U.S.C. 512(c). The case continues to defend the boundaries of the DMCA safe harbor provision, with the court concluding that “[g]eneral knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its service for infringements.”

Visa Int’l Serv. Ass’n v. JSL Corp., No. 08-15206 (9th Cir. Jun. 28, 2010)

Opinion

The Ninth Circuit for the United States Court of Appeals affirmed the U.S. District Court for the District of Nevada’s summary judgment ruling, holding that JSL Corporation’s (“JSL”) “eVisa” mark diluted Visa International Service Association’s “Visa” mark under the theory of dilution by blurring, which occurs when a mark previously associated with one product also becomes associated with a second. 15 U.S.C. § 1125(c)(2)(B). The court decided that even though Visa doesn’t own the word “visa” and may not “deplete the stock of useful words” by asserting otherwise, the injury addressed by anti-dilution law in fact occurs when marks are placed in new and different contexts, thereby weakening the mark’s ability to bring to mind the plaintiff’s goods or services. This case has deep repercussions for brands that employ generic or common words as part of their trademarks.

Toyota Motor Sales v. Tabari, No. 07-55344 (9th Cir. Jul. 8, 2010)

Opinion

The Ninth Circuit for the United States Court of Appeals vacated and remanded an injunction against auto-brokers Farzad and Lisa Tabari issued by the District Court for the Central District of California in a trademark infringement claim brought by Toyota Motor Sales U.S.A. (“Toyota”), the exclusive distributor of Lexus vehicles in the United States. The Court of Appeals ruled that Tabaris’ use on their website of copyrighted photography of Lexus vehicles and the circular “L Symbol Design mark,” in addition to the use of the string “lexus” in their domain names. The Ninth Circuit held that the nominative fair use doctrine allows truthful use of a mark, even if the speaker fails to expressly disavow association with the trademark holder, so long as it’s unlikely to cause confusion as to sponsorship or endorsement. This case has great reverberations for domain name use because it extends the notion of nominative fair use to hold that trademarks are part of our common language, and we all have some right to use them to communicate in truthful, non-misleading ways.

MGA Entertainment, Inc. v. Mattel, Inc., No. 09-55673 (9th Cir. July 22, 2010)

Opinion

The Ninth Circuit for the United States Court of Appeals reversed the District Court’s decision to enter equitable relief based on a jury’s findings that Mattel-competitor MGA had committed three state-law violations relating to a former employee’s involvement in creating The Bratz Dolls during the scope of his employment at Mattel. The court also issued a general verdict finding MGA liable for infringing Mattel’s copyrights in its former employee’s works. In addition to assignment of ownership of the Bratz brand, the district court also ordered Bratz manufacturer MGA to pay Mattel $10 million in damages. Instead, the Ninth Circuit ruled that even if Bryant’s employment agreement assigned his ideas to Mattel, the value of the trademarks the company eventually acquired for the entire Bratz line was significantly greater because of MGA’s own development efforts, marketing and investment. The case is particularly important for companies considering the language in their employment contracts: it’s no longer clear exactly how broadly or narrowly the phrase “at any time during my employment” should be interpreted.

In re Chippendales USA, Inc., Serial No. 78/666,598 (Fed. Cir. Oct. 1, 2010)

Opinion

The United States Court for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s refusal to register Chippendales abbreviated tuxedo costume — wrist cuffs and a bowtie collar without a shirt — as inherently distinctive. The court looked to the use of the Playboy bunny suit, including cuffs and a collar, as substantial evidence supporting the Board’s factual

determination that Chippendales’ Cuffs & Collar mark is not inherently distinctive. This case is important in helping define the boundaries for which businesses can apply for trade dress protection for costumes.

Righthaven v. Realty One Group, 2:10-cv-1036-LRH-PAL (D. Nev. Oct. 18, 2010)

Opinion

The District Court of Nevada granted defendant Michael Nelson’s motion to dismiss, ruling that Nelson’s use of copyrighted materials on a blog falls within the Fair Use doctrine. Nelson displayed an unauthorized copy of a news story entitled “Program may level housing sale odds” which was originally published in the Las Vegas Review Journal. Although Righthaven obtained a transfer of rights for the article from the Review Journal, the court held that when the traditional fair use analysis was applied to the situation, Nelson did not infringe Righthaven’s copyright as a matter of law. The proliferation of the Righthaven lawsuits is notable because the campaign echoes the attempts by the music industry to aggressively enforce copyrights via the courts.

Capitol Records Inc. v. Thomas-Rasset, No. 06-1497*

680 F.Supp.2d 1045 (D. Minn. Jan. 22, 2010)

Overview: In January, U.S. District Court Chief Judge Michael Davis for the District of Minnesota remitted a 2009 jury award of statutory damages totaling $1.92 million against defendant Jammie Thomas-Rasset by 97% to $54,000. This damages award arose from claims that Thomas-Rasset willfully infringed plaintiffs’ copyrights by downloading 24 songs using the Kazaa peer-to-peer network. Judge Davis held that although Plaintiffs highlight valid reasons that Thomas‐Rasset should pay a statutory damages award, the Judge ruled that these facts simply could not justify a $2 million verdict in this case. He further opined that although this new award was still three times the statutory minimum, this reduced award remains “significant and harsh” and should sufficiently serve both the deterrent and the compensatory purposes of statutory damages.

Judgment in a Civil Case: Civil File No. 06‐1497 (MJD/LIB)

Overview: The plaintiffs rejected the reduced damage award and, instead, asked for a new trial on damages. On November 4, the jury returned a verdict awarding statutory damages in the amount of $62,500 for each of 24 songs for a total amount of $1.5 million.

Takeaways: P2P file-sharing cases are having a profound impact on the future of copyright as applied to individual users of online platforms. Judges in at least two jurisdictions have changed the jury awards — both citing them unconscionable — potentially leading to not only a split in future appeals but also calls for legislation from all sides.

Reed Elsevier v. Muchnick, 559 U. S. ____ (2010)

Overview: In one of the only copyright cases to reach the Supreme Court of the United States this year, the Supreme Court overturned a Second Circuit Court of Appeals decision which held that a Section 411(a)’s registration requirement is a precondition to filing a copyright infringement claim. The case was a class action litigation over the rights of free lance authors with respect to republication of their works in electronic databases. The settlement reached between the parties and approved by the District Court, was objected to by ten class member authors. The Supreme Court ruled that in a class action lawsuit, a copyright holder’s (within the class or the settlement) failure to comply with this registration requirement does not restrict a federal court’s subject-matter jurisdiction over infringement claims involving unregistered works.

Takeaway: A copyright registration is no longer needed by all plaintiffs in a class action lawsuit.

Viacom Int’l Inc. v. YouTube, Inc., No. 07 Civ. 2103 (S.D.N.Y. June 23, 2010)

Overview: The United States District Court for the Southern District of New York granted summary judgment in favor of video-sharing service YouTube (owned by Google) on all of Viacom’s claims for direct and secondary copyright infringement. The court held that YouTube was entitled to the protections of the Digital Millennium Copyright Act’s (“DMCA”) “safe harbor” provisions, 17 U.S.C. 512(c).

Takeaway: Helping to define the boundaries of the DMCA safe harbor provision, the court in this case concluded that “[g]eneral knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its service for infringements.”

Visa Int’l Serv. Ass’n v. JSL Corp., 95 USPQ2d 1571 (9th Cir. 2010)

Overview: The Ninth Circuit for the United States Court of Appeals affirmed the U.S. District Court for the District of Nevada’s summary judgment ruling, holding that JSL Corporation’s (“JSL”) “eVisa” mark diluted Visa International Service Association’s “Visa” mark under the theory of dilution by blurring, which occurs when a mark previously associated with one product also becomes associated with a second. 15 U.S.C. § 1125(c)(2)(B). The court decided that even though Visa doesn’t own the word “visa” and may not “deplete the stock of useful words” by asserting otherwise, the injury addressed by anti-dilution law in fact occurs when marks are placed in new and different contexts, thereby weakening the mark’s ability to bring to mind the plaintiff’s goods or services.

Takeaway: Use of everyday, uncoined words that are also well-known brand names, even in connection with different contexts, can give rise to successful dilution claims.

MGA Entertainment, Inc. v. Mattel, Inc., No. 09-55673 (9th Cir. July 22, 2010)

Overview: The Ninth Circuit for the United States Court of Appeals reversed the District Court’s decision to enter equitable relief based on a jury’s findings that Mattel-competitor MGA had committed three state-law violations relating to a former employee’s involvement in creating The Bratz Dolls during the scope of his employment at Mattel. The court also issued a general verdict finding MGA liable for infringing Mattel’s copyrights in its former employee’s works. In addition to assignment of ownership of the Bratz brand, the district court also ordered Bratz manufacturer MGA to pay Mattel $10 million in damages. Instead, the Ninth Circuit ruled that even if Bryant’s employment agreement assigned his ideas to Mattel, the value of the trademarks the company eventually acquired for the entire Bratz line was significantly greater because of MGA’s own development efforts, marketing and investment.

Takeaway: The case is particularly important for companies considering the language in their employment contracts: it’s no longer clear exactly how broadly or narrowly the phrase “at any time during my employment” should be interpreted.

In re Chippendales USA, Inc., Serial No. 78/666,598 (Fed. Cir. Oct. 1, 2010)

Overview: The United States Court for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s refusal to register Chippendales abbreviated tuxedo costume — wrist cuffs and a bowtie collar without a shirt — as inherently distinctive. The court looked to the use of the Playboy bunny suit, including cuffs and a collar, as substantial evidence supporting the Board’s factual determination that Chippendales’ Cuffs & Collar mark is not inherently distinctive.

Takeaway: This case helps define what qualifies for trade dress protection for employee apparel.

Righthaven v. Realty One Group, 2:10-cv-1036-LRH-PAL (D. Nev. Oct. 18, 2010)

Overview: The District Court of Nevada granted defendant Michael Nelson’s motion to dismiss, finding that Nelson’s use of copyrighted materials on a blog falls within the Fair Use doctrine. Nelson displayed an unauthorized copy of a news story entitled “Program may level housing sale odds” which was originally published in the Las Vegas Review Journal. Although Righthaven obtained a transfer of rights for the article from the Review Journal, the court held that when the traditional fair use analysis was applied to the situation, Nelson did not infringe Righthaven’s copyright as a matter of law.

Takeaway: The Righthaven lawsuits are particularly notable because it represents a rising trend of using mass copyright litigation both to enforce copyright and to turn copyright litigation into a business model.

——————————–

*Disclosure: Before joining DLA Piper, I worked as a law student under the guidance of attorneys and professors on a file-sharing case in Massachusetts.