In a decision yesterday, the Federal Circuit affirmed a district court's denial of the defendant's motion to dismiss for lack of subject matter jurisdiction.  The court also denied the defendant's post-verdict motion for judgment as a matter of law.  The defendant contended that because it shipped its allegedly infringing products f.o.b. from its place of business in Canada, it did not sell or import the product in the United States, and thus there was no subject matter jurisdiction over the plaintiff's infringement claims.  Alternatively, the defendant argued these same facts in support of its motion for judgment as a matter of law.

The Federal Circuit noted that the district court had erred in considering the issue of whether allegedly infringing products had been sold or imported in the United States as an issue implicating the court's subject matter jurisdiction.  Instead, this issue was simply an element of the claim to be proven that did not affect the court's ability to hear the case.  On the merits, the Federal Circuit rejected the contention that because legal title to the products changed in Canada that there was not a "sale" in the United States as contemplated by § 271(a), given that the customer was in the United States and the products were shipped there.  As a result, the court affirmed the finding of infringement.

More detail of Litecubes, LLC v. N. Light Prods., Inc. after the jump.

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A story in yesterday's Wall Street Journal (via Bill Patry) illustrates how important it is for parties to a transaction to know what they're getting up-front.

Starting way back in the 1970s, Wal-Mart hired an outside company, Flagler Productions, to document various aspects of Wal-Mart's operations.  Flagler produced videos of Wal-Mart corporate officers and directors, "often in unguarded moments."  The original agreement to produce the videos was made with just a handshake, with apparently no written contract between the parties.  In total, Flagler produced over 15,000 tapes over the course of over 30 years.

In 2006, Wal-Mart stopped using Flagler.  As a result of losing this source of income, Flagler has now made its library of Wal-Mart video available to the public, and is seeking to sell its footage.  Needless to say, Wal-Mart isn't happy about this turn of events.

How could this happen?  In short, assuming there really is no written contract, Wal-Mart probably has no recourse.  This is because under copyright law, in the absence of a written agreement to the contrary, the copyright in works created by an independent contractor is generally held by the independent contractor (in this case Flagler), and not by the client (in this case Wal-Mart) who hired them to produce the works.  All the client gets is a non-exclusive license to use the produced work.

What this means here is that, under copyright law, Flagler is the owner of the videos, and is free to exploit the copyright in whatever way it sees fit.  Flagler has already begun placing clips of the videos on YouTube.  All this because Wal-Mart didn't get a written agreement up-front.

This situation all too frequently happens to businesses, simply because they don't realize that when they hire an independent contractor, they probably aren't getting the exclusive right to use that contractor's work unless they agree to that in writing up-front.  This can come up in situations from hiring someone to do your company's web design, to having a marketing firm prepare brochures or other promotional materials, or having a computer programmer write some custom software. 

Situations like these face businesses every day, which is why it's important to consult with competent intellectual property lawyers early on so you make sure not only that you get what you pay for, but that you know what you're getting.

In a decision last week, the Sixth Circuit affirmed an award of partial attorney fees to a defendant in a copyright case.  The plaintiff sued multiple defendants, alleging copyright infringement under numerous theories.  One such theory was that receipt of royalties from the sale of infringing music rendered a party liable for the underlying infringement.  This theory was rejected by the court when it granted summary judgment in favor of some of the defendants.  Even though it had been rejected, the plaintiff continued to pursue the theory in this case against the remaining defendant.  When the last defendant prevailed on summary judgment, the district court awarded the defendant its attorney fees incurred after the first summary judgment decision.  

In a previous appeal, the Sixth Circuit vacated the award, noting that the theory of recovery did not become objectively unreasonable by virtue of the decision regarding the other defendants' summary judgment motion, and remanded the issue for redetermination in light of additional factors.  On remand, the district court awarded the same amount, noting the plaintiff's overly aggressive litigation tactics.  Such tactics included needlessly requiring the defendant to prepare for an unnecessary trial (rather than stipulating to the same decision regarding the "royalty receipt" theory of recovery and addressing the issue on appeal), filing a single complaint over 900 pages long with hundreds of separate claims and defendants, engaging in discovery abuses, abusing the summary judgment process by submitting massive statements of disputed facts which included legal conclusions and immaterial and argumentative assertions, and engaging in sharp pre-trial practices.  The court also sought to deter the plaintiff from similar litigation tactics, given the plaintiff's pattern of litigation.

The Sixth Circuit affirmed.  The court noted that while the "royalty receipt" theory of liability had been rejected by the court, it was not objectively unreasonable.  However, the district court's assessment of the various factors was not an abuse of discretion, and the court therefore affirmed the award.

More detail of Bridgeport Music, Inc. v. WB Music Corp. after the jump.

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In a decision last week, the Ninth Circuit affirmed a district court's dismissal of a copyright infringement claim for lack of standing, as well as several related claims.  The plaintiff obtained an "exclusive" license for one of the exclusive rights from a single co-owner of several copyrighted works.  However, because the plaintiff only obtained the license from one co-owner, and not from all co-owners, the license could not be exclusive, as one co-owner does not have the right to exclude other co-owners from exploiting the work.  Accordingly, as a nonexclusive licensee, the plaintiff did not have standing to assert the copyright infringement claims. 

More detail of Sybersound Records, Inc. v. UAV Corp. after the jump.

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In a decision this week, the Eleventh Circuit reversed the decision of a district court, holding the "one-satisfaction rule" does apply to infringement claims under the Copyright Act.

This appeal arose out of a jury award to copyright plaintiff of almost $1.6 million against two defendants who infringed the plaintiff's rights in its used boat price guide.  Pursuant to the one-satisfaction rule, the two defendants moved the district court to reduce the final judgment against them by the amounts the plaintiff obtained from co-defendants that settled before trial.  The district court declined.

The Eleventh Circuit held that the one-satisfaction rule, drawn from Rule 60(b)(5), is an appropriate rule to seek credit for settlement amounts obtained against joint tortfeasors.  As a result, the court vacated and remanded the matter to the district court to reduce the award by the amount the plaintiff had already received from the settling codefendants.

More detail of BUC Int'l Corp. v. Int'l Yacht Council Ltd. after the jump.

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In a decision yesterday, the Seventh Circuit clarified what is required for a party to be considered a "prevailing party" in a copyright case, and therefore be eligible for an award of attorneys' fees under § 505.  In this case, the plaintiff asked for a voluntary dismissal without prejudice under Rule 41(a)(2), as the case had been pending for over a year.  The district court dismissed the case with prejudice, but held that the dismissal did not make the defendant a prevailing party, and therefore declined to award fees under § 505.

The Seventh Circuit reversed, holding that because the dismissal with prejudice was a favorable judgment that materially altered the legal relationship of the parties.  As a result, the district court should have considered whether fees were appropriate.  The court took the next step also, and found that an award of fees was appropriate in this case, given the facts and the relationship between the parties, and remanded with instructions to award appropriate fees for both the original case and the appeal.

More detail of Riviera Distribs., Inc. v. Jones after the jump.

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In a recent decision, the Tenth Circuit reversed a district court's dismissal of a copyright case for lack of personal jurisdiction.  The case arose out of the efforts by a copyright holder to have an eBay auction for allegedly infringing products removed via eBay's VeRO program.  After the auction was removed, the alleged infringer filed suit, seeking a declaration that its products did not infringe.  The district court had dismissed the matter for lack of personal jurisdiction, rejecting a Calder-type argument that the act of removing the auction was specifically directed to Colorado, where the alleged infringer resided.

The Tenth Circuit reversed the dismissal, finding that at least at the pleadings stage, a prima facie showing of jurisdiction had been made under Calder.  Specifically, the complaint sufficiently alleged that the copyright holder's actions were intentional and expressly aimed at the forum state with knowledge that the brunt of the injury would be felt in the forum state, and that the case arose out of that conduct.

More detail of Dudnikov v. Chalk & Vermillion Fine Arts, Inc. after the jump.

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In a decision released today, the highest court in the EU, the European Court of Justice, ruled that under EU law, internet service providers (ISPs) are not required, in the course of a civil lawsuit, to disclose the identity of an individual subscriber associated with a particular IP address. 

The case arose out of an attempt by PROMUSICAE, a trade group representing the music industry in Spain and the rough equivalent the RIAA in the United States, to obtain the names and addresses of subscribers of the Spanish ISP Telefonica SA that were suspected of copyright infringement by sharing copyrighted songs via the peer-to-peer (P2P) network KaZaA.  The issues in this case are similar to those in the lawsuit campaign currently being conducted by the RIAA in the United States.  A Spanish court sought guidance from the Court of Justice on the question of whether various EU directives required Telefonica to disclose its subscribers' identities, even though Spanish law only authorizes such disclosure in criminal proceedings, matters of national defense, or public security.

In the decision, the Court stated:

[T]he answer to the national court's question must be that Directives 2000/31, 2001/29, 2004/48 and 2002/58 do not require the Member States to lay down, in a situation such as that in the main proceedings, an obligation to communicate personal data in order to ensure effective protection of copyright in the context of civil proceedings.

The decision left open the possibility that individual members of the EU could pass legislation permitting or requiring such disclosure, although such action would have to be on a country-by-country basis.  In fact, France is already exploring some alternatives to combat copyright infringement via P2P networks.

Hat tip:  How Appealing.

More media coverage is available from the AP, Reuters, and the BBC.

Update (1/30):  The EFF provides this report, including possible ramifications of the ruling. 

In a recent decision, the Sixth Circuit considered the scope a mandatory arbitration clause in a software license agreement, and specifically whether the clause mandated arbitration of certain copyright infringement and other claims arguably related to the agreement.  The district court entered an order compelling arbitration.

The Sixth Circuit partially reversed.  According to the court, given the broadly-worded nature of the arbitration clause, the key question was whether the cause of action could be maintained without reference to the contract.  If no reference to the contract was required to maintain the claim, it did not fall under the mandatory arbitration agreement; if reference was required, the claim must be arbitrated.

The court held that while many of the claims contained similar factual allegations, only some of the claims must be arbitrated.  Those claims that required reference to the agreement in order to determine which of the defendant's actions were arguably authorized had to be arbitrated, whereas those claims relating to similar subject matter as the agreement, but did not require any reference to the agreement, were not arbitrable.

More detail of NCR Corp. v. Korala Assocs. Ltd. after the jump.

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In a decision last week, the Seventh Circuit vacated and remanded a district court's preliminary injunction in a copyright and trade secret case.  The court addressed the degree of specificity necessary for an injunction against misappropriating trade secrets and infringing copyrights, and vacated the injunction because it failed to detail the substance of the trade secret or confidential information the defendant was enjoined from using.

Interestingly, the court called attention to the fact that most of the information claimed as trade secret could actually be obtained by FOIA requests sent to state authorities.  The parties are modular home manufacturers, and are required to submit specific details of the homes they plan to sell in order to obtain state approval; those details were among the purported trade secrets.  The court said the injunction did not specify whether information obtained through the FOIA requests would violate the injunction.

More detail of Patriot Homes, Inc. v. Forest River Housing, Inc. after the jump.

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