Intellectual Property

A KISS Principle for the Right of Publicity

April 22, 2014
Intellectual Property

Alexander Vlisides, MJLST Staff

The right of publicity tort is meant to balance two rights: a person’s limited right to control uses of their name or likeness and the right of artists and content creators to exercise their First Amendment rights. Unfortunately, courts have not addressed the First Amendment rights at stake in right of publicity cases with the deference or clarity that is required in other First Amendment contexts.

In Volume 14 of the Minnesota Journal of Law, Science and Technology, Micheal D. Murray argued that content creators should navigate right of publicity issues through common sense and an ethical approach to appropriating another’s likeness. In “DIOS MIO–The KISS Principle of the Ethical Approach to Copyright and Right of Publicity Law” Murray advises content creators to avoid legal issues by following the DIOS MIO acronym: “Don’t Include Other’s Stuff or Modify It Obviously.” In recent right of publicity decisions, courts have not conformed with this common sense approach.

Ryan Hart and Sam Keller are former NCAA quarterbacks. EA sports made a video game called NCAA Football, which features players that look and play exactly like Hart and Keller. Each of them sued EA sports, the makers of NCAA football, and the NCAA for violations of their right of publicity. In Hart v. Electronic Arts and In re NCAA Student Athlete Name and Likeness Litigation, the U.S. Courts of Appeals for the Third and Ninth Circuits, respectively, both found that EA had violated the players right of publicity, meaning that they would need to pay to use players’ likenesses in the video games. In many ways this seems like a very equitable outcome. These college athletes receive none of the profits while EA and the NCAA make hundreds of millions of dollars from these games.

However these cases give too little weight to the First Amendment rights at stake and provide little clarity for content producers to know what is protected from suit. When applied outside the sympathetic facts of this case, there is little to distinguish this video game from other works traditionally thought to be protected by the First Amendment, such as biographical books and films. The dissent in In re NCAA concluded that “[t]he logical consequence of the majority view is that all realistic depictions of actual persons, no matter how incidental, are protected by a state law right of publicity regardless of the creative context.”

In addition, the fundamentally unclear nature of right of publicity analysis is demonstrated by a paradox within the Hart decision. In the NCAA football games there are two uses of Ryan Hart’s likeness. One is the digital avatar that EA artists and designers created to look like him and operate in the interactive world of the game. Another is a simple photograph of him that is used as part of an introductory montage with other football players. The court found the avatar was not protected, but the photograph was. In other words, the court concluded that an animation of Hart, produced by artists, designers and engineers and placed into an interactive virtual world, is a “literal” depiction of Hart and thus unworthy of First Amendment protection, while a photograph of Hart, shown in a montage with other football players, has been transformed to be predominately the creative expression of its designers. A failure to clearly identify criteria and values informing right of publicity analysis led to this paradoxical result.

First Amendment protected creative content should not be subject to so inscrutable a standard. Courts should attempt to give content producers a more workable right of publicity standard by following Murray’s advice to KISS: Keep It Simple, Stupid.

ABC v. Aereo: Television on the Internet!?

April 15, 2014
Intellectual Property, Internet

Elliot Ferrell, MJLST Staff

American Broadcasting Companies v. Aereo, Inc. has seen a surge in the news as the parties head in for arguments next Tuesday, and Justice Alito has no longer recused himself. The case involves copyright issues in streaming television over the internet, specifically asking “Whether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the internet.”

Some of the arguments revolve around the technology used. Aereo maintains that their streaming service is not a “public performance” in violation of copyright law because the DVR’d copy of customer’s television content, saved to the cloud, comes from an “individual antenna” accessing “free-to-air broadcasts.” However, others counter that Aereo’s technology does not save them from violating the law because, when it comes to down to it, they are simply taking a signal, repackaging it, and selling it to their customers without compensating those who produce the content.

Personally, I can see the appeal of such a service. I catch my Game of Thrones on HBOGO, and whatever else I feel like watching on Netflix or the free section on Hulu. A few years ago, if there were a way to watch Lost immediately on the internet, then I may have questioned whether it was worth owning a television at all. However, none of this makes for a particularly compelling legal argument.

Perhaps the most relevant issue that will come out of this for the average person is what will happen to the consumer experience. If Aereo is successful than it could lead to cheaper prices cable bills, as Aereo’s service costs a mere $8 per month while the average cable bill is over $100. However, this argument is complicated by the fact that a typical cable package includes a bit more than just the free-to-air broadcasts (but how much of that does the consumer really care about/want to pay for?), and Aereo’s service is available in only a few regions. Additionally, one option broadcasters have in the event of an Aereo victory is to remove free-to-air content and sell it instead, perhaps with a streaming service of their own.

The consumer experience has been enriched by the options presented by television streaming services, and Aereo’s service seems to supplement the current trend nicely. However, with the proliferation of sites like Netflix and Hulu and individual content producers providing their own similar services, access to free-to-air broadcasts over the internet seems kind of like an inevitability.

Alice Corporation: Is Software That Implements an Abstract Idea Patentable?

April 10, 2014
Intellectual Property, Patents

Nathan Peske, MJLST Staff

On March 31, 2014 the Supreme Court heard oral arguments in the case CLS Bank International v. Alice Corporation Pty. Ltd. This case examines patents held by the Alice Corporation for software that implements an abstract scheme for managing settlement risk in the series of transaction banks make back and forth over the course of the day. The question before the court is whether the software is patent-eligible subject matter under §101 of the Patent Act.

Section 101 sets out the initial statutory requirements for patent-eligible subject matter. An invention must be a “new and useful process, machine, manufacture, or composition of matter” or an improvement to one of those categories. Supreme Court jurisprudence has repeatedly affirmed that there are three judicial exceptions to these categories. These exceptions are laws of nature, natural phenomena, and abstract ideas. Einstein’s famous theory of relativity E = mc^2 is often cited in court opinions as an example of unpatentable subject matter. If patents this broad were granted they would foreclose any other innovation using the abstract idea. This would ultimately stifle innovation rather than encouraging it.

When an implementation of an abstract idea is patentable has proved a very difficult standard to establish, particularly when software is involved. In Gottschalk v. Benson a computer program implementing a mathematical formula was ruled unpatentable because simply incorporating an abstract idea into a software program is not sufficient to render it patent-eligible subject matter. In Diamond v. Diehr a software program that calculated the cook time for curing rubber was ruled patent-eligible subject matter because it also controlled the cook time and opened the mold when the rubber was done. Subsequent cases have generally been decided on narrow factual grounds and have failed to establish a general test.

The Federal Circuit en banc rehearing of Alice Corporation continued this trend. In a thoroughly fractured decision seven of the ten Federal Circuit judges held the Alice patents invalid and wrote five concurring and dissenting opinions to justify their reasoning. Chief Judge Rader also penned a series of Reflections discussing the current state of patent law. Since the Supreme Court granted Alice’s petition for certiorari it has the opportunity to establish a clear standard that will settle some of the continuing uncertainty over software and business method patents.

This decision has sweeping implication for the future of software patents. A broad interpretation of the patentability of software would open the door for endless patent litigation and reduced the patent system to dueling patent lawyers. A narrow interpretation would have the benefit of reducing the ability of “patent trolls” to harass other companies. Patent trolls acquire patents, often cheaply from struggling companies, and sue or threaten to sue other companies for infringing them. Rather than face years of expensive patent litigation many companies will settle even spurious claims. At the same time a narrow interpretation could drastically limit the abilities of software inventors to patent their inventions. Thus discouraging the innovation the patent system was designed to encourage.

Justice Breyer summarized the situation during oral arguments when he said “There is a risk that you will take business in the United States or large segments and instead of having competition on price, service and better production methods, we’ll have competition on who has the best patent lawyer. And if you go the other way and say never, then what you do is you rule out real inventions with computers.” The justices’ questions seemed to indicate they were unsure if and how to address this question.

There is ample precedent for the Supreme Court to issue a narrow ruling on the merits. Rather than attempting to issue a sweeping decision to establish a precedent for future cases. Indeed, they seem poised to do exactly this. Observers can only watch and wait to see how the Supreme Court will decide this time.

Why Antitrust Must Play a Role in Analyzing Drug Patent Settlements

March 28, 2014
Antitrust, Patents

Michael A. Carrier, Distinguished Professor, Rutgers School of Law, MJLST Guest Blogger

Think back several years to, say, 2006 or 2008. The world of drug patent settlements, by which brand-name drug companies pay generics to delay entering the market, was a far different place. A string of appellate courts–the Second, Federal, and Eleventh Circuits–had essentially immunized these agreements by applying a toothless framework based on the “scope of the patent.” The test applied by these courts assumed that the patent was valid and infringed and that a payment for delayed entry could not violate the antitrust laws.

In the landmark case of FTC v. Actavis, 133 S. Ct. 2223 (2013), the Supreme Court rejected such a narrow view. Writing for a majority of five, Justice Stephen Breyer concluded that these settlements “tend to have significant adverse effects on competition” and could violate the antitrust laws. The Court also found that such agreements could demonstrate market power and that the parties had ways to settle other than with payment.

In contrast, writing for three Justices in dissent, Chief Justice John Roberts downplayed antitrust law in contending that “the scope of the patent–i.e., what rights are conferred by the patent–should be determined by reference to patent law.” The claimed reason is that “a patent holder acting within the scope of its patent does not engage in any unlawful anticompetitive behavior” but “simply exercis[es] the monopoly rights granted to it by the Government.”

Roberts combined his exclusive preference for patent law with the position that activity within the nominal scope of the patent is immune from the antitrust laws. A patentee “acting within the scope of its patent has an obvious defense to any antitrust suit: that its patent allows it to engage in conduct that would otherwise violate the antitrust laws.” And even though he viewed “the question posed” as “fundamentally a question of patent law,” he lamented that “the majority declares that such questions should henceforth be scrutinized by antitrust law’s unruly rule of reason.”

My short article in the Minnesota Journal of Law, Science & Technology highlights three significant flaws with Roberts’ opinion. First, Roberts ignored the patent-law policy of challenging and eliminating invalid patents. Second, he downplayed the role of antitrust law. And third, he neglected the importance of the Hatch-Waxman Act, Congress’s resolution of the patent-antitrust intersection in the pharmaceutical industry.

First is patent law. Empirical studies have consistently shown that at least 40% of patents issued by the U.S. Patent and Trademark Office (PTO) that are litigated to decision are invalid. For that reason, the Actavis Court recognized the “patent-related policy of eliminating unwarranted patent grants so the public will not ‘continually be required to pay tribute to would-be monopolists without need or justification.'” Roberts’ suggestion to decide the issue solely on the grounds of patent law does not include this important aspect of patent policy.

Second is antitrust law. As the majority in Actavis recognized, reverse-payment settlements “tend to have significant adverse effects on competition.” Of all the types of business activity subject to the antitrust laws, agreements by which competitors divide markets could be the most dangerous since market division restricts all competition between the parties on all grounds.

Reverse-payment settlements result in generics dropping patent challenges and, in exchange for millions of dollars, agreeing to delay entry into the market. Because the brand makes more by keeping the generic out of the market than the two parties would receive by competing in the market, the parties have an incentive to cede the market to the brand firm and split the monopoly profits.

Third is the regulatory regime. As the Supreme Court has made clear, it is appropriate for courts applying antitrust law to “be attuned to the particular structure and circumstances of the industry at issue.” Congress resolved the tension between the patent and antitrust laws in the pharmaceutical industry by enacting the Hatch-Waxman Act.

The Act had a central purpose of encouraging challenges to invalid or not infringed patents during the term of the patent to encourage early market entry. Reverse-payment settlements directly contravene this goal by allowing brands to pay generics for delayed market entry. In short, not only does such conduct flout the patent policy of testing invalid patents and present significant antitrust harm, but it also disregards the Hatch-Waxman Act and important public-policy goal of increasing the number of affordable generic medicines.

As courts begin to interpret drug patent settlements in the wake of Actavis, they should not follow the approach to patent and antitrust law articulated by Chief Justice Roberts. For in addition to being rejected by the Supreme Court, it (1) shortchanges patent law, which includes a policy goal of testing invalid patents to ensure they do not block competition; (2) downplays antitrust law’s role in monitoring behavior that resembles market division between potential rivals; and (3) ignores the Hatch-Waxman Act’s encouragement of challenges to patents that are invalid and not infringed.

Everything That Can Be Digital Will Be

February 22, 2014
Intellectual Property

Dylan J. Quinn, MJLST Staff

This past spring, the Supreme Court delivered a landmark decision in regard to the first sale doctrine by reversing the Second Circuit in John Wiley & Sons, Inc. v Kirtsaeng. The First Sale Doctrine allows a buyer or recipient of a copyrighted work to dispose of, lend, or distribute that copy as they see fit. In Wiley, the Court ruled in favor of the Defendant – who bought books in another country at a lower cost, imported them to the U.S., and then re-sold them at a higher market rate – thereby solidifying that the doctrine applies to copies of a copyrighted work lawfully obtained abroad.

A year prior to the ruling, in Volume 13, Issue 2, of the Minnesota Journal of Law Science & Technology, Benjamin Hamborg critiqued the Second Circuit for ruling against the Defendant, arguing that the Supreme Court needed to overturn the decision because the Circuit Court failed to give proper weight to the legislative history of the first sale doctrine and the negative public policy implications that would arise from affirming the ruling. The Supreme Court was in agreement with Hamborg, and seemingly eliminated those public policy concerns and the uncertainty surrounding the doctrine.

Hamborg discussed the potential dangers posed to libraries if they were not allowed to distribute works that were manufactured abroad, and while Wiley seemed to put an end to those issues, the movement of libraries into a more digital age has raised recent concerns about libraries’ ability to lend or distribute e-books and other digital works. Currently, redistribution of a digital work is not given the same “first sale” protection from copyright infringement claims because digital works do not decay over time and copies are just as valuable as the original – thereby having unknown consequences on the market for the copyrighted works. As libraries convert more and more of their collections into digital formats, we could be moving into an era where a dispute over a licensing agreement removes a large portion of a library’s collection instantly.

The recent concerns over libraries by no means represent the first discussion about a potential “digital” first sale doctrine, however it is just another example of the pressure pushing down on Congress to address the proper application of the first sale doctrine in a digital age. Back in 2001, the Copyright office addressed proposals for a digital first sale doctrine, and responded that “there was no convincing evidence of present-day problems” and that no expansion of first sale would be recommended. In the years since, there have been few developments that suggest Congress is ready to address the issue, until recently.

In the last two years, the Department of Commerce solicited comments on a possible digital first sale doctrine, the Director of the Copyright Office discussed possible options Congress could weigh if addressing the issue, and a court ruled against expanding the first sale doctrine into the digital sphere – stating that it is an issue for Congress. The recent resurgence of concerns over libraries is just another indication of the pressure facing Congress to address the application of the first sale doctrine on the internet.

While the issue clearly impacts libraries, the issue has massive implications on the entire online market place. It is a tall order to address such a large issue, but eventually something has got to give. At some point there needs to be alternative legislation or expansion of the first sale doctrine on the internet. The slogan surrounding the early days of internet sums it up best: everything that can be digital will be.

Athletic Performance Heavyweights on Verge of Patent Battle

February 16, 2014
Patents

Comi Sharif, MJLST Staff

Last week, athletic apparel giant Adidas filed a complaint accusing Under Armour of patent infringement. The complaint identifies ten Adidas-held patents that are used in mobile applications to collect and share workout-related data. The patents currently implemented in Adidas’s “miCoach” product line are allegedly being put to similar use in Under Armour’s “Armour39” products. The technology allows users to monitor their workout progress, and record and share statistics such as calories burned, heart rate intervals and distances traveled.

Both companies are major players in the fast-growing wearable technology fitness market. Adding fuel to the rivalry is the fact that Under Armour’s director of product and innovation previously worked as a senior innovation engineer at Adidas for over a decade. In addition, Under Armour recently announced a sponsorship deal with the University of Notre Dame, which ended a run for the school as one of Adidas’s biggest partners.

Though this dispute is only just getting underway, the results will be an important indicator for future events. If Adidas can succeed in preventing Under Armour and others from using the identified patents in its products, Adidas could put itself in a strong market position moving forward, while Under Armour would be relegated back to the drawing board. As fitness and mobile interconnectivity continue to trend worldwide, the intensity of the competition to gain market share is sure to increase as well. Holding and protecting patents could be the key that separates the winners and the losers in this race to the top. Stay tuned.

Akamai Provides a New Induced Infringement Standard, but How Do We Use It?

February 3, 2014
Intellectual Property, Patents

Ryan J. Connell, MJLST Lead Articles Editor

In the spring 2013 issue of the Minnesota Journal of Law, Science & Technology Mr. Roy D. Gross examined the use of circumstantial evidence to prove inducement of infringement. Mr. Gross’s article is titled Can an Inference of Intent to Induce Infringement of a Patent Be Drawn Where Other Reasonable Inferences Exist? An Examination of the Use of Circumstantial Evidence to Prove Inducement of Infringement. Mr. Gross ultimately argues that that the doctrine of specific intent to infringe in patent cases should be harmonized with the standard used for inequitable conduct.

It is important to discern the boundaries of specific intent to infringe in light of the recent Akamai case. Akamai Techs. Inc. v. Limelight Networks Inc., 692 F.3d 1301 (Fed. Cir. 2012). In Akamai the Federal Circuit arguably made it easier for a patent owner to hold a person liable for induced infringement of a method claim when no single person performed all the steps of the method. The Akamai decision still requires the alleged inducer to have the specific intent to induce infringement. Akamai, 692 F.3d at 1308. The results of Akamai are mixed then, on one hand patent owners can now go after those who induced infringement but never induced a single party to infringe the patent. On the other hand the patent owner must still provide evidence of a specific intent to induce infringement.

Proving induced infringement is a difficult task. Direct evidence of inducement is often hard to come by and the patent owner must often resort to using circumstantial evidence to prove specific intent. Mr. Gross suggests courts to weigh the following three factors, in light of circumstantial evidence, when determining if the requisite intent is present: (1) nexus; (2) control; and (3) mitigating evidence of intent not to infringe.

Akamai has closed an undesirable loophole in patent law. For Akamai to reach its full potential however, courts and litigators need to understand how to weigh circumstantial evidence that may be more strained in cases where a patent is collectively infringed as opposed to directly infringed by one actor. Articles such as this can help the legal community understand how to use circumstantial evidence in light of the new induced infringement standard.

Akamai Provides a New Induced Infringement Standard, but How Do We Use It?

February 3, 2014
Intellectual Property, Patents

Ryan J. Connell, MJLST Lead Articles Editor

My Body, My Tattoo, My Copyright?

December 5, 2013
Copyrights, Intellectual Property

by Jenny Nomura, UMN Law Student, MJLST Managing Editor

A celebrity goes into a tattoo shop and gets an elaborate tattoo on her arm. The celebrity and her tattoo appear on TV and in magazines, and as a result, the tattoo becomes well-known. A director decides he wants to copy that tattoo for his new movie. He has an actress appear in the film with a copy of the signature tattoo. Not long after, the film company gets notice of a copyright infringement lawsuit filed against them, from the original tattoo artist. Similar situations are actually happening. Mike Tyson’s face tattoo artist sued Warner Bros. for copying his tattoo in “The Hangout Part 2.” Warner Bros. settled with the tattoo artist. Another tattoo artist, Christopher Escobedo, designed a large tattoo on a mixed martial arts fighter, Carlos Condit. Both the tattoo and the fighter appeared in a video game. Now Escobedo wants thousands of dollars for copyright infringement. Most people who get a tattoo never think about potential copyright issues, but these recent events might change that.

These situations leave us with a lot of uncertainties and questions. First of all, is there a copyright in a tattoo? It’s seems like it meets the basic definition of a copyright, but maybe just a thin copyright (most tattoos don’t have a lot of originality). Assuming there is a copyright, who owns the copyright: the wearer or the tattoo artist? Who can the owner, whoever he is, sue for copyright infringement? Can he or she sue other tattoo artists for violation of right of derivative works? Can he or she sue for violation of reproduction if another tattoo artist copies the original onto someone else? What about bringing a lawsuit against a film company for publicly displaying the tattoo? There are plenty of tattoos of copyrighted and trademarked materials, so could tattoo artists and wearers themselves be sued for infringement?

What can be done to avoid copyright infringement lawsuits? Assuming that the owner of the copyright is the tattoo artist, the potential-wearer could have the tattoo artist sign a release. It may cost more money to get the tattoo, but there’s no threat of a lawsuit. It has been argued that the best outcome would be if a court found an implied license. Sooner or later someone is going to refuse to settle and we will have a tattoo copyright infringement lawsuit and hopefully get some answers.

Is the Juice Worth the Squeeze? Fighting Patent Trolls With Fee-Shifting

November 1, 2013
Intellectual Property, Patents

by Eric Maloney, UMN Law Student, MJLST Lead Managing Editor

It’s a bad time to be a patent troll in the United States. Both the Supreme Court and Congress are taking aim at these widely disparaged “trolls” who buy up a portfolio of patents and proceed to file lawsuits against anyone who may be using or selling inventions covered by those patents, often with a disregard for the merits of such suits.

Critics see these patent trolls as contributing nothing but a waste of time and resources to an already-burdened court system. President Obama has echoed this sentiment, accusing these trolls of “hijack[ing] somebody else’s idea and see[ing] if they can extort some money out of them.” On the other hand, legitimate patent holders are concerned that their ability to sue infringers may be limited in this mad rush to curb the patent troll problem.

The Patent Act does already have a mechanism in place to deal with frivolous patent lawsuits–35 U.S.C. § 285. This statute allows courts to award patent suit winners with “reasonable attorney fees.” There’s a catch, though–this fee-shifting isn’t available for just any winner. It can only be awarded in “exceptional cases.”

The Federal Circuit hears all patent appeals and sets patent precedent that is followed by district courts throughout the country. So far, their interpretation of “exceptional case” has required losing parties to misbehave quite flagrantly; the patent holder’s suit must have been “objectively baseless,” and the loser must have known it was baseless. Failing that, fees can only be shifted if the loser committed misconduct in the course of the suit or in obtaining the patent. MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 916 (Fed. Cir. 2012). This high standard makes it tough for those sued by patent trolls to recover fees spent defending against a frivolous suit.

Two branches of government are taking aim at potentially easing this standard and making fee-shifting more commonplace, or even mandatory. The Supreme Court has decided to hear two appeals for fee-shifting cases, and may be looking to change how courts evaluate what is an “exceptional case” to make it easier for courts to punish frivolous plaintiffs. Rep. Goodlatte (R-VA) introduced the Innovation Act last week, which would change § 285 to mandate that patent suit losers pay fees to the winner, with some exceptions.

This would bring patent suits more in line with how English courts treat losing parties. The American legal system typically does not add insult to injury by forcing losing parties to reimburse the winners. While all the concern about patent trolls may not be misplaced, it may be worthwhile for policymakers (be they Congressional or judicial) to step back and consider the effect this may have on legitimate patent holders, such as inventors wishing to protect their patented products. Is mandatory fee-shifting the answer? All those involved should tread carefully before making groundbreaking changes to the patent litigation system.

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