·         In Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. the Federal Circuit clarified several points relating to claim construction, determinations of non-obviousness, and calculation of damages.   The court confirmed that claiming a “circuit” in conjunction with a sufficiently definite structure for performing the identified function is adequate to bar means-plus-function claiming.  The court also confirmed that secondary considerations of non-obviousness could constitute evidence sufficient to support a finding of non-obviousness.  Finally, the court held that plaintiffs are not entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States, regardless of any foreseeability of world-wide damages.  A more in-depth analysis of this case will be posted shortly.

·         In Rubin v. The General Hospital Corp., Dr. Berish Y. Rubin and Dr. Sylvia L. Anderson (collectively, Rubin) sued The General Hospital Corporation (GH Corp.) in the U.S. District Court for the District of Massachusetts requesting correction of inventorship of two patents assigned to GH Corp., or alternatively invalidation of the two patents.  Rubin alleged that the inventors named in the patents used confidential information—from a manuscript and abstract submitted by Rubin to the American Journal of Human Genetics—to complete the inventions described and claimed in the patents.   The district court granted summary judgment to GH Corp.

The Federal Circuit affirmed the grant of summary judgment, reasoning that the dispute was fundamentally a question of priority of the invention.  The court ultimately agreed with the district court, concluding that Rubin and Anderson could not be added as joint inventors or be substituted for the named inventors of the patents because they did not meet the requirements of 35 U.S.C. § 116 for joint invention or §256 for correction of inventorship, and that the issue of priority is appropriately determined by PTO interference proceedings.    

·         The U.S. District Court for the Southern District of N.Y. has handed down its decision in Capitol Records, llc. V. ReDigi Inc.  ReDigi considers itself the "world's first and only online marketplace for digital used music."   ReDigi's website "invites users to sell their legally acquired digital music files, and buy used digital music from others at a fraction of the price currently available on iTunes."   ReDigi's website sold various records belonging to Capitol Records.  Capitol Records brought an action against ReDigi, alleging direct copyright infringement, inducement of copyright infringement, contributory and vicarious copyright infringement.  In its defense, ReDigi asserted that the “first sale” doctrine precluded a finding of copyright infringement.  The district court disagreed, however, holding that the very nature of transferring digital files over the internet constituted copyright infringement because in order to transfer a file, a copy of the file must be made on the transferring computer.  Because the “first sale” doctrine does not protect against reproduction of copyrighted material, ReDigi could not successfully assert the defense for the present action.   

            The Supreme Court recently decided a much anticipated case, finally answering a long awaited question:  Does the first sale doctrine apply to copyrighted works manufactured in other countries?  According to the Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., the answer to this question is yes.

            John Wiley & Sons sued Supap Kirtsaeng for selling textbooks on eBay that he imported from foreign countries.  The books were printed by a wholly-owned subsidiary of Wiley, Wiley Asia, and were marked with a legend designating them for sale only in Europe, Asia, Africa, and the Middle East.  Wiley alleged that selling the foreign textbooks in the United States infringed its U.S. copyrights on its American editions.  Kirtsaeng attempted to assert that the first sale doctrine precluded liability, but was denied the ability to raise the defense by the district court judge.  The jury found that Kirtsaeng was liable for willful copyright infringement for eight works and awarded $75,000 in damages for each work.

            Kirtsaeng appealed the jury's verdict to the Second Circuit Court of Appeals.  The Second Circuit concluded that the district court was correct to preclude Kirtsaeng from raising the first sale doctrine because the books at issue were manufactured outside the United States.  The appellate court based its decision on the language of the 1976 Copyright Act and the Supreme Court's decision in Quality King Distributors, Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135 (1998).  In Quality King, the Supreme Court held that § 602(a)(1), by referencing the exclusive distribution right of § 106(3), incorporates the later subsections' limitations including, in particular, the "first sale" doctrine of § 109.  However, the Supreme Court in Quality King expressly decided not to answer the question of whether or not a copyright work manufactured abroad was eligible for the first sale doctrine exemption of § 109. 
 

            In reviewing the Second Circuit’s decision, the Supreme Court took Quality King one step further, holding that the first sale doctrine applies to copyrighted works both manufactured in the U.S. and abroad, notwithstanding the 1976 Act's provision against importation of copyrighted works in §§ 602 and 603.  As some have noted, this unique situation occurred because, as written, the 1976 Act—as it relates to the importation of foreign works and the first sale doctrine—has two equally plausible statutory constructions, as evidenced by the fact that the circuit courts are divided on the issue.

            The Supreme Court's decision in Kirtsaeng focused mainly on the correct statutory interpretation of § 109(a) of the 1976 Act. Specifically, the Court answered "whether the words 'lawfully made under this title' restrict the scope of §109(a)'s 'first sale' doctrine geographically." Wiley's interpretation of  § 109(a) follows the Second and Ninth Circuit which apply "a form of geographical limitation" on the imposition of the first sale doctrine, stating that the doctrine only covers works manufactured and created in America.  Kirtsaeng, on the other hand, suggests the words "lawfully made under this title" impose a "non-geographical limitation" on the first sale doctrine.  The Supreme Court agreed, stating:

In our view, §109(a)'s language, its context, and the common-law history of the "first sale" doctrine, taken together, favor a non-geographical interpretation. We also doubt that Congress would have intended to create the practical copyright-related harms with which a geographic interpretation would threaten ordinary scholarly, artistic, commercial and consumer activities. We consequently conclude that Kirtsaeng's nongeographical reading is the better reading of the [1976] Act.

In making its decision, the Court relied on what it considered to be a proper reading of “'lawfully made under this title” in § 109(a) of the 1976 Act.  The Court found "linguistic difficulty" with previous circuit's interpretations of § 109(a).  The Ninth Circuit's interpretation was particularly difficult to reconcile in the Court's opinion, as the interpretation contained a "half-geographical/half-nongeographical interpretation" of the phrase "lawfully made under this title."  The Ninth Circuit, for example in Denbicare U.S.A. Inc. v. Toys "R" Us, Inc., has interpreted the first sale doctrine to cover both (1) copies manufactured aboard but first sold in the United States and (2) copies manufactured abroad but first sold in the United States with the American copyright owner's permission.  According to the Court, "it would seem that those five words either do cover copies lawfully made abroad or they do not" and declined an attempt to read a half-geographic limitation in § 109(a) of the Act.

The Court also looked to the common law to solidify what it held to be the proper statutory interpretation of § 109(a).  "The 'first sale' doctrine is a common-law doctrine with an impeccable historic pedigree . . . [and] makes no geographical distinctions [in the application of the 'first sale' doctrine."  The Court drew on the conclusion reached in Bobbs-Merrill v. Straus, the first case to discuss and interpret the 'first sale' doctrine.  In Bobbs-Merril the Court stated "that the copyright laws were not 'intended to create a right which would permit the holder of the copyright to fasten, by notice in a book . . . a restriction upon the subsequent alienation of the subject-matter of copyright after the owner had parted with the title to one who had acquired full dominion over it."

This morning the Supreme Court will hear oral argument in Costco Wholesale Corp. v. Omega S.A., a case regarding the potential international scope of the first sale doctrine.  Costco lawfully purchased authentic Omega watches abroad and imported them to the United States for sale in its stores.  Omega sued for copyright infringement, arguing the watches bore a copyrighted design and the purchase abroad did not exhaust its rights under the first sale doctrine.

The Ninth Circuit agreed with Omega, holding the foreign purchase did not exhaust Omega's copyright rights in the United States (our post regarding the Ninth Circuit's decision is here).  Costco sought review by the Supreme Court, which granted certiorari in April after inviting the United States to file a brief with its views on the matter.  The Solicitor General (at the time, Elena Kagan) filed a brief recommending the Court deny certiorari.  As a result of her involvement, Justice Kagan is recused from the case.

For our discussion of the Ninth Circuit decision being reviewed, click here.

For SCOTUS Blog's collection of documents relevant to the case, click here. 

In a decision last week, the Ninth Circuit held the purchaser of a copy of AutoCAD software was not an owner of the copy, but instead a licensee.  As a result, the purchaser did not have the protection of the first sale doctrine (codified in 17 U.S.C. § 109(a)) when attempting to resell the software to a third party.  

The declaratory judgment plaintiff was attempting to sell used copies of AutoCAD on eBay.  Autodesk, makers of AutoCAD, sent takedown notices to eBay asserting copyright infringement, which resulted in eBay removing the auctions.  The plaintiff sued to have the sales declared noninfringing based on the first sale doctrine.  The district court agreed, holding the first sale doctrine protected the sales of the used copies of AutoCAD. 

The Ninth Circuit reversed.  Reconciling its earlier precedent, the court identified conditions where a purchaser is a licensee, rather than an owner of a copy.  Specifically, a purchaser is a licensee when:

[T]he copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions.

In this case it was undisputed the agreement stated the user was granted a license.  Further, the shrinkwrap license from Autodesk prohibited:  transfer of the software without its consent, transfer or use outside the Western Hemisphere, reverse engineering or modifying the software.  In addition, the license required destruction of prior versions of the software upon upgrading if an upgrade license was purchased.  Based on all of these restrictions, the court held the three criteria were satisfied, and the purchaser of the software was a licensee, not an owner, and therefore could not rely on the first sale doctrine as a defense to copyright infringement.

More detail of Vernor v. Autodesk, Inc. after the jump.

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Every three years, the United States Copyright Office seeks proposals for exemptions from the Digital Millennium Copyright Act ("DMCA").  As part of the DMCA, it became unlawful to circumvent access control measures copyright holders used to secure their copyrighted works.  For example, it is arguably a violation of the DMCA to use a program to "break" the content scrambling system ("CSS") encryption used for standard DVDs in order to make a copy of the DVD, even if making such a copy would otherwise be considered fair use under copyright law (although a recent decision by the Fifth Circuit arguably holds to the contrary).  The purpose of the exemptions is to adapt to any unintended consequences of the DMCA, such that lawful uses of copyrighted works are not unduly restricted.

Today, the Copyright Office issued the list of exemptions in this go-around of the triennial rulemaking process.  Included among the newly-granted exemptions are circumvention of the above-mentioned CSS encryption to use "short portions" in new works for the purpose of criticism or comment, when the use is educational, noncommercial, or for documentary filmmaking.  This is an important exemption, as it arguably covers the majority of videos on sites such as YouTube where short portions of movies, televisions shows, and the like are posted as a portion of a remix or other creative work.

In addition, unlocking a mobile phone to allow software to be run (commonly called "jailbreaking") is also exempted from the DMCA.  Notably, this does not prevent phone providers (such as Apple) from placing the restrictions on a phone in the first instance, it simply makes it not a DMCA violation to remove the restrictions.

The Office also permitted circumvention of prohibitions on "read-aloud" functionality of e-books.  Some e-books have been sold with a limitation that prevents the user from using their e-reader's "read-aloud" function, essentially turning the e-book into an audio book.  This is now not a violation of the DMCA anti-circumvention provisions.

The Copyright Office revisits these exemptions every three years.  Click below for the full text of the exemptions granted, or head to the Copyright Office website for the full release.

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In a decision last week, the Ninth Circuit held the filing of an application for registration with the copyright office is sufficient to meet the requirement that a copyright be "registered" before suit is brought under 17 U.S.C. § 411(a).  In the first circuit court decision on the subject since the Supreme Court's Reed Elsevier decision (holding the registration requirement of § 411(a) is not jurisdictional), the Ninth Circuit took the position that the statute was ambiguous, and that the "application" approach better comported with the purpose of the registration requirement.

The decision deepens the circuit split on the subject, with the Fifth, Seventh, and Ninth Circuits following the "application" approach, and the Tenth and Eleventh following the "registration" approach.  This continues to be an issue that would benefit from either Congressional action or a definitive ruling from the Supreme Court, something the Court declined to do in Reed Elsevier.

More detail of Cosmetic Ideas, Inc. v. IAC/InteractiveCorp after the jump.

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Today the Supreme Court decided Reed Elsevier, Inc. v. Muchnick, a case regarding whether the registration requirement of 17 U.S.C. § 411(a) is jurisdictional or a claim processing rule. The Court held the requirement to be nonjurisdictional.

The case involves a class action for copyright infringement by freelance journalists based on republication of works in electronic databases that originally appeared in, for example, newspapers.  Some members of the class had copyright registrations, some did not.  Nevertheless, the district court certified the class and approved the proposed settlement agreement.  The Second Circuit sua sponte raised the issue of jurisdiction, and eventually held the district court lacked jurisdiction to enter an order regarding the unregistered copyrights by virtue of § 411(a).

The Supreme Court disagreed, and held the registration requirement of § 411(a) did not prevent a court from entering an order affecting unregistered copyrights.  Specifically, the Court held there was nothing in the statute that indicated Congress intended the requirement to be jurisdictional.  Notably, the Court observed § 411(a) did not "clearly state[]" that its requirement was jurisdictional, and also explicitly permits claims involving unregistered works in certain circumstances.  This was inconsistent with a jurisdictional requirement, and therefore the district court had jurisdiction to approve the settlement agreement even though it adjudicated claims for unregistered copyrights.

The Court left the question as to whether district courts should sua sponte dismiss copyright cases where the Plaintiff is asserting an unregistered copyright for another day.

More detail of Reed Elsevier, Inc. v. Muchnick after the jump.

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In a recent decision by the Court of Appeals for the Fourth Circuit, the court decided that the anti-plagiarism service provided by iParadigms at turnitin.com, did not constitute copyright infringement of high school students' papers submitted via the service.  Instead, the court held the service was a fair use of the copyrighted works and therefore not infringement under § 107.  However, the court reversed and remanded to a district court on the issue against a student for liability under the Computer Fraud & Abuse Act for allegedly unauthorized access to its servers based on one student's use of a password meant for students from another school obtained via the internet.

More on A.V. v. iParadigms, LLC after the jump.

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In a recent decision, the Seventh Circuit affirmed a district court's grant of summary judgment that a plaintiff could not prevail in her copyright claim.  The court first addressed whether the plaintiff complied with the necessary procedural requirements to have her claim heard.  The plaintiff had filed for a copyright registration and had been rejected (thereby satisfying part of the requirements of § 411).  However, when filing suit, she did not notify the Copyright Office she was doing so, and thus did not meet this second requirement applicable to those who bring suit after being refused registration.

This fact notwithstanding, the Seventh Circuit concluded it could hear the case, given the plaintiff had her registration refused.  The court characterized the notification requirement as a case processing rule, and observed the copyright office had granted a registration in the interim, and thus the purpose of the notification requirement (to permit the Copyright Office to address the issue of registrability) was satisfied.

On the merits, the court noted the plaintiff's claim failed because she did not allege copying of any of the actual materials protected by copyright, but rather her ideas for better educating students.  The court affirmed the long standing rule that copyright protection does not extend to ideas, but rather the original expression of an idea.

More detail of Brooks-Ngwenya v. Indianapolis Pub. Sch. after the jump.

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Last month, the UK Department for Culture, Media, and Sport released Digital Britain, a report regarding the future of communications infrastructure in the UK, how to deal with challenges of a digital economy (such as copyright infringement), and containing policy recommendations regarding how to move forward.  Click below for our thoughts on the report and associated documents.

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