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Legal Updates |
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Litigation and Alternative Dispute Resolution |
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Doe v. Geller et al.
Lennon, et al. v. Premise Media Corp
National Athletic Trainers’ Association Inc. v. American Physical Therapy Association et al.
Leadsinger, Inc. v. BMG Music Publishing, et al.
New York v. Microsoft
Eastwood v. Palliser Furniture Ltd. et al.
Ex parte Sacha Baron Cohen et al.
Kiedis, et al. v. Showtime Networks Inc., et al.
Bank Julius Baer & Co. Ltd.
Mediacom Communications Corp. v. Sinclair Broadcast Group, Inc.
Netflix, Inc. v. Blockbuster, Inc.
In re Compact Disc Minimum Advertised Price Antitrust Litigation
Reilly v. MediaNews Group, Inc.
International Profit Associates, Inc. v. Paisola
Entertainment Software Association v. Swanson
Pritchett v. Pound
Kinn v. Alaska Sales & Service, Inc.
Hotels Nevada v. L.A. Pacific Center, Inc.
Canon Latin America, Inc. v. Lantech (CR), S.A.
Street v. Smith
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Doe v. Geller et al. |
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Practice Area |
John Doe, who is known publicly by the pseudonym Brian Sapient
(“Sapient”), as part of his religious beliefs and mission to debunk
what he alleges are “irrational beliefs and theories,” uses YouTube, a
California-based file-sharing website, to “reach thousands of audience
members and promote [his] activist messages and campaigns
online.” As part of this campaign, Sapient uploaded a video clip
that originally aired on the NOVA television program featuring an
illusionist named James Randi challenging claimed psychic Uri Geller’s
alleged powers. The clip Sapient uploaded contained an embedded
clip, the copyright to which Explorologist, Inc., of which Uri Geller
is a controlling shareholder, owns. Geller and Explorologist sent
YouTube a takedown notice identifying Sapient’s post as infringing and
demanding it be removed. YouTube did so and suspended Sapient’s
account for more than two weeks. On May 7, 2007, Explorologist
filed suit against Sapient in the Eastern District of Pennsylvania
where Sapient resides alleging copyright infringement under British
law. On May 8, 2007, Sapient filed suit in the Northern District
of California against Geller and Explorologist, alleging violation of
the takedown provisions of the Digital Millennium Copyright Act
(“DMCA”), 17 USC § 512(f) (2000), claiming that Geller and
Explorologist knowingly misrepresented to YouTube that one of
plaintiff’s video postings infringed defendants’ copyrights.
On February 4, 2008, the Northern District of California dismissed
Sapient’s suit for lack of personal jurisdiction.
The Court first concluded that it need not reach the difficult issue of
subject matter jurisdiction presented by this case stating that no
federal court has addressed subject matter jurisdiction under § 512(f)
and the issue is particularly complex in this case since the
defendants’ act of sending the YouTube takedown notice occurred in
England and this fact was significant because United States copyright
laws do not apply extraterritorially and copyright law is generally
unsettled when it comes to cross-border communications. Noting
that arguably an alleged violation of § 512(f) is not, itself, a
copyright claim, the Court explained that treating the case as an
ordinary tortuous misrepresentation or analogizing to other federal
misrepresentation statutes provided “scant guidance” on how to resolve
the subject matter jurisdiction question, and therefore the Court
turned to the alternative ground of personal jurisdiction to decide the
case.
After finding no clear guidance on the “purposeful direction” prong of
the California personal jurisdiction test for metaphysical Internet
free speech injuries, the Court found clear insufficiency on the third
prong of the jurisdiction test which is that jurisdiction must be
reasonable. While defendants had the burden of showing that that
the exercise of jurisdiction would be unreasonable, they did so where
on balance of a seven-factor test, they showed that 1) their
“purposeful interjection” into California consisted of a single
takedown notice and was not aimed at a California resident; 2) there
was no indication that Geller frequently traveled to California for
business or had an agent in California to alleviate a foreign
defendant’s burden of litigating in another country; 3) sovereignty
considerations weighed against jurisdiction where the defendants were a
British resident and a British corporation and the clip at issue was
filmed in England; 4) the forum state’s interest was slight since
Sapient was a Pennsylvania resident, not California, and California
state law was not at issue; 5) the most efficient judicial resolution
of the controversy was in the Eastern District of Pennsylvania where a
suit was already pending; 6) plaintiff failed to show any concerns that
would make California “important” to the claims; and 7) the
plaintiff did not meet its burden of proving the “unavailability of an
alternative forum.”
Doe v. Geller et al., No. 07-2478, 2008 WL 314498 (N.D. Cal. Feb. 4, 2008)
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Lennon, et al. v. Premise Media Corp. |
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Practice Area |
Plaintiffs
Yoko Ono Lennon, other Lennon family members, and EMI Blackwood Music
filed suit against Premise Media Corporation, producers of the movie,
“Expelled: No Intelligence Allowed” alleging claims of copyright and
trademark infringement for utilizing fifteen seconds of the song
“Imagine” without permission of the plaintiffs, who own the copyright
to the song. Plaintiffs moved for a preliminary injunction prohibiting
the continued distribution of the movie and a recall of the existing
copies. However, on June 2, 2008, the United States District
Court for the Southern District of New York denied that motion
concluding that plaintiffs failed to make the required showing of a
“clear” or “substantial” likelihood of success on the merits to obtain
an injunction with both prohibitory (maintaining the status quo by
prohibiting further distribution of “Expelled”) and mandatory aspects
(demanding the positive act of recalling copies of the movie already
distributed) because the defendants would likely prevail on their
defense of fair use.
The doctrine of fair
use under the Copyright Act of 1976, 17 U.S.C. § 107 allows the “fair
use” of a copyrighted work without the permission of the copyright
owner for purposes such as “criticism, comment, news reporting,
teaching …, scholarship, or research.” The Court considered the
following four codified factors: “(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; and (4) the effect of the use upon the potential
market for or value of the copyrighted work.” 17 U.S.C. § 107.
The court noted that the first factor, whether the use of a commercial
rather than educational nature, is the “the heart of the fair use
inquiry,” but is not decided merely on the consideration of whether the
sole motive of the use is for monetary gain, but whether the use
produces a value that benefits the broader public interest. The
Court found that, in this case, while the defendants conceded that
“Expelled” was a commercial film from which they sought profit, the
film’s use of the copyrighted work was highly transformative and
contributed to the broader public interest by stimulating debate on an
issue of current political concern and therefore the commercial purpose
weighed only weakly against a finding of fair use. Moreover,
while defendants obtained permission for all other music used in the
movie, that this fact did not evince bad faith because if the use is
otherwise fair, then no permission need be sought.
As to the nature of the work, while again conceding that “Imagine” is a
creative work, and as such, at the “core” of copyright protection, the
Court explained that because the work was widely published and the
secondary work (the film) comments on the “social and aesthetic
meaning” of the original, the second fair use factor has limited
weight. As to the third factor concerning the amount and
substantiality of the portion used, the Court found that the
quantitative component “clearly favors defendants,” while the
qualitative aspect was “more complicated.” The plaintiffs’ expert
musicologist opined that the fifteen-second excerpt at issue contained
the “heart” of the song, repeated in 48.8 percent of its total duration
and immediately recognizable as being from “Imagine.” The Court
found that because the song was repetitive it was not clear that
defendants could have used any portion without referencing a part of
the overall composition and from this alone the Court could not
conclude the defendants’ use was unreasonable. Furthermore, the
Court found that Supreme Court precedent had established that copying
was not excessive in relation to a parodic purpose merely because the
portion taken was from the heart of the copyrighted original, and in
fact the criticism or commentary would be less effective if not
directed at that recognizable portion of the work. Hence, the
Court found the defendant’s copy quantitatively and qualitatively
reasonable.
With regard to the effect on the potential market value of the work,
the focus of the inquiry according to the Court is whether the
secondary use usurped the market of the original. The Court
rejected the plaintiffs’ lost licensing revenue argument as not
weighing strongly “if at all” since plaintiffs proffered no evidence
showing that permitting defendant’s use would usurp the licensing
market for the song. Finally, the Court found that the plaintiffs
failed to show that the balance of harms tipped “decidedly” in their
favor since substantial costs of reediting the movie and reprinting the
affected portions were established and plaintiffs lost licensing fees
were merely speculative.
Lennon, et al. v. Premise Media Corp., No. 08 CV 3813 (S.D.N.Y. filed Apr. 22, 2008)
A copy of the complaint can be found here.
A copy of the preliminary injunction order can be found here. |
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National Athletic Trainers' Association Inc. v. American Physical Therapy Association et al. |
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Practice Area |
On
February 1, 2008, National Athletic Trainers’ Association Inc (“NATA”),
claiming to represent 30,000 certified athletic trainers worldwide,
filed suit against the American Physical Therapy Association (“APTA”),
the main United States organization representing physical therapists.
The suit claims that APTA violated the antitrust laws of the
Sherman Act, 15 U.S.C. § 2 by monopolization and attempted
monopolization and violating Section 1 of the Act through restraint of
trade and group boycott. The suit alleges that the APTA falsely
told the public that only certified physical therapists can perform
“manual therapy,” the “skilled use of hands to evaluate or treat a
neuromuscular skeletal condition.” The complaint further
alleges that APTA furthers their monopoly on the manual therapy market
by conspiring to and engaging in a pattern of conduct designed to
prevent NATA members and other certified athletic trainers from
completing professional educational requirements to effectively compete
in the manual therapy market, including advising its members that it is
illegal to train NATA members or other athletic trainers manual therapy
procedures and by baring NATA members from education conferences and
training programs on the practice. The complaint explains that
while plaintiff “acknowledges [that] physical therapy may only be
practiced by [physical therapists], the techniques used by [physical
therapists] are neither owned by them nor exclusively for their
use.” Plaintiffs seek treble damages and permanent injunctive
relief.
National Athletic Trainers’ Association Inc. v. American Physical Therapy Association et al., No. 08-158 (N.D. Tex., Dallas Div. filed Feb. 1, 2008)
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Leadsinger, Inc. v. BMG Music Publishing, et al. |
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Practice Area |
On
January 2, 2008, the Ninth Circuit Court of Appeals, in a matter of
first impression in the circuit, upheld the district court’s dismissal
for failure to state a claim of Leadsinger, Inc.’s complaint for
declaratory judgment against music publisher defendant BMG Music
Publishing that it was entitled, by use of its karaoke device, to print
and/or display song lyrics in real time with song recordings as long as
it obtained a compulsory mechanical license under the Copyright Act, 17
U.S.C. § 115 or under the fair use doctrine of 17 U.S.C § 107. The
Court found no viable claim under § 115 because that section only
applies the compulsory licensing scheme to “phonorecords,” which
excludes audiovisual works and, according to precedent, excludes the
synchronization of musical compositions with the content of audiovisual
works which requires a synchronization license from the copyright
owner. The Court found that Leadsinger’s karaoke device met each
element of the statutory definition of an audiovisual work.
With regard to fair use under § 107, the Court found that no viable
claim existed because Leadsinger had not alleged facts that, under the
four factors considered in determining whether use of a copyrighted
work is fair, could establish the use through the karaoke device was
fair. Under the first factor, whether the use is commercial in nature
or is for nonprofit educational purposes, the Court found the purpose
of the use to be primarily commercial. With regard to the second
factor, addressing the nature of the copyrighted work, it was clear
that song lyrics were works of creative expression which is precisely
what the copyright law aims to protect. Under the third factor, looking
at the amount and substantiality of the portion used in relation work
as a whole, Leadsinger was claiming the right to print or display all
of the lyrics to an entire song and therefore this factor clearly
weighed against fair use. Finally, with regard to the fourth factor,
the effect of use upon the potential market for or value of the
copyrighted work, the Court agreed with the district court’s conclusion
that Leadsinger’s complaint did not permit an analysis of the effect
that the sale of Leadsinger’s karaoke devices would have on the market.
The Court found that while publishers have never or rarely demanded a
print license for non-karaoke uses, the Court also acknowledged that
publishers have charged in the context of karaoke uses and therefore
the Court could not infer that no harm would result from Leadsinger’s
use. However, the Court concluded that because it is “well accepted”
that when the use is for commercial gain the likelihood of harm may be
presumed. This combined with the showing on the other factors justified
the dismissal of the Leadsinger’s request for a declaration based on
the fair use doctrine.
Leadsinger, Inc. v. BMG Music Publishing, et al., 512 F.3d 522 (9th Cir. 2008) |
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New York v. Microsoft |
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Practice Area |
On
January 29, 2008, District Court Judge Colleen Kollar-Kotelly issued a
ruling extending for two additional years the antitrust oversight of
Microsoft ordered in New York v. Microsoft Corporation, 224
F. Supp. 2d 76 (D.D.C. 2002). Judge Kollar-Kotelly cited
Microsoft’s “extreme and unforeseen delay” in making available
“complete, accurate, and useable technical documentation relating to
the Communications Protocols that Microsoft is required to make
available to licensees” under the Final Judgments, a delay caused by
insufficient allocation of employee and economic resources toward
generating the technical documentation. In the previous Remedy
Judgment, the Court explained that
[t]he
mandatory disclosure of the communications protocols relied upon by
Microsoft’s PC operating system to interoperate with its server
operating systems will advance the ability of non-Microsoft server
operating systems to interoperate, or communicate, with the ubiquitous
Windows PC client. Advancement of the communication between
non-Microsoft server operating systems and Windows clients will further
the ability of these non-Microsoft server operating systems to provide
a platform which competes with Windows itself.
New York v. Microsoft, 224 F. Supp. 2d at 172-173.
The Court found that Microsoft’s delay in disclosing the communications
protocols constituted changed circumstances preventing the Final
Judgments from achieving their objectives and therefore warranted
extending the remedy provisions two years. The plaintiffs,
antitrust regulators from 10 states and the District of Columbia, had
requested an extension of five years.
New York v. Microsoft, 531 F. Supp. 2d 141 (D.D.C. 2008)
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Eastwood v. Palliser Furniture Ltd. et al. |
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Practice Area |
Clint
Eastwood is seeking a federal court injunction against Palliser
Furniture Corporation for using his name without authorization by
naming one of its home theater chairs “The Eastwood.” The
complaint was filed on January 16, 2008 in the Central District of
California, alleging claims for false designation of origin and false
endorsement in violation of the Federal Lanham Act, in addition to
claims for misappropriation of name or likeness under common law and
the California Civil Code. The claims are based on the allegation
that Palliser’s use of Eastwood’s personality rights was without
authorization and creates the false impression that Eastwood is somehow
associated with the manufacturer. The complaint explains that the
chair dubbed “The Eastwood” is sold and marketed within a line of home
theater chairs named by defendants after various living and deceased
celebrities, including “The Brando,” “The Cagney,” “The Cooper,” “The
Bronson” and “The Connery.” The complaint also states that
Eastwood has a long history of rejecting third-party licenses,
reserving the exploitation of his personality rights and goodwill
associated therewith for motion picture and other business ventures in
which he is personally involved. In addition to injunctive
relief, the complaint seeks to recover all profits earned as a result
of selling the chairs and punitive damages for defendant’s “knowing,
willful and conscious disregard” for Eastwood’s rights.
Eastwood v. Palliser Furniture Ltd. et al., No. 08-00266, (C.D. Cal. filed Jan. 16, 2008)
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Ex parte Sacha Baron Cohen et al. |
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Practice Area |
Kathie
Martin, who owns and operates the Etiquette School of Birmingham, filed
a lawsuit against Sacha Baron Cohen, Twentieth Century Fox Film
Corporation and other production companies associated with the film Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan
(hereinafter referred to as "the Borat movie"), stating claims alleging
fraud and deceit, quasicontract and unjust enrichment, commercial
appropriation and invasion of privacy, and intentional infliction of
emotional distress. Martin alleged that she had been embarrassed
and humiliated by scenes in the Borat movie in which she is seen
teaching etiquette to the film’s main character during a dinner party,
and she claims that she thought she had been legitimately hired to
teach etiquette to a foreign reporter for inclusion in a documentary
film.
On April 26, 2007, the trial
court denied defendants’ motion to dismiss based on the forum selection
clause in the contract signed by Martin and Springland Films (one of
the defendant production companies) that provided that New York County,
New York was the exclusive venue for Martin’s claims. The
defendants sought mandamus relief from the denial of their motion to
dismiss.On January 18, 2008, the Supreme Court of Alabama found that
the primary purpose of the transaction between plaintiff and defendants
was interstate commerce, “specifically, to provide for Martin's
appearance in a film that might be used ‘without restriction in any
media throughout the universe.’” Consequently, the Court found
that the Commerce Clause of the United States Constitution precluded
the courts of Alabama from applying a state law rendering void
contracts made by foreign corporations that fail to first obtain a
state certificate of authority to transact business within
Alabama. The Court concluded that Martin could not then prevent
the petitioners from enforcing the consent agreement between the
parties, which includes a forum selection clause, the clause under
which defendants had previously brought a motion to dismiss based on
lack of jurisdiction.
Ex parte Sacha Baron Cohen et al., (In re: Kathie Martin v. Sacha Baron Cohen et al.) [Ms. 1061288] (Ala. Jan. 18, 2008) Jefferson Circuit Court, CV-06-7333.
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Kiedis, et al. v. Showtime Networks Inc., et al. |
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Practice Area |
On
November 19, 2007, band members of Red Hot Chili Peppers (hereinafter
“RHCP”) filed a lawsuit in the Los Angeles County Superior Court
against Showtime Networks and the producers and writer (hereinafter
“Showtime”) of Showtime’s hit cable television series entitled
“Californication,” seeking injunctive relief, treble damages, and
disgorgement of profits. The case was removed to federal court on
December 17, 2007.
The complaint claims
violations of the federal Lanham Act for unfair competition and
dilution based on the use of the title “Californication,” the title of
RHCP’s 1999 multi-platinum, Grammy-nominated composition and albums of
the same name, and use of the nickname “Dani California” for a
character in the series, which was also the name of a character who is
the subject of or mentioned in three RHCP songs, including the
“Californication” composition, and the title of another multiple
Grammy-winning hit single by RHCP. RHCP claims that the
title “Californication” is distinctive, famous, and immediately
recognized by consumers as associated with RHCP and their composition
and album, and has thereby acquired secondary meaning long before
defendants used the term beginning at least with the series debut in
August 2007. Therefore, according to the complaint, defendants’
actions in creating and distributing the television series
“Californication” constitutes a false designation of origin and has
caused and continues to cause a likelihood of confusion, mistake, and
deception as to source or sponsorship in the minds of the public, a
violation of section 43(a) of the Lanham Act. Moreover, the
complaint alleges that the use of the “Californication” mark by
defendants dilutes the quality of the mark by diminishing its capacity
to identify RHCP’s goods, services, sponsorship and affiliation.
Showtime filed a motion to dismiss claiming that Plaintiffs’ false
designation of origin claims fail because Defendants’ use is protected
by the First Amendment. In particular, Showtime argues that the
term “Californication” has been used for decades, beginning with a 1972
Time magazine story entitled “The Great Wild Calfornicated West,” and
continuing with bumper stickers and various sound recordings and
registered copyrights for print and sound recordings from the 1980s and
1990s that include a form of the term “Californication.” Also,
use of this common term did not mislead as to the source of the work
nor did the title suggest, explicitly or otherwise, that Plaintiffs had
sponsored it. Specifically, because the term accurately
represents the themes of the California lifestyle and a character who
attempts to deal with writers’ block through a series of sexual
encounters, hence “California” and “fornication,” Defendants’ use of
the term is noncommercial expressive speech artistically relevant to
the substance of the series, and therefore it is protected by the First
Amendment and exempt from dilution statutes.
The court ruled on Defendants’ motion to dismiss on February 19, 2008,
denying in part and granting in part. It denied the motion as to the
Lanham Act unfair competition and the state law unfair competition and
unjust enrichment claims, while granting the motion and dismissing
RHCP’s federal and state law trademark dilution claims with prejudice.
Relatedly, Showtime filed an application with the U.S. Patent and
Trademark Office on April 10, 2007, to register the mark
CALIFORNICATION, “for entertainment in the nature of an on-going comedy
series.” The mark was published for opposition on October 2,
2007, and RHCP filed a motion to extend time for filing an opposition
on October 22, 2007. Although granted, RHCP’s motion to extend
time for filing was rendered moot when Showtime abandoned its
application on November 21, 2007.
A copy of Showtime’s motion to dismiss can be found here.
A copy of the notice of removal can be found here.
A copy of the court’s minute order regarding Showtime’s motion to dismiss can be found here.
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Bank Julius Baer & Co. Ltd. |
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Practice Area |
In
November of 2007, “Wikileaks.org” proved itself more effective than the
Freedom of Information Act in providing information regarding the
United States military detention facilities at Guantánamo Bay, Cuba.
Since 2003, the Pentagon had resisted an American Civil Liberties Union
Freedom of Information Act request for the 238-page, “Camp Delta
Standard Operating Procedures” manual dated March 28, 2003. However, in
November of 2007, WikiLeaks.org anonymously published a copy of the
manual that the Pentagon grudgingly confirmed was authentic.
WikiLeaks.org is an international website, formatted like the popular
Wikipedia.com, with the goal of “developing an uncensorable Wikipedia
for untraceable mass document leaking and analysis.” The site quickly
became popular for some profound successes eluding court gag orders and
providing a forum for whistleblowers. Contributors or organizers of the
site include “Chinese dissidents, journalists, mathematicians and
startup company technologists, from the US, Taiwan, Europe, Australia
and South Africa,” and a “public Advisory Board,” consisting of
“journalists, representatives from refugee communities, ethics and
anti-corruption campaigners, including a former national head of
Transparency International, human rights campaigners, lawyers and
cryptographers.
The site is also recently responsible for leaking several Bank Julius
Baer documents from a Swiss banking whistleblower purportedly showing
offshore tax evasion and money laundering by wealthy and politically
sensitive clients from the US, Europe, China and Peru. The Bank
succeeded in temporarily shutting down the site by obtaining what
purported to be a “Permanent Injunction” issued on February 15, 2008,
by District Court Judge Jeffery White of the California Northern
District Court in San Francisco, by aiming their request for an
injunction against the Domain Name Registrar, rather than the actual
publishers of the material who would have been outside of the US
jurisdiction. Apparently upon Dynadot’s (the Domain Name Registrar)
stipulation, the court ordered Dynadot to use its access to the
Internet website name registration system to delete the records for
“Wikileaks.org” and to replace the content with a blank page. The Court
also issued Temporary Restraining Orders preventing anyone aware of the
injunction from linking to the site’s content. However, the site was
almost immediately back up and running under its many “back-up”
international sites and domain names despite the order.
On February 29, 2008, the court reversed its prior orders after it was
bombarded with several motions and briefs in support of the site and
its right to operate. Twelve media organizations filed a joint Amici
Curiae (“friends of the Court”) brief in support of the site opposing
the “permanent” and temporary injunctions, including the Reporters
Committee for the Freedom of the Press (RCFP), The American Society of
Newspaper Editors (ASNE), The Associated Press (AP), Citizen Media Law
Project, The E.W. Scripps Company (newspapers, TV, cable TV etc.),
Gannet Co. Inc. (largest publisher of newspapers in the US, including
USA Today), The Hearst Corporation (media conglomerate which publishes
the San Francisco Chronicle), The Los Angeles Times, National Newspaper
Association (NNA), Newspaper Association of America (NAA), The
Radio-Television News Directors Association (RTNDA), and The Society of
Professional Journalists (SPJ). The Public Citizen Group, founded by
Ralph Nader and the California First Amendment Coalition (CFAC) also
filed a separate brief in support of the site. Finally, The Electronic
Freedom Foundation (EFF), the American Civil Liberties Union (ACLU),
The Project on Government Oversight (POGO), and Jordan McCorckle (an
individual at the University of Texas and user of WikiLeaks.org) filed
their own motion to intervene as Defendants in the case. Among other
arguments made in the briefs, those supporting WikiLeaks pointed to the
overly broad nature of the injunction against the site’s total
operation as an unconstitutional prior restraint on the public’s right
to access information guaranteed by the First Amendment, tantamount to
shutting down an entire newspaper because of the content of one
article. The Court agreed, and dissolved the “permanent injunction” and
declined to extend the temporary restraining orders previously issued,
stating that neither was narrowly tailored enough to be appropriate
even if a more limited injunction redacting personal information from
specific documents may be constitutional given sufficient evidence.
For copies of the Court’s February 15th and February 29th orders, go to 021508 Order, 021508 TRO, 021508 Order to Seal, and 022908 Order
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Mediacom Communications Corp. v. Sinclair Broadcast Group, Inc. |
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Practice Area |
Mediacom
Communications Corporation brought an action against Sinclair Broadcast
Group, Inc. asserting, among other claims, violations of the Sherman
Antitrust Act seeking to preliminarily enjoin Sinclair from terminating
an existing retransmission agreement allowing Mediacom to carry
Sinclair’s broadcast stations and from initiating any active marketing
campaign designed to induce Mediacom’s subscribers to discontinue
services with Mediacom.
Due to the
increasing popularity and competition among satellite television and
cable companies, Sinclair became aware both that satellite companies
would pay for analog signals cable companies traditionally did not pay
for and the amount that cable companies routinely paid for
non-broadcast stations such as TNT, HGTV, and Animal Planet. Hence, for
the first time in 2005, Sinclair sought compensation from cable
companies, including Mediacom, for analog signals when negotiating
retransmission rights. In response, Mediacom said it would only
consider purchasing retransmission rights for thirteen Sinclair
stations affiliated with major networks (“Tying Stations”) and were not
interested in retransmission rights for the other stations (“Tied
Stations”) that were of little value due to low subscriber demand, the
absence of which would free up channels to the benefit of Mediacom.
Sinclair refused offers made by Mediacom that included less than all
stations and then announced an agreement with a Direct Broadcast
Satellite (“DBS”) company, either DirectTV or The Dish Network, both
direct competitors of Mediacom. Under the terms of the alleged
agreement, Sinclair would be reimbursed for any lost advertising
revenue due to any interruption or termination of its relationship with
Mediacom and receive consideration for each subscriber that switched to
the DBS company as a result.
Mediacom then sought a preliminary injunction against Sinclair’s
termination of Mediacom’s 2002 retransmission agreement, requiring
Mediacom to give notice to its subscribers of the subsequent change in
service. The United States District Court for the Southern District of
Iowa agreed with Sinclair that the potential injuries Mediacom would
suffer would not be as a result of alleged antitrust violations
stemming from illegal “tying” arrangements. Rather, the injuries that
both Mediacom and its customers would face would be due to the
termination of the retransmission agreement and would be tangible
losses, not the kind of “irreparable harm” that a preliminary
injunction requires. Further, with regard to factoring in the
likelihood of success on the merits, the Court found that Mediacom had
not shown that the packaging of stations by Sinclair made buying the
desired stations “prohibitedly more” in the context of multi-million
dollar cable companies, than they otherwise would be without the tying,
despite an additional one million dollar price tag. Further, Mediacom
failed to define the parameters of the market in which it claimed
Sinclair had market power to control the tying product’s market, nor
did Mediacom show that negotiating on a “bundled basis” was unusual
when negotiating retransmission rights. Finally, the public interest
was better served by the free market bargaining that would take place
without the imposition of the injunction.
Mediacom Communications Corp. v. Sinclair Broadcast Group, Inc., No. 4:06-cv-491 (S.D. Iowa filed Oct. 24, 2006)
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Litigation and Alternative Dispute Resolution
Business Disputes
Advertising, Marketing, Publishing, and Media
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Netflix, Inc. v. Blockbuster, Inc. |
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Practice Area |
In
a suit brought by Netflix, Inc. against Blockbuster, Inc. for
infringing two patents for the business method of renting DVDs and
computer-implemented business method of renting DVDs, Blockbuster
counterclaimed alleging that Netflix violated Section 2 of the Sherman
Antitrust Act by committing “knowing willful fraud on the Patent and
Trademark Office when applying for the two patents in issue, and by
asserting these patents in bad faith in sham litigation.” Netflix moved
for dismissal of Blockbuster’s antitrust claim, but the United States
District Court for the Northern District of California found that
Blockbuster had sufficiently pled its Walker Process claim, based on
the Supreme Court’s decision in Walker Process Equipment, Inc. v. Food
Machinery & Chemical Corp., 382 U.S. 172, 176 (1965). The District
Court found that Blockbuster adequately alleged that: 1) Netflix failed
to identify as prior art similar patents during the prosecution of
either patent in suit; 2) was aware of the existence of those similar
patents but nevertheless failed to point them out to the PTO examiner,
and in fact did not point out any prior art in applying for at least
one of the patents; 3) that but for the omission of the similar patents
from Netflix’s patent applications, the patents in suit would not have
issued; and 4) Netflix had fraudulent intent in failing to disclose the
similar patents evidenced by its barrage of the PTO with prior art
references, not including those that were at issue, to conceal the
discovery of the similar patents and Netflix’s own CEO referred to one
of their patents as a “joke.”
Netflix, Inc. v. Blockbuster, Inc., No. C 06-02361 WHA (N.D. Cal. filed Aug. 22, 2006)
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Litigation and Alternative Dispute Resolution
Intellectual Property
Business Disputes
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Reilly v. MediaNews Group, Inc. |
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Practice Area |
Plaintiff
Clinton Reilly sought an emergency order blocking the proposed sale of
four San Francisco Bay Area newspapers, claiming that the three current
owners of the major Bay Area newspapers, Defendants The Hearst Company,
Media News Group, Inc., and California Newspapers Partnership, were
planning to consolidate ownership of those newspapers, divide the
geographic markets between them, and thereby effectively forego
competing with each other in violation of Section 7 of the Clayton Act,
and Sections 1 and 2 of the Sherman Act. The United States District
Court for the Northern District of California found that Hearst’s
acquisition of the Monterey Herald and Pioneer Press
did not fall within the relevant geographical market and therefore
plaintiff was unlikely to succeed on the merits of his antitrust claim
with respect to these two papers, and therefore denied the request for
an emergency restraining order. However, with regard to the sale of the
San Jose Mercury News and the Contra Costa Times,
while the Court found the transaction troubling, the plaintiff had not
presented sufficient evidence to meet a “heightened” showing of
likelihood of success on the merits where plaintiff had not shown
irreparable harm from increased subscription rates, increased
advertising rates, and decreased quality of the newspapers due to the
lack of competition.
Reilly v. MediaNews Group, Inc., No. C 06-04332 SI (N.D. Cal. filed July 28, 2006)
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Litigation and Alternative Dispute Resolution
Business Disputes
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In re Compact Disc Minimum Advertised Price Antitrust Litigation |
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Practice Area |
The
United States District Court for the District of Maine found that an
inventor and supplier of a technology that calculated discount prices
of compact discs (CDs), who licensed the technology to a music
distributor, did not have standing under Section 1 of the Sherman Act
to assert a claim that record companies conspired to maintain the
minimum advertised price of retail CDs. The plaintiff inventor claimed
that various record companies, motion picture studios, and music
distributors engaged in a price-fixing conspiracy to maintain the
minimum prices of retail CDs, and that the defendants engaged in a
concerted refusal to license copyrighted musical recordings and movies
in order to prevent competition from online music and “video-on-demand”
distribution. However, because plaintiff did not bring his claim as
either a consumer who paid higher prices or a competitor in the CD
retail market, but simply as a supplier of a technological product that
CD distributors refused to use, he did not have standing to bring an
antitrust conspiracy claim. Further, with regard to his claims that
record companies conspired to prevent online competition, plaintiff did
not have standing to bring an antitrust conspiracy claim because he did
not allege that he sought and was denied a license by the record
companies. Lastly, with regard to his conspiracy claims against the
movie studios, plaintiff failed to make anything but conclusory factual
allegations that could not withstand a motion to dismiss.
In re Compact Disc Minimum Advertised Price Antitrust Litigation, MDL No. 1361 (D. Mo. filed Oct. 2, 2006)
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Litigation and Alternative Dispute Resolution
Business Disputes
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International Profit Associates, Inc. v. Paisola |
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Practice Area |
Plaintiff consulting company brought action against representative of
former customer for violations of the Lanham Act, violation of the
Illinois statute prohibiting eavesdropping, and defamation. The
consulting company moved for a temporary restraining order (TRO) based
on the plaintiff’s Lanham Act claims that defendants were incorporating
plaintiff’s trademarks into the search terms used to lead people to its
website, using those trademarks in the domain name of one of its
websites, and using plaintiff’s trademarks in the content of its
websites. The United States District Court for the Northern District of
Illinois granted the plaintiff’s request for a TRO on the “cyberpiracy”
and “cybersquatting” claims that defendants’ website was using a domain
name that was likely to cause confusion among consumers between
plaintiff’s website, “ipaopinions.com” and defendants’ website,
“ipaopinion.com.” The court reasoned that plaintiff had established a
likelihood of success on these claims having shown that defendants had
started using the plaintiff’s trademarks only after plaintiff had
registered and began using “ipaopinions.com” and therefore the intent
to cause confusion was apparent, and actual confusion had apparently
occurred, and the damage to the goodwill of the plaintiff was
irreparable as it would be almost impossible to quantify. The
defendants were therefore ordered to cease making content available on
the Internet through the offending domain name, cease conducting
advertising using the trademarked terms, and cease from using
plaintiff's trademarks as keywords for any Internet advertising
service, including services run by Google or Yahoo.
However, the court found that a limited injunction was appropriate for
the plaintiff’s defamation claims because, though plaintiff had
demonstrated a likelihood of success on this claim as well, only a TRO
prohibiting defendants from publishing false statements was in the
public’s interest.
International Profit Associates, Inc. v. Paisola, No. 06 C 6154 (N.D. Ill. filed Nov. 14, 2006)
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Litigation and Alternative Dispute Resolution
Intellectual Property
Publicity, Privacy and Defamation
Software & the Internet
Advertising, Marketing, Publishing, and Media
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Entertainment Software Association v. Swanson (formerly ESA v. Hatch) |
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Practice Area |
In
a suit seeking to permanently enjoin Minnesota’s new statute
prohibiting persons under the age of 17 years from buying or renting
certain video games, the United States District Court for the District
of Minnesota joined the 7th, 8th, and 9th Circuits, as well as various
other District Courts, in finding Minnesota’s statute and others like
it violated the First Amendment. The Minnesota Restricted Video Games
Act prohibited persons under the age of 17 from buying or renting video
games that were rated M (Mature) and AO (Adults Only) by the
Entertainment Software Rating Board (“ESRB”), a private entity which
bases its ratings on reviews made by a randomly-selected group of three
trained reviewers. Noting that the standard for a permanent injunction
is virtually the same as that for a preliminary injunction, the only
substantive difference being the showing of actual, as opposed to a
probability of, success on the merits, the Court explained that the
plaintiffs had established the four factors: (1) success on the merits;
(2) the threat of irreparable harm; (3) the balance between that harm
and any injury the relief would inflict on other parties; and (4) the
injunction would serve the public interest. Since the state admitted
that it was incapable of showing a causal link between playing video
games and deleterious effects on the psychological, moral, or ethical
well-being of minors and it was impossible to determine “from the data
presented whether violent video games cause violence, or whether
violent individuals are attracted to violent video games,” the state
could not demonstrate the harms the statute sought to alleviate were
“real, not merely conjectural, and that the regulation will in fact
alleviate those harms in a direct and material way.” Interactive
Digital Software Ass'n v. St. Louis County, 329 F.3d 954, 958 (8th Cir.
2003). Further, the state could not show that restricting just video
games, rather than other violent media, would have alleviated the harm,
and therefore the statute was not narrowly tailored enough to survive
First Amendment strict scrutiny for protected speech.
The Court further found that the Act's delegation of authority to the
ESRB to determine which video games were prohibited violated due
process under the Fourteenth Amendment in delegating public regulatory
authority to a private body.
Subsequently, the Court found that the loss of First Amendment freedoms
and the chilling effect therefrom “unquestionably constitutes
irreparably injury” from which there was no adequate remedy at law.
Further, the state could not show that the harm to minors outbalanced
the First Amendment harms because the state could not establish any
evidence linking the availability of video games with any harm to
Minnesota’s children. The permanent injunction against enforcement of
the Minnesota Restricted Video Games Act was therefore granted.
The State of Minnesota appealed and the Eighth Circuit upheld the
decision of the district court. Judges Wollman, Smith and Benton
reasoned that the State had failed to proffer “incontrovertible proof
of a causal relationship between the exposure to violence” in video
games and “subsequent psychological dysfunction,” it therefore had not
satisfied its evidentiary burden. On March 28, 2008, the State
petitioned the Eighth Circuit for a rehearing en banc.
Entertainment Software Association v. Swanson, 443 F. Supp. 2d 1065 (D. Minn. 2006)
The district court’s decision granting permanent injunction can be found here.
The Eighth Circuit opinion affirming can be found here.
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Litigation and Alternative Dispute Resolution
Advertising, Marketing, Publishing, and Media
The Arts, Entertainment & Sports
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Pritchett v. Pound |
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Practice Area |
The
Fifth Circuit affirmed the District Court’s grant of summary judgment
to the plaintiff, a consulting firm, which had sole ownership of books
written by the defendant as works made for hire and held that the
plaintiff’s declaratory judgment action was not barred by the statute
of limitations. An employment contract governed Pound’s
employment with Pritchett, providing that any written materials he
produced in the scope of his employment would be on behalf of and
belong exclusively to the employer. The deceased defendant co-wrote two
handbooks sold and paid for by the employer which also received all
profits. When Pound died, his widow signed a release discharging
the employer from any claims she might have against it. But, she and
Pound’s estate subsequently sued Pritchett in state court, alleging
co-ownership in the copyrights and seeking an accounting of and
royalties from the book sales. After failing in its effort to remove
the case to federal court, Pritchett filed suit in the District Court
seeking a declaratory judgment that it was the sole owner of the
copyrights in the books, to which Pound’s widow and estate asserted
counterclaims. The Fifth Circuit affirmed the District Court’s holding
that Pritchett was the sole owner of the books, consistent with the
employment agreement. Pritchett’s ownership of the copyrights defeated
the claims for royalties and the Court did not address any effect the
release may have had. Further, the Court affirmed the finding that the
statute of limitations did not bar Pritchett’s declaratory judgment
action, noting that such actions are usually sought by defendants and
do not bar the defense asserted to defeat a plaintiff’s claims.
Accordingly, the Court of Appeals found that Pritchett’s “claim” that
the books were works for hire was a defense to Pound’s initial state
court claim and that Pritchett’s declaratory judgment action did not
accrue until Pound’s estate asserted accounting claims. Because the
work for hire assertion was made by Pritchett in 2003, it was within
the three year statue of limitations period. The Fifth Circuit also
affirmed the District Court’s award of attorneys’ fees to Pritchett as
the prevailing party.
Pritchett v. Pound, No. 05-41445 (5th Cir. filed Dec. 18, 2006)
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Intellectual Property
Business Transactions and Organizations |
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Kinn v. Alaska Sales & Service, Inc. |
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Practice Area |
In
a contract dispute regarding the sale of land and environmental
contamination thereon, the Alaskan Supreme Court held that where the
sales contract specified that arbitration of disputes would be in
accordance with the rules and procedures of the American Arbitration
Association (AAA)/American Bar Association Code of Ethics for
Commercial Arbitrators, arbitrator’s failure to disclose to the AAA
prior and current relationship to a party giving rise to “justifiable
doubt as to the arbitrator’s impartiality or independence,” could be
raised on appeal. However, the court found that, especially in a
jurisdiction where membership in the bar is small, no “evident
partiality” was found to exist where: 1) arbitrator had served as an
attorney to a different client, but on the same case as a party; 2)
arbitrator had infrequently and nonexclusively received referral of
cases from a party in the past; and 3) the arbitrator had engaged as a
panelist on a Continuing Legal Education event coordinated by one of
the parties. The Court noted that if it were to find such contacts
would disqualify an arbitrator, “the most experienced members of the
Anchorage bar would be effectively disqualified from acting as
arbitrators, and it would be difficult to find any arbitrator at all
for some disputes.” The Court further found that, while claims that the
arbitrator exceeded his or her powers are reviewable, an arbitrator’s
decision is only reversible “if all fair and reasonable minds would
agree that the construction of the contract made by the arbitrator(s)
was not possible under a fair interpretation of the contract.”
(footnote omitted). Finally, the Court found, in accord with the trend
in many other jurisdictions, that the arbitrator could retain “limited
continuing jurisdiction” over resolution of ambiguities in the award
and ensuring the enforcement of the award.
Kinn v. Alaska Sales & Service, Inc., 144 P.3d 474 (Alaska Sup. Ct. 2006)
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Hotels Nevada v. L.A. Pacific Center, Inc. |
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Practice Area |
In
an action alleging rescission of a contract based on fraud and
cancellation of written instruments based on illegality and conspiracy,
wherein defendant sought to compel arbitration pursuant to the
contract, the California Court of Appeal held that the trial court
erred when it denied defendant’s petition to compel arbitration without
an evidentiary hearing. The court found that a petition to compel
arbitration should not be denied simply because the plaintiff alleged
fraud in an unverified pleading. Rather, the trial court should have
required the plaintiff to produce evidentiary support by affidavit or
declaration under penalty of perjury for the facts supporting the
plaintiff’s claim that the arbitration clause in the contract was void
due to the defendant’s fraud in the execution of the agreement
Hotels Nevada v. L.A. Pacific Center, Inc., No. B185814 (Cal. App. 2 Dist. filed Nov. 7, 2006)
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Business Disputes
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Canon Latin America, Inc. v. Lantech (CR), S.A. |
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Practice Area |
In
a conflict involving alleged breach of a distributorship agreement
between Canon Latin America, Inc. (“Canonlat”) and Lantech (CR), S.A.,
(“Lantech”), Lantech filed an action against Canon in Costa Rica
seeking indemnity from Canon and damages for hiring a new distributor
when Canon was unable to collect payment from Lantech. Canon then
brought an action against Lantech seeking a declaratory judgment as to
choice of law and forum provisions of the parties’ distribution
agreement, an injunction enjoining the parties from litigating in Costa
Rica, and a preliminary injunction enjoining Lantech from taking any
action to further its proceedings against Canon in Costa Rica.
Acknowledging that enjoining foreign proceedings raised significant and
substantial issues of international comity and sovereignty, the United
States District Court for the Southern District of Florida nonetheless
granted a preliminary injunction enjoining the furtherance of the
foreign suit because Lantech’s action frustrated the policy of the
federal courts of enforcing the forum selection clause included clearly
in the parties’ written agreement. In addition, the Court found that
Lantech’s action was “vexatious” since it forced Canon to post a one
million dollar bond in order to avoid losing its right to import
products into Costa Rica. However, on November 21, 2007, the Eleventh
Circuit reversed, vacated the injunction and remanded the case for
dismissal of Canon’s outstanding claims. The Court of Appeals
reasoned that at least one of the threshold requirements for issuing an
anti-suit injunction are not satisfied and that Canonlat has not shown
that resolution of its claims in the district court would be
dispositive of Lantech’s claims in Costa Rica, a prerequisite to
determining whether the injunction was proper.
Canon Latin America, Inc. v. Lantech (CR), S.A., No. 05-20297 (S.D. Fla. filed Sept. 27, 2006)
A copy of the Eleventh Circuit’s opinion can be found here.
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Business Disputes
Business Transactions and Organization |
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Street v. Smith |
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Practice Area |
In
an action brought by a Mississippi attorney against a Pennsylvania
attorney and a Louisiana attorney for attorney’s fees allegedly owed,
the United States District Court for the Southern District of
Mississippi ordered the Mississippi attorney’s action transferred to
District Court in Louisiana pursuant to the “first-filed rule.” The
first-filed rule usually dictates that the court in which the first
action was filed is the appropriate court to determine the merits of
substantially similar issues and whether the second suit filed must be
dismissed, stayed or transferred and consolidated. The Mississippi
Court found that defendants’ first-filed action for a declaratory
judgment that they owed no money to the plaintiff in Louisiana could
fall within the anticipatory declaratory judgment exception to the
first-filed rule. This exception allows the second court to proceed
where the first action was simply sought in anticipation of the filing
of the second. However, noting that the first-filed rule and its
exceptions are discretionary for the latter court, used to maximize
judicial economy, the Mississippi court found that the transfer was
warranted because the two pending actions were so duplicative or
involved substantially the same issues that only one court should
proceed and, under the law of the circuit in Mississippi, it was for
the first-filed court to decide whether either the first or second
action was to be dismissed.
Street v. Smith, No. 456 F. Supp. 2d 451 (S.D. Miss. 2006)
The memorandum opinion and order can be found here. |
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