The Associated Press, or AP, is a not-for-profit group which creates news reports from all over the country. AP’s revenue comes from licensing fees it earns by licensing uses of its articles to newspapers, websites, and other subscribers.

Meltwater is an Internet media monitoring service. Their news service is a method for their clients to keep tabs on how they are portrayed in the press. AP alleged that Meltwater is infringing AP’s copyright by republishing AP articles without a license. Meltwater uses a computer program to scrape news articles on the web and provides excerpts of those stories daily to its subscribers. Meltwater did not dispute that it took content from AP stories that is protected by the Copyright Act. Instead, Meltwater claimed an affirmative defense of fair use. Meltwater argued it is a search engine, albeit one which is a closed system for subscribers only. This case revolves around thirty-three Registered Articles of the AP which Meltwater copied and then delivered excerpts of to its subscribers. Meltwater News employs automated computer programs known as “crawlers” to scan the Internet for news. This is the same method which most search engines will employ. Meltwater’s crawlers scan approximately 162,000 online news websites from over 190 countries each day to create an index of the websites’ content. It is of notes that Google, Yahoo, and other large search engines do have licenses from the AP.

Meltwater argues that they are not liable for their copyright infringement since it is  “fair use” of the plaintiff’s copyrighted work.17 U.S.C. § 107 provides that “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright.” It is important to note that Meltwater did not claim it was ‘news reporting’ as stated in the fair use exception, but rather that it was a search engine. Courts look to four non-exclusive statutory factors to determine whether a defendant has made fair use of a copyrighted work: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. In this case, the first and fourth factors weighed heavily against Meltwater. For the first factor, the district court quote Harper & Row Publishers, Inc. v. Nation Enterp., 471 U.S. 539, 562 (1985), “the fact that a given use is profit-driven is not the focus of the commerciality inquiry. Instead, the “crux of the profit/nonprofit distinction is . . . whether the user stands to profit from the exploitation of the copyrighted material without paying the customary price.” Given that Meltwater charges it subscribers thousands of dollars annually for their service, the purpose and character of the infringement is clearly for profit. For the fourth factor, the court quoted Castle Rock Entertainment, Inc v. Carol Publishing Group, 150 F.3d 132, 145 (2nd Cir. 1998),  as the concern of this factor is not with “whether the secondary use suppresses or even destroys the market for the original work or its potential derivatives, but [with] whether the secondary use usurps or substitutes for the market of the original.” Meltwater subscribers would have no use for an AP subscription when Meltwater can provide the same information. This constitutes suppressing the market for the original work.

Ultimately, the court decided that commercial Internet news clipping services do not provide enough of a public service to outweigh the enforcement of the copyright laws and therefore allowing Meltwater a free ride on AP’s reporting cannot be justified

If this ruling is upheld by the appellate court and/or the Supreme Court, then content aggregators and bloggers will need to take notice. The internet is often though of as the wild west when it comes to intellectual property law. There is a fine line between a blog linking to another website with a short description, and a blog wholly copying another website’s posts. For amateur bloggers, this is a small matter of poor etiquette, but for professionals, Meltwater may become a very noteworthy.

This case deals with a Thai national who was subsidizing his college tuition in the U.S. by having his relatives in Thailand buy textbooks for cheap, shipping them to him in the US, and then selling the text books to Americans on sites such as eBay. He made about a $100,000 profit off this enterprise. Eventually, the publisher caught wind, and sued.

This enterprise is known as the “gray market”. Exploiting the price differential between the US and overseas can be quite profitable. The legality of this practice differs depending on the type of good being sold. Prior to this ruling, on copyrighted goods purchased overseas, most judges were ruling against the gray marketeers.

Kirtsaeng argued that the ‘first sale doctrine’ creates an exception that validates his actions. The “first sale doctrine” in copyright law permits the owner of a lawfully purchased copy of a copyrighted work to resell it. Once you buy a copy of something, you own that copy. You can do as you wish with it. This is codified at 17 U.S.C. § 109(a) of the Copyright Act of 1976. However, Congress also enacted 17 U.S.C. § 602(a)(1).That section provides that importing goods into the United States without the authority of the copyright holder is illegal. The Supreme Court has now decided that §109(a), does in fact, limit the scope of §602(a)(1), and ruled for Kirtsaeng.

Previously, the Supreme Court opinion which was most influential in ‘gray market’ dealings was Quality King Distributors, Inc. v. L’anza Research International, Inc., 523 U.S. 135, (1998). In Quality King, L’anza Research International, a California shampoo company, sold to foreign distributors at rates which were 35% to 40% lower than the prices charged to its domestic distributors. Quality King Distributors, Inc. purchased shipments of L’anza’s products from one of L’anza’s foreign distributors and then reimported the products into the United States for resale. L’anza sued, alleging that Quality King’s actions violated its “exclusive rights under 17 U.S.C. §§ 602. The Supreme Court heard the case to decide the question of “whether the `first sale’ doctrine endorsed in § 109(a) is applicable to imported copies.” The Supreme Court held that § 109(a), limits the scope of § 602(a), and ruled for Quality King.

While this may seem like it is the exact same facts as Kirtsaeng, there was a key difference. In Quality King, the copyrighted items in question had all been manufactured in the United States. In Kirtsaeng, the books were printed overseas. Since these books were intended to be sold in Thailand, it was cheaper and easier for Wiley to print them over there.

With the opinion in Kirtsaeng, the Supreme Court has overruled Omega S.A. v. Costco Wholesale Corp, 541 F.3d 982 (9th Cir. 2008).That case involved the importation into the United States of Omega-brand watches. The watches were ultimately purchased and resold by Costco Wholesale Corporation. The Ninth Circuit had held that § 109(a) (First Sale Doctrine) does not apply to items manufactured outside of the United States. But, the Court’s ruling was 4-4 (with Justice Kagan recused), and therefore the opinion of the Ninth Circuit stood.

The ruling in Kirtsaeng will legitimize the ‘gray market’. Now, copyrighted materials which are sold overseas for cheap, can be purchased, imported into the U.S., and sold for close to market value. This could mean that American consumers can soon purchase high quality, copyrighted goods for the price of cheap foreign knock offs. It will also mean that until the market adjusts, quite a few entrepreneurs will follow in Kirtsaeng’s footsteps and start searching overseas markets for good value without the fear of copyright infringement lawsuits. Places such as Costco, Walmart, and other large retailers will also likely scour foreign markets for cheap sources of goods. Once these practices become widespread, either manufacturers will lower their prices, or pull out of foreign markets all together. Until this happens, the next time you are on vacation overseas, it might just be worth it to pop your head into the local bookstore and pick up a few copies of whatever English texts they have.

The current case, Blackhorse v. Pro-Football, Inc., illustrates the principle codified in the Lanham Act at 15 U.S.C. §1052(a), that trademarks which depict “immoral, deceptive, or scandalous matter” or “matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols” shall not be registered. §1064(3) of the Lanham Act allows for the cancellation of a trademark which violates §1052(a). Examples of trademarks which were denied as scandalous or disparaging include: “Bullshit” as mark for attache cases, handbags, purses, belts, and wallets, In re Tinseltown, Inc. 212 USPQ 863, (1981, TMT App Bd), “Bubby Trap” for brassieres, In re Runsdorf  171 USPQ 443, (1971, TMT App Bd), “Khoran” for alcoholic beverages, In re Lebanese Arak Corp.  94 USPQ2d 1215, (2010, TMT App Bd), “1-800-JACK-OFF” for an adult phone service, In re Blvd. Entm’t  334 F3d 1336, (2003, CA FC), “Only a breast in the mouth is better than a leg in the hand” for restaurant services Bromberg v Carmel Self Service, Inc. 198 USPQ 176. (1978, TMT App Bd), and “Black Tail” for entertainment magazines, Boswell v Mavety Media Group 52 USPQ2d 1600, (1999, TMT App Bd). Examples of ethnic slurs which were held not to be disparaging include: “JAP” for clothing, In re Condas S. A. 188 USPQ 544, (1975, TMT App Bd), and “The Memphis Mafia” used for entertainment services, Order Sons of Italy in Am. v Memphis Mafia, Inc. 52 USPQ2d 1364, (1999, TMT App Bd).

Amanda Blackhorse has presented quite a bit of evidence of the offensiveness of the phrase. This includes: national polls of Native Americans and the public at large of the connotations of the phrase, the dictionary definitions which define the phrase as offensive, academic studies detailing the derogatory usage of the phrase in popular media prior to the 1980’s, and the manner in which the team has used the phrase. Whether this evidence is sufficient is a matter for the TTAB. But, should the TTAB, and the appellate courts who are likely to hear the case afterward, strip the Redskins of the trademark, this would not mean that the team would be forced to change their name. This would only prevent the team from stopping others from using the trademark. In actuality, this would mean that anyone could begin selling Washington Redskins apparel without the consent of the team. This would likely mean less income in apparel sales, but not prohibitively so. Mostly, a decision for Blackhorse would be a moral victory. This would be the federal government officially stating that this name is offensive. This would be far more public embarrassing for the team, and their owner Dan Snyder, than it would be financially disruptive.

The Yankees have never used the phrase themselves, however, and that is why this is such an interesting trademark case. The team argued that they have “implicitly embraced” the “Evil Empire” theme as a “badge of honor” by playing music from Star Wars during their home games. The team does not necessarily want to make t-shirts with the phrase on it, yet they still wish to block others from doing so. The Yankees had not registered the trademark for itself. But, nonetheless, they now own the trademark. This is because there is a likelihood of confusion and that people now associate the term with the Yankees. If the Trademark Trials and Appeals Board, the TTAB, were to allow Evil Enterprises to have the mark, then consumers would think that their products were official Yankees apparel. This confusion would lead to a dilution of the Yankees brand, since the phrase has a negative connotation. Evil Enterprises claimed that its mark was a “spoof and parody.”  A primary test of trademark infringement is whether there is a likelihood of confusion as to the source of goods and services. Here, the TTAB held that this standard was met.

But, this rationale only explains why Evil Enterprises did not win the exclusive rights to the phrase. Understanding why the TTAB gave those rights to the Yankees, rather than leaving the phrase in the public domain, is far more complex. The purpose of trademarks is to identify the source of goods and services. It matters far less who invented the idea, the important factor is who is using the trademark. Where a trademark comes from does not matter. But, instead, where the trademark goes and who and what it identifies will dictate registration. To determine that, this case hinged on the ‘public use doctrine’. The public use doctrine provides that the public’s use of a term to describe a company can confer trademark rights. The TTAB explained that “[i]t is well-settled that in order to establish rights in a mark, a party need not have actually used a mark if the public nevertheless associates the mark with the goods or services of that party.” Some examples of the public use doctrine include: Coca-Cola Co.‘s mark COKE, Apple’s mark MAC for its Macintosh computers, American Express’s mark AMEX, McDonald’s mark Mickey D’s, and Volkswagen’s mark BUG for its Beetle’s. None of these companies had used those phrases at the time at which they were trademarked. But, since the public so closely identified them with these marks, they were granted exclusive ownership.  “The Public Use doctrine states that abbreviations or nicknames used only by the public can give rise to protectable trademark rights to the owner of a mark which the public has modified.” George & Co. LLC v. Imagination Entertainment Ltd., 575 F.3d 383, 403 (4th Cir. 2009). However, the cases cited by the TTAB panel all properly apply the doctrine to the public’s adoption of shorthand or abbreviations for a trademark owner’s mark. In George & Co. LLC v. Imagination Entertainment, the Plaintiff sought to apply the public use doctrine in the reverse. Id, at 383. The Plaintiff had a dice game titled “LCR”, which stands for “Left Center Right.”  Id, at 390.  They claimed that the Defendant’s mark, LEFT CENTER RIGHT, was infringing upon its LCR mark. Id, at 392. The Plaintiff argued that the public use doctrine applied so that LCR’s elongated form “LEFT CENTER RIGHT” would be covered. Id, at 403.

The Fourth Circuit held that the public use doctrine is limited to where the formal mark is well-known and the nickname “adds distinctiveness” to the formal mark. Previously, that ruling is was thought to only include where the public abbreviates or nicknames a mark, not the other way around. Here, the Yankees have greatly expanded this doctrine, since “Evil Empire” is in no way an abbreviation of Yankees. While the TTAB’s opinion is not a precedent, so it will in no way change the law, it does indicate how a judge can interpret broadly the public use doctrine.

This paradox was solved by forming a corporation, JMAN2 Enterprises. JMAN2 has registered the trademarks of “Johnny Football” and “Johnny Manziel”. JMAN2 has begun sending cease and desist letters to any entrepreneurs marketing his name or likeness, and even filing suit against those who do not. This is an awkward combination of policing others from using a mark, and yet not using it themselves. Johnny Football may inspire a roar of the crowd inside Kyle Field, but in the metaphorical marketplace, the name inspires a deafening silence.

This is the awkward truce between the NCAA rules and trademark law. The NCAA does not wish its schools to engage in a bidding war over top players, but rather insists upon a spirit of amateurism. To this end, they’ve set up a byzantine system of regulations to ensure schools do not allow their players to profit while playing.

Trademark law, however, does not distinguish between amateurs and professionals. The law will not take pity on a intellectual property holder who abandons their trademark in favor of a college scholarship. If the trademark holder does not police their mark, then a court will find it to have been abandoned. A finding of abandonment implies that the mark is in the public domain and the owner no longer has any rights to the mark. If the mark was abandoned through non-use a subsequent user may claim it after three years when the likelihood of confusion is lessened. §1127 of the Lanham Act states clearly that three years of non-use will be the principle evidence of abandonment.  The trademark of Johnny Football would like have belonged to Johnny Manziel as soon as he became famous and t-shirts were printed up. This is true regardless of federal registration.

The NFL will not let him enter until after next season due to their draft policies. So, if Johnny Football wishes to play football in America, he will have to do so under the NCAA regulations for at least one more year. Counting last season, that will make two years for which he has not used his trademark. If he wishes to forego the NFL draft and play for his junior and/or senior years, a common enough occurrence among elite players, he will have exceeded the three years of non-use as required by the Lanham Act for a finding of abandonment. Therefore, the only option, for the player who knows how to run an option, is to thoroughly police his trademark while not profiting off of it. The silence in the marketplace is the only outcome for the two incompatible worlds of superstar athlete and college student.

Although, it is also worthy of note that Johnny Manziel is allowed under NCAA regulations to keep any awards from lawsuits which he would settle or win. This is because lawsuits are not profits. They remedies from a lawsuit are there to make the plaintiff whole, and to recoup losses. Cynics, however, have wondered if this will encourage a school’s boosters to intentionally infringe upon a player’s trademarks, then settle the resulting law suit for hundreds of thousands of dollars, as an end run around the NCAA regulations. The NCAA has said colluding to do so would be a violation, but has yet to define what evidence of collusion would be necessary. Nonetheless, we can look for the uneasy truce between NCAA regulations and intellectual property law to get far more complex in the coming decade.

This case deals with a Thai national who was subsidizing his college tuition in the U.S. by having his relatives in Thailand buy textbooks for cheap, shipping them to him in the US, and then selling the text books to Americans on sites such as eBay. He made about a $100,000 profit off this enterprise. Eventually, the publisher caught wind, and sued.

This enterprise is known as the “grey market”. Exploiting the price differential between the US and overseas can be quite profitable. The legality of this practice differs depending on the type of good being sold.

At trial, and on appeal to the 2nd Circuit, John Wiley & Sons, Inc. v. Kirtsaeng, 654 F.3d 210, (2d Cir. 2011), Kirtsaeng argued that the ‘first sale doctrine’ makes his actions legal. The “first sale doctrine” in copyright law permits the owner of a lawfully purchased copy of a copyrighted work to resell it. Once you buy a copy of something, you own that copy. You can do as you wish with it. This is codified at 17 U.S.C. § 109(a) of the Copyright Act of 1976. However, Congress also enacted 17 U.S.C. § 602(a)(1).That section provides that importing goods into the United States without the authority of the copyright holder is illegal. The Supreme Court will have to decide, as it often does, how these two contradictory laws interact.

The 2nd Circuit opinion in Kirtsaeng relied heavily on Quality King Distributors, Inc. v. L’anza Research International, Inc., 523 U.S. 135, (1998). In Quality King, L’anza Research International, a California shampoo company, sold to foreign distributors at rates which were 35% to 40% lower than the prices charged to its domestic distributors. Quality King Distributors, Inc. purchased shipments of L’anza’s products from one of L’anza’s foreign distributors and then reimported the products into the United States for resale. L’anza sued, alleging that Quality King’s actions violated its “exclusive rights under 17 U.S.C. §§ 602. The Supreme Court heard the case to decide the question of “whether the `first sale’ doctrine endorsed in § 109(a) is applicable to imported copies.” The Supreme Court held that § 109(a), does in fact limit the scope of § 602(a), and ruled for Quality King.

While this may seem like it is the exact same facts as Kirtsaeng, there was a key difference. In Quality King, the copyrighted items in question had all been manufactured in the United States. In Kirtsaeng, the books were printed overseas. Since these books were intended to be sold in Thailand, it was cheaper and easier for Wiley to print them over there.

The Supreme Court intended to rule on this distinction when they heard the case of Omega S.A. v. Costco Wholesale Corp, 541 F.3d 982 (9th Cir. 2008).That case involved the importation into the United States of Omega-brand watches. The watches were ultimately purchased and resold by Costco Wholesale Corporation. The Ninth Circuit had held that § 109(a) (First Sale Doctrine) does not apply to items manufactured outside of the United States. But, the Court’s ruling was 4-4 (with Justice Kagan recused), and therefore the opinion of the Ninth Circuit stands.

What this case may come down to is what the phrase “lawfully made under this title” in §109(a) actually means. Does ‘made’ mean where the book is written? Or does this mean where the book was printed? Does ‘under’ mean in the territory that the Copyright Code reaches? Or does it apply to whatever works were copyrighted in the US? If that term is understood by the Court broadly, then §109(a) will subsume §602(a) and the ‘first sale doctrine’ should apply.

If the Court rules for Wiley, as expected, then copyright holders would be protected from their foreign manufacturing hurting business in the US. There could be effect on outsourcing, product manufacturing for copyright holders, if one does outsource the printing of foreign editions, they will enjoy protections that domestic goods do not, under Omega. For average consumers, this would mean that you might not be able to legally resell your property, if you purchased it from overseas. In the digital age of e-commerce, this is becoming more common. For sites such as eBay, they could see potentially significant decline in goods for sale. For import/export companies in the ‘grey market’ businesses, this would be devastating.

Standards Essential Patents are those patents that have been adopted as standard for an industry. Standards Essential Patent holders are obligated to license the use of their patent under fair and reasonable non-discriminatory terms. Google believes that many of Apple’s patents, like multi-touch screen technology and the “slide to unlock” feature, have been adopted as standard features by the smartphone industry as a whole. Since these features have become so common, Google believes Apple’s patents are commercially essential and should be treated like Standards Essential Patents in the interests of fairness. Google also argues that failing to standardize Apple’s patents would hurt consumer welfare.

Not surprisingly, Apple’s CEO Tim Cook disagrees. Cook dismissed Google’s argument as an attempt to piggy-back on Apple’s industry-leading innovation and said Apple would not be “developer for the world.” Apple also argued that allowing a widespread adoption of their patented technology would disincentivize innovation. Other critics have accused Google of basically saying they cannot compete with Apple without infringing or licensing their patents.

As it currently stands, Apple’s patents can still be licensed by companies like Google, but they can choose exactly who can use it. If their patents were considered industry standard like Google requests, Apple would be required to license their technology to any competitor under fair and reasonable non-discriminatory terms. While they would still receive payment and profit off their patent, such an arrangement could hurt Apple’s ability to profit off their innovation after spending billions on development. Apple is currently estimated to be involved in 60% of mobile patent lawsuits according to Kanzatec IP Group. Losing control over who can license their patents would greatly impact Apple’s ability to navigate their current mass of litigation.

Apple’s lawyer, Bruce Sewell, wrote a refutation to the Senate committee. He argues that the popularity of Apple’s technology does not transform it into a standard in the eyes of the law. Apple should not be forced to license their patents to competitors just because they built the best mousetrap. Apple also pointed out that many of the iPhone’s signature features are not standard for telephones. Apple has spent billions developing the iPhone, and it includes features, like video games and camera software, that are nothing like a standard phone. In addition, Apple pointed out that the iPhone’s aesthetic design was a result of extensive development and is completely unrelated to industry standards for mobile phone technology. According to Apple, the iPhone is markedly different from a standard mobile phone.

The Digital Millennium Copyright Act allows YouTube to escape liability if they remove content when someone claims to hold a copyright to it. The DMCA then allows users to submit a counter claim if they believe their content does not infringe on an existing copyright and was wrongfully removed.

It’s unclear exactly how or why Scripps filed the complaint, or whether YouTube took it down automatically because their system believed it copied an existing video. Scripps Local News released an apology for the problem through a spokesperson for their parent company, E.W. Scripps Company. This is not the first NASA video that has been taken down on a claim by Scripps. Bob Jacobs, NASA’s Deputy Associate Administrator for Communications said that DMCA complaints routinely disrupt NASA’s online presence. The repeated invalid takedowns are probably a result of YouTube’s automated copyright system that can block wrongfully claimed material.

The Tetris case and the EA case may be the start of a new line of litigation targeting the makers of clone video games.  Whatever the motivation for these recent litigation events was, or what entity was behind the suits, it now seems that those video game manufacturers copying substantial elements of other game manufacturers are no longer safe from infringement claims.  Although it has always been the law that copyright can not and should not protect the underlying idea behind a work, the expression of that idea can be protected.  The central issue in the Tetris, and most likely in the Sims Social case, was whether the underlying idea of a game can be separated from the expression of that idea; the idea of watching someone’s life and controlling it in a video game may not be protectable, but the interface for doing so seems as if it should be.

The commonality which is shared between The Sims Social and The Ville appears to go beyond the mere superficial, as shown on page 20 of the attached complaint, the skin tone choices in both games is identical.  Somehow it appears that Zynga has independently picked the exact same eight skin pigmentation representations as EA, in addition to the fact that Zynga also appears to have chosen to allow the same number of skin pigmentation representations.  Unless there is some universal skin color chart which is given to first year computer programmers it seems that these similarities can not be coincidental.  There are numerous other design choices which carry over from the EA game into the Zynga game which appear to defeat any argument that the Zynga game is at least a partial copy of the EA game.

It cannot be said for sure that The Ville is a copy of The Sims Social, that is something which the court will have to decide.  It will be interesting to see what Zynga’s response to the complaint is and whether they can explain some of the many similar choices which the developers of both games chose.

Electronic Arts v. Zynga Inc. – Complaint

The case has been ongoing since The Authors Guild, along with The American Society of Media Photographers and other parties, sued Google in 2005 claiming the company’s plan to create an online literary database was carried out without permission from copyright holders. Google estimated it has already scanned more than 20 million books and posted excerpts from over 4 million. The process began when Google entered agreements with public and university libraries to digitize and upload information for their Google Books service. So far, Google says works have been scanned from Harvard University, Oxford University, Stanford University, the University of California, the University of Michigan, and the New York Public Library. Judge Denny Chin began hearing the case as a trial judge and has retained jurisdiction after being elevated to the Federal Appeals Court in 2010.

The Authors Guild believes that Google’s actions constitute massive copyright infringement. Google argues, however, that their Google Books service actually furthers the objectives of copyright law by providing significant public benefits. Google believes their service even provides a benefit to the authors themselves and argues the authors have failed to prove Google Books displaced any book sales whatsoever. Google Books, the company argues, actually makes the authors’ works more easily available and may have even increased sales. Additionally, Google argues that Google Books constitutes fair use since it creates significant benefits without diminishing the value of the copyrighted works in question.

Previously, in March 2011, Judge Chin rejected a $125 million settlement reached between the plaintiffs and Google. While this may seem unreasonable, the Judge believed the proposed settlement was far too broad. Judge Chin accused Google of using the settlement to implement a business plan that would leave them with a monopoly to copy works without permission. The settlement went beyond the bounds of the litigation and would strengthen Google’s control over the search engine market. The United States, Amazon.com, and Microsoft had raised antitrust concerns following the first proposed settlement. Further talks to reach an alternate settlement between the parties were unsuccessful. In May, the judge granted class-action status to the plaintiffs, allowing photographers and graphic artists to join the suit.