By Sarah R. Riedl *

Why does Spotify limit free music streaming to ten hours per month and limits repeat playing of single songs to only five times per month, while Grooveshark users stream to their hearts’ content?  Unfortunately for Grooveshark, the unlimited streaming may cost the company a pretty penny.

On Wednesday, January 4, 2012, EMI Music Publishing became the fourth major music label to file suit against Escape Media Inc., parent company for Grooveshark, for copyright infringement.  EMI’s suit came only one month after Universal Group, Sony Corp, and Warner Music Group filed a federal suit accusing Grooveshark of piracy in violation of copyright law.  Just three years prior to this most recent lawsuit, Grooveshark’s parent company Escape Media Group negotiated a licensing agreement with EMI, providing for payment of royalties.  EMI’s complaint alleges that Grooveshark has failed to pay any royalties since that agreement solidified.

Grooveshark operates a website that allows users to upload music files to Grooveshark’s servers, which can then be streamed by any of the site’s 35 million users.  Grooveshark claims its service does not constitute copyright infringement under the Digital Millennium Copyright Act.  The provisions of the Act provide limited exceptions to activity that would otherwise constitute copyright infringement.

Under the terms of the Act, infringement liability is limited for websites that store content at the direction of users provided three conditions are met: (1) the website does not have actual knowledge of the infringing activity; (2) the website must not earn a direct financial benefit over infringing activity it has the capacity to control; and (3) after receiving notice of infringing activity the website must quickly remove the material.

Grooveshark operates under the same exception to the Act as other user-based websites including YouTube.com.  The main thrust of the exception provides protection from copyright infringement suits provided the company complies quickly with any take-down notices received from copyright holders.

Grooveshark’s litigation future does not look rosy, especially in light of admissions from Grooveshark’s own staff.  Comments made by Grooveshark’s own personnel indicate the company had actual knowledge of the infringing activity, thereby failing the first prong necessary for limited liability.  For example, according to the complaint filed by another label late last year, the senior director admitted “that Escape ‘bet the company on the fact that it is easier to beg forgiveness than ask permission.’”  A Grooveshark employee blogged about how employees are encouraged to upload as much material as possible to the servers, and receive bonuses for going above and beyond company-set uploading quotas.

Additionally, the senior director further added that the strong growth of the company was bolstered “without paying a dime to any of the labels.”  The director seemingly throws a wrench into the second prong just as he did the first.  The second prong to escape infringement liability requires the company not gain a direct financial benefit as a result of the infringing activity.  However, the director illustrates that Grooveshark was created on the premise of getting something, or in this case a whole lot, for nothing.

Due to the comments made by Grooveshark’s own and the failure to pay any royalties to EMI despite contractually obligated to do so for the past three years, the most provident course of action for Grooveshark would be to settle.  Perhaps allocating some of the “meteoric growth” profits made “without paying a dime”  to an enticing settlement offer would be helpful.  Whether Grooveshark will choose litigation or a settlement negotiation is unclear, but the future of Grooveshark user’s unlimited indulgence in copyrighted material will certainly change.

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*  Sarah R. Riedl is a second year law student at Wake Forest University School of Law.  She has a Bachelor of Arts in English from the University of Illinois.  Upon graduation in May 2013, Miss Riedl intends to practice business litigation and intellectual property law

Facebook seeks to raise $5 Billion in its initial public stock offering, making it the largest Internet IPO on record.  It is believed that its stock offering will value the company $75 and $100 billion.  Mark Zuckerberg, however, will maintain his control over Facebook with voting power of almost 60 percent of total shares.  Meanwhile, Facebook is coming under a siege of patent lawsuits.  In 2011, Facebook was named as a defendant in 22 patent infringement suits.

Google announced its new privacy policy, which is set to become effective on March 1.  The new policy will allow it to track users’ activities across YouTube, Gmail, its search engine, and nearly all of its other sites.  Users will not be able to opt out, which may trigger more scrutiny from federal regulators.

On January 23, the Supreme Court held that attaching a GPS device to track a vehicle constitutes a search under the Fourth Amendment and requires a warrant.  The ruling is considered a victory for privacy rights in the age of advanced technology, but some argue it was too narrowly reasoned on the basis of the physical intrusion of attaching the device.

Congress indefinitely shelved the controversial antipiracy bills SOPA and PIPA after over 7,000 websites, including Wikipedia and Google protested the bills, handing a crushing blow to the traditional media industry.

Following the shutdown of file-sharing site Megaupload last month and arrest of 7 company employees, Federal prosecutors announced that Megaupload user data would be deleted as early as Thursday (Feb. 2).  However, a nonprofit group stepped in at the last minute, announcing on Wednesday that it would work with data-storage providers to create a website that will allow legitimate Megaupload users retrieve their data.

This article examines patent entitlement and invention assignment in light of the recent University of Western Australia v Gray and The Leland Stanford Junior University v Roche Molecular Systems cases.

While the Gray case found that the employment contract of academic employees has special features that prevent the implication of a term vesting ownership of inventions in the employer, those features may have general application, meaning that employers should no long rely upon the implied term to ensure title to inventions.

The Roche case, though decided on the basis of settled contractual and patent law principles, establishes that the Bayh-Dole Act does not vest ownership of inventions created with federal funding in the employer, nor does it disrupt those settled principles. Employers should ensure that express vesting clauses in employment contracts are operative as at the creation of any invention.

In broad terms, free and open source software (FOSS) is software where the copyright in the code is licensed in a way that allows fairly unfettered use, reproduction and modification. There is, though, some tension–at least a perceived tension–between trade mark law, which can be and is used to limit the distribution of software, and the freedom that is the heart of FOSS principles. This article briefly explores the relevant legal doctrines that guide use of trade marks for free and open source software.

While FOSS licences allow the copyright in the code to be freely shared, the same is not true of the trade mark. The owner of a trade mark for free and open source software has discretion, within limits, to decide the parameters of others’ use of its trade mark.

The article will give the reader a better understanding of the free and open source software culture and the challenges a practitioner might face in advising the FOSS trade mark owner on trade mark enforcement in the industry.

In this article the authors discuss the benefits of alternative dispute resolution (“ADR”) over litigation in resolving patent infringement, licence and other technology-related disputes.

The benefits of ADR and the numerous different paths that can lead parties to a dispute to ADR are accelerating its use. In this article the authors discuss the various paths and also the different types of ADR that are available, including for example, mediation and arbitration.

The authors provide readers with practical advice concerning best practice for making ADR work, concluding that it is here to stay and will probably continue to grow in importance given rising costs associated with traditional litigation.

The Indian Patent Act 1970 has come a long way from its genesis in the Ayyangar Committee Report of 1956, through the TRIPS Agreement, to its present day avatar. The Act, amended six times from 1999 to 2006, has sought to bring in checks and balances to prevent an absolute monopoly over patent rights and anti-competitive practices.

In this article the author explores the provisions of the Act, from the incorporation of a Bolar-like exemption, to the cautious inclusion of the highly debated Section 3(d) to prevent the evergreening of patents, to compliance with the Doha Declaration. The Patent Act includes a series of provisions to ensure that the commercialization of patents is of benefit to society.

In particular the author discusses licensing and whilst the Act is largely silent on voluntary licensing, six of its provisions may be construed as non-voluntary forms of licensing.

However, in reality various factors can conspire against achievement of this aim, including commercial pressures – IP licences will often form part of a suite of documents agreed in relation to a wider transaction – time pressure and lack of communication. This can render an executed IP licence unclear, inaccurate, incomplete and unreflective of the agreement between the parties.

In this article we examine various approaches to the post-contractual plugging of gaps in IP licences.

This article explores a number of legal and commercial issues relating to ecolabels, which are signs used with products to indicate their environmental preferability.

The contours of the ecolabel right are uncertain, due partly to an apparent duality in essential function where an ecolabel is also used as a trade mark.

The remarkable growth in ownership and use of ecolabels is fuelling renewed debate about their status at law, impact on trade, and actual contribution to environmental protection.

This year’s Symposium is co-sponsored by Stanford’s Center for Internet and Society and will examine First Amendment challenges in the Digital Age. The first panel will explore European and American views of a right to be forgotten and how to balance privacy with free expression. The second panel consists of a discussion of First Amendment architecture, protection of speech spaces, and net neutrality. The third panel will examine Protect-IP and SOPA from a First Amendment perspective.

The Symposium will culminate with STLR’s 15th Anniversary Reception in the Neukom Building Faculty Lounge from 5:00 pm – 6:00 pm, co-sponsored by the Palo Alto offices of Morrison Foerster and Baker & McKenzie.

There has been overwhelming interest in this year’s Symposium and we have reached our capacity. Registration is now closed. The full schedule is available here.

Over the past three years, students in Columbia Law School’s Lawyering in the Digital Age Clinic have teamed up with the judges at New York City’s Office of Administrative Trials and Hearings and the Legal Aid Society to create a website to help people who had their cars confiscated during an arrest get their cars back.

The NYC Police Department can seize a car during the course of an arrest for a variety of reasons, including driving while intoxicated, drug possession, and weapons possession.  What many car owners and drivers who have had their cars taken away do not know is that there is a process for asking to have the car returned in a civil proceeding even if there is a concurrent criminal trial for the arrest.

The process by which they can do this is called a Krimstock hearing, named after a plaintiff in a class action brought by the Legal Aid Society specifically to challenge the police department’s practice of seizing a car without providing a prompt hearing.

The website provides a comprehensive guide for people who wish to bring a Krimstock hearing case, whether or not they have a lawyer.  It describes car owners’ rights and guides them step-by-step through the entire hearing process, from requesting a hearing to recovering the car from the police impound.   It includes a detailed description of the process, what to prepare, how to settle during a pre-hearing conference if they want to, what to expect during the hearing, and what to do/how to re-schedule if they cannot make their hearing date. There are also videos on different pages of the site made by the OATH judges that serve as special guides through the site.

The Krimstock hearing site can be found at www.law.columbia.edu/krimstock.

About the Clinic

The Lawyering in the Digital Age clinic at Columbia Law School was created more than 10 years ago to explore the impact of technology on law practice and the legal profession. The clinic is taught by Professors Conrad Johnson and Mary Marsh Zulack along with Brian Donnelly, Director of Educational Technology.

The clinic represents an innovative approach to teaching students to engage in effective contemporary legal practice. Student fieldwork projects are done in partnership with public interest organizations and with judges. A common theme for all of the fieldwork is to improve access to justice. Clinic students have collaborated with several Legal Aid and Legal Services organizations to help lawyers integrate technology into their practice.

The clinic has also partnered with judges on all levels of the judiciary in New York.  The Krimstock project with OATH, showcased in this STLR post, is just one example of clinic students helping to make an adjudicative system more accessible and legal
information more available to under-served communities. The clinic students hope that this innovative effort will be a model for using technology to create other resources and tools to provide greater access to justice in other legal arenas.

To learn more about the Lawyering in the Digital Age Clinic, visit here.

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By Tierryicah Mitchell *

Retired basketball player, Shaquille O’Neal is no novice when it comes to victory. Throughout his nineteen year career, O’Neal was the recipient of the 1999–2000 MVP award, the 1992–93 NBA Rookie of the Year award, three All-Star Game MVP awards, three Finals MVP awards, and two scoring titles.  However, one of O’Neal’s most recent victories occurred off the basketball court and in the courtroom against an Arizona company, True Fan Logo Inc., Michael D. Calmese of Phoenix, and Utah resident Dan Mortensen.

On or around January 2010, O’Neal’s licensing company, Mine O’Mine, filed a lawsuit in a U.S. District Court in Las Vegas alleging, among other things, that the named parties infringed upon O’Neal’s trademarks by operating an online store called “Shaqtus Orange Clothing Co.”  The suit also alleged dilution, unfair competition, infringement of O’Neal’s right to control the commercial use of his name, and cybersquatting.  Cybersquatting occurs when an individual “register[s], sell[s], or us[es] a domain name with the intent of profiting from the goodwill of someone else’s trademark.”

At the center of all of Mine O’Mine’s allegations is Calmese’s use of the name, Shaqtus.  O’Neal coined the nicknames “The Big Shaqtus” and “The Big Cactus” while playing for the Phoenix Suns.  According to the allegations, after O’Neal was traded from the Miami Heat to the Phoenix Suns in February 2008, Calmese, in the name of True Fan Logo, and Mortensen registered the website domain names shaqtus.net and shaqtus.com respectively.  Both websites were primarily used to promote the sale of “Shaqtus” apparel and collectibles.  The websites prominently displayed an animated cactus that bore a loose resemblance to O’Neal.  According to Mine O’Mine and O’Neal’s attorneys, “Defendants’ use in commerce of the Shaqtus mark and domain names constitutes a reproduction, copying, counterfeiting, and colorable imitation of the Shaq marks in a manner that is likely to cause confusion or mistake or is likely to deceive consumers.”

On or around this time and into 2009, ESPN broadcast commercials featuring O’Neal encountering an O’Neal lookalike cactus in the Arizona desert.  According to the lawsuit, on December 4, 2009, Calmese sent a conditional cease-and-desist letter to ESPN claiming to own the Shaqtus trademark.  In the letter, Calmese claimed that the commercials created a “likelihood of confusion” with his products.  In order to establish a prima facie case for trademark infringement, the actual owner of the trademark must prove that there is a “likelihood of confusion between his or her trademark and the allegedly infringing mark.”  That is, where the owner of the trademark can show “a comparison of the appearance, pronunciation, meaning, and commercial impression of the respective marks,” he may have a viable claim of trademark infringement.

However, according to the terms of the letter, Calmese would have been willing to resolve the matter on the condition that ESPN conduct business with Calmese, including the joint creation of a “Shaqtusclaus” clip for Christmas.  A few days later, ESPN attorneys informed Calmese that ESPN had received consent from Mine O’Mine to use “Shaq” trademarks and countered that Calmese was in fact the trademark infringer on Mine O’Mine’s intellectual property rights.  On or around December 29, Mine O’Mine and O’Neal’s attorneys sent Calmese a cease-and-desist letter demanding that Calmese and True Fan Logo not only discontinue the Shaqtus name, but also that Calmese transfer the shaqtus.net and shaqtus.com Web site names to Mine O’Mine.

In response, Calmese stated that O’Neal implicitly consented to Calmese’s use of the Shaqtus name when O’Neal, of his own volition, took pictures with Calmese and autographed a t-shirt.  Further, Calmese’s response stated, “These pictures clearly show that there was no ill intent by defendants and that there was no indication that plaintiffs had any problems with defendants’ Shaqtus trademark, cactus character and/or company. . . [b]y virtue of having used and continuing to use the cactus character, Calmese has acquired common law trademark rights in the cactus character.”

In its denial of any form of consent to the use of the Shaqtus name, Mine O’Mine and O’Neal’s attorneys stated, “Neither O’Neal nor Mine O’Mine has granted a license to use the Shaq right of publicity or to use and own the Shaqtus mark or the shaqtus.com or shaqtus.net domain names.”  Federal Judge, Kent Dawson, ruled in favor of O’Neal in late October 2011 and issued an injunction which effectively barred the defendants from any further use of the “Shaqtus” mark and the website domain names shaqtus.com, shaqtus.net, as well as any other names that could cause a likelihood of confusion to any of O’Neal’s trademarks.  Judge Dawson held that “Calmese intended to cause confusion with the Shaqtus mark.  He knew about the Shaq mark and yet chose the Shaqtus mark anyway after O’Neal was traded to the Phoenix Suns in February 2008 and after O’Neal was dubbed ‘Shaqtus.[T]here is no question Calmese intended Shaqtus to be confusingly similar to Shaq and the Shaq family of marks.”

I am inclined to agree with Judge Dawson.  The average consumer would likely be confused regarding the distinguishable difference between Mine O’Mine’s apparel and merchandise, which bears the Shaq trademark, and Calmeses’, which bears the Shaqtus mark.  Given that Calmese’s Shaqtus websites and merchandise fail the primary and basic tenant of trademark law, Judge Dawson correctly barred the defendants from the use of the Shaqtus mark.  To have ruled in any other way would have been… well, Shaq-ing (PUN).

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*  Tierryicah D. Mitchell is a third-year law student at Wake Forest University School of Law.  She holds a Bachelor of Arts and Science in Political Science and History from the University of North Carolina at Chapel Hill.  Upon graduation in 2012, Ms. Mitchell plans to work for the federal government.

The importance of deterring patent settlements based on potentially invalid patents need not be particularly stressed, as scholars have repeatedly found that invalid patents have significant innovation-stifling/anticompetitive effects. As such, invalid patents can disturb the delicate balance between the patent system and antitrust laws. Although antitrust laws protect robust competition while the patent system enables patentees to suppress competition for extended periods of time, modern thinking has dismantled the concept that the patent system and antitrust laws are in conflict. The common view is that the two bodies of law are actually complementary, as both share the common goal of promoting innovation and enhancing consumer welfare. Consequently, the grant of a patent exempts the holder from the normal prohibition against monopolies, but nevertheless, such immunity might be stripped if the patent at issue is invalid.

This Article will examine the issue of deterring patent settlements involving NPEs based on potentially invalid patents. This Article focuses solely on NPEs, because NPEs appear to own a substantial number of the most-litigated patents, they are more likely to enforce them, and, as will be explained in Part II of this Article, NPEs are primarily interested in settling their patent disputes, because their business model is typically based on enforcing patents and extracting lucrative settlements. The Article asserts that although recent court decisions have made it more challenging for NPEs to obtain very lucrative settlements, the current legal framework is still ill-suited to deter patent settlements based on invalid patents. Moreover, the Article suggests that the fact that recent court decisions have ostensibly made it more difficult for NPEs to obtain lucrative settlements could actually be counter-productive, as sued entities might now find it even more cost-beneficial to settle the case rather than take it to trial.  Consequently, the validity of a patent at issue might never be litigated, which is a very concerning fact, given that NPEs own almost two-thirds of the most-litigated patents. As a major part of the solution to the NPE problem, this Article argues in favor of expanding the role of consumer-led private litigation in deterring NPE patent settlements based on invalid patents, particularly those procured by defrauding the PTO.

To be sure, the Article does not suggest that patent settlements are undesirable, even though it is worth noting here that the generally favorable attitude towards settlements does not necessarily apply to the patent system because of its interaction with antitrust laws. Along the same lines, the Article does not suggest that all NPE patents are invalid, nor that just because a substantial number of litigated patents were found invalid, settled patents are also likely to be invalid. The Article merely argues that the available data and cases suggest that validity of patents in NPE settlements is a legitimate issue and, because of NPEs’ unique business model and the need to maintain the delicate balance between the patent system and antitrust laws, the role of consumers in addressing this issue ought to be expanded.

The Article has seven parts and is divided as follows: Part II of this Article discusses in modest detail the business model of NPEs, and explains why they are so controversial and successful in obtaining lucrative settlements. Part III reviews recent court decisions, including three major Supreme Court decisions that directly affect settlements involving NPEs. Part IV points out that the “new environment” does not adequately solve the NPE problem and argues that it might actually be counter-productive in deterring NPE settlements based on invalid patents, particularly those procured by defrauding the PTO. Part V discusses the issue of consumer standing to bring antitrust claims based on invalid patents via Walker Process claims that, in certain circumstances, can subject the patent holder to punitive antitrust damages. Part V underlines that courts and commentators are currently split on the issue of consumer standing to bring antitrust claims based on invalid patents via Walker Process claims. Part VI discusses a very recent decision from the Second Circuit—the first appellate treatment of the underlying consumer standing issue—in which the Second Circuit has introduced a novel follow-on consumer litigation approach.

Part VII first addresses the criticism of the Second Circuit’s opinion. Part VII then points out that the Supreme Court has recently denied certiorari in the case decided by the Second Circuit, so the underlying consumer standing issue is destined to play out in lower courts. In fact, in two very recent 2011 decisions, lower courts reached opposite conclusions on the issue of consumer Walker Process standing. Furthermore, Part VII suggests that just as Justice Kennedy has taken into consideration NPEs’ unique business model and practices while analyzing policy justifications for granting injunctive relief, lower courts should do the same when analyzing policy justifications for limiting consumer Walker Process standing to follow-on litigation. Finally, the Article concludes that the Second Circuit’s policy considerations for limiting consumer standing to a follow-on litigation do not necessarily apply to NPEs, particularly to those NPEs that the Federal Trade Commission has labeled as patent-assertion entities (PAEs) in its new report released in March of 2011. Therefore, lower courts should lean towards allowing consumers unconditional Walker Process standing in NPE cases in order to deter NPE settlements based on invalid patents. Part VII ends by addressing possible criticism to arguments in favor of expanding the role of consumers in Walker Process litigation.

Although size is important in understanding the nature of the shift, size alone is not the issue. It is also the method of organization and the types of activities that are causing a paradigm shift in the world of patents and innovation.

These entities, which we call mass aggregators, do not engage in the manufacturing of products nor do they conduct much research. Rather, they pursue other goals of interest to their founders and investors. Non-practicing entities have been around the patent world for some time, and in the past, they have fallen into two broad categories. The first category includes universities and research laboratories, which tend to have scholars engaged in basic research and license out inventions rather than manufacturing products on their own. The second category includes individuals or small groups who purchase patents to assert them against existing, successful products. Those in the second category have been described colloquially as “trolls,” which appears to be a reference to the children’s tale of the three billy goats who must pay a toll to the troll waiting under the bridge if they wish to pass. Troll activity is generally reviled by operating companies as falling somewhere between extortion and a drag on innovation. In particular, many believe that patent trolls often extract a disproportionate return, far beyond the value that their patented invention adds to the commercial product, if it adds at all.

The new mass aggregator, however, is an entirely different beast. To begin with, funding sources for mass aggregators include some very successful and respectable organizations, including manufacturing companies such as Apple, eBay, Google, Intel, Microsoft, Nokia, and Sony, as well as academic institutions such as the University of Pennsylvania and Notre Dame, and other entities such as the World Bank and the William and Flora Hewlett Foundation. Nations such as China, France, South Korea, and Taiwan even have their own mass aggregators to varying degrees.

Moreover, the acquisition appetites and patent supply sources are quite interesting. Mass aggregators may have portfolios that range across vastly different areas of innovation from computers to telecommunications to biomedicine to nanotechnology. In some of the acquisition activity, mass aggregators purchase large chunks, and even the majority, of an operating company’s patents and patent applications. They typically pay cash up front, as well as a share of any future profits generated from asserting the patents against anyone other than the selling manufacturer. Mass aggregators have engaged in other unusual acquisition approaches as well, including purportedly purchasing the rights to all future inventions by researchers at universities in developing countries. Other acquisition approaches purportedly include targeted purchases of patents that are of particular interest to the mass aggregators’ investors.

The types of returns promised to investors and the types of benefits offered to participants are also quite different from garden-variety non-practicing entities, as are some of the tactics used in organizing the entities and in asserting the patents. Finally, the scale itself is simply mind-boggling. Mass aggregators operate on a scale and at a level of sophistication and complexity that would have been unimaginable a decade ago. They have taken the prototype strategies pioneered by a prior generation of non-practicing entities and changed them into some of the cleverest strategies yet seen in the intellectual property rights field.

The goal of this article is to shed some light on mass aggregators. We hope to provide some understanding of the nature of the change, to analyze its economics and implications, and to offer some normative considerations. In the descriptive section, we focus on the oldest and largest of the mass aggregators, Intellectual Ventures, which has gone to great lengths to maintain secrecy. Working from public sources and investing thousands of hours of research, we offer a detailed picture of the entity, tracing through approximately 1300 shell companies and thousands of patents. The section also describes in brief form several other mass aggregators, including ones that are public companies.

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By Chris Hewitt *

Art is a simple yet broad term.  One need not examine the various forms of art to determine that that realm of creation is anything but clear and form fitting.  The word itself is cryptic.  Art can take various forms, including audio, visual, or a combination of the two.  What qualifies as art?  If an individual appropriates another artist’s images and uses those images to form his own work of art, is this art or is it piracy?  Specifically, can this art form bypass copyright protections through the fair use doctrine?  This question is at the center of many copyright controversies being heard by courts throughout the world, including the case against Richard Prince and his “Canal Zone” series.

This issue has become even more important in recent years as works of art, whether visual or audio, can be accessed and copied with the swipe of a finger or a click of a traditional mouse.  It has become even easier with the introduction of the iPad art app named Mixel, which allows users to hoist images from the Internet and create their own collages or works of art.  Artists that use appropriation to develop their own works of art view such images as part of a “shared digital space” and that the images are available for them to change, to improve, or to elaborate on.  Using another’s work without permission or compensation, however, can have drastic copyright implications, as evidenced by Prince’s recent experiences.

Prince, an artist in New York, built his career on appropriating images from the works of other artists.  The lawsuit against Prince follows his use of photographs taken by Patrick Cariou, a French photographer, and published in his book, “Yes, Rasta.”  Cariou alleged that Prince appropriated at least 41 of the images in his book.  Prince used the items to create collages of the appropriated photographs and other images overlaid with “brushy strokes in the style of Willem de Kooning.” Kooning was an American artist and leader in the Abstract Expressionism movement.  Cariou was not compensated for the use of the photographs and Prince testified that he never obtained permission to use the images.

It appears that Cariou would have had no challenge in winning the copyright infringement case were it not for the fair use doctrine.  Prince argued that the fair use doctrine applied and therefore the use of the photographs should be allowed.  The fair use doctrine is an exemption under copyright law that allows individuals to borrow protected commentary for purposes such as “commentary, criticism, news reporting and scholarship.”  Judge Deborah A. Batts, however, applied a narrow construction of the fair use doctrine in her opinion holding Prince unlawfully appropriated the images.  The judge stated that for the doctrine to apply, the work must be transformative.  This means that it must “in some way comment on, relate to the historical context of, or critically refer back to the original works” that the new piece borrowed from.

At the center of the inquiry surrounding the fair use doctrine is the artist’s intent, as can be seen by the district court’s construction of the doctrine.  Prince said that he used the images to “explore his fascination with the painting of Willem de Kooning” and to link the collages to a post-apocalyptic movie he is considering.  Prince further provided that he did not make the art to comment on the work of Cariou, hence the inapplicability of the fair use doctrine under the district court’s interpretation.

Having found that Prince unlawfully appropriated the images, the art from the “Canal Zone” is now illegal to sell or publically exhibit.  Any unsold paintings have also been ordered to be impounded.  Furthermore, the Gagosian Gallery, which held the show of “Canal Zone” and sold many of the paintings for millions, was forced to send letters to collectors informing them that the art they purchased was now illegal after the district court’s decision.  Prince will appeal the district court decision, but he has already been adversely affected by the decision.  The real question, however, is the affect this ruling will have on the art industry as a whole, and whether it will have a “chilling effect” on appropriation artists and galleries as many observers fear.

The Andy Warhol Foundation for the Visual Arts, among others, has filed an amicus brief supporting Prince and advocating the upheaval of the district court’s claim.  In its brief, the Andy Warhol Foundation states that it believes the district court misapplied the fair use doctrine and jeopardized the works of many artists.  Despite the fact that the Andy Warhol Foundation holds many copyrights from which it derives revenue, it believes that copyright protections must be balanced with “the need to protect the right to create new art,” something it believes the district court failed to do.

With the appeal of the Prince case and the many amicus briefs to be filed, it is clear that despite Cariou’s assertion that the fair use doctrine is “really [a] simple thing,” it is anything but.

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* Chris Hewitt is a second-year law student at Wake Forest University School of Law and a member of the Journal of Business and Intellectual Property Law.  He holds a Bachelor of Business Administration in Trust and Wealth Management from Campbell University.  Upon graduation in 2013, Mr. Hewitt plans to practice business and estate planning law.

By Lena Mualla *

Lipitor, the best selling prescription drug in the U.S. and in the world, will be available in a generic form at the end of this month, when Pfizer’s patent expires.  Lipitor is used to lower users’ cholesterol levels.  Ranbaxy, a generics manufacturer based in India, struck a deal with Pfizer, the current patent holder.  As a result of that deal, Ranbaxy will have exclusive rights to the generic form of Lipitor, atorvastatin, for six months.  Since generics are legally required to contain the same active ingredients as the name brand, the generic is essentially equivalent to the name brand, yet much cheaper.

Under the Hatch-Waxman Act, which provides a whole array of incentives so that generics manufacturers can mount litigation against patent holders without the normal financial risk, the exclusivity provision is just one of many meant to entice generics manufacturers into competing with current patent holders.  Basically, due to the Act, Ranbaxy will be in an excellent position to reap the rewards of a market shift at Pfizer’s expense.  An added bonus may also hit CVS and Walgreens, who are both expected to increase the price of their shares by about 10%.  Representatives from both stores have remained cautious in their outlook, taking care to note other factors that may come into play.

Apparently, Pfizer is not letting go easily.  It has already tried extending its patent based on various technicalities.  Now it is trying, quite successfully, to pay pharmacy benefit managers to not sell the generic.  At the end of the month, once the patent runs out, patients can expect their copayments to drop from $25 to $10 upon switching to the generic form of Lipitor.  The real drop off will come after May 31, when the six-month exclusivity period is up.  At that time, other generics manufacturers can compete with Ranbaxy.

Lipitor is not the only drug coming out in generic form; four other major drugs that have patents expiring this year are the following, in order of sales: Zyprexa, Levaquin, Concerta, and Protonix.  Those five, including Lipitor, had sales of over 10 billion dollars in 2010.  In addition, five more major drugs will lose their patent protection next year: Plavix, Seroquel, Singulair, Actos, and Enbrel.

These common, household prescription drugs are clearly raking in vast sums of money.  However, the share of those profits is going to take a major shift.  As this article indicates, CVS and Walgreens have a great opportunity to cash in on the patent expirations, since each company depends on prescription drug sales for over 60% of its sales.  Also, Ranbaxy is a no-brainer, sure to gain based on its exclusivity agreement with Pfizer, as well as continued profits following the May 31 expiration date.  Not to mention, consumers will pay much less out of pocket for their monthly medication supply for these drugs.  Experts predict savings to consumers of billions of dollars; the savings to the U.S. healthcare system are projected to be $6.7 billion.  Conversely, we can expect that Pfizer, Eli Lilly, Johnson & Johnson, Bristol Myers Squibb, and other manufacturers will experience a dip in their profits as a result of these patent expirations.  Experts indicate a hit of billions.  This is no surprise, given that generics are, on average, 71% cheaper than brand name drugs.

Despite the recent litigation launched against Ranbaxy and Pfizer alleging price-fixing, Ranbaxy is set up nicely to do well given the exclusivity agreement for the manufacture of the number one selling drug worldwide.  The recent suit, likely meritless, alleges price-fixing and seeks disgorgement of profits.  However, given that the Hatch-Waxman provides for the exclusivity period arrangement, the suit is unlikely to succeed.  As this case demonstrates, it is good policy to encourage potential competitors to challenge current patent holders.  Otherwise, instead of a six-month exclusivity period with a single competitor, Pfizer could have held on a little longer to its exclusive rights as patent holder.  In the end, consumers will be the primary beneficiaries of the patent expiration on Lipitor and other prescription drugs.

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*  Lena Mualla is a second-year law student at Wake Forest University School of Law.  She holds a Bachelor of Arts in Government and International Politics from George Mason University.  Ms. Mualla, a Fulbright award recipient, taught English in Indonesia prior to entering law school.  Upon graduation, she intends to practice international law or environmental law.

From its inception, the company’s management takes data security very seriously. The company forms an interdepartmental team to assess potential vulnerabilities to the company’s website, computers, and physical building, creates a written data security plan and policy, and, each year, conducts a data inventory to help identify where it stores the information that it collects and who has access to that information. As the company grows, it may even hire a Chief Privacy Officer who does everything from training employees on how to shred old invoices to making sure that the company’s growing list of outside vendors don’t have disparate data security practices. This company has complied with its obligation to secure consumer data, right?

Maybe not. The Federal Trade Commission’s settlements with SettlementOne Credit, ACRAnet, Inc., and Fajilan and Associates, Inc. suggest that in addition to enacting good practices for their own operations and making sure that their vendors do the same, companies are responsible for making sure that their customers have adequate data security. Although the FTC cites several statutes as the basis for this “duty to police customers,” it is not at all clear that the FTC’s theory could survive judicial scrutiny. Part I of this article provides a brief history of the FTC’s success over the past ten years to position itself as the primary federal regulator concerning issues of data security. Part II discusses the FTC’s recent enforcement actions and settlements with SettlementOne Credit, ACRAnet, and Fajilan. Part III analyzes the limits of the FTC’s data security enforcement powers. As part of this analysis, it reviews the scope of the new duty that the Commission proposes as part of the Reseller settlements, and analyzes whether the duty that the Commission seeks to impose can be supported by the Commission’s authorizing legislation. Finally the article concludes that the Commission’s attempt to create a new duty to police customers lacks firm statutory support and may not be successful if challenged in court.

By Joseph Norman *

Red soles, blue boxes; are these proper trademark subjects?  French high-fashion house Christian Louboutin and New York City American iconoclastic jeweler Tiffany & Co. think so.  Both companies are known for using a specific color to represent their brand.  Louboutin is known for its stiletto heels adorned with its signature bright red lacquered outsoles and Tiffany & Co. is known for the famous blue of its Tiffany boxes.  Whether these specific uses of color are trademark proper arose earlier this year when Louboutin turned heads in the fashion world by suing fellow French couture fashion house Yves Saint Laurent (YSL) for infringing on Louboutin’s signature red soles in YSL’s Cruise 2011 collection.  Louboutin received a trademark on the red soles in 2008 and its shoes have featured the distinctive red color since 1992.  Sex and the City, the hit television show, is mostly responsible for popularizing the $445 to $4,645 (www.barneys.com product search “Louboutin”) a pair shoes.

Initially, Louboutin sought a preliminary injunction against YSL, which Southern District of New York Judge Victor Marrero rejected in August on grounds that the trademarked red color unduly hindered competition in the fashion industry.  Marrero grounded his decision on the “aesthetic functionality doctrine,” holding that Louboutin’s use of the color “serves ornamental and aesthetic functions vital to robust competition.”  Christian Louboutin S.A. v. Yves Saint Laurent American, Inc., 778 F. Supp 2d 445, 449 (S.D.N.Y. 2011).  The Court distinguished between uses of color that attain secondary meaning, which are trademark proper, and uses of color that are “functional,” where the color’s use is essential to the purpose of the product.  Id. at 450.  Secondary meaning of an attribute pertains, in the legal context, to aspects that are inherently distinctive—marks that the consuming public associates with a particular brand rather than an arbitrary characteristic or quality of the product.  See generally Zatarain’s, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786 (5th Cir. 1983).  Finally, Marrero concluded by calling into question the validity of Louboutin’s trademark altogether, theorizing that “[L]ouboutin is unlikely to be able to prove that its red outsole brand is entitled to trademark protection, even if it has gained enough public recognition in the market to have acquired secondary meaning.”  Louboutin, 778 F. Supp 2d at 449.

Alarmed that Marrero’s injunction refusal might turn into an outright cancellation of its trademark, Louboutin appealed the decision to the Second Circuit, where the issue remains.  On appeal, Louboutin is likely to question Marrero’s use of aesthetic functionality—a rarely used doctrine.  See Katherine Morton, “Sole” Searching: Christian Louboutin’s Fight against Yves Saint Laurent – and the Aesthetic Functionality Doctrine – to Own the Color Red (Nov. 17, 2011) (unpublished manuscript) (on file with the Wake Forest Journal of Business and Intellectual Property Law).  Moreover, the lower court punted on the real issue: when is the use of color on a portion of apparel a design element and when is it a trademark?

Because trademarks identify and distinguish the source of goods between one party and another, See The Lanham Act, 15 U.S.C. §§ 1051-1141 (2006), fashion industry participants are anxiously awaiting the resolution of Louboutin’s claims.  Should the Second Circuit determine that Louboutin’s “Red Sole Mark” cannot be sustained, major changes are likely to come to some of fashion’s biggest names.  Designers’ that have relied on proprietary colors—such as Valentino red, Hermes orange, and Tiffany blue—may have less ability to use those colors to distinguish their brands, particularly if competing brands can use the formerly-trademarked colors.  To that end, Tiffany & Co. recently filed an amicus brief with the Second Circuit asserting the broad and sweeping scope of Marrero’s blanket rule on color use in fashion and questioning the prudence of a bright-line rejection of color marks in fashion.

To the casual fashion observer, to whom red soles and blue boxes likely identify certain brands, a case-by-case determination makes more sense.  Otherwise, what would my wife think when I bring home a robin’s egg blue box only to find out it came from Zales?

Special thanks to Katie Morton, whose note “Sole” Searching: Christian Louboutin’s Fight against Yves Saint Laurent – and the Aesthetic Functionality Doctrine – to Own the Color Red” was incredibly helpful.

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*  Joseph Norman is a third-year law student at Wake Forest University School of Law.  He holds a Bachelor of Science in Management from North Carolina State University and an MBA in Finance from the McColl School of Business at Queens University of Charlotte.  Prior to enrolling in law school, Mr. Norman worked for Wells Fargo Wealth Management in Equity Research.  Upon graduation in May 2012, Mr. Norman will practice corporate law.

The patents in question were found to be invalid. It was also found that the relevant antibody product (Lucentis) did not infringe the patents as it was not produced by a process falling within the scope of the claims. The judge, however, indicated clearly that the product would have infringed the patents as a direct product of the claimed processes under section 60(1)(c) of the UK Patents Act 1977, had it been produced in accordance with the claimed process.

This case illustrates that screening method Patents can in principle be enforced against products obtained using such methods, despite the fact that ‘reach through’ claims cannot in general be obtained. This highlights the potential importance of including reference to such manufacturing/production steps in a claim set to a screening method, even if that step is not itself inventive. Further, this dispute between MedImmune and Novartis is taking place not only in the UK but also in several other European countries. The UK judgment is the first to issue and may well influence the outcome in other countries. However, it remains to be seen to what degree the judgment will be followed elsewhere.

In the post independence era (i.e. post 1947) the Indian pharmaceutical industry was completely dominated by multinational companies (MNCs) and drug price in India was among the highest in the world. In 1970, the Indian parliament passed the Indian Patents Act 1970 with provisions to allow only process patents for pharmaceutical molecules and new chemical entities (NCEs). The Indian Patent Act 1970 was the main reason for the fast and continuous growth of the Indian pharmaceutical industry. The Indian pharmaceutical industry until 2005, engaged in generic product development hence there was no significant activity in patenting in India. In 2005, the Indian Patent Act was amended to include a ‘product patent’ regime to make Indian patent law compliant with TRIPs. This shifted the Indian pharmaceutical industry’s focus from generic products to research based ‘NCEs’ and ‘novel drug delivery products’. The post TRIPs era saw vigorous activity in patenting in India.

The present review aims to study the growth and various transition phases in the Indian pharmaceutical industry in light of pharmaceutical patenting by members of the Indian pharmaceutical industry in India.

UK IP and in particular copyright law in the context of licensing was the focus of much analysis in the recent Hargreaves Review entitled ‘The Digital Opportunity: A Review of Intellectual Property and Growth’. Arguably, one of the Review’s biggest ideas was the Digital Copyright Exchange (DCE). As envisaged by Hargreaves, it could resolve a large number of current problems within the existing UK licensing regime(s). As envisaged, the DCE would require both UK and EU legislation to allow it to be implemented.

This article looks at what Hargreaves’ DCE could look like; whether it would resolve all the issues it is being put forward to address; and whether it is likely to be achievable at all or at least in the short term.

There is no doubt that any improvement to the current regime would be welcomed both by creators and prospective licensees. It seems likely though that if the DCE is to come to fruition at all, it will, at least at the outset, represent a far less radical change to the legal and commercial landscape than Hargreaves would necessarily wish.

By Jason Weber *

In the past year, the Internet has been used to do some amazing things.  Pro-democracy advocates used social networking to further populist uprisings during the Arab Spring.  Iron-fisted governments manipulated the same tools to silence dissent and isolate citizens seeking freedom.  While the United States has consistently portrayed itself as a voice for a free and open Internet, SOPA, a bill circling in the House of Representatives, is sending a different message to tech giants and human rights activists around the world.

SOPA stands for the Stop Online Piracy Act.  Along with its sister bill in the Senate, the Protect IP Act, SOPA has laudable goals: to protect intellectual property rights and stop online piracy.  To accomplish these goals, Section 102 of the bill gives the U.S. Department of Justice broad power to force U.S.-based online search engines, payment providers, and advertising networks to stop doing business with, and block access to, any foreign website guilty of infringing on a U.S. copyrights or patents.  Any U.S.-based internet company that fails to use “technically feasible and reasonable measures” to remove infringing content within five days of receiving a court order can be subject to monetary sanctions.

Section 103 of SOPA also allows for third-party lawsuits brought by any intellectual property right holder harmed by infringing activity.  These “qualifying plaintiffs” can directly seek court orders to shut down foreign infringing sites or to force U.S.-based search engines, payment providers, and advertising networks to cut ties with an infringing site.  Finally, section 201 of SOPA makes it a felony to stream any copyrighted works, with a maximum penalty of up to five years in prison.

Proponents of SOPA include a bipartisan group of Republican and Democratic House members, 43 state attorney generals, powerful lobbies such as the Motion Picture Association of America, the U.S. Chamber of Commerce, and the AFL-CIO, as well as tech giants like Microsoft and Apple.  These advocates claim that the bill is about protecting American jobs and furthering economic prosperity.  According to the U.S. Chamber of Commerce, American businesses lose about $135 billion in revenue each year from infringing products and intellectual property pirates.  Further, while the U.S. has current copyright enforcement laws like the DMCA, they all lack measures to reach foreign sites that infringe on U.S. copyrights and patents.

Critics of the bill, however, think it is overly aggressive, overly broad, and amounts to unconstitutional censorship.  Tech giants including Google, eBay, Facebook, and Twitter sent a letter to Congress praising SOPA’s goals, but warning that it will expose lawful companies to uncertainty and costly litigation while stifling innovation and undermining job growth.  Eleven bi-partisan members of Congress have also sent an opposition letter expressing similar concerns about the effect of the bill on the internet’s ability to foster economic growth.  Zoe Lofgren (D-CA), whose district includes Silicon Valley, is leading the congressional backlash against the bill, calling it “the end of the Internet as we know it.”  A number of international groups have also attacked the bill, claiming it undermines human rights and will erect an American version of the Great Firewall in China.  For a detailed overview of how SOPA might stifle innovation, watch this video posted by Lifehacker.com.

While the House continues to hold hearings and debate the bill, it is uncertain whether SOPA will become law.  A number of websites, including the Electronic Frontier Foundation, have launched an awareness campaign and held American Censorship Day on November 16 to rally public sentiment against the bill.  International hackers Anonymous took their opposition a step further and threatened Congress not to pass the bill.  However, given the strong lobbying power of SOPA’s proponents and its support from ranking House members, it is likely that the bill will pass in one form or another.

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*  Jason Weber is a second-year law student at Wake Forest University School of Law and a staff member on the Journal of Business and Intellectual Property Law.  He holds a Bachelor of Arts in Political Science from Hope College and served with Teach for America prior to entering law school. After graduating in 2013, Mr. Weber intends to practice in the areas of education or community and economic development law.

By Rob Abb & Matthew McClellan *

As I discussed in a previous blog, there is a looming battle between the major recording companies and prominent performing artists regarding who will own the copyrights to some of the most valuable albums produced in the last 35 years.  The issue will be whether the performing artists, including Bruce Springsteen, Michael Jackson, and Bob Segar, among others, may exercise their termination rights.  Congress passed the Copyright Act in 1976 and granted authors a new property right – a right to recapture ownership and control of copyrights by terminating past assignments or licenses of those works following a set number of years.  The right is granted to authors, including songwriters, poets, novelists, painters, etc., and ensures that grants of even the entire copyright can be terminated, regardless of consideration or what the contract specifies.

We expect that performing artists will begin exercising those rights as soon as the 35-year time limit is reached, beginning  in 2013.  However, in anticipation of many performing artists beginning to try and exercise their termination rights, the record companies, operating via their umbrella organization, the Recording industry of America (RIAA), have already started trying to prevent losing the rights to their most lucrative albums.  To do this, the RIAA has argued that the performing artists’ works were actually “works for hire,” and created “not by independent performers but by musicians who are, in essence, employees of the labels.”  Accordingly, artists who attempt to use their termination rights will have to argue that they were independent performers and do not fall within the “work for hire” exclusion.

In anticipation of this upcoming battle, the rest of this blog will set out the test for when a work is “for hire” and when a recording artist would be considered an employee.  It will then offer arguments for and against finding that the performing artists’ work was “for hire.”  Hopefully this discussion will demonstrate: (1) what a difficult question this is; and (2) the likelihood that courts may not be able to issue a blanket decision and instead may have to conduct a fact-specific analysis each time a record company challenges a performing artist’s attempt to exercises his or her termination rights.

To determine whether a performing artist’s album was a “work made for hire,” we must first look at 17 U.S.C. Section 101.  Under the statute, a “work made for hire” is a work “prepared by an employee within the scope of his or her employment.”  Accordingly then, we must turn to the federal common law of agency to determine whether the performing artists were employees of the record company.  The Supreme Court enumerated several factors (the “Reid factors”) to consider in the analysis in Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989). The blog will now discuss each factor in turn and analyze whether a court would weigh that factor in favor of finding a performing artist to be an employee or an independent contractor.

The Hiring Party’s Right to Control the Manner and Means by Which the Product is Accomplished:

Both the artists and record companies should be able to make compelling arguments with respect to this factor.  Largely, this factor may come down to the scope of the deal between the recording artist and the record company.  More prominent and established artists are able to make the argument that they have more control in the recording and production process in terms of what producers to work with, where to record, and when the product will be completed, among other factors.  For new artists or artists with less clout and bargaining power than more popular artists, record companies may substantially control the production process, deciding what producers and/or songwriters are tapped to work on the project, deadlines for completion, singles to release, and how the product is marketed and distributed.

The Skill Required:

Although cynical critics often enjoy attacking pop music, it is hard to imagine any court finding that it does not take some specialized skill to make music.  This factor should weigh in favor of almost any recording artist.  Nonetheless, record companies may be considered the “skilled” contributors in situations where an artist “merely” performs and records the works of in-house writers and producers on staff at record companies.  Despite the recording artist’s performance talents, depending on the deciding court’s application of the Reid factors, record companies may be able to assert strong and winning arguments on this ground.

The Source of the Instrumentalities and Tools:

As a perfect example of how this analysis will vary depending on which performing artist is trying to exercise his or her rights, it is difficult to predict how a court will analyze this factor.  For example, even though many recording artists likely own and use their own instruments to write, practice, and perform their songs, they will generally record the songs in a studio that is owned by the record company.  As mentioned earlier, however, more established and prominent artists may be able to record independently of record companies, in their own homes, studios, or in the studios of independent producers not affiliated with the parent record company.  This is a common situation in the context of distribution deals between a record company and recording artist.

The Location of the Work:

The analysis of this factor is analogous to the analysis described above for the sources of the instrumentalities and tools factor.  It poses a larger question which the courts will be forced to address, and that is whether to focus on private work being done by the artists in writing and practicing their songs, or on the recording process itself.  Depending on what courts choose, it will likely have a significant impact on the outcome.

The Duration of the Relationship Between the Parties:

Though some artists have long-term relationships with record companies, for better or for worse, oftentimes, most relationships come to an end for a myriad of reasons (inability to renegotiate favorable terms, creative differences, neglect and lack of support from executives, etc.).  An artist may then go on and work for several different record companies throughout his career, depending on his relationship with the subsequent company.  Analysis of this factor will be fact-specific to whichever artist is litigating.

Whether the Hiring Party Has the Right to Assign Additional Projects to the Hired Party:

The relationship and success of the artist will play an important role in determining which party is favored by this factor.  Interestingly, the amount of control a record company has over an artist likely changes over time, meaning that this factor could weigh in favor of or against deeming the party an employee depending on which specific album is the subject of litigation, and could change in subsequent termination proceedings.

The Extent of the Hired Party’s Discussion Over When and How Long to Work:

Considerations of how long to work will also likely depend on whether the court focuses on the writing/rehearsing process, or on the recording.  Most artists can probably control when they want to write songs and practice them, but the record companies who own the recording studios probably retain control over when artists use their facilities.  Artist prominence is also an important factor to consider in this context.  Artists that command critical acclaim, and/or commercial prowess, may be less bound to deadlines than a new artist or one struggling to find prominence or remain relevant.

The Method of Payment and Tax Treatment:

The method of payment will also be fact-specific to each situation, depending on how the artist negotiates to be paid in his or her contract.  However, many artists receive a lump payment and/or royalty payments for their work, which is more akin to how an independent contractor is paid.  That is, rather than receiving a set weekly/monthly salary (typical for most employees), many artists are paid per project, which is the way one would be paid as an independent contractor.  Accordingly, though it would depend on what specific agreement the artist had with the record company, this factor would more often than not weigh in favor of deeming the artist an independent contractor.

The Hired Party’s Role in Hiring and Paying Assistants:

This factor is closely related to the control and manner of production factor.  Often, the album production process involves several players, from the performing artists, songwriters and producers, to engineers, mixers, and even art directors and photographers.  Again, where an artist is in his or her career may affect his or her role in who is hired to work on the project.  In addition, the scope of the record deal may specify which party is responsible for paying the personnel, regardless of which party solicited the production staff.  A recording project that utilizes an in-house production team shifts the balance of this factor in favor of the record company.  Contrarily, a recording artist who assembles his or her own production crew, irrespective of who finances the production costs, may fair better in the court’s analysis and application of this factor.

Whether the Work is Part of the Regular Business of the Hiring Party:

This factor will almost always weigh in favor of the record companies, since their regular business is hiring artists and producing albums.

The Provision of Employee Benefits:

Although it would be possible for an artist to negotiate a contract that included benefits, traditionally, the record companies do not provide health insurance and other typical employee benefits to the artists.  There are actually non-profit organizations that have taken up the cause of artists and musicians and seek to educate them about health issues while advocating on their behalf.

Ultimately, the party with the upper hand will likely come down to where the recording artist is in his or her career, the artist’s sustained prominence, or lack thereof, and the length of time the artist remained or has remained with the record company.  In a termination proceeding regarding content produced during the early part of an artist’s career, the record company would likely be able to assert a strong argument that the work was made for hire, under the scope of the artist’s employment.  In most recording deals, the record company has a significant amount of control in the development of new artists, or artists that have not been able to find success just yet.  Such artists are more susceptible to the record company’s direction and branding.  However, artists that have found success are better able to navigate and control their creative direction. Presumably, these are artists that have garnered a stable and loyal fan-base, after at least a few years of sustained prominence.  Termination proceedings for these artists for works produced later in their careers strongly support status as independent contractors.

In any case, the Reid factors are not clear-cut, and as indicated in this blog, the majority of these factors can be argued favorably by either side.  The evolution of the music industry will continue to complicate how courts apply this test and how the factors are weighed.  The digital music era has ushered in nontraditional artists that gain much attention before being signed to major labels because of their ability to produce and release their music independently with ease via social media such as YouTube and Myspace.  These artists come to record labels with pre-established fan bases, where record labels, in theory, provide more widespread distribution. Overlap of the old and new ways of doing things in the music industry further blurs the line between who may be an independent contractor versus an employee doing precisely what he or she was hired to do.

Other Parts:

Part I: Artists Prepare for Battle with RIAA over Looming Termination Rights
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*  Rob Abb is a third-year law student at Wake Forest University School of Law and is President of the International Law Society.  He holds a Bachelor of Arts and Science in Political Science and Asian Studies from the University of Michigan.  Upon graduation in 2012, Mr. Abb plans to practice international law.

*  Matthew McClellan is a third-year law student at Wake Forest University.  He is president of the Student Bar Association, as well as a member of the National Trial Team and Sports and Entertainment Law Society.  He holds a Bachelor of Arts in Media Studies Communication from the College of Charleston.  Upon graduation in May 2012, Mr. McClellan intends to enter a graduate journalism program, and eventually practice law in the media and entertainment industries.

Today, Bauby might have instead have used a revolutionary new technology from neuroscience to communicate his memoir. A technology known as brain-machine interface enables a computer to “read” brain activity and to decode it through pattern-recognition algorithms. Cyberkinetics Neurotechnology Systems, Inc. has developed a brain-machine interface technology that connects the motor cortex of the brain to a computer, where the subject is able to move a cursor on the computer screen, check email, change the volume, and select or move anything on the screen that would be possible with cursor movements by simply thinking about hand movements. So by connecting Bauby to this brain-machine interface, he might have typed out his memoir himself by thinking about the letters of the words he wished to communicate.

Brain-machine interface has already extended beyond the two-dimensional world to the control of three-dimensional objects. Researchers at Duke University pioneered a study in which they connected electrodes to the motor cortex of a monkey’s brain to interpret the electrical impulses arising from the firing of the neurons that signaled movement to the monkey’s limbs. The researchers studied those electrical impulses to learn the neural process involved in moving the monkey’s limbs. They then used this knowledge to build a brain-machine interface device to allow the monkey to manipulate a robotic arm through its thoughts. After training, the monkeys could manipulate a robotic arm that was connected directly to its brain such that the monkey ceased moving its own arm and instead moved the robotic arm to achieve its intended movement through intentional thought.

The next step—human control of robotic arms by thought alone—has become reality. Tim Hemmes, a paraplegic by car accident, moved a robotic arm through brain-machine interface technology that decoded his intention to move the arm and translated it into three-dimensional action. With the help of a new type of chip that was implanted on his brain, Hemmes focused his deliberate intention on moving the three-dimensional arm and succeeded in doing so. To accomplish this feat, Hemmes had to undergo brain surgery whereby electrodes were implanted in his brain to record the electrical signals in his motor cortex brain region. Those electrical signals were connected to the robotic arm and after training for several weeks Hemmes could mentally achieve its movement.

Despite these extraordinary advances that enable individuals to move three-dimensional objects through consciously willing those actions and the ability to now isolate the deliberate intentions in the brain, scholars continue to debate the existence of free will. Whether Bauby had used brain-machine interface to transcribe his memoir or communicated via eye-blinks, a stronghold of scholars would challenge whether he acted freely. Not because Bauby suffered from the tragic and rare neurological condition called locked-in syndrome, characterized by the paralysis of all voluntary muscles except for those that control eye movement while leaving one conscious and able to think and reason. Rather, because such scholars question whether human actors have free will, or merely an illusion of freedom. Scholars who deem free will merely illusory claim that all events are determined by past events, including every event in the mind one would call choice.

This essay illustrates why neuroscience supports a robust theory of human freedom. Rather than condemning humanity to a reductionist view of human actions, neuroscience provides a lens through which a long-standing debate about freedom of choice versus freedom of action can be renewed and resolved. Research investigations into the neural processes involved in preferences, desires, and human actions offer new insights into the flexibility and control that human actors exercise over voluntary actions.

Distinguishing between choice with respect to preferences and desires, and freedom to act in particular ways is consistent with a legal system that punishes for wrongful actions but not wrongful desires that are not acted upon. Yet legal scholars argue that the criminal justice system relies on a much thinner and consequential justification for individual responsibility than freedom of action. The prevailing concept of free will advanced by legal scholars is one that I call “legal free will.” Scholars of legal free will argue that the law does not need a metaphysical account of freedom, nor does it rely upon one for its legitimacy. This essay argues that rather instead of eschewing theoretical free for criminal responsibility, legal scholars could embrace advances in neuroscience to support a theory of freedom that focuses on voluntary actions.

Part I begins with a discussion of legal free will, a concept that appears most controversially in criminal law but also pervades most areas of law. Underpinning the attribution of responsibility in criminal law is a presumption that humans are free to act and to refrain from acting (“legal free will”). But legal free will is in fact a misnomer since the freedom it describes is a vacuous one. Scholars claim that the law holds individuals responsible for their actions not because they are free, but because it is expedient to treat them as if they are free. This leaves the legal system open to persistent attacks on its legitimacy for failing to comport with ordinary intuitions about moral responsibility. In criminal law in particular, legal free will creates a problem because its proponents disclaim any need to grapple with questions about moral responsibility. Because the power of the state and the threat to liberty is at its highest in the control of conduct deemed criminal, the refusal to grapple with questions of theoretical free will leaves the criminal justice system open to a never-ending slew of attacks. Part II illustrates the newest incarnation of these attacks, which have been rooted in neuroscience. Scholars are coalescing around the belief that neuroscience supports determinism and substantiates the claim that at the very least some individuals—if not all individuals—lack moral responsibility. Proponents of this view argue that the legal sanctions of the criminal justice system, such as blame, stigma, and shame, should therefore not follow. Part III then uses emerging studies in neuroscience to support a distinction between freedom of action and freedom with respect to our preferences and desires. This distinction matters, as Part IV argues that freedom of action offers a robust theory of freedom for attributions of responsibility.

By Chris Hewitt *

One simple, three word phrase has captivated, or has at least been imprinted upon, the minds and hearts of many Americans.  It has become the headline of the morning paper, the topic of water cooler chatter, and the subject of the nightly news.  It has come to signify a political movement and to describe the distribution of wealth in America.  The phrase: “Occupy Wall Street.”  Occupy Wall Street is a “leaderless resistance movement” that began on September 17, 2011, with a protest in New York’s financial district in Lower Manhattan.  The protestors profess to represent the 99% (the “have nots”) that are standing up against the greed and corruption of the 1% (the “haves”).  What began as a localized movement has spread to other cities throughout the United States and even across the Atlantic to Europe.

Despite the purpose of the movement, entrepreneurs are attempting to cash in on the movement in true capitalistic fashion.  Shirts appeared just days following the initial protest and now both camp sites and the Internet are riddled with vendors peddling coffee mugs, shirts, and various other products bearing phrases related to the movement.  Even millionaire rapper and entrepreneur, Jay-Z, is creating a line of Occupy Wall Street themed apparel that will bear the phrase “Occupy All Street.”  With such business potential, it is not surprising that the United States Patent and Trademark Office (USPTO) has been bombarded with a flurry of trademark applications for phrases dealing with the movement, including “Occupy” and “We Are The 99 Percent.”  But what about the original phrase, the one that represents the movement in its entirety, “Occupy Wall Street?”

There are currently two trademark applications pending for “Occupy Wall Street” at the USPTO.  Both applications were filed on October 24, 2011.  The first application was submitted by the organizers of the protest, indicating that they would use the phrase on merchandise, in periodicals and newspapers, and on their website dedicated to their movement.  Just three hours later, Fer-Eng Investments, LLC, applied for an identical trademark but indicated it would only use the phrase on merchandise and not in periodicals or newsletters.  Both of these applications, however, were preceded by an application on October 18, 2011.  That application, submitted by a Long Island couple, sought to trademark “Occupy Wall St.” for use on merchandise.  The Long Island couple has since withdrawn its application so only the latter two are still pending.

Why does Occupy Wall Street want a trademark when it is supposedly fighting corporate greed?  An attorney for the group stated that the filing was intended to prevent profiteering and commercial use of the phrase.  The attorney further stated that the trademark could be used for noncommercial purposes.  Vince Ferraro, the individual behind the second application, has business purposes in mind should he receive the trademark.  Despite his comments that he sees a business opportunity in the phrase, he has refused to give any indication of what use he intends for “Occupy Wall Street.”

It is likely that Occupy Wall Street will receive the trademark over Ferraro.  When the USPTO receives two applications for a similar trademark, priority is given to the application that it received first.  Also taken into account, however, is whether the phrase was widely used prior to the filing of the first application.  Several attorneys have predicted that Occupy Wall Street will likely win because not only did it file first, but it has been using the phrase for months.  Ron Coleman, a trademark attorney and blogger, has raised the question of how a leaderless group will manage a trademark.  Specifically, who will “speak on behalf of the trademark?”

Though it appears likely that Occupy Wall Street will receive the trademark, that will not be the end of this trademark controversy.  With designers and vendors marketing and selling products with the “Occupy Wall Street” phrase, there will probably be several lawsuits surrounding the improper use of the trademark following the USPTO’s decision.  So if Occupy Wall Street is victorious, who will speak on behalf of the group?  How far will the group take legal action?  What effect will such a capitalistic action have on this greed-averse group?

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* Chris Hewitt is a second-year law student at Wake Forest University School of Law and a member of the Journal of Business and Intellectual Property Law.  He holds a Bachelor of Business Administration in Trust and Wealth Management from Campbell University.  Upon graduation in 2013, Mr. Hewitt plans to practice business and estate planning law.

EU courts may issue injunctions against ISPs to prevent past as well as future trade mark infringements, which must ‘be effective, proportionate, and dissuasive and must not create barriers to legitimate trade’ and which may include ordering the ISP to help identifying its infringing (commercially operating) customers.

The ECJ held that the ‘hosting defence’ under Article 14 E-Commerce Directive will not be available to ISPs if they have played an active role in the promotion of trade marked goods, or gained knowledge of facts or circumstances on the basis of which a diligent economic operator should have realised that the online offers for sale were unlawful and failed to act promptly to remove the data concerned from its website.

The next status conference for AT&T’s embattled T-Mobile merger proposal has been postponed until December 9, due to a scheduling conflict. AT&T and Deutsche Telecom, parent company of T-Mobile, have withdrawn their FCC applications after FCC Chairman, Julius Genachowski, expressed strong doubts that the $39 billion deal would serve the public interest, citing instead the likelihood of job losses and stifled competition.

HTC’s purchase of S3 Graphics Co. may not be as fruitful as originally anticipated. HTC made the $300 acquisition in hopes that Apple would have to license graphics technology or risk patent litigation, but the U.S. International Trade Commission declared last week that Apple’s Macs and iPhones did not infringe on two S3 patents. S3 and HTC still have other outstanding patent disputes with Apple.

Onlookers are turning a critical eye on Zynga as the company gears up for its IPO. Reports have surfaced about the hard-nosed culture of the startup, which has grown to 2,200 employees since its inception in January 2007 and produced social gaming blockbusters such as FarmVille and Words with Friends. In the wake of Groupon’s falling share price, others are concerned about the strength of Zynga’s business model, which requires ongoing development and large marketing budgets to stave off the user boredom.

ShopCity, a website that helps local businesses sell products, has filed a complaint and added to Google’s antitrust worries. ShopCity alleges that the search giant favors its own competing service, Google Places, and pushes ShopCity listings onto later results pages that few web surfers ever check.

Opposition to the proposed Stop Online Piracy Act continues to grow, with more than one million emails and 87,000 phone calls flooding Congress to date. If passed, SOPA would enable the Department of Justice and private rights holders to block access to sites accused of hosting infringing content.

• Content Type Journal Article
• Pages 333-355
• DOI 10.1007/s10506-011-9116-1
• Authors
  • Romain Boulet, UMR ESPACE-DEV, IRD, 500 Rue Jean-François Breton, 34000 Montpellier, France
  • Pierre Mazzega, Laboratoire Mixte International Observatoire des Changements Environnementaux, UnB/IRD, Universidade de Brasilia, Brasilia, Brazil
  • Danièle Bourcier, CERSA CNRS, Université de Paris 2, 10 rue Thénard, 75005 Paris, France

• Journal Artificial Intelligence and Law
• Online ISSN 1572-8382
• Print ISSN 0924-8463
• Journal Volume Volume 19
• Journal Issue Volume 19, Number 4

By Pierce Haar *

Drago and the other villains from the Rocky movies have some company now as the enemies of “Rocky” a.k.a. Sylvester Stallone.  A Connecticut screenwriter has sued Sylvester Stallone and his co-writer of the 2010 action film for copyright infringement.  Marcus Webb claims that the screenplay for “The Expendables” is “strikingly similar and in some places identical” to his screenplay for “The Cordoba Caper.”  Mr. Webb claims to have filed the screenplay for the work with the U.S. Copyright and Patent Office in 2006.  According to him, “there can be no dispute that Stallone had access to and copied portions of the screenplay.”  Webb shopped the script around Hollywood between 2006 and 2009 to various producers, but it was ultimately not picked up.

For those unfamiliar with the movie, “The Expendables” is about an elite team of mercenaries that are charged with overthrowing a South American dictator.  Notably, the film starts off with the crew of mercenaries performing a hostage rescue off a foreign coast, the same opening that Mr. Webb’s screenplay had.  In both films, this opening was unrelated to the main plot, which was the mercenary crew’s task of overthrowing General Garza, a South American dictator in both movies.  Mr. Webb noted more than twenty similarities between the two screenplays in his lawsuit filed in Manhattan federal court.  Mr. Webb is seeking an injunction against any further action by Sylvester Stallone in the series, such as the sequel that has been planned for 2012, and unspecified damages for the infringement of his copyright on the work.

It is quite ironic that Stallone has been sued for copyright infringement after the other intellectual property issues surrounding the movie.  In August 2011, the studio responsible for making the film decided to dismiss the charges against 23,322 defendants accused of pirating the film.  The studio is planning, however, on re-filing charges against thousands of American defendants for illegally downloading the movie.  Copyright infringement of screenplays has always been around, but has become an increasingly visible problem.  Federal copyright law does not cover a particular idea, but rather a specific expression of the idea.  Therefore, a talent manager could receive a script from a writer, change a few specific things in the script, and then create his or her own copyrightable screenplay and movie, all on the back of another’s hard work.

Given that Mr. Webb has outlined more than 20 similarities between “The Cordoba Caper” and “The Expendables,” it will be interesting to see how the court decides the issue.  As previously mentioned, if there are some differences between the two scripts, then a court might find that there is no copyright infringement.  On the other hand, if the similarities between the two screenplays are sufficiently significant, then the court might find copyright infringement.  Additionally, the court and Mr. Webb could potentially fall back on contract law if their copyright efforts fail.  Depending upon the nature of his relationship with the talent manager, Mr. Webb could pursue a breach of contract claim if his copyright efforts fail.  Either way, I know I for one cannot WAIT for the next Sylvester Stallone movie, even if it does not include an ensemble cast of “elite mercenaries.”

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*  Pierce Haar is a second-year law student at Wake Forest University School of Law and a member of the Pro Bono Board, serving as the Special Trips Coordinator.  He holds a Bachelor of Arts in Peace, War, and Defense from the University of North Carolina at Chapel Hill.  Upon graduation in May 2013, Mr. Haar intends to practice either criminal law or civil litigation.

Witnesses in the United States may choose to exercise their right to “plead the Fifth,” or refuse to answer a question because the response could provide self incriminating evidence of an illegal act. But how strong is this right if a prosecutor is already aware of where a witness was, what they saw, what they heard, and in some ways even what they were thinking at any given time on any given day? I do not refer to torture, truth serums, or the recent accomplishment of Berkeley scientists in creating visual pictures from brain waves. Rather, I refer to smart phones and the growing field of “reality mining” or “mobile phone sensing.”

The Progression of Mobile Phone Technology

Mobile phones had a humble beginning in 1973. Unlike modern iterations, the first mobile phone was bulky, difficult to transport, and had but one function; it allowed you to make a phone call. Technology has rapidly progressed from 1973, and today’s smart phones come rich with functionality through the use of embedded sensors. For example, the Apple iPhone comes equipped with an accelerometer, gyroscope, GPS, digital compass, ambient light detection, and dual microphones and cameras. These sensors give the iPhone the ability to speak, listen, locate, give directions, detect movement etc…  The new iPhone4S also responds to natural language queries.

“Mobile phone sensing” makes use of these digital senses to enable smart phones to become even more dynamic. Dartmouth College’s Smartphone Sensing Group
describes it as “turning the everyday smart phone into a cognitive phone by pushing intelligence to the phone and the computing cloud to make inferences about people’s behavior, surroundings and their life patterns.” The practical applications of this field seem enormous:

• Researchers at Dartmouth college describe examples such as 1) using accelerometer data to automatically recognize different activities (e.g., running, walking, standing), 2) combining accelerometer data with location estimates from a phone’s GPS to recognize the mode of transportation such as walking, biking, driving, taking a bus or riding the subway and 3) continuously collecting audio from a phone’s microphone to “classify a diverse set of distinctive sounds associated with a particular context or activity in a person’s life, such as using an automated teller machine, being in a particular coffee shop, having a conversation, listening to music, making coffee, and driving.” Amongst a laundry list of other applications, this data can be translated into suggestions for how to avoid traffic, increase social networking, and for personal health care by tracking your physical activity or the number of times you’ve visited your doctor’s office.
• An Oregon based technology company, Digimarc, has developed an application that uses a mobile phone’s camera and microphone to “detect digital watermarks encoded into magazines, newspapers, packaging and other printed materials, as well as identify songs in music and read QR codes.” Mobile phones can then recognize what it is that a user is looking at or listening to and make personalized suggestions.
• Sandy Pentland (a leader in the field of mobile phone sensing and director of MIT’s Human Dynamics Laboratory) predicts that mobile phone sensing may be able to give clues to diagnosing depression by detecting changes in speech patterns, or using a phones motion sensors to reveal slight changes in gait, potentially acting as an early indicator of ailments such as Parkinson’s disease.

Smart Phone as a Witness

Yet these examples may not be the limit to what mobile phone sensing may be used for in the future. It seems possible that future criminal (or civil) trials may not need live witnesses so long as the sensor data from an accused individual’s smart phone was admissible as evidence. Before a word was said, it could be known where the individual was, who they were with, what they were looking at, listening to, talking about etc… Not just the day that a crime was committed, but days, weeks, or months in the past. These seem to be the personal experiences that individuals were traditionally allowed to protect to avoid self-incrimination.

Conclusion

The Fifth Amendment is concerned with what an individual must be witness to after a crime is committed, rather than before. Ex ante choices such as planning to commit a crime do not bar a person’s right to avoid self-incrimination. Thus a person who purchases a smart phone in order to utilize the advantages of mobile phone sensing (or for whatever other reason) should not diminish their rights under the Constitution. When we look ex post, the experiences that a phone interprets are the users, the senses that it has are digital extensions of the individuals. Those experiences and senses is what the Fifth Amendment is concerned with and should not be allowed as evidence of a person’s guilt.

By Sarah R. Riedl *

Urban Outfitters has been the target of numerous complaints over the years for lacking sensitivity to various ethnic, racial, and religious groups.  Among the most notable examples are a parody of Monopoly called “Ghettopoly,” a t-shirt stating “I Love Jewish Girls” surrounded by dollar signs, and a “Jesus Dress Up” magnet game.  The most recent incident to add to the list of Urban Outfitters’ rap sheet involves the Navajo Nation.

The Navajo nation recently saddled Urban Outfitters with a cease and desist letter demanding the clothing marketer take uses of the word “Navajo” out of its descriptions of the company’s products.  The source of the Navajo’s trademark claims stem from the use of the word “Navajo,” not the use of Navajo patterns in the items, which many fashion companies have borrowed throughout the years.

The Navajo nation holds ten trademarks on the name Navajo that apply in fashion on online sales contexts.  Despite the Navajo Nation Government’s existence outside the United States federal government, many of the trademarks are registered with the United States Patent and Trademark Office.

In response to the requests by the Navajo nation, Urban Outfitters has since taken use of the word Navajo off its website entirely, with no remaining references to the word.  The two particular items targeted by the complaints, a flask and a hipster panty, now bear the term “printed” to replace “Navajo.”

Luckily for Urban Outfitters, they quickly complied with the cease and desist letter because the Navajo Nation would likely have a viable claim for infringement under the Lanham Act.  The Lanham Act uses the “likelihood of consumer confusion” standard to determine whether a person or company has infringed on the trademark rights of another.  The standard does not require the complainant show actual evidence of consumer confusion, though evidence of actual confusion will weigh heavily on the analysis.  Rather the standard merely requires a showing that consumers might become confused regarding the source of the products.

In Urban Outfitter’s case, the Navajo nation would likely prevail by showing that the use of the word “Navajo” to describe their products may lead consumers to think the products are made by the Navajo nation. The main issue the Navajo Nation has with regards to this trademark infringement largely surrounds the two objects the name was associated with, the flask and the panty.  The Navajo Nation preaches modesty, and the confusing use of the word “Navajo” could lead consumers to believe the product was created by their people.  Additionally, the Navajo Nation is plagued with alcoholism in higher proportions than the general population, making Urban Outfitters’ flask seem particularly insensitive to the Navajo Nation’s issues and concerns.

Regardless of Urban Outfitters’ intent in branding the more than twenty products on its website “Navajo,” the Nation maintains the company should have gone to Navajo sources for any products made in the Navajo tradition.  Of course, several skilled Navajo artisans may have been willing to provide products for the company’s line or provide designs to be used on products.

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*  Sarah R. Riedl is a second year law student at Wake Forest University School of Law.  She has a Bachelor of Arts in English from the University of Illinois.  Upon graduation in May 2013, Miss Riedl intends to practice business litigation and intellectual property law

By Pierce Haar *

Despite all the rage for the latest and greatest from that little tech company in Cupertino, California, Google’s Android operating system continues to hold a 40% market share in the U.S. and somebody besides Google is looking to cash in on that business.  Microsoft, claiming that the Android operating system infringes upon its patents, stands to gain hundreds of millions, if not billions, of dollars from licensing deals and settlements with Android device manufacturers such as HTC and Samsung if successful in its litigation.  Microsoft could receive as much as $15 per Android phone produced by Samsung.  Between April and September of 2011, the Galaxy S-II, a Samsung Android phone, moved 10 million units.  That is potentially $150 million for just one phone line.  In addition to the onslaught that Google is facing from Microsoft, the company is also facing complaints from Oracle that Android devices infringe upon its patents covering the Java software system.  How did Google, and its software progeny, get into this sticky intellectual property situation?

Patent infringement and licensing issues have arisen over the years as technology companies have developed new products and technologies that build upon prior technological breakthroughs.  For instance, Microsoft has had licensing agreements with IBM, HP, Oracle, and others over the years for its data management products created to serve the business sector.  The base “layer,” according to Microsoft’s general counsel Brad Smith in the cell phone and smartphone sector, is the basic radio technology for cellular communication.  Qualcomm, the leading patent owner with respect to that particular type of technology, makes about $20 for every smartphone (and cell phone) produced.  The next layer in the development of cell phones and smartphones is media technology, which allows smartphones to play music and video.  The holders of these sorts of patents earn anywhere from $3 to $5 per phone produced that uses the technology.  The latest layer in the technological progression of smartphone devices is software, operating software to be more specific.  Microsoft and Apple have been developing such systems for years and are claiming that Google’s Android operating system uses their hard-earned work and development.

The conflict presents an interesting dilemma that strikes at the heart and nature of intellectual property rights.  Intellectual property law exhibits our belief in the ability and right of someone to be secure in their innovation.  When an inventor creates something patent-worthy, he should be rewarded when others use his creation.  At the same time, our intellectual property law intends to promote future innovation without restricting those potential innovators in what they can and cannot do, what they can and cannot use.  Microsoft is asserting that they have invested billions of dollars and countless time into these innovations and should be compensated for their use.  On the other side, Google is voicing its concerns over the effect that such broad patent protection will have on future technological development.  Google has recently acquired the mobile division of Motorola, a producer of Android phones, which will help present a more unified target for Microsoft in its intellectual property litigation campaign.  As the legal conflict between Microsoft and Google reaches full steam, the courts must decide which side of the intellectual property debate they will support: will it be past, present, or future innovators?

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*  Pierce Haar is a second-year law student at Wake Forest University School of Law and a member of the Pro Bono Board, serving as the Special Trips Coordinator.  He holds a Bachelor of Arts in Peace, War, and Defense from the University of North Carolina at Chapel Hill.  Upon graduation in May 2013, Mr. Haar intends to practice either criminal law or civil litigation.

By Chris Hewitt *

A patent can be the life blood of a company because it gives the company the sole right to use or market the process, product, or machine that is covered by the patent for a few years. This essentially gives the company a temporary monopoly over the patented subject matter.  Patents are particularly of great value for technology companies like Apple and Samsung.  The technology industry is extremely competitive and securing a patent on the design of a product can give a company an advantage over its competitors.  Once a patent is received, companies go to great lengths to protect their patents and will often initiate litigation when necessary, as evidenced by the extensive patent litigation between Apple and Samsung that began in April.

In April, Apple sued Samsung in the United States, alleging that Samsung’s line of Galaxy tablets were a mere copy of the iPhone and iPad.  Litigation between the companies has since spread to other countries throughout the world (including Italy, France, Germany, the Netherlands, and Australia among others) as each company has attempted to have the other’s alleged infringing product banned from that market.  Apple has had much success in its litigation, having its claims upheld in the United States, Germany, and the Netherlands, as well as receiving a temporary ban of the Samsung Galaxy Tab 10.1 in Australia.

In this ensuing global patent battle, the most recent attack came from Samsung as it sought to have France and Italy bar the sale of the Apple iPhone 4s.  These two suits are based on two alleged patent infringements related to the 3G technology of cell phones, otherwise known as the Wideband Code Division Multiple Access standards.  Samsung claims that these patents are “essential” patents, meaning that they are part of an “industry standard-setting process.”  Such patents are required to be licensed to all who desire them, but licensing must be done in accordance with competition laws and in a fair, reasonable, and non-discriminatory manner.  The consequence of this classification is that Apple will have to pay Samsung to use its technology.   A failure to reach an agreement, however, on the amount of payment, would not result in Samsung having the ability to block any products from being shipped and sold.

Given the potential consequences of such a characterization of the alleged infringed patents, it may seem odd that Samsung chose this strategy.  Understanding the complex relationship between the two parties makes the classification more comprehensible.  Apple and Samsung are major competitors in the cell phone market.  In the second quarter of 2011, Apple had the most global sales of smartphones and Samsung was ranked second.  In the third quarter of 2011, however, Samsung outsold Apple and gained the top spot.  Despite this intense competition, Samsung, the world’s largest memory chip manufacturer, serves as an important supplier for Apple.  This relationship explains why Samsung would take the approach it has.

The Italian court presiding over the lawsuit in Italy denied Samsung’s ban request in late October, allowing for the scheduled release of the iPhone 4s on October 28, 2011.  There will, however, be another hearing on December 16, 2011, during which the parties will submit additional information for further consideration.  Though the French court has yet to make a ruling, the Italian decision is yet another victory for Apple in its ongoing patent war with Samsung.  When the fight will cease, and what effect this litigation will have on the business relationship of the parties, has yet to be determined.

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*  Chris Hewitt is a second-year law student at Wake Forest University School of Law and a member of the Journal of Business and Intellectual Property Law.  He holds a Bachelor of Business Administration in Trust and Wealth Management from Campbell University.  Upon graduation in 2013, Mr. Hewitt plans to practice business and estate planning law.

By Tierryicah D. Mitchell *

Commonly referred to as King James for his superior skills on the basketball court, LeBron James is the perfect subject of the second edition in the Kings in Court Series. The Kings in Court series was created to highlight individuals, who are deemed to be royalty in their own right, that have found themselves in court for some sort of intellectual property violation.

On or around September 6, 2011, songwriter-producer Mason “Big Mace” Hall filed suit in a Georgia federal court against Lionsgate Entertainment (the distributor of the documentary) and Interscope Records (LeBron James’ label) for copyright infringement for the inclusion of unauthorized music in Liongate’s documentary, More Than A Game. Mr. Hall alleges that the song at the center of the controversy entitled, “We Ready,” was used at several points during the documentary without his permission.  During the documentary, which highlights the high school basketball careers of LeBron James and his high school teammates, the young players can be heard performing a pre-game motivational chant also entitled, “We Ready.” Interviews conducted during the documentary with several players explained that this song-chant, which was performed ritually during the warm-up of each game, became the “rallying cry” of the team.

According to the complaint, Mr. Hall seeks the following relief: (1) an injunction against any further use of the song, which effectively includes stopping Lionsgate from any continued distribution of the documentary; (2) punitive damages in excess of $1 million dollars or the maximum statutory damages awarded under copyright law; and (3) profits arising from the documentary.

However, before this copyright infringement suit can pick up any legal traction, Mr. Hall must first establish that the song-chant in the documentary is his original song. In order to establish a viable copyright claim, a copyright holder must show that: “(1) the defendant has actually copied the plaintiff’s work; and (2) the copying is illegal because a substantial similarity exists between the defendant’s work and the protectable elements of plaintiff’s [work].”  Hamil Am., Inc, v. GFI, 193 F.3d 92, 99 (2d Cir. 1999).  According to the Hollywood Reporter, Rapper Yaboy turned the “We Ready” chant into a rap song that was used on the documentary’s soundtrack. Notwithstanding this, Mr. Hall alleges that he authored the song “We Ready,” which was originally recorded by music recording artist, Archie Eversole, Jr.  After listening to all versions of the song, it is reasonably apparent that all later versions of the song were derived from his original song.

Even after establishing ownership and authorship of the song, Mr. Hall must next overcome the doctrines of fair use and de minimis use as well as the notion that current copyright law may not extend its protection to include the words, “We Ready.”  A brief explanation of the law may prove useful in contextualizing the potential contours of Mr. Hall’s lawsuit.

The fair use doctrine allows non-copyright holders “to copy, publish, or distribute parts – sometimes even all – of a copyrighted work without permission, for purposes such as commentary, news reporting, education, or scholarship.” The court takes the following four factors into consideration when determining whether an infringer’s use of a work falls within the purview of the fair use doctrine: “(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.”  The application of the fair use defense is unpredictable as no one factor is dispositive.  Accordingly, the courts must perform a balancing test in light of the totality of circumstances.

Perhaps two of the leading factors in the case at hand will be the character of use prong and the substantiality prong.  Under the character of use prong, the court looks at how the infringer used the original work.  That is, the court looks at whether the infringer’s use constitutes a creative or transformative use of the work. A work is deemed transformative when the “new work” adds something new in terms of meaning, expression, or message to the original work.  The way that the court ultimately comes out on this prong could depend in no small part on whether the court considers the chant commercial in nature.

In considering the substantiality prong, the court looks “not only to how much of the copyrighted work is used, but also to how central that portion is to the original work.” As a general rule, the less of the work that is used, the better an infringer’s chance of being able to successfully satisfy the substantiality prong of the defense.  In tandem, the court may also consider whether the use of the term, “We Ready,” is too common of an adage to have any copyright protection extended to it.  If the court should find that the term falls within the scope of copyright law, the court then considers whether the actual use of the term was so minor in comparison to the work-at-large that the copyright infringement claim necessarily fails.  Given that More Than A Game is a 105-minute documentary that follows the high school basketball careers of five then-high school teammates, it seems unlikely that a court will find that the pre-game chant satisfies the substantiality prong.  However unlikely this may seem, it is not impossible for a court to find otherwise. Considering that the chant was a pre-game ritual used and shown in different portions during the documentary, a court could reason that the chant’s use was substantial in the context of the entire work.

No matter which way the court decides to come down in this lawsuit, one thing is for certain.  I would much rather follow LeBron James on a basketball court than in a court of law defending a lawsuit.

Other Parts:

Kings in Court Series: Part I

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* Tierryicah D. Mitchell is a third-year law student at Wake Forest University School of Law.  She holds a Bachelor of Arts and Science in Political Science and History from the University of North Carolina at Chapel Hill.  Upon graduation in 2012, Ms. Mitchell plans to work for the federal government.

By Lena Mualla *

Google aims to create the world’s largest library.  Depending on the outcome of its pending litigation with authors and publishers, we may see the realization of that goal sooner rather than later.  The benefits are obvious: making a massive array of books available, including books from all over the world as well as books that are currently out of print, would improve access to knowledge.  In fact, as part of an earlier, unsuccessful attempt to resolve the litigation, Google announced it would offer at least one terminal in each public library, allowing free access to its digital library.  In addition, Google further committed to providing accommodations for those who are visually impaired.

However, authors have been up in arms over Google’s alleged copyright infringement of their works in its quest to form its digital library.  Specifically, Google had used snippets of authors’ works without obtaining the right to do so.  Moreover, Google came under fire for its scanning of orphan works.  An orphan work is a copyrighted work whose copyright owner cannot be found.    That is why the Authors Guild and the Association of American Publishers brought suit against Google in 2005 for copyright infringement.  Yet, Google is seemingly in a good position, despite the ongoing litigation.  Attorneys for both the Authors Guild and the Association of American Publishers indicate that progress is being made, hinting that a settlement may be reached before the trial date.

At this point, following over six years of litigation, the date for trial has been extended to July 2012.  A prior settlement agreement reached by the parties was rejected by the judge who, in agreeing with the Department of Justice, believed a potential Google monopoly would result.  The judge said that the proposed settlement, which was for $125 million, needed to be amended so that authors would be presumed to be excluded from the class action settlement, and included only if affirmatively “opting-in.”  The rejected settlement would have done the opposite, using the automatic opt-in approach, requiring affirmative steps in order to opt-out.  This is a significant difference, since an estimated 88% of authors had passed on their right to decide, which is an opt-in by default.  Thus, it is easy to see why Google is averse to the default opt-out method.  Since Google already has about 15 million books on its shelf, and it plans to reach 130 million once a settlement is finalized, an automatic 88% would go a long way towards filling that shelf in one fell swoop.

The opt-out provision in the settlement was one of the more salient issues with the proposed amended settlement that was rejected by the court.  However, some critics note that other weaknesses will need to be addressed as well.  The status of orphan works has also been a focus of criticism.  The October 2008 settlement agreement, as well as the November 2009 amended settlement agreement, both contain terms offering Google protection against suits filed by copyright holders of orphan works.  Since this protection would be unique to Google, and given that there are as many as five million orphan works, Google would end up with a significant leg up on the competition due to its dominance within the orphan works category.

Ultimately, since the parties indicated that a new settlement is likely to be reached, there will likely not be a need for a trial.  Yet, the judge’s deadline of June 2012 will push the parties to hammer out the details of a new settlement without any further delay.  It seems obvious that a digital library of books would be extremely beneficial to the public; however, if one company is permitted to set prices in the absence of significant competition, those benefits will not be as great as they could be.

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*  Lena Mualla is a second-year law student at Wake Forest University School of Law.  She holds a Bachelor of Arts in Government and International Politics from George Mason University.  Ms. Mualla, a Fulbright award recipient, taught English in Indonesia prior to entering law school.  Upon graduation, she intends to practice international law or environmental law.

By Jason Weber *

Scut Farkus

After a successful National Bullying Prevention Month in the books, parents can rest assured that classic bullies like O’Doyle and Scut Farkus will no longer be stalking the halls and playgrounds of the nation’s schools.  But there is another breed of bandit out there that terrorizes small businesses instead of small children – the “trademark bully.”  While typical bullies might hurl insults or twist your arm until you scream “Uncle,” these trademark bullies engage in even more sinister tactics: driving their victims out of business with meritless trademark infringement claims.

There is obviously nothing wrong with bringing trademark infringement suits.  Businesses, large and small, are entitled to protect their intellectual property rights under § 1114 of the U.S. Trademark Act.  Trademark bullying, however, is when a large business with unlimited resources tries to enforce its trademark beyond a reasonable interpretation of the rights granted to it by the U.S. Trademark Act.  Basically, trademark bullies use trademark law as a guise to harass smaller competitors by sending cease-and-desist letters and using other threats, regardless of the spurious nature of their claims.  These larger corporations, with deep pockets and powerful attorneys, bank on the fact that many small businesses simply cannot afford to defend themselves because of the exorbitant costs of intellectual property suits.  Instead of fighting back, most defendants are forced to give in to the bully’s demands or face the possibility of going bankrupt during the litigation process.

While some trademark infringement suits certainly represent valid claims, see Lady Gaga’s suit against a fictitious British children’s character – Lady Goo Goo, others are more questionable.  Some prominent examples of alleged bullying include the multiple lawsuits filed by Facebook against social networking sites that use the prefix “face” or suffix “book;” Proctor and Gamble’s suit against Willa, a small U.S. children’s skin care company, for allegedly infringing on P&G’s German hair care line – “Wella;” Apple’s claim that it owns “pad;” and Monster Energy Drink’s lawsuit against small, Vermont-based Rock Art Brewery for its Vermonster beer.

After the Vermonster lawsuit, Senator Patrick Leahy (D-VT) suddenly became concerned about the issue of trademark bullying, and in 2010, Congress unanimously mandated a study on the merits of these claims.  Section 4 of the Trademark Technical and Conforming Amendment Act of 2010 ordered the Secretary of Commerce to study the issue and make a report with recommendations on how Congress can help protect small businesses from harassing litigation.  The report, published in April of 2011, failed to find enough hard evidence of trademark bullying to recommend any legislative fix.  Its only major recommendation was to encourage the private sector to step in and provide pro bono services to small businesses engaged in trademark disputes with larger companies.

Some commentators immediately blasted the Commerce Department’s findings and recommendations, arguing that the simple solution is to award attorney’s fees to the prevailing party in questionable trademark disputes.  This would presumably provide a greater deterrence for accused trademark bullies, and encourage small businesses to defend themselves without having to worry about the costs of litigation.  But given the inconclusive findings of the study and lack of subsequent congressional action by Senator Leahy, trademark bullying victims will have to find other ways to protect themselves.  One solution is to be extremely careful when deciding what trademark to register and to conduct an extensive search of any similar marks to avoid future lawsuits.  Another solution is to fight back.  Willa successfully forced P&G to settle its claim, but racked up $750,000 worth of attorney’s fees in the process.  For businesses that cannot afford this price tag, publicizing the harassment and using social media can also be a successful strategy, as evidenced by Rock Art Brewery’s defeat of Monster energy.

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* Jason Weber is a second-year law student at Wake Forest University School of Law and a staff member on the Journal of Business and Intellectual Property Law.  He holds a Bachelor of Arts in Political Science from Hope College and served with Teach for America prior to entering law school. After graduating in 2013, Mr. Weber intends to practice in the areas of education or community and economic development law.

By Joseph Norman *

Alright, who forgot to lock the equipment shed?  Apparently, the intellectual property lawyers at Major League Baseball (MLB) and the 2010 World Series Champions San Francisco Giants.  It seems that while the Giants have been using their cursive script logo since 1993, nobody thought to trademark it.  Well, an entrepreneurial clothing maker from close-by Hayward, California did.  On March 15, 2011, Gogo Sports, Inc. registered a mark “virtually identical” to the Giants’ cursive logo in the United States Patent and Trademark Office Supplemental Register.  All is not lost for the Giants, however, as it is likely they can establish a prior use claim to the trademark.

In April 2011, the Giants finally wised up to their failure to register the mark.  On April 26, the Giants submitted a Trademark Application to the USPTO for a mark consisting of the words “San Francisco in stylized text.”  Complaint at 37, Exhibit K, Gogo Sports, Inc., v. Major League Baseball and The San Francisco Giants Baseball Club, (C.D. Cal. 2011)( No. 11 Civ. 7992JHNTJEM) (hereinafter “Complaint”).  On August 8, the Giants’ application was refused “because of a likelihood of confusion with the mark in U.S. Registration No. 3933119.” Id. It is not clear whether they were aware of Gogo’s mark, but the Giants did not seek to assert any right against Gogo until September.  Complaint at 4.

Will “the Thrill” because he is not Barry Bonds

On September 7, MLB counsel Nicholas Eisenman sent Gogo a cease and desist letter demanding immediate and express abandonment of Gogo’s registration of the mark.  Complaint at 4.  Clearly by that time MLB recognized its error and realized that it had neglected to register the mark and that Gogo had successfully registered its mark.  Gogo’s counsel responded on September 13, with a request for MLB to identify its trademark registration with the Patent and Trademark Office.  MLB answered two days later with an explanation of its stance and a reiteration of its demands.  Complaint at 5.  On September 21, Gogo responded again by requesting MLB’s trademark registration, to which MLB answered on the same day with a vague response as to the merits of their claims and a stern request for settlement discussions.  Complaint at 6.  Following the perfunctory cease and desist letters, Gogo filed suit in Federal District Court for the Central District of California seeking declaratory judgments validating its right to the registered trademark.

Although it might seem that the Giants are behind in the count, legally they are in a pretty good spot due to the prior use defense provided in the Lanham Act.  15 U.S.C. § 1115(b)(5) (2006).  Section 1115(b)(5) essentially provides that a trademark infringer may contest the trademark registration by showing that: i) his use was without knowledge of the registrant’s use; and ii) he has continuously used the mark from a date prior to registration of the mark.  Id. Ninth Circuit courts have long recognized this defense to trademark infringement.  See Mister Donut of America, Inc. v. Mr. Donut, Inc., 418 F.2d 838 (9th Cir. Cal. 1969).  In essence, the Giants need only show they have been using the logo prior to Gogo’s use to defeat Gogo’s enforcement of the mark.  The Giants claim they started using the logo in 1993.  Complaint at 19, Exhibit D.  If that is the case, then it is a safe bet that they will be able to successfully challenge Gogo’s trademark.  Although Google image searches for the cursive logoed jerseys only return one hit.  Raising the question of what threshold the use must reach before it will be recognized.  Despite their advantageous legal position, San Francisco and MLB could have saved themselves from this hassle by covering their logo bases.

Finally, it is easy to point out the Giants’ and MLB’s failure here, but uniforms and logos these days are increasing exponentially.  MLB teams can wear ten or more different uniform styles—each with different color schemes and logos—during a single season.  These include a home uniform, a road uniform, an alternate uniform, multiple throwback uniforms, batting practice uniforms, spring training uniforms, and uniforms for special occasions.  With an ever-increasing number of logos in use, it is not surprising that one fell through the cracks.  That being said, it is highly likely that professional sports teams across the country are double-checking their trademarks.

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* Joseph Norman is a third-year law student at Wake Forest University School of Law.  He holds a Bachelor of Science in Management from North Carolina State University and an MBA in Finance from the McColl School of Business at Queens University of Charlotte.  Prior to enrolling in law school, Mr. Norman worked for Wells Fargo Wealth Management in Equity Research.  Upon graduation in May 2012, Mr. Norman will practice corporate law.