IP News

Justices Hear Oral Arguments in First Sale Copyright Case

On Oct. 29 2012, the Supreme Court heard oral arguments in Supap Kirtsaeng dba Bluechristine99 v. John Wiley & Sons, Inc., No. 11-697. The question presented involves how ' 602(a)(1) of the Copyright Act, which prohibits the importation of a work without the authority of the copyright's owner, and ' 109(a) of the Copyright Act, which allows the owner of a copy “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright owner's permission, apply to a copy that was made and legally acquired abroad and then imported into the United States.

The Second Circuit ruled that the “first sale” defense to copyright infringement does not reach books manufactured overseas and sold in the United States. John Wiley & Sons v. Kirtsaeng, 654 F.2d 210 (2d. Cir. 2011). The Second Circuit explained that the first sale doctrine permits the owner of a lawfully purchased copy of a copyrighted work to resell it without limitations imposed by the copyright holder. Id. at 211-212. The Second Circuit analyzed the plain language of the statute and noted that the words “lawfully made under this title” appear in several provisions of Title 17 where “it is at least arguable that Congress intended this language to apply to copies of works manufactured outside the United States.” Id. at 220. The Second Circuit went on to note that “[W]hile a textual reading of ' 109(a) does not compel the result favored by Wiley, it does not foreclose it either. The relevant text is simply unclear.
'[L]awfully made under this title' could plausibly be interpreted to mean any number of things, including: (1) 'manufactured in the United States,' (2) 'any work made that is subject to protection under this title,' or (3) 'lawfully made under this title had this title been applicable.'”

The Second Circuit held, after acknowledging the “difficult question of statutory construction,” that the alleged infringer Kirtsaeng could not avail himself of the first sale doctrine because the copies were made outside the United States. The Supreme Court granted certiorari on April 16, 2012.

DC Attorneys Escape Malpractice Claim

In a brief order, Magistrate Judge Judith G. Dein of the District of Massachusetts granted a motion to dismiss two attorneys from a malpractice suit. Maling v. Finnegan, Henderson, Farabow, Garrett, Dunner, LLP, No. 12-10639 (D. Mass), involves an inventor accusing his former law firm of simultaneously advising his eyeglass company and a rival eyeglass company on similar patent applications.

The two attorneys moved to dismiss themselves from the case because “their names appear on patent documents associated with another Finnegan client, an eyeglass company that plaintiffs now identify as a competitor.” D.I. 15 at 2. The motion also notes that “the Complaint is devoid of any allegations of misconduct” by either of the attorneys. Id. Several current and former Finnegan attorneys remain in the case.

Coach Wins Big Default Judgment in Illinois

Handbag maker Coach Inc. won a $257 million default judgment in a trademark infringement suit against operators of hundreds of websites allegedly selling counterfeit Coach products in Coach Inc. v. Does 1 through 573, No. 12-1514 (N.D. Ill). None of the 573 defendants ' all operating overseas ' responded to Coach's Complaint, which alleged trademark infringement, counterfeiting, and cybersquatting. In addition, Coach pled state law claims of violations of the Illinois Uniform Deceptive Trade Practices Act. In addition to awarding damages and a permanent injunction, Judge Robert M. Dow, Jr. ordered all 573 domain names owned by the defendants to be transferred to a domain registrar of Coach's selection.

ITC to Review Wiper Blade Ruling, Reverses iPod Touch Determination

The U.S. International Trade Commission issued a Notice of Decision to Review Two Initial Determinations in In the Matter of Certain Wiper Blades, Inv. No. 337-TA-816. The administrative law judge held on summary determination that certain claims of four patents asserted by Robert Bosch LLC against multiple accused infringers were not infringed and also that some of the claims were invalid as indefinite. In addition to reviewing these two orders, the full Commission will also review the ALJ's claim construction determinations regarding the claims found to be indefinite.

The International Trade Commission has also reversed an earlier decision and held that a protective case for Apple's iPod Touch manufactured by Griffin Technology, Inc. infringes a patent held by Otter Products LLC, U.S. Patent No. 7,933,122 titled “Protective Enclosure for a Computer.” The ALJ found in June that several cases infringed the patent but that two of Griffin's cases did not. The Commission reversed the findings with respect to one of the cases (the Survivor for iPod Touch). There were several other utility and design patents in the case, captioned In the Matter of Certain Protective Cases and Components Thereof, Inv. No. 337-TA-780.

Patent Verdicts Awarded to Plaintiffs in Virginia and Texas

In I/P Engine, Inc. v. AOL, Inc. et al., a Virginia federal jury found that Google, AOL, IAC Search & Media Inc., Gannett Co. Inc. and Target Corp. infringed the claims of two patents held by Vringo, Inc. that cover a system for targeting advertisements to search engine users. Google was hit with the largest damages
calculation and is liable for a $15.8 million judgment. The case, No. 11-0512, was filed by Vringo's subsidiary, I/P Engine Inc., in September 2011. The question of the invalidity of the claims was not presented to the jury and will be determined by the judge in post-trial briefing.

A Texas jury delivered a $386 million verdict to VirnetX Holding Corp. against Apple Inc. for the use of its FaceTime application. The case, 10-417, was presided over by Judge Leonard Davis and involved four patents asserted by the software company. On the same day as the verdict was announced, VirnetX filed a new complaint in the Eastern District of Texas, and the company also has a pending complaint against Apple in the International Trade Commission alleging infringement of an additional patent. VirnetX has also had prior intellectual property disputes with Microsoft, resulting in a jury verdict of $106 million and an additional agreement from Microsoft to pay licensing fees.

Howard J. Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.

Justices Hear Oral Arguments in First Sale Copyright Case

On Oct. 29 2012, the Supreme Court heard oral arguments in Supap Kirtsaeng dba Bluechristine99 v. John Wiley & Sons, Inc., No. 11-697. The question presented involves how ' 602(a)(1) of the Copyright Act, which prohibits the importation of a work without the authority of the copyright's owner, and ' 109(a) of the Copyright Act, which allows the owner of a copy “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright owner's permission, apply to a copy that was made and legally acquired abroad and then imported into the United States.

The Second Circuit ruled that the “first sale” defense to copyright infringement does not reach books manufactured overseas and sold in the United States. John Wiley & Sons v. Kirtsaeng , 654 F.2d 210 (2d. Cir. 2011). The Second Circuit explained that the first sale doctrine permits the owner of a lawfully purchased copy of a copyrighted work to resell it without limitations imposed by the copyright holder. Id. at 211-212. The Second Circuit analyzed the plain language of the statute and noted that the words “lawfully made under this title” appear in several provisions of Title 17 where “it is at least arguable that Congress intended this language to apply to copies of works manufactured outside the United States.” Id. at 220. The Second Circuit went on to note that “[W]hile a textual reading of ' 109(a) does not compel the result favored by Wiley, it does not foreclose it either. The relevant text is simply unclear.
'[L]awfully made under this title' could plausibly be interpreted to mean any number of things, including: (1) 'manufactured in the United States,' (2) 'any work made that is subject to protection under this title,' or (3) 'lawfully made under this title had this title been applicable.'”

The Second Circuit held, after acknowledging the “difficult question of statutory construction,” that the alleged infringer Kirtsaeng could not avail himself of the first sale doctrine because the copies were made outside the United States. The Supreme Court granted certiorari on April 16, 2012.

DC Attorneys Escape Malpractice Claim

In a brief order, Magistrate Judge Judith G. Dein of the District of Massachusetts granted a motion to dismiss two attorneys from a malpractice suit. Maling v. Finnegan, Henderson, Farabow, Garrett, Dunner, LLP, No. 12-10639 (D. Mass), involves an inventor accusing his former law firm of simultaneously advising his eyeglass company and a rival eyeglass company on similar patent applications.

The two attorneys moved to dismiss themselves from the case because “their names appear on patent documents associated with another Finnegan client, an eyeglass company that plaintiffs now identify as a competitor.” D.I. 15 at 2. The motion also notes that “the Complaint is devoid of any allegations of misconduct” by either of the attorneys. Id. Several current and former Finnegan attorneys remain in the case.

Coach Wins Big Default Judgment in Illinois

Handbag maker Coach Inc. won a $257 million default judgment in a trademark infringement suit against operators of hundreds of websites allegedly selling counterfeit Coach products in Coach Inc. v. Does 1 through 573, No. 12-1514 (N.D. Ill). None of the 573 defendants ' all operating overseas ' responded to Coach's Complaint, which alleged trademark infringement, counterfeiting, and cybersquatting. In addition, Coach pled state law claims of violations of the Illinois Uniform Deceptive Trade Practices Act. In addition to awarding damages and a permanent injunction, Judge Robert M. Dow, Jr. ordered all 573 domain names owned by the defendants to be transferred to a domain registrar of Coach's selection.

ITC to Review Wiper Blade Ruling, Reverses iPod Touch Determination

The U.S. International Trade Commission issued a Notice of Decision to Review Two Initial Determinations in In the Matter of Certain Wiper Blades, Inv. No. 337-TA-816. The administrative law judge held on summary determination that certain claims of four patents asserted by Robert Bosch LLC against multiple accused infringers were not infringed and also that some of the claims were invalid as indefinite. In addition to reviewing these two orders, the full Commission will also review the ALJ's claim construction determinations regarding the claims found to be indefinite.

The International Trade Commission has also reversed an earlier decision and held that a protective case for Apple's iPod Touch manufactured by Griffin Technology, Inc. infringes a patent held by Otter Products LLC, U.S. Patent No. 7,933,122 titled “Protective Enclosure for a Computer.” The ALJ found in June that several cases infringed the patent but that two of Griffin's cases did not. The Commission reversed the findings with respect to one of the cases (the Survivor for iPod Touch). There were several other utility and design patents in the case, captioned In the Matter of Certain Protective Cases and Components Thereof, Inv. No. 337-TA-780.

Patent Verdicts Awarded to Plaintiffs in Virginia and Texas

In I/P Engine, Inc. v. AOL, Inc. et al., a Virginia federal jury found that Google, AOL, IAC Search & Media Inc., Gannett Co. Inc. and Target Corp. infringed the claims of two patents held by Vringo, Inc. that cover a system for targeting advertisements to search engine users. Google was hit with the largest damages
calculation and is liable for a $15.8 million judgment. The case, No. 11-0512, was filed by Vringo's subsidiary, I/P Engine Inc., in September 2011. The question of the invalidity of the claims was not presented to the jury and will be determined by the judge in post-trial briefing.

A Texas jury delivered a $386 million verdict to VirnetX Holding Corp. against Apple Inc. for the use of its FaceTime application. The case, 10-417, was presided over by Judge Leonard Davis and involved four patents asserted by the software company. On the same day as the verdict was announced, VirnetX filed a new complaint in the Eastern District of Texas, and the company also has a pending complaint against Apple in the International Trade Commission alleging infringement of an additional patent. VirnetX has also had prior intellectual property disputes with Microsoft, resulting in a jury verdict of $106 million and an additional agreement from Microsoft to pay licensing fees.

Howard J. Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.