Posted On: March 28, 2012

Court Again Denies Mgame's Temporary Restraining Order Against K2 Network For Knight Online Game

trademark-copyright-infringement-tro-mgame-k2-license-breach.jpgK2 network sued Mgame in state court for breach of contract and fraud because K2 claimed overpayment of royalties in its distribution of the Knight Online 3D video game. Mgame then sued K2 in Federal Court seeking a temporary restraining order and a preliminary injunction for copyright infringement and violation of the Computer Fraud and Abuse Act. The Court denied the TRO and preliminary injunction because Mgame's complaint did not have a claim that conferred the Federal Court jurisdiction. Click here for details.

Mgame has now filed a new complaint alleging copyright infringement, trademark infringement, and violation of the Computer Fraud & Abuse Act. Once again, Mgame requested that the Court issue a Temporary Restraining Order and Preliminary Injunction against K2 pending submission of the dispute to arbitration, as provided in the parties' contracts.

The Court has once again denied Mgame's application for a temporary restraining order because Mgame's own conduct does not establish its entitlement to emergency relief:

Although Plaintiff implies that emergency relief is not available from the arbitral tribunal because of the length of time required to constitute the tribunal, Plaintiff has not yet initiated arbitration. Instead, Plaintiff merely states that it intends to initiate arbitration. Therefore, at least part of the reason that recourse to the arbitral tribunal is unavailable is that Plaintiff has failed to initiate arbitration. Furthermore, Plaintiff has been aware of a dispute with Defendant since at least the beginning of February, first responding with self-help, then terminating the agreement with Defendant on February 23, 2012. Only now, a month later, has Plaintiff sought a temporary restraining order. The Court concludes that this does not amount to an emergency requiring ex parte relief. Accordingly, Plaintiff’s request for a temporary restraining order is DENIED.

The Court did, however, provide Mgame with a glimmer of hope by issuing an order that K2 appear on April 30, 2012 and show cause why a preliminary injunction should not issue enjoining k2 from "either directly or indirectly, from continuing to operate, promote, publish, produce, distribute and service the Game; ordering Defendant to immediately transfer the Game Servers and Billing and User Databases to Plaintiff, including up-to-date billing and user data; ordering Defendant to provide Plaintiff with up-to-date sales information; and ordering Defendant to take any further steps necessary to transfer control of the Game to Plaintiff without disruption in its availability and continuity."

The new case is Mgame Corp. v. K2 Network, Inc., CV12-2525 JST (C.D. Cal. 2012).

Posted On: March 26, 2012

Court Denies Mgame’s Knight Online 3D Game TRO and Preliminary Injunction Against K2 Network

mgame-k2-lawsuit-knight-online-3d-preliminary-injunction-tro-restraining-order.jpgUPDATE: Court Denies Mgame's Second Attempt For Temporary Restraining Order.

Mgame licensed K2 Network in 2003 to operate and distribute the “Knight Online 3D” multiplayer, role-playing game in return for payment of royalties. Mgame claims that it terminated the written license on February 23, 2012 due to K2’s failure to pay royalties. Despite the termination, K2 is allegedly continuing to operate and distribute the game without payment of royalties. Also, K2 is accused of illegally accessing Mgame’s secured servers without authorization and illegally copying user and billing databases and has refused to return Mgame’s servers. “K2, in short, has hijacked the Game to Mgame’s detriment and has continued to operate and distribute it using Mgame’s own computer hardware, software, and Game-related intellectual-property.”

Although the parties’ licensing agreement provides for Arbitration, Mgame sued K2 in Federal Court for a more expedited ruling since “it could easily take 60 days after Mgame files its Notice of Arbitration, and possibly much longer, before the arbitral tribunal is fully constituted and capable of entertaining a request for interim measures.” That delay, Mgame contends, will cause and is currently causing irreparable harm. Thus, Mgame asks the Court to issue a temporary restraining order and a preliminary injunction prohibiting K2’s conduct.

The Court denied Mgame’s motion for a temporary restraining order because Mgame failed to establish the Court’s jurisdictional authority to do so in light of the parties’ arbitration provision in their licensing agreement. The Court found that the complaint asserts only a single cause of action for “TRO and Preliminary Injunction,” which is insufficient to establish the Court’s jurisdiction to grant the requested relief. F.T.C. v. H.N. Singer, Inc., 668 F.2d 1107, 1109 (9th Cir. 1982). “Plaintiff does not point to any jurisdictional authority that allows the Court to provide preliminary injunctive relief without an underlying claim. While Plaintiff states that this case “arises under” federal copyright laws and the Computer Fraud and Abuse Act, neither of these claims is actually asserted in the Complaint.” Further, the Court could not find a likelihood of success on Mgame’s copyright and Computer Fraud and Abuse Act claims because they were not asserted in the complaint, but are claims Mgame intends to assert in arbitration.

Other Courts in the Ninth Circuit have granted injunctions despite agreements to arbitrate. PMS Distrib. Co. v. Huber & Suhner, A.G., 863 F.2d 639 (9th Cir. 1988) (holding court retains jurisdiction to issue injunction despite order to arbitrate). Mgame’s loss may be based on a technicality, its failure to include a cause of action for copyright infringement and Computer Fraud & Abuse Act claim to provide the Federal Court with jurisdiction to grant the requested relief.

The case is Mgame Corp. v. K2 Network, Inc., SACV12-438 JST (C.D. Cal. 2012).

It also appears that K2 sued Mgame a day earlier in Orange County Superior Court for breach of licensing agreement and fraud. K2 alleges that a March 1, 2012 audit revealed it overpaid Mgame by $1,903,254.07 in royalties. K2 also claims that Mgame's February 23, 2012 termination letter is a repudiation of their 2011 extension because it constitutes a termination without cause and excludes the accompanying payment. Mgame is also accused of breaching the contract by failing to use its best commercial efforts to maximize the sales of electronic serial numbers ("ESNs"), selling in specific territory after its right to do so had been terminated, failing to sell country specific versions, and publishing a competing game through "eNTiTy Games" and "NFinity Games". Defendant Chris Hwang -- part owner of Mgame -- is also accused of intentionally interfering with K2's contractual relations with Mgame by establishing competing corporations to disrupt Mgame's performance of the K2 agreements.

The state court case is K2 Network, Inc. v. Mgame Corporation, et al., Orange County Superior Court Case No. 30-212-00555196-CU-BC-CJC.

Posted On: March 21, 2012

Charriol Files Cable Motif Jewelry Copyright and Trade Dress Infringement Lawsuit

UPDATE 4-24-2013: District Court finds non-infringement of trade dress and copyrights on summary judgment.

trade-dress-jewelry-copyright-cable-charriol-yurman-trademark.jpgA’lor International Ltd., dba Charriol USA, is suing sixteen defendants for manufacturing and selling numerous jewelry designs incorporating a nautical cable motif that allegedly infringe Charriol’s copyrights and trade dress. Charriol claims that it has been designing unique jewelry designs for decades, which have either been registered with the U.S. Copyright Office or are pending registration. To see pictures of Charriol’s entire list of asserted designs and allegedly infringing products, click here. Through many years of sales, advertising, and media coverage, Charriol alleges that the cable motif has become its trade dress, meaning that the jewelry’s visual appearance functions as a trademark and consumers associate the appearance with the source of the jewelry. Charriol also asserts a breach of implied contract against four defendants that received samples of the jewelry and agreed to only use the designs if they compensated Charriol.

Charriol’s cable jewelry designs are reminiscent of David Yurman’s twisted cable design. Indeed, Yurman has filed numerous lawsuits for infringement of his copyrights and trade dress in the twisted cable jewelry design. In Yurman Design, Inc. v. PAJ, Inc., the defendant appealed the jury’s verdict awarding Yurman damages for PAJ’s infringement of Yurman’s copyrights and trade dress. The Second Circuit affirmed the finding of copyright infringement despite the use of cable designs by others in the jewelry industry because “the originality in Yurman's four designs inheres in the ways Yurman has recast and arranged those constituent [preexisting] elements. We have carefully reviewed the cable jewelry produced by third parties that PAJ submitted to the jury, and cannot conclude that any of Yurman's four combinations are nonoriginal as a matter of law.” The appellate court, however, reversed Yurman’s trade dress victory because his definition of the trade dress as "the artistic combination of cable [jewelry] with other elements" was overbroad or generic:

Yurman's inability to articulate its trade dress at a lower level of generality is not altogether surprising, given (1) that there are 18 different Yurman pieces in the product line it seeks to protect (eight rings, seven bracelets, and three pairs of earrings), four of which the jury found to be separately copyrightable; and (2) Yurman's concession that the pieces are composed exclusively of elements commonly used in the jewelry industry. A unique combination of elements may make a dress distinctive, but "the fact that a trade dress is composed entirely of commonly used or functional elements might suggest that the dress should be regarded as unprotectible or 'generic,' to avoid tying up a product or marketing idea."

Charriol defines its trade dress as “interwoven nautical cable threads; twisted stainless steel components; 1.0, 1.2, 1.5, 1.6, 5.5, 3.0, and 6.0 millimeter cable composition; electro-polished juxtaposed multi-strand cable threading; treated soft-textured components; poly/physical vapor deposition-treated design elements.” Assuming that it does not suffer Yurman’s overbroad or generic definition of its trade dress, it will be interesting to see how Charriol will argue that its cable jewelry design trade dress has been substantially exclusive in light of Yurman’s similar cable jewelry design.

The case is A’lor International, Ltd. v. Tappers Fine Jewelry, Inc., CV12-02215 RGK (C.D. Cal. 2012).

Posted On: March 13, 2012

Copyright Infringement Lawsuit Filed Over Artist’s Use Of Beastie Boys Photos

pictures-copyright-infringement-artist-derivative-work.jpgArtist David Flores is being sued for copyright infringement for using photographer Glen Friedman’s pictures of the Beastie Boys to make derivative artistic works, some of the photographs and accused infringing works are reproduced to the right. Friedman also alleges copyright ownership in a photograph of famous skateboarder, Jay Adams, which copyright was infringed by Flores’ derivative artistic work. Friedman contends that defendants engaged in widespread distribution of unauthorized copies of his copyrighted works. In addition to monetary damages, Friedman seeks his attorneys’ fees.

The current images remind me of Shepard Fairey’s “Obama Hope” posters, where Fairey was countersued for copyright infringement by the Associated Press for using one of its photographs to make his derivative work. After Fairey admitted to destroying evidence and was untruthful regarding which photo he used, Fairey settled the case for an undisclosed sum and his agreement to refrain from using AP photo’s without a prior license. Two weeks ago, in the criminal case against Fairey, he plead guilty for disobeying a judge’s order to not destroy evidence and lying to the court. He is to be sentenced on July 16, 2012.

On the other hand, the clothing company, One 3 Two, Inc., that used Fairey’s work on T-shirts and its website continued the litigation with AP claiming that its use of Fairey’s work did not infringe and was protected under the fair use defense. In a relatively short order, U.S. District Judge Alvin K. Hellerstein, denied One 3 Two’s fair use defense: “I hold, however, that should the AP establish copyright infringement, One 3 Two does not have a basis to rebut the finding on the ground of fair use. I therefore grant [AP’s] motion insofar as it seeks to pare the fair-use dense away from the case, but otherwise deny it.” The AP was also seeking a finding of copyright infringement and a violation of the DMCA, which were not decided on summary judgment and must now proceed to trial.

The case is Friedman v. Flores, CV12-1840 JFW (C.D. Cal. 2012).