Los Angeles Intellectual Property Trademark Attorney Blog

KTS Karaoke is suing Sony/ATV Music Publishing for declaratory relief of copyright non-infringement and/or reduction of the damages amount at issue, which Sony claims is almost $1.3 billion. The music publishing company is co-owned by The Michael Jackson Family Trust (in 1985 Michael bought ATV publishing company that included the Beatles’ catalog for $47.5 million, causing a rift with Paul McCartney) and Sony and owns a vast library of music copyrights. KTS claims to be the largest distributor of karaoke hardware and software in the country.

Sony/ATV sent correspondence to KTS claiming at least 6715 acts of copyright infringement by virtue of selling karaoke discs that contained allegedly unlicensed recordings of music copyrights, resulting in statutory damages of at least $1,282,050,000.00. KTS argues that Sony/ATV has known of the manufacture and distribution of the karaoke CDs for more than the applicable three year statute of limitations and has not taken reasonable steps to stop the manufacture of the infringing products at the source. Instead, KTS alleges, Sony/ATV has engaged “in copyright misuse by seeking to secure multiple license fees from the same allegedly infringing work by suing each link of the distribution chain, by demanding license fees for licensed goods and by attempting to obtain more than one statutory damage award for the continuing infringement (i.e., downstream distributions of the infringing work) of a SINGLE WORK.”

If the court finds that KTS has infringed the copyrighted works, KTS asks the court to then determine the proper amount of damages in dispute: KTS alleges that “Sony/ATV claims that it is entitled to multiple awards of statutory damages for the same song appearing on different products while KTS believes that Sony/ATV is limited to one award per work, no matter how many different products are at issue as to a given work.” In addition, KTS contends that Sony/ATV is not entitled to any damages for many of the discs at issue because Sony/ATV has already recovered damages for the distribution of the subject discs from others in the distribution chain. KTS will presumably rely on the Ninth Circuit’s holding that “when statutory damages are assessed against one defendant or a group of defendants held to be jointly and severally liable, each work infringed may form the basis of only one award, regardless of the number of separate infringements of that work.” Columbia Pictures Television v. Krypton Broad. of Birmingham, Inc., 106 F.3d 284, 294 (9th Cir. 1997), rev’d on other grounds, Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998)).

KTS also asserts a California unfair competition claim premised on the belief that Sony/ATV has allowed the Karaoke music CDs to be placed in the stream of commerce so that it could make various claims against sub-distributors and thereby recover multiple times for the same allegedly infringing conduct. KTS essentially claims that Sony/ATV encourages the infringement because it is part of its revenue generation model to extract “multiple recoveries from the same infringing discs and to line the pockets of Sony/ATV and its counsel.”

The case is KTS Karaoke, Inc. v. Sony/ATV Music Publishing LLC, CV12-0014 (C.D. Cal. JMM).

Before last week’s release of Twilight Saga: Breaking Dawn Part 1, a trademark and copyright infringement lawsuit saga dawned on clothing manufacturer B.B. Dakota over the pictured Bella Jacket. Summit Entertainment, the producer of the Twilight franchise that has raked in more than $1 billion in gross revenues, owns several USPTO trademark registrations for the “TWILIGHT” and “BELLA” trademarks, including for use on clothing and jewelry. Summit of course also owns all copyrights in the movies in addition to marketing and publicity materials and the “Bella Trading Card Image.” Summit’s licensing of the intellectual property rights has grossed an additional $63 million.

Defendant BB is a clothing manufacturer that sold the pictured women’s cargo jacket in 2006 under the “Leigh” mark, which was discontinued in 2008. When the Leigh jacket was worn by Bella in the 2009 Twilight movie, BB was credited as the manufacturer in an Entertainment Weekly article accompanying a photograph. BB’s outside public relations contractor then contacted Summit’s manager of national publicity requesting permission to re-publish the EW image on its website, which she included in an email link to EW’s website. Summit’s representative responded with a simple “OK.” A few days later, BB requested permission to allow for a retail store to use the image, to which Summit responded with one word: “sure”.

Without seeking further permission, however, BB created “hangtags” for the jackets that included not the Entertainment Weekly picture, but an image of Bella wearing the jacket that Summit had used to promote posters, clothing, and other merchandise. Apparently, BB’s own PR rep warned BB to obtain permission to use the new image, but BB failed to heed the warning and argued that by including “As seen in the Twilight movie” language on the tag would constitute fair use. Thus, BB’s sales representative emailed the image to two hundred of her sales accounts representing that BB had permission to use the image on the hangtag and to publicize the product. The retailers in turn sent out email blasts using the Bella image with the belief that BB had properly licensed it. Summit sent cease and desist letters to BB’s retailers, after which BB instructed them to cut the hang tags from existing inventory and provided a substitute picture of a girl resembling the Bella character. To make matters worse, BB continued to refer to the jacket as the “Twilight jacket.”

Metropark, one of BB’s retailers, filed bankruptcy and ModCloth settled the matter. BB countersued Summit for trade dress infringement and unfair competition. Summit filed for summary judgment of liability on its trademark and copyright infringement, and trademark dilution claims and on BB’s counterclaims.

Continue reading "Twilight’s Bella Swan Wins Trademark and Copyright Infringement Lawsuit Over Jacket" »

Glacern Machine Tools, LLC is suing its former employee, who was also an owner and manager of the company, for copyright infringement, conversion, and breach of fiduciary duty. Glacern alleges that defendant Eric Sun wrote and created copyrighted source code, within the scope of his employment and on a work-for-hire basis, for a first property management software program and a second, derivative work that incorporates elements of the original source code. Sun allegedly used Glacern’s equipment at the direction of Glacern to create the software programs, which are owned by Glacern under the operating agreement.

Glacern contends that Sun removed two computers from its headquarters, copied the software programs, and changed the administrative passwords. In addition, Sun allegedly contacted Glacern’s customer and demanded that monthly payments now be paid to him instead. Thus, Glacern sought a temporary restraining order from the Court preventing Sun from: “(1) destroying Plaintiff’s Software Products; (2) withholding from Plaintiff personal property which Plaintiff owns, including the Software Products; and (3) transferring “any such asset, real or intangible.” In addition, Glacer sought to compel Sun to: “(1) within five (5) days, give Plaintiff a complete list of all locations of the Software Products; and (2) allow Plaintiff unlimited remote access to an IP address, which Plaintiffs believe houses the Software Products.”

The Court noted that in order to be granted equitable relief, Plaintiff must show irreparable injury and the inadequacy of legal remedies. Also, “[t]he proper legal standard for preliminary injunctive relief requires a party to demonstrate ‘that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.’”

The Court found that Plaintiff’s first alleged harm – loss of customers and business reputation – did not constitute irreparable harm because it could be redressed through monetary relief. But the second alleged harm – possible destruction of the software – did constitute irreparable harm warranting the issuance of the TRO. The Court, however, believed that the relief sought was too broad and only restrained the defendants from deleting or destroying the software programs until a hearing on the possible issuance of a preliminary injunction on November 7, 2011.

Prudent business owners require that employees execute work-for-hire agreements assigning copyrights, as well as other intellectual property rights, created in the scope of employment to the employer despite the Copyright Act’s ownership provision. In the absence of a written agreement, in Community for Creative Non-Violence v. Reid, the Supreme Court set forth several non-exhaustive factors to determine whether a hired party is deemed an employee. If an independent contractor creates the software program without a written assignment agreement, however, the independent contractor will own the copyrights therein. So if you want to own the copyright to your website, make sure you have an agreement transferring the rights to you before you pay the web designer.

The case is Glacern Machine Tools, LLC v. Eric Suyu Sun, SACV11-1641 DOC (C.D. Cal. 2011).

Saban Entertainment originally created the “Power Rangers” live action children’s television series in 1993, where several teenagers would morph from ordinary people into powerful superhero characters wearing color-coded battle suits. The colors also served as each character’s name, e.g. the Pink or Blue Rangers. Plaintiff alleges that the “television series has been immensely popular with young audiences all around the world. To date, it has been broadcast over 19 seasons, spawned two theatrical films, and become a highly valuable merchandising franchise.”

To protect its intellectual property, Plaintiff has copyrighted the artwork and design of the Power Rangers uniforms (“Uniform Copyrights”) and also owns the copyrights in the television series where they are depicted. In addition, Plaintiff has copyrighted the characters in a style guide that is provides to authorized licensees. Further, Plaintiff is the owner of numerous USPTO trademark registrations incorporating the “Power Rangers” word mark and several USPTO registered trademarks for the Power Rangers character images.

Plaintiff accuses Underdog Endeavors, Inc. of advertising and selling Halloween costumes (one image shown here) on its www.mypartyshirt.com site that infringe Plaintiff’s “intellectual property rights relating to the popular ‘Power Rangers’ television series, brand, and related products.” In addition to the copyright and trademark infringement claims, Plaintiff brings causes of action for trademark dilution and unfair competition under Section 43(a) of the Lanham Act.

As a side note, Underdog’s placement of the allegedly infringing products on its website should constitute sufficiently widespread advertising activity to trigger coverage under its Commercial General Liability Insurance (“CGLI”) policy, which policy was hopefully in place before the alleged infringement began. Hyundai Motor Am. v. Nat'l Union Fire Ins. Co., 600 F.3d 1092 (9th Cir. 2010). Most CGLI policies have an advertising injury provision under which copyright, trade dress, and sometimes trademark infringement claims are covered and the insurance company has a duty to pay attorneys’ fees and costs to defend the insured against such claims.

Are Halloween costumes copyrightable because they are garments, you ask? Although a broad category of creative works are eligible for copyright protection, the Copyright Act, however, excludes any “useful article” (e.g. clothing) – defined as “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information” – from copyright protection. Thus although garments as a whole are not eligible for copyright protection, the individual design elements – for example a floral graphic applied to the fabric – may be copyrightable. In Chosun, the Second Circuit held that Halloween costumes may be copyrightable if the design elements are separable from the overall function of the costume as clothing. Chosun Int’l, Inc. v. Chrisha Creations, Ltd., 413 F.3d 324 (2d Cir. 2005).

The case is SCG Power Rangers, LLC v. Underdog Endeavors, Inc., CV11-08485 JHN (C.D. Cal. 2011).

Bethesda Softworks and Interplay Entertainment have waged a long-running, real world copyright and trademark battle over the virtual-world Fallout video game. The Bethesda v. Interplay Maryland lawsuit apparently arose over an ambiguity in the scope of a license back to Interplay in developing future Fallout video games. In 2007, Bethesda and Interplay entered into an asset purchase agreement that assigned all rights in the Fallout trademarks and copyrights to Bethesda. And, in a simultaneously executed trademark license agreement, Bethesda granted a license back to Interplay that provides:

Subject to the terms and conditions set forth in this Agreement, Bethesda grants to Interplay an exclusive, non-transferable license an right to use the Licensed Marks on and in connection with Interplay’s FALLOUT-branded [Massively Multiplayer Online Game] MMOG (the “FALLOUT MMOG” or “Licensed Product”) and for no other purpose. The conditional license herein does not grant Interplay any right to sublicense any of the licensed rights without Bethesda’s prior written approval.

In its initial filings, Bethesda claimed that Interplay failed to meet other contractual requirements, including securing required financing and complying with commercial launch deadlines. Later, Bethesda claimed that the trademark license applied only to the Fallout mark and not to any of the elements or characters in the game. Interplay countered that Bethesda’s interpretation cannot be harmonized with the rest of the agreement that provides for Interplay’s right to use “non-FALLOUT MMOG, inter alia, any or all locations, graphic representations, creatures, monsters, names, likenesses, [etc.]” should the agreement terminate prior to commercial launch. The Maryland court appears to have initially agreed with Interplay’s interpretation by denying, without much analysis, Bethesda’s motion for preliminary injunction.

Undeterred, and possibly seeking a change of scenery, Bethesda has filed a new copyright infringement lawsuit against Masthead Studios in Los Angeles. Bethesda alleges that Interplay has, in violation of the trademark license, entered into a product development agreement with Masthead for the development of a Fallout video game called Project V:13 by improperly sublicensing Bethesda’s intellectual property. This time, Bethesda wastes no time in alleging that under the Interplay trademark license, in “plain, clear and unambiguous” terms, Bethesda “granted Interplay a conditional license to use only the ‘FALLOUT’ trademark and nothing more relative to a Fallout-branded MMOG. Bethesda did not provide Interplay with any license to use any copyrighted materials relating to Fallout -- all copyrighted materials were retained exclusively by Bethesda.” Bethesda claims that Masthead’s performance of its duties under the Interplay agreement is both a direct and contributory infringement of its copyrights and filed for a temporary restraining order.

The Hon. John F. Walter, without even the benefit of an opposition from Masthead, denied Bethesda’s ex parte application for a temporary restraining order:

Plaintiff has not demonstrated that it will be irreparably prejudiced if the requested ex parte relief is not granted, or that it is without fault in creating the crisis that requires ex parte relief. Indeed, Plaintiff was aware as early as February 2011 that Masthead was potentially infringing its copyrights. . . . Bethesda Softworks LLC v. Interplay Entertainment Corp., Case No. 09 CV 2357, D. Maryland, Memorandum in Support of Plaintiff’s Motion for Preliminary Injunction at p. 7 (“According to Interplay, pursuant to this purported development agreement, Masthead Studios is assisting Interplay in developing its Fallout MMOG using the copyrighted Fallout works.”). Yet, Plaintiff waited seven months to apply for ex parte relief. The Court finds that Plaintiff unreasonably delayed in seeking relief, and that the emergency that allegedly justifies a TRO is self-created. Accordingly, Plaintiff’s Ex Parte Application for Temporary Restraining Order and Order to Show Cause Re: Preliminary Injunction is DENIED. If Plaintiff wishes to pursue its request for injunctive relief, it may do so by way of regularly noticed motion after complying with Local Rule 7-3.

Further, the Court denied Bethesda’s ex parte application for substituted service on Masthead, a Bulgarian software company.

The case is Bethesda Softworks, LLC v Masthead Studio, Ltd., CV11-7534 JFW (C.D. Cal. 2011).

Lukasian House supplies major retail chains with hand-made storage and organization products made of wood and fibers. Lukasian alleges that for over ten years it has built a database of “mom and pop” factories in rural China that reliably provide well-designed, high-quality hand-woven products. Major retail chains choose to work with Lukasian because it has a dependable source of products for timely delivery. Lukasian, naturally, keeps the identity of its suppliers a closely guarded secret by limiting disclosure to certain employees, maintaining it on a secure computer network, and instructing employees of the confidential nature of the information. Lukasian has also filed several copyright registration applications for photographs of samples of storage baskets and a hamper that it never published.

Aprille Vergara and Chen “Jane” Chen were former employees that allegedly had access to Lukasian’s trade secrets in performing their duties. In May of 2010, Vergara and Chen and other defendants allegedly accessed Lukasian’s server to download trade secrets to use in establishing a competing business. Shortly thereafter, Vergara and Chen resigned and allegedly falsely stated that the former intended to go back to school and the latter was to work with in her husband’s real estate business. Relying on the provided reasons, Plaintiff allowed Defendants to continue working and they’re accused of acquiring “knowledge of Lukasian’s suppliers, its customers, its best-selling items, the prices at which it buys and sells those items, and its profit margins on those items.” Defendants are accused of selling competing products to Lukasian’s customers and undercutting its prices.

Lukasian brings causes of action for copyright infringement (17 U.S.C. § 501(a)), computer fraud and abuse act violation (18 U.S.C. § 1030(g)), California comprehensive computer data access and fraud act (Cal. Penal Code § 502(c)), trade secret misappropriation (Cal. Civ. Code § 3426), unfair competition (Cal. Bus. & Prof. Code § 17200), intentional interference with prospective economic advantage, and conversion.

The case is Lukasian House, LLC v. Ample International, Inc., CV11-6449 JFW (C.D. Cal. 2011).

The race for Mandeville-Anthony was over before it even began. In March of this year, Plaintiff sued Disney and Pixar alleging that the Cars and Cars 2 animated motion pictures infringed his copyrights. Also, Plaintiff claimed that Disney and Pixar stole his idea for the motion pictures from his work that he submitted to Disney and Pixar employees.

Disney and Pixar quickly filed a motion for judgment on the pleadings under FRCP 12(c), which means after the complaint, answer, counterclaims and reply, if any, are filed, a defendant can seek early judgment that – based on the pleadings alone – a plaintiff cannot meet its burden of proof. In a short one page opinion, the Court dismissed the copyright infringement claim because the parties’ works are not substantially similar as a matter of law: “[a]mong other things, the protectable elements of the parties’ respective works are dissimilar in plot, sequence of events, pace, themes, dialogue, mood, setting, and characters.” As to the second cause of action for breach of implied contract (aka idea submission), the Court found that the claim was untimely because it was filed after the applicable two-year statute of limitations. Cal. Code Civ. Pro. 339(1).

Reviewing Defendants’ motion shed’s light on the flimsy nature of Plaintiff’s allegations: “How Plaintiff can contend these characters [pictured here] are similar is mystifying. . . In short, the parties’ expressions of the general idea of animated, anthropomorphic cars are extremely different. Any suggestion that the parties’ characters are similar – let alone, substantially similar – would defy the Ninth Circuit’s exhortation that copyright law protects only the specific details of an author’s rendering of an idea, and not the idea itself.”

The Court agreed with Defendants’ contention that the statute of limitations period begins to run on the date defendants first began to use plaintiff’s idea without compensation. Because Cars was released in June 2006, Plaintiff’s complaint was filed about three years too late.

The case is Jake Mandeville-Anthony v. The Walt Disney Company, CV11-02137 VBF (C.D. Cal. 2011).

Jewelry designer Sonya Frisina does business as Sonya Ooten and has a retail store in Los Angeles. Ooten owns U.S. Design Patent No. D544,389, titled “Metal Crochet Earring,” covering the ornamental jewelry design. There is often overlap with different forms of intellectual property and Ootent, to maximize protection, also registered the “Cosmos” earring design with the U.S. Copyright Office.

Ooten alleges that Soixante Neuf’s “Oval Woven Beaded Earrings” infringe both its design patent and copyright. To prove design patent infringement, Ooten must meet both the ordinary observer test and points of novelty test. The design as a whole is examined in the ordinary observer test and the individual elements of the design are examined in the points of novelty test. To prove copyright infringement, unlike design patent infringement, Ooten must show that Soixante Neuf had access to Ooten’s design and copied it. Also, unlike utility patents, a successful design patent plaintiff can recover the infringer’s profits, plaintiff’s lost profits, or a combination of lost profits and reasonable royalty.

The case is Sonya Frisina v. Soixane Neuf, Inc. et al., CV11-5705 VBF (C.D. Cal. 2011).

Tacori suffered another loss in its continuing copyright and trade dress infringement lawsuit against rival jewelry designer Scott Kay. The Court previously denied Tacori’s ex-parte application for a temporary restraining order, but that did not deter Tacori’s attempts to prevent Scott Kay’s sales of its Heaven’s Gate jewelry collection. Not surprisingly, the Court denied Tacori’s preliminary injunction bid, which was now focused solely on the copyright issue.

“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, 129 S. Ct. 365, 374 (2008). Although a plaintiff must make a showing on each factor, the Ninth Circuit employs a sliding scale approach where “a stronger showing of one element may offset a weaker showing of another.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-35 (9th Cir. 2011). Thus, a preliminary injunction may still issue where there are “serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff . . . , so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id. at 1135 (internal quotation marks omitted).

The Court found that Tacori may be able to meet “its low burden of establishing copyright ownership” because the “requisite level of creativity is extremely low.” In order to show copying, Tacori had to establish Scott Kay’s access to its reverse crescent design and that the Heaven’s Gates rings were substantially similar. Scott Kay admitted that it was aware of Tacori’s design, but the Court found that the parties’ respective designs were not substantially similar.

In applying the extrinsic test, the court compared the two designs and found that neither the repeating reverse crescent design nor the diamond set in the triangular spaces between the openings is original. In addition, the Court found that Tacori “failed to provide competent expert testimony for this test” as its expert did not examine the parties' rings. For the intrinsic test, the Court found it unlikely that the ordinary audience for these very expensive rings “would find Defendant’s rings so similar in total concept and feel to Plaintiff’s rings that they infringe Plaintiff’s copyrights.” Further, the Court that Tacori failed to establish irreparable harm “absent injunctive relief, that the balance of the equities tips in its favor, or that an injunction would be in the public’s interest.”

The case is Tacori Enterprises v. Scott Kay, Inc., CV11-1565 DSV (C.D. Cal. 2011).

The “Ultramarines: A Warhammer 40,000 Movie” is based on the popular “Warhammer 40,000” table-top war game. The movie is a science-fantasy action thriller set in the future where genetically enhanced super-warriors battle aliens to protect mankind. But in the present, a legal battle has commenced regarding distribution rights to the movie involving the production company and the distributor.

The scene opens with Anchor Bay Entertainment, Codex Pictures and BF1 Films entering into a series of agreements relating to the distribution of the movie. The picture was to be produced by Codex with financing from Aramid Entertainment. The agreements between Anchor Bay and BF1 allegedly granted Anchor Bay “the exclusive, irrevocable, worldwide home video and digital/electronic rights (among other rights) to eight” motion pictures. Anchor Bay selected Ultramarines as one of the pictures and advanced $495,000 to BF1.

Then, for a $200,000 advance, BF1 and Codex executed a North American distribution agreement (“NA Agreement”) for the exclusive right to exploit the movie in all home-video formats, which agreement is alleged to have been made expressly for Anchor Bay’s benefit and with Codex’s knowledge of the Anchor Bay and BF1 agreement. Later, Codex and BF1 also executed a rest of the world distribution agreement (“ROW Agreement”) for the same exclusive rights and referring specifically to Anchor Bay’s sub-licensee status. Anchor Bay and the rest of the parties also signed a deed of undertaking that was allegedly required by Aramid in order for it to finance the film.

By the time the movie was almost completed, Anchor Bay and Codex allegedly discovered that BF1 may have made misrepresentations regarding the movie, including failing to disclose a “holdback” provision in the distribution agreement granting Codex the right to simultaneously distribute a special edition DVD with different packaging and extras. Codex thus terminated the distribution agreements with BF1. But Anchor Bay contends that it still has the rights to distribute the movie because the agreements require Codex to honor all sublicenses despite BF1’s termination. Anchor Bay alleges that Codex and Aramid are seeking a more profitable distribution agreement and not honoring its enforceable agreement.

Anchor Bay is seeking the Court’s declaratory judgment that it has the right to distribute the movie under the Copyright Act as the worldwide licensee, in addition to asserting claims for breach of contract and unjust enrichment.

The case is Anchor Bay Entertainment LLC v. Codex Pictures, Ltd., CV11-4891 DDP (C.D. Cal. 2011).