From the category archives:

CASEBOOK

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Have to love a United States District Court complaint that starts as follows:

“The publicized origin story of Square, Inc. is a fabrication. The business now known as Square was not created solely by Jack Dorsey and James McKelvey. It was Professor Robert Morley— and Dr. Morley alone— who invented the Square card reader, and Dr. Morley coinvented the corresponding magnetic stripe decoding algorithms of the Square app. Dr. Morley had over a decade of experience in the credit card industry, spanning card reader technology,
industry contacts, and business operations. In contrast, Messrs. Dorsey and McKelvey had no noteworthy experience in the credit card industry. Dorsey, Morley, and McKelvey worked together in a joint venture with the goal of entering the mobile credit card transaction industry inventing the Square card reader, which enabled Square’s entry into the mobile credit card transaction industry, Dr. Morley contributed his technological expertise and knowledge of the credit card industry to the joint venture. But Messrs. Dorsey and McKelvey betrayed the joint venture by incorporating Square, Inc., dictating the ownership of the newly incorporated company, and cutting Dr. Morley completely out of the enterprise.And in an attempt to whitewash these transgressions, Square has embroiled Dr. Morley in years of litigation and proceedings before the United States Patent and Trademark Office— forcing him to defend himself against the company he helped create. This lawsuit seeks justice for Dr. Morley, redress and redemption.”

For you startup litigation geeks:

Count One – Breach of Joint Venture Agreement

Count Two – Breach of Fiduciary Duty

Count Three – Unjust Enrichment

Count Four – Patent Infringement

Count Five – Consturctive Trust

Count Six – Civil Conspiracy

Count Seven – Negligent Misrepresentation

Count Eight – Fraud

Count Nine – Fraudulent Nondisclosure

Count Ten – Correction of Inventorship

Count Eleven – Conversion

Count Twelve – Misappropriation of Trade Secrets

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A recent client inquiry caused me to read again this excerpt from a decision of the United States Court of Appeals for the First Circuit:

llbeandrake“Our reluctance to apply the anti-dilution statute (Maine trademark law) to the instant case also stems from a recognition of the vital importance of parody. Although, as we have noted, parody is often offensive, it is nevertheless “deserving of substantial freedom — both as entertainment and as a form of social and literary criticism.” Berlin v. E.C. Publications, Inc., 329 F.2d 541 (2d Cir.), cert. denied, 379 U.S. 822, 85 S.Ct. 46, 13 L.Ed.2d 33 (1964). Accord Fisher v. Dees, 794 F.2d 432, 437-38 (9th Cir.1986)(“`Destructive’ parodies play an important role in social and literary criticism and thus merit protection even though they may discourage or discredit an original author.”);Pring v. Penthouse International, Ltd., 695 F.2d 438 (10th Cir.1982), cert. denied, 462 U.S. 1132, 103 S.Ct. 3112, 77 L.Ed.2d 1367 (1983) (defendants’ bawdy “spoof” and “ridicule” of Miss America pageant entitled to full range of first amendment protection); Groucho Marx Productions v. Day and Night Co., 689 F.2d 317, 319 n. 2 (2d Cir.1982) (noting “the broad scope permitted parody in first First Amendment law.”); Elsmere Music v. National Broadcasting Co., 623 F.2d 252, 253 (2d Cir.1980)(“in today’s world of unrelieved solemnity, copyright law should be hospitable to the humor of parody….”). It would be anomalous to diminish the protection afforded parody solely because a parodist chooses a famous trade name, rather than a famous personality, author or creative work, as its object.[5]”

L.L. BEAN, INC. v. DRAKE PUBLISHERS, INC., 811 F.2d 26 (1987) (1st. Cir 1987)

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Here is the brief filed by Kendall Brill and Fenwick & West in opposition to the motion seeking to enjoin the CNET reporting on Bit Torrent and other file sharing software: “a full year after they commenced this action, and a decade after the software reviews about which they complain.” Of course we see the irony of CBS, the progeny of Viacom (think YouTube litigation), taking its position here, but we nevertheless applaud it.”

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In Nitro-Lift Technologies, L.L.C. v. Lee, the Supreme Court of the United States reversed the decision of the Oklahoma Supreme Court and upheld the right of an employer to bring its claim directly to an arbitrator and not be subject to a challenge to its right to arbitration in state court. The U.S. Supreme Court decision is based on the clear principles of the Federal Arbitration Act, an almost 90 year old statute that creates a federal right to arbitration.

Our advice is not always to include an arbitration clause in our intellectual property and Founders’ Agreements, but we use the case decided today to highlight the power of such alternative dispute procedures.

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“In the plaintiffs’ version, a dog embarks on a mission to save Christmas from a witch threatening to drain the world of holiday cheer with her magic icicle. In Disney’s version Santa Paws combats an evil icicle that threatens Christmas.”

[Source, TheWrap: "Judge Dismisses 'Santa Paws' Copyright Lawsuit Against Disney" 9/20/2012]

The precedent established here is that you cannot copyright the idea of a dog combating an evil icycle. One wonders, of course, what the outcome would have been if Disney had been the plaintiff, had produced its movie, and the plaintiffs here had come along and published their short story.

While I agree with the Court’s decision (federal trial court, Missouri), I rue the inherent ambiguities and unfairness of the laws and their litigated enforcement in our courts.

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The Australian High Court has refused to overturn a ruling holding Optus TV liable for copyright infringment for recording and showing from its cloud free over the air broadcasts of the Australian Football League.

From Google/YouTube to Apple/Samsung to Sydney, Australia, the new battles of copyright and intellectual property war are being waged by massive entities seeking to control the distribution of entertainment and ideas.

Although there are no pure or neutral judicial decisions based on law alone, the logic of the upheld appellate court decision seemed, at best, strained:

“The full bench of the Federal Court ruled that the 2004 exemption in the Copyright Act, which was designed to allow people to record TV broadcasts to watch later at a time more convenient, did not apply to the TV Now product, because Optus stood to gain commercially from it. And although the recording system was automated, Optus nonetheless had a role in “making” the recording.”

Some commentators worry about the effect that this decision may have on cloud storage services. I see the issue differently. The case has interest because the initial broadcasts were free, financed presumably by advertising revenue, and it is the time shifting prohibition that Professor Matthew Rimmer of the Australian National University sets out in the ZDNet article referenced here that is in play.

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A library defendant deep in the heart of Georgia will be awarded massive legal fees in its successful fair use defense of its library copying practices in Cambridge University Press et al v. Patton et al.

We link to the Publishers Weekly August 10 article that is being read by publishers and libary clients alike this week as the balance of power begins to subtly shift in our post-modern digital culture.

Our previous article “Cambridge Nil Georgia State Nil? A Copyright Derby Analysis” can be found here.

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Software engineer, patent examiner, and IP Blogger Charles Bieneman does a nice job summing up this week’s comprehensive copyright infringement grant of summary judgment in the TetrisMino battle at Tetris Holding, LLC v. Xio Interactive, Inc., No. 09-6115 (D. N.J. May 30, 2012).
[click to continue…]

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