UnIntellectual Property

Software Copyright Infringement Case Practice Tips

On July 21, 2014, in Copyrights, by Brian A. Hall

There was no finding of UnIntellectual Property in this case out of the Tenth Circuit, but it did highlight two items that I believe are worthy of note to any copyright attorney, especially those litigating copyright infringement cases involving software.  The case involved a payroll processing company suing another company and its owner for copyright infringement of computer software code.  The Defendant appealed after the District Court appointed a special master and adopted the special master report that found copyright infringement had occurred, thus leading to the Court ordering all copies of the infringing software destroyed.  The issues on appeal, that form the basis of my two practice tips relate to (1) the use of a special master and (2) analysis of software code for infringement.

The appointment of a special master to assist the Court is worth consideration in copyright infringement and/or trade secret cases involving computer source code.  This is typically something a plaintiff will request so as to help establish its cause of action.

As it relates to analysis of software code to determine if copyright infringement has occurred, this Court makes clear that any special master (and I would proffer any expert) should not only apply the abstraction-filtration-comparison test but also document such application.  The abstraction-filtration-comparison test is summarized as follows:

First, in order to provide a framework for analysis, … a court should dissect the [work] according to its varying levels of generality as provided in the abstractions test.4 Second, poised with this framework, the court should examine each level of abstraction in order to filter out those elements of the [work] which are unprotectable. Filtration should eliminate from comparison the unprotectable elements of ideas, processes, facts, public domain information, merger material, scenes a faire material, and other unprotectable elements suggested by the particular facts of the program under examination. Third, the court should then compare the remaining protectable elements with the allegedly infringing [work] to determine whether the defendants have misappropriated substantial elements of the plaintiff’s [work].  Mitel, Inc. v. Iqtel, Inc., 124 F.3d 1366, 1371 (10th Cir. 1997)

Ultimately, these two tips can help establish a successful copyright infringement of computer software source code case.
Paycom Payroll, LLC v. Richison, 13-6181, 2014 WL 3377679 (10th Cir. July 11, 2014).
 

UnIntellectual Property (UnIP): Trade Secret for Information Posted on the Internet and Generally Known

The United States District Court for the District of Maryland analyzed several alleged trade secrets as part of a lawsuit involving six former employees and their activities before and after resigning.  Plaintiff, whose business is locating, selecting, screening, mobilizing, and placing candidates in temporary and permanent employment positions throughout the United States at all levels of skill and expertisehad sued defendants, for, among other things, trade secret misappropriation in violation of the Maryland Uniform Trade Secrets Act (MUTSA).

Plaintiffs allege Defendants misappropriated the following documents:

(1) a TEKsystems CATS 2 Price Sheet and a Federal Supply Service Price List – Although the Court notes that pricing information is protectable as a trade secret, the Court made quick work of this particular price sheet, agreeing with Defendants that it was a not a trade secret because it was published on the Internet.

(2) a Software Market Definitions Memorandum – Again, the Court recognized that marketing plans are protectable as a trade secret.  However, the Court found that Plaintiff’s failure to offer evidence that the list is not generally known or would be valuable to competitors, let alone rebut Defendant’s evidence, favored a finding that the Memo did not qualify as a trade secret.

(3) an Allegis Group Internal Employee Handbook and a TEKsystems Staffing Services Agreement – The Court held: “Plaintiffs offer no evidence that the information in the agreement and the handbook is not generally known or would be valuable to competitors. Thus, there is no evidence from which a reasonable jury could conclude these documents are trade secrets.”

Thus, the Court granted Defendant’s motion for summary judgment with respect to the MUTSA claim.

Again, I wonder whether the trade secret misappropriation claim, which is typically included when there is a breach of a covenant in an employment agreement, was included as mere habit.  Will a motion for fees be forthcoming?

Allegis Grp., Inc. v. Jordan, CIV.A. GLR-12-2535, 2014 WL 2612604 (D. Md. June 10, 2014).

 

 

UnIntellectual Property (UnIP): Trademark for REDSKINS

The USPTO’s TTAB today issued its opinion cancelling the REDSKINS trademark as owned by Pro Football, Inc. and used in connection with the Washington Redskins NFL team.  The USPTO issued a statement that, in sum, says:

1. “Redskins” was disparaging of Native Americans, when used in relation to professional football services, at the times the

2. The federal registrations for the “Redskins” trademarks involved in this proceeding must be canceled.

3. If not appealed or not affirmed, the previous registrant loses the benefits associated with a federal trademark registration, including the legal presumptions of ownership and of nationwide scope of rights in these trademarks, as well as the ability to use the federal registration ® symbol, and to record the registrations with the U.S. Customs and Border Patrol Service to block importation of infringing or counterfeit foreign goods.

4. The decision does not require that the REDSKINS trademark be changed or no longer used by Washington D.C.’s NFL team, since the TTAB’s jurisdiction does extend to trademark use but rather only trademark registration with the USPTO.

You can read the precedential opinion.

Given the facts, this decision does not surprise me.  The timing of it, however, confirms to me the power of lobbying and social change efforts, as evidenced by the Native American commercial ran during, among other times, the NBA Finals.  As an alumni of Miami University, who used be called the Miami Redskins and has since changed to Miami Redhawks, I understand both sides views on the matter.  Ultimately, it will be interesting to see whether Washington D.C.’s football team actually stops use and rebrands.

 

Today, the CEO of Tesla, Elon Musk, has decided that patents may not be the best thing for his company, the automobile industry, or the environment.  Instead, he is advocating for open source.  He posted the following on the Tesla Blog:

“Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology….We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.”

IP attorneys, including Tesla’s, must be collectively sweating.  I am not, and not simply because I prefer trademark over patent (no way Tesla would ever say their brand name is open source).  Sure IP is immensely valuable to many companies and one of the most important line items when it comes time for valuation and financing.  That said, securing patents and choosing not to enforce them or bypassing patent protection in the interest of open source deserves consideration, especially by companies looking to change the world.  I don’t drive a Tesla, but I want to now, more than ever, and not only because it is a great looking car.  This confirms it is a socially conscious and admirable company, even to an IP attorney like me.

 

UnIntellectual Property (UnIP): Trademark for ASSHOLE

The Trademark Trial and Appeal Board (TTAB) affirmed, in a precedential opinion, an Examining Attorney’s refusal of a trademark application for ASSHOLE REPELLENT in connection with an “amusement device, namely, a can with a spray top used as a gag gift and sold as a unit.”  The mark was held immoral and scandalous under Section 2(a) of the Trademark Act.  When determining if a mark is scandalous, according to the TTAB, the “analysis must be made (1) from the standpoint of a substantial composite of the general public, and (2) in terms of contemporary attitudes.”  The word “shit” has previously been repeatedly held as scandalous.  Now, it appears, the word “asshole” is subject to the same fate.  Applicant’s evidence included reference to broadcast television using the A-Word and countless website references for other products was not enough.  The TTAB relied upon dictionary definitions and distinguished the word from “ass” in and of itself, which was included in several trademark registrations.

I’ve always said that we are a victim of our time and place.  20 years ago this application would have had no chance.  Today, it is obviously still difficult to overcome a scandalous refusal.  However, with the explosion of social media and hardening of the populations tolerance for “vulgarity,” most likely due to overexposure, would this same decision stand in 5 years?  I think contemporary attitudes are changing, and as a result, I envision the TTAB will too, eventually.  For now, this Applicant will have to rely upon common law trademark rights if he wishes to enforce his mark.  I’m guessing that this Applicant could put some of his spray to good use regardless.

 

UnIntellectual Property (UnIP): Trade Dress for Stylus Holder

The United States District Court for the District of Massachusetts granted summary judgment to Defendants with respect to Plaintiff’s claim of trade dress infringement of a stylus holder.  The Court recognized that Plaintiff and Defendants had done business together, including one Defendant (Pitney Bowes) having purchased stylus holders directly from Plaintiff and the other Defendant having helped source a “similar” alternative stylus holders for a cheaper price to Pitney Bowes.  However, the Court found that although issues of material fact remained with regard to whether the wingless shape, oval-shaped backplate, and curved spine were functional, Plaintiff had failed to establish the requisite secondary meaning so as to establish distinctiveness for its trade dress.

In doing so, the Court analyzed both direct and indirect evidence offered by Plaintiff in support of its claim of distinctiveness, based upon secondary meaning.  The First Circuit only recognizes consumer surveys as direct evidence, and Plaintiff’s consumer survey was deemed deficient.  In particular, the Court noted that the 8 question multiple choice survey was more geared toward likelihood of confusion rather than secondary meaning.  Even the two questions that could be arguably directed toward secondary meaning were held deficient because the survey only questioned existing customers who are already familiar with Plaintiff’s product and was thus an improper sampling of individuals.  Since consumers had a 30% chance at guessing the source of the product, it was not sufficient to establish that consumers associated the stylus with a single source, namely the Plaintiff.

As it relates to indirect evidence, the Court acknowledged that the following could suffice: 1) the length and manner of the use of the trade dress; 2) the nature and extent of advertising and promotion; 3) the efforts to promote a conscious connection between the public, the trade dress, and the source; 4) the products’ established place in the market (possibly through continuous use in the market); and 5) proof of intentional copying.  Despite Plaintiff’s arguing, and offering some evidence in support of such arguments, that its existance for over seven years with large expenditures resulting in web traffic and “Top 10″ placement on Google, the Court held that “[p]roof of secondary meaning requires at least some evidence that the consumer associates the trade dress with the source.”  Plaintiff simply did not provide such evidence.  Therefore, Defendants were granted summary judgment.

Had the survey been different, would this case have survived summary judgment?  Would a piece of evidence showing intentional copying or indirect evidence (perhaps consumer testimony) that it associates the trade dress with Plaintiff have created an issue of material fact?  Trademark/trade dress attorneys can advise their clients of these issues, but unfortunately, as is more often than not the case in the subjective area of trademark law, one piece of evidence may make or break a case.  Surveys are typically ripe for dispute and can become (or not) that important piece of evidence, as shown by this case.

Genesis Strategies, Inc. v. Pitney Bowes, Inc., CIV.A. 11-12270-TSH, 2014 WL 2048447 (D. Mass. May 16, 2014).

 

The United States District Court for the W.D. of Pennsylvania has confirmed that, at least under Pennsylvania law, there is no standalone cause of action for attorney’s fees, expenses, and costs to be recovered in a separate lawsuit filed by the prevailing party in a previous trade secret misappropriation lawsuit.  Section 5305 of the Pennsylvania Uniform Trade Secrets Act (PUTSA), namely Section 5305, empowers a court may award reasonable attorney’s fees, expenses and costs to “the prevailing party” (1) if a claim of misappropriation is made in bad faith; (2) a motion to terminate an injunction is made or resisted in bad faith; or (3) willful and malicious misappropriation exists. 12 Pa. Cons.Stat. § 5305.  However, the Court confirmed that the proper procedure for such an award is following either summary judgment or trial on the merits.  In doing so, the Court granted Defendants Motion to Dismiss the PUTSA count.

It is worth noting that this federal court lawsuit between rival carpet-cleaning companies followed a state court action and also relates to abuse of process, Lanham Act claims, unfair competition, and fraud (with the fraud claim also being dismissed).  Regardless, trade secret litigators regularly deal with claims for attorneys fees following a UTSA claim.  While it is within the Court’s discretion whether to award such fees, this case helps trade secret attorneys understand when and how to pursue such fees.

Peek v. Whittaker, 2:13-CV-OI188, 2014 WL 2154965 (W.D. Pa. May 22, 2014).
 

UnIntellectual Property (UnIP): Trade Dress for Water Squirting Toys

The United States District Court for the District of Jersey, in an over 60 page opinion, has refused to issue a preliminary injunction based upon alleged infringement of trade dress.  Plaintiff, Buzz Bee, offers a product line entitled WATER WARRIORS, which includes the AVENGER, KWIK GRIP XL, ARGON, and XENON water squirting toys, and seeks to protect the trade dress for each model.  For example, Plaintiff identified its AVENGER trade dress, which was not registered with the USPTO as follows:

(i) a raised portion along the top of the rear body portion, having a downwardly sloping body element crossing forwardly along the rear body portion, a forward wavy top projection and a forward wavy lower projection with a wave-like arcuate design pointing rearward formed between the top projection and the lower projection; (ii) an irregularly shaped inlay having a forward point located in the rear body portion; (iii) a front and bottom body portion having a complementary wave-like shape to meet the rear body portion, a grip portion having a raised back, a downwardly extending trigger guard portion having an arcuate design inlay pointing forward, a forward raised conical portion; (iv) a forward stock portion having three sloped ridges; and (v) a cylindrical orange muzzle portion.
Defendant, Swimways, manufactures leisure and recreational water products, including a watergun product line from a manufacturer’s catalog while in discussions with Target for the sale of the same.  Swimways’ FLOOD FORCE line includes the AVALANCE, TSUNAMI, STORM, and STRYKER.
As evidence of the similarity between Buzz Bee’s and Swimways’ products, Plaintiff provided a February 12, 2014 post from the “BUFFDADDY NERF” blog, in which the blogger discussed similarities amongst the products.  Defendant countered with evidence of massive third party use of such products.
The Court first analyzed whether the trade dress claimed by Plaintiff was functional, to which it held: “The WATER WARRIORS trade dresses are not functional; Plaintiff has shown a likelihood of success with this element.”  However, Plaintiff’s efforts to obtain a preliminary injunction failed because, as the Court put it, “[u]pon the present record, Plaintiff has not demonstrated a likelihood of showing that its trade dresses have acquired secondary meaning,” after having analyzed each of the factors: (1) the extent of sales and advertising leading to buyer association; (2) length of use; (3) exclusivity of use; (4) the fact of copying; (5) customer surveys; (6) customer testimony; (7) the use of the mark in trade journals; (8) the size of the company; (9) the number of sales; (10) the number of customers; and, (11) actual confusion.  While the Court noted the similarity between the products makes it a difficult decision, the extraordinary remedy of an injunction ultimately favored denial.  That said, the Court seemed to provide a road map, so to speak, of ways Plaintiff’s case could be improved, including additional evidence.  One such piece of evidence, which always becomes a factor in secondary meaning cases relates to surveys and/or testimony, to which the Court said: “Perhaps as pretrial discovery progresses, Plaintiff will amass customer testimony or survey evidence that sheds light upon customer recognition of Buzz Bee’s products or confusion as to the source of Swimways’ products. Presently, this lack of customer evidence cuts against Plaintiff.”
This case is one worth keeping an eye on if it proceeds.  The Court’s analysis is, in my humble opinion, typical of these cases and provides an easy to follow, factor by factor, guide for trademark lawyers in these kinds of cases.  I wonder if a design patent had been pursued, and successfully, whether this case would be different.  Dual protection, with the trade dress remaining even after any such design patent expires, may have been the best IP protection route.  That said, it is always easy to critique after the fact, without knowing what discussion the IP lawyers had with the client and/or the client’s desires/budget/etc.
Buzz Bee Toys, Inc. v. Swimways Corp., CIV. 14-1948 JBS/KMW, 2014 WL 2006799 (D.N.J. May 15, 2014).
 

UnIntellectual Property (UnIP): Trade Secret for Software

The United States District Court for the Northern District of California has once again taught trade secret plaintiffs a hard lesson.  The Court granted Defendant’s motion to strike Plaintiff’s trade secret misappropriation cause of action for failure to identify the trade secret, which was alleged to be recruiting software, with reasonable particularity.

In doing so, the Court analyzed the California Civil Code, namely Section 2019.210:

For each trade secret, plaintiff must file, and serve on counsel, a statement, under seal, that should include:
(1) a summary of the specific trade secret;
(2) the background of the trade secret and a description of how each secret has derived independent, actual or potential economic value by virtue of not being generally known to the public:
(3) a description of how each secret has been the subject of reasonable efforts to maintain its secrecy; and finally
(4) each of the precise claimed trade secrets, numbered, with a list of the specific elements for each, as claims would appear at the end of a patent.

Defendant provided a three-page narrative and three barely-legible schematics. No explanation was provided for the schematics other than to say a “representation of Jobscience’s proprietary process and efficient solution is reflected in the following schematic diagram and screen shot examples.”  Having previously been warned, twice, by the Court that failure to provide additional identification or face dismissal, the Court finally dismissed the claim, without leave to amend.

This may sound harsh, but given the factual nature of trade secret misappropriation claims, especially when it comes to software, it aids in more efficient litigation.  Interestingly here, Plaintiff still may be able to satisfy its copyright infringement claim, but we shall see given that the remainder of this Opinion discusses issues concerning expert analysis.

Jobscience, Inc. v. CVPartners, Inc., C 13-04519 WHA, 2014 WL 1724763 (N.D. Cal. May 1, 2014).

 

 

UnIntellectual Property (UnIP): Trade Dress for Speaker Adapter

The United States District Court for the Middle District of Florida has granted Plaintiff’s motion for summary judgment with regard to Defendant’s trade dress claim in a speaker adapter.  Plaintiff filed the present lawsuit seeking declaratory judgment from the Court that its sale of a Jeep Wrangler aftermarket speaker adapter on eBay was not unlawful.  Defendant had offered a speaker adapter made of steel, with rounded corners, featuring holes for mounting, and includes hardware for installation.

Defendant has previously failed to acquire a design patent, despite having applied for one, because the application was incomplete, which led to it never being examined.  It also failed to acquire a copyright, again despite having applied for one.  The US Copyright Office stated: “[b]ecause all of the elements of the work you deposited are either related to the utilitarian aspects or function, or are subsumed within the overall shape, contour, or configuration of the article, there is no physically or conceptually ‘separable’ authorship as such. Consequently, we cannot register this claim.”  Nonetheless, when Defendant identified Plaintiff’s sales, it sent a cease and desist letter to Plaintiff, who complied with requests in an effort to avoid litigation.  However, when Defendant posted the letter on his Facebook page, Plaintiff took this action.

The Court focused its trade dress analysis on the design features of Defendant’s speaker adapter, which Defendant claimed was non-functional, including: (1) the presence of three mounting holes, (2) utilization of rounded corners, and (3) steel construction. The Court held that “each of these features is primarily functional and not entitled to trade dress protection.”  In doing so, the Court applied both the traditional test, in which a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article, as well as the competitive necessity test, in which a functional feature is one the ‘exclusive use of which would put competitors at a significant non-reputation-related disadvantage.’  Ultimately, it found that the mounting holes were to adapt to universal mounting devices, the rounded corners were for safety purposes, and the steel was to avoid corrosion. 

These cases are as factual as they come, and perhaps as factual as trade secret cases.  They are oftentimes, by their very nature, subjective.  Would an expert have helped?  What else could have been done to avoid functionality?  Was the design patent the best chance at an early indication as to protectability?  Who knows, but this case is very telling and important to trade dress claims.

Dynamic Designs Distribution Inc. v. Nalin Mfg., LLC, 8:13-CV-707-T-33TBM, 2014 WL 1576381 (M.D. Fla. Apr. 18, 2014).