The federal district court in New Jersey has dismissed Stefani Germanotta, a.k.a. Lady Gaga, from a copyright lawsuit filed by composer and record producer Calvin Gaines.  Mr. Gaines alleged in his complaint that his writing and producing partner, Rob Fusari, proved to be something of a Judas by betraying their longstanding collaborative relationship.  According to Gaines, he and Fusari composed the music and produced the master recordings for several Lady Gaga tracks, including the international megahit Paparazzi.  The problem, according to Gaines, is that the partnership went from a You and I  proposition to just merely Eh, Eh because Fusari failed to give credit or, perhaps more importantly, a share in the proceeds of the alleged jointly created works to Gaines.  Under U.S. copyright law, each author of a jointly authored work has the right to exploit the work as he or she sees fit, but must share the proceeds with co-collaborators.  If you don’t share the Money Honey, suddenly, a once fruitful partnership may begin to look more like the aftermath of a Bad Romance. 

Despite the fact that Gaga herself was the lyricist for all the involved compositions, and therefore a joint copyright owner herself, Gaines did not name her but, rather, only Fusari and his company in the dispute.  Why would Gaines play such a risky litigation LoveGame when the Mother Monster is likely the party with the deepest pockets or, in her case, meat purse?  According to the complaint, Gaines had already reached some form of agreement with team Gaga whereby Gaga Nation agreed to be bound by the outcome of the suit. 

An apparent penchant to settle with Gaines notwithstanding, Gaga was not free to Just Dance while the court decided Fusari’s fate.  Not content to wait on the Edge of Glory alone, Fusari filed a third-party complaint seeking to hold Ms. Germanotta liable to him for any damages he might owe to Gaines.  Gaga responded by filing a motion to dismiss, alleging Fusari to be a Paper Gangsta with no right under federal copyright law to collect from a third party.

As it turns out, Gaga didn’t need her Poker Face to best Fusari, because the court agreed with her.  In a short but pointed opinion, the judge held that “neither federal statutory law nor federal common law provide causes of action for indemnification or contribution in Copyright Act cases. . . .  Accordingly, the Court will dismiss [the claims] with prejudice.” 

Looks like Gaga is a winner of lawsuits as well as Grammy Awards; maybe she was just Born This Way. 

 An employer may have rights in a patent on its employee’s invention in three situations:

(1)  if there is an express agreement to assign or license the patent to the employer,

(2)  if the employee was “hired to invent” and the employer can show an implied contract to assign the patent rights in the invention, or

(3)  if there was no express or implied agreement but the employee used the employer’s facilities to conceive of the invention.  In this last case, the employer will have a “shop right,” an irrevocable, non-exclusive, non-transferable, royalty-free license to practice the invention.

A recent decision by a judge of the U.S. District Court in the District of Massachusetts nicely illustrates aspects of these three situations, and also demonstrates the intellectual property complexities that can arise when the assets of a corporate group are distributed among different buyers as a result of bankruptcy.

The case, US SolarTech, Inc. v. J-Fiber, GmbH, involved the purchasers of certain assets of the bankrupt FiberCore group, an optical fiber manufacturer and developer.  After FiberCore went into bankruptcy in 2003, US SolarTech, Inc. (“SolarTech”) purchased the patent assets of the parent company in the group, FiberCore, Inc. (“FiberCore”).  J-Fiber, GmbH (“J-Fiber”) purchased the patent assets of FiberCore’s German subsidiary, FiberCore Jena GmbH (“FC Jena”).  The District Court was required to decide whether J-Fiber, as successor to FC Jena, had any ownership or license rights in certain patents that had been assigned to FiberCore and subsequently purchased by SolarTech.

The issue arose because the inventors of the patents in issue included two Russian scientists who had been formally employed by FiberCore and had signed invention assignment agreements with FiberCore, but who had worked at FC Jena facilities and been paid by FC Jena.  J-Fiber argued that it had a co-ownership right in the patents because the Russian scientists were de facto employees of FC Jena.  In deciding summary judgment motions by both parties, the Court held that J-Fiber had not established co-ownership rights.  The patents had been validly assigned to FiberCore and the assignments had been recorded with the U.S. Patent & Trademark Office.  As such, they were presumptively valid and so J-Fiber bore the burden of showing the assignments were invalid.  J-Fiber was unable to show that FiberCore’s paying of the Russian employees through the FC Jena subsidiary created an implied employment agreement between the employees and the subsidiary.  The explicit documentary evidence that showed the scientists as employees of FiberCore trumped any such argument.  As such, SolarTech as successor to FiberCore was the sole owner of the patents.

In the alternative, J-Fiber had argued that it was entitled to shop rights in the patents because the Russian scientists had used FC Jena’s resources to develop the subject inventions.  J-Fiber failed in this argument as well.  Shop rights are generally non-transferable.  However, the successor to a shop rights licensee’s entire business can claim the valid transfer of the shop right to the successor entity to the business, and so J-Fiber argued that any shop rights should be transferable because it was a successor to FC Jena’s business.  The Court held that J-Fiber had not purchased FC Jena’s entire business but only certain intellectual property rights.  Although J-Fiber was leasing FC Jena’s tangible assets from a third party who had acquired them and thus the J-Fiber business did resemble the FC Jena business in many respects, J-Fiber was nevertheless not FC Jena’s corporate successor.  For this reason, any shop right that FC Jena may have had was not transferable to J-Fiber.

As this case demonstrates, an employer’s rights in patents on an invention created by an employee may be very different than its rights in its employee’s copyrights.  A copyrightable work created by an employee in the scope of employment is considered a “work for hire” under the US Copyright Act, and the employer automatically owns the copyright without any need for a written assignment.  In the case of patents, the employer has much weaker rights in the absence of a written agreement.  Employers who anticipate that their employees may create or contribute to patentable inventions should arrange for written assignments at the earliest opportunity, or otherwise protect themselves by contract.  Otherwise, unless they can establish an implied contract under the “hired to invent” doctrine, their rights might be limited to mere shop rights which cannot be transferred.

After infamously departing (i.e., being fired) from the nascent production of the Broadway musical Spider-Man: Turn Off the Dark, acclaimed stage and screen director Julie Taymor filed suit against the show’s producers.  As discussed previously on this blog, Taymor brought claims for breach of contract as well as copyright infringement.  The stakes were high.  Had Taymor succeeded in her suit, she might have been in a position to bar further productions and adaptations of the show, which has gained in popularity and profitability despite being riddled with problems and injuries during early preview performances.  Since the suit was filed, the parties have reportedly been on the verge of settlement on more than one occasion, but to no avail.  It seems that a deal has finally been struck. 

A little more than a month before trial was scheduled to begin, the presiding court granted a stipulated dismissal with prejudice, ending the lawsuit and signaling that the parties have all settled.  As is to be expected, the terms of the settlement have not been made public.  Nonetheless, the scant information available indicates that the compromise was good for all concerned.  Unnamed sources close to Taymor imply that she is assured a significant payday if the musical proves to be lucrative in the long term.  While the producers have been mostly silent in regard to the settlement, they are now almost certainly free to adapt the show for tours and alternative venues, such as Las Vegas, as they have announced that they are “looking forward to spreading Spider-Man: Turn Off the Dark in new and exciting ways around the world.”  Given the Broadway production’s rumored $75 million price tag, the largest in the history of the Great White Way, future productions will be critical to the show’s profitability.   

Now that your friendly neighborhood Spider-Man’s legal troubles are a thing of the past, he may be swinging into your neighborhood for a limited engagement sometime soon.

Image courtesy of marvelousRoland.

            Following the Second Circuit’s remand order last year on appeal of an initial grant of summary judgment for YouTube, the Southern District of New York has revisited the issues in Viacom’s copyright infringement suit and again found that the Digital Millennium Copyright Act (“DMCA”) shields YouTube from liability for infringing video clips posted by users on its site.  Last year’s Second Circuit decision had laid out specific directives on four topics to be addressed on remand.  In his April 18 opinion, Judge Louis Stanton dutifully addressed the issues one by one, finding in each case that the facts were not sufficient to deprive YouTube of the DMCA “safe harbor.”

Knowledge or Awareness of Infringement of Specific Clips-In-Suit

            The Second Circuit agreed with the district court’s initial conclusion that in order to lose the benefit of the safe harbor provided by the DMCA under 17 U.S.C. § 512(c) for “information residing on systems or networks at [the] direction of users,” an online service provider like YouTube must have had either (1) actual, subjective knowledge or (2) should-have-known “red flag” awareness of specific instances of infringement.  In other words, general knowledge or awareness that infringement is likely to be occurring on a service provider’s site is not enough to strip it of DMCA protection.  Because the record contained some communications that seemed to suggest YouTube’s executives had been aware of specific infringing video clips, the Second Circuit remanded for a determination of whether any infringing clips of which YouTube had knowledge or awareness were among the 63,000 clips-in-suit.

            As it turned out, neither party could say for sure.  The early communications among executives did not identify clips by specific location or URL, and “neither side possesse[d] the kind of evidence that would allow a clip-by-clip assessment of actual knowledge.”  In the face of this evidentiary vacuum, Viacom argued that, since the DMCA safe harbor was asserted as an affirmative defense, it was YouTube’s burden to prove that it did not have knowledge or awareness.  The district court rejected this argument, relying on the structure of the DMCA itself, and the fact that the statute explicitly places the burden on copyright owners to notify service providers of infringements.  This is a far-reaching and purely legal conclusion that seems likely to end up on the Second Circuit’s docket on another appeal.

Willful Blindness

            The Second Circuit held that willful blindness remained a valid concept even in the context of the DMCA’s admonition that service providers have no duty to actively monitor or seek out infringement.  Because the district court had not considered willful blindness in the first instance, the Appeals Court remanded with a directive to consider “whether the defendants made a ‘deliberate effort to avoid guilty knowledge.’” 

            The district court’s analysis of willful blindness on remand feels a bit perfunctory.  The court points out that early internal YouTube reports referencing infringing clips of, e.g., “Family Guy” did not identify the specific clips or their location, and that at the time there were over 450 clips on YouTube that might have fit that description.  Relying on the DMCA’s promise that service providers have no duty to actively sniff out infringement, the district court reasoned that YouTube was not required to search those 450 clips to find the ones to which the report referred as infringing.  It seems a bit odd that the Court does not appear to consider the knowledge of the report’s drafter (one of YouTube’s founders) to be attributable to YouTube; presumably he at least knew the location of the specific clips referenced in his report, even if he did not convey  this information in the report.  In any event, none of the conduct the court describes could easily be characterized as a “deliberate effort to avoid guilty knowledge,” so the discussion fails to provide much illumination on the question of what might constitute willful blindness.  It is unclear whether the facts of the case actually lend themselves to an answer, but perhaps the appeals court, if given the opportunity, will see something different worth commenting on to elucidate the issue. 

Right and Ability to Control Infringing Conduct

            The Second Circuit also asked the district court to reconsider whether YouTube may have lost its safe harbor by receiving a financial benefit from infringing activity while possessing the “right and ability to control such activity” under 17 U.S.C. § 512(c)(1)(B).  On this point, the appeals court had disagreed with the district court’s original analysis, holding that loss of safe harbor under the right-to-control provision did not require knowledge of specific instances of infringing activity.  The Second Circuit also pointed out, however, that “right to control” must mean something more than the mere ability to take down infringing material, since the DMCA assumes that all service providers have that power.  Without delineating exactly what the right to control might mean, the Second Circuit asked the district court to consider in the first instance whether YouTube possessed it here.

            The district court tackled this question in the longest section of its opinion, ultimately concluding that YouTube did not have such control.  The court looked to several cases cited in the Second Circuit’s opinion to hold that “right to control” means something quite substantial, such as influencing, inducing, or participating in infringement.  YouTube’s decision to take down certain kinds of content (such as pornography), its efforts to organize content to facilitate user searches, and its decision to take certain but not all possible steps to assist content owners in locating infringement were not enough, the court ruled, to strip it of the DMCA safe harbor under the “right to control” provision.

Syndication to Third Parties

            Finally, the Second Circuit indicated that YouTube’s practice of syndicating videos to third parties – that is, transcoding, or reformatting, certain videos to make them accessible on other devices, such as Verizon Wireless mobile devices – may have removed such selected videos from the realm of content stored “at the direction of users” and therefore from the DMCA safe harbor.  The appeals court therefore remanded for a determination of whether any of the videos selected for syndication were among the clips-in-suit. 

The district court dealt with this question easily as a factual matter: none of the videos syndicated to Verizon were clips-in-suit, and none of YouTube’s other syndication deals involved manual selection of videos.  Rather, for partners such as Apple, YouTube simply transcoded all of the videos on its site.  Because the Second Circuit had held that transcoding itself was not a problem, such syndication without selection was simply a matter of providing access to material stored at the direction of users, and did not undermine YouTube’s safe harbor.

Looking Forward

Viacom has indicated that it plans to appeal again, so it is likely that the Second Circuit will be taking another look at this long-running dispute.  As suggested above, several of the issues involve novel questions of law on which the appeals court may be able to shed additional light.  In the meantime, however, this most recent decision may at least for the time being inspire online service providers to place renewed confidence in DMCA safe harbor protections in appropriate circumstances.

The Madrid Protocol Concerning the International Registration of Trademarks (the “Protocol”) provides a simple, unified, cost-effective means for citizens of member countries (including the United States) to register their marks in other member countries.  By using the Protocol, trademark owners can obtain a single “International Registration” designating some or all of the member countries, instead of filing separate national applications in each country.  If none of the member countries objects to the International Registration, the trademark owners will not have to hire attorneys in each country to assist them with the registration process.  This typically results in significant cost-savings.  Moreover, an International Registration can be maintained, renewed and assigned through a single filing with the World Intellectual Property Organization (WIPO), resulting in further cost-savings throughout the life of the Registration.

A complete list of the Protocol members may be found here.  At present, there are 89 members, including the US, the European Union, China and Japan. Last year, Mexico, New Zealand and the Philippines joined.  This year, India will join, its membership taking effect on July 8, 2013, bringing the total number of Protocol members to 90.

The accession of India is particularly gratifying, since India’s national trademark office is notoriously overburdened and slow-moving.  Under the Protocol, however, a country is typically required to examine a registration request within 12-18 months.  If the country does not raise any objections within this period, the mark is deemed registered in its territory.  In other words, the Protocol provides an incentive for timely examination, and creates a situation in which national inertia is on the side of the applicant.

The Protocol continues to expand its membership.  In 2015, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar and Thailand are scheduled to join.  It is also expected that Canada will ultimately join, although its accession has not yet been scheduled for a specific date.  Keep reviewing this blog for further updates and information.

Image Courtesy of McKay Savage