INTERNET LAW BLOG

Comments/Questions: ljm@gdnlaw.com

© 2009 Nissenbaum Law Group, LLC

Comments/Questions: ljm@gdnlaw.com

© 2009 Nissenbaum Law Group, LLC

Intellectual Property: In Gottlieb Development LLC v. Paramount Pictures, Corp., 2008 WL 8396360 (S.D.N.Y. 2008), the Federal Court for the Southern District of New York recently decided a case involving the use as a background prop of a pinball machine, in the movie What Women Want. As described by the Court, the scene at issue involved stars of the film, Mel Gibson and Helen Hunt, “brainstorm[ing] with other employees to develop these ideas for marketing certain consumer products to women. At various points during the scene, . . . a pinball machine – the “Silver Slugger” – appears in the background.” The Silver Slugger machine is distributed by the plaintiff and was apparently used in the film without its approval.

The Court denied the plaintiff’s claims for copyright and trademark infringement for use of the pinball machine in the background. In large part, both of these claims were dismissed on the rationale that the use was de minimus (only utilized minimally). The Court noted that the machine was only shown in the background; was never the focus; did not serve as a central part to any of the plot line; and was only present in a three-and-a-half minute scene out of a film running over two hours.

Although the film production company prevailed in this case, the fact that it was litigated at all emphasizes the importance of having an attorney conduct a final clearance review of a production before the work is distributed, published or sold. Such a review can help identify copyright infringement, branding concerns, trademark infringement and music clearances all of which generally need to be addressed before promoting or distributing a production. At the very least, such a review can be helpful in troubleshooting any potential issues and help identify legal risks sooner rather than later. Furthermore, it is important to keep in mind that other production companies, distributors and/or networks could condition a sale on an assurance that the originating company obtained all rights free and clear from the claims of any third parties. By preparing ahead of time, production companies can help prevent possible infringement actions, as well as increase the production’s viability of being picked up by third parties.

Comments/Questions: ljm@gdnlaw.com

© 2009 Nissenbaum Law Group, LLC

Intellectual Property: State and Federal law provides various remedies for parties who have been wronged by another. However, depending upon the nature of that claim, the injured party only has a limited time period in which to assert his claim. These deadlines, set by the law, are commonly referred to as “statute of limitations.” The statute of limitations for a copyright infringement claim is generally three years. A potential plaintiff’s claim often revolves around when the claim originally accrued that determines whether or not his lawsuit was timely filed.

This was addressed in a recent Southern District of New York case, Ortiz v. Guitian Brothers, Inc., et al., 2008 WL 4449314. The Ortiz case was derived from a film production company engaging an artist, Mr. Ortiz, to create the musical score for the motion picture. When Mr. Ortiz later claimed that the film production company infringed his copyright in incorporating that score into the movie and not paying him royalties, he sued for copyright infringement.

In copyright cases, the statute of limitations generally begins to run when the plaintiff knows or should have reason to know of a potential infringement. Courts make a distinction in evaluating this time period, though, when copyright ownership is at issue. In other words, if the party alleged to have infringed upon the work is claiming that it owns the work, such a claim changes the evaluation of the statute of limitations.

In Ortiz, the defendant-film production company defended the lawsuit by arguing that (a) they did not engage in copyright infringement and (b) the claim was also time-barred by the statute of limitations. The film production company included copyright notices on the DVD which arguably asserted a claim in the copyright to the sound recording. In addition, the defendant-film production company also filed for and received a US Copyright registration for the film. In this regard, the production company claimed that the copyright in and to the musical score for the film was incorporated within this filing. Without addressing this question, the Court determined that such a copyright notice and filing was clear evidence of the film production company’s assertion of a claim of ownership over the score. In fact, the Court noted that since Mr. Ortiz authored the work “with the knowledge that it was going to be used in the Motion picture, he should reasonably have anticipated that [the film production company] would seek to copyright the Motion Picture prior to or in conjunction with marketing and distributing it and, in the exercise of reasonable diligence, discovered [the film production company’s copyright] registration.”

In other words, the Court determined that

     (a) the plaintiff needed to exercise due diligence in learning of a copyright registration that would have asserted an ownership claim and
     (b) by making such a filing, the film production company did so assert its ownership so as to start the running of the statute of limitations.

“As ‘[c]opyright ownership claims accure swhen (sic) a plaintiff knows or has reason to know of the injury upon which the claim is premised, . . . [a]n express assertion of sole authorship or ownership will start the copyright statute of limitations running.” (citations omitted).

Accordingly, Mr. Ortiz’s claim was dismissed because the Court determined that the claim accrued upon the film production company’s assertion of ownership, which was more than three years prior to Mr. Ortiz’s institution of the lawsuit. This case underscores the importance of evaluating potential infringement claims in a timely manner, and undertaking enforcement action as quickly as possible. Moreover, the case points out another benefit to making an appropriate copyright filing: based on the Ortiz decision, film production companies should be sure to promptly file copyright registrations as they can effectively be deemed to put potential plaintiffs on notice of the company’s assertion of ownership and therefore start the statute of limitations clock. In other words, the sooner the film production company files the registration, the sooner it can argue that the statute of limitations started, therefore helping to preclude a future claim.

Comments/Questions: ljm@gdnlaw.com

© 2009 Nissenbaum Law Group, LLC

Cybersquatting: The United States District Court for the Western District of New York recently found that cybersquatting had not occurred in connection with the registration of a similar domain name. In Dudley v. HealthSource Chiropractic, Inc., 2008 WL 4507714, the Court found that even though the mark at issue was protectable; and even though the allegedly infringing domain name was similar to the protected mark; the plaintiff could nevertheless prevail on a claim arising out of a violation of the Anti-cybersquatting Consumer Protection Act (ACPA).

The ACPA is a federal statute instituted in connection with federal trademark law. The ACPA specifically prohibits the registration of a domain name that incorporates a famous or distinctive mark when that registration was conducted with a bad faith intent to profit from the registration. The most common example of cybersquatting is when a company or person beats the legitimate trademark owner to the registration punch and then offers to sell the domain name at an exorbitantly inflated rate to the trademark owner. For instance, if someone registered www.dietcoke.com, before the Coca-Cola company did and then approached Coca-Cola with an offer to sell the domain to the company for hundreds of thousands of dollars, that would be a clear example of cybersquatting. However, the bad faith intent to profit can often be demonstrated in other, less obvious, ways as well. For example, an argument could be made that the operation of a commercial website on the allegedly infringing domain would likewise be considered an “intent to profit.” Similarly, arguments have been made that even if the website is not commercial in and of itself, but it sells advertising space, that the infringer arguably is using the infringing aspects of the domain with a “bad faith intent to profit.”

Nevertheless, the Court in Dudley, indicated that there are some limitations on the use of the ACPA. Dudley was based on a claim by a chiropractor who had been operating in Rochester, New York under the business name HealthSource Chiropractic. In connection with that business, he had registered the domain name healthsourcechiropractic.com. Mr. Dudley then sued the defendant based on its use of the business name “HealthSource Chiropractic” and its adoption of the domain name healthsourcechiro.com. In making its determination, the Court noted that Dudley was the prior user to the mark and accordingly had senior rights. Importantly, this was despite the fact that HealthSource Chiropractic, Inc., the defendant, had registered the mark with the USPTO first. This underscores the important legal principle that prior use trumps registration.

The Court noted that the defendants’ domain name was confusingly similar to the plaintiff’s common law trademark. It is important to note that the Court distinguishes the standard that is applied for this purpose. Specifically, the Court noted that “for purposes of a claim made under the ACPA, ‘‘[c]onfusingly similar’ is a different standard from the ‘likelihood of confusion’ standard for trademark infringement’ . . . [U]nder the ACPA, ‘whether a domain name is confusingly similar to a trademark is to be evaluated ‘without regard to the goods or services of the parties.’” The Court further noted that for ACPA evaluation purposes, the Court compares the plaintiff’s mark and the defendant’s domain name. In this regard, the factors that are reviewed include “their intrinsic sounds, sight, and meaning, without reference to goods or services with which the domain name is associated by the parties’ use.”

Notwithstanding the fact that applying this test the Court found that the mark and domain name were similar, the Court determined that the defendant had not engaged in cybersquatting. This decision was specifically based on a determination that the defendant had not had the requisite bad faith intent to profit. The Court then proceeded to analyze various factors to determine whether or not the bad faith intent was present. The factors examined include: (a) whether the defendant has trademark rights in the domain name; (b) whether the domain name consists of a legal name; (c) prior use of the domain name in connection with the bona fide offering of services; (d) bona fide noncommercial or fair use of the mark; (e) intent to divert consumers; (f) offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain; (g) information when applying for registration of the domain name; (h) acquisition of multiple domain names which are identical or confusingly similar; and (i) whether the mark incorporated into the domain name is a distinctive and famous mark.

However, critical to the Court’s determination was its conclusion that the defendant’s acts were not that which had been targeted by the ACPA. Again, the Court noted that the ACPA’s focus was aimed at those who “‘register well-known brand names as Internet domain names in order to extract payment from the rightful owners of the marks, . . . register well-known marks to prey on consumer confusion by misusing the domain name to divert customers from the mark owner’s site to the cybersquatter’s site, and target distinctive marks to defraud customers, . . .’ Here, it is clear that the defendants did not purchase a domain name for the purpose of holding it ransom so as to later extract payment from the ‘rightful’ owner of the mark.” The Court specifically noted in this determination that the defendant’s own use of the mark had commenced prior to it learning of the plaintiff’s use. In other words, the mere fact that the domain name incorporated a trademark, and that the two were “confusingly similar” was not enough.

Comments/Questions: ljm@gdnlaw.com

© 2009 Nissenbaum Law Group, LLC