Monthly Archives: July 2010

The Innocent Purchaser Defense as it Relates to Aquiring Domain Names

On April 6, 2010, the Ninth Circuit Court of Appeals sitting in California held that more facts needed to be developed before a lawsuit respecting the wrongful acquisition of domain names could be decided. In the course of that holding, the Court in  CRS Recovery, Inc. v. Laxton, 600 F.3d 1138 (9th Cir. 2010), analyzed the legal principal called the important “innocent purchaser defense” under California law.
The Court’s analysis was as follows. It stated that “[u]nder California law, ‘[c]onversion is generally described as the wrongful exercise of dominion over the personal property of another.” Fremont Indem. Co. v. Fremont Gen. Corp.,148 Cal.App.4th 97, 55 Cal.Rptr.3d 621, 638 (2007). The common law rule thus holds that so long as [the defendant] exercised conscious dominion and control over [the domain at issue], he assumed the risk on the question of whether he is correct about the true title holder. Poggi v. Scott,167 Cal. 372, 139 P. 815, 816 (1914). Further, where a person entitled to possession demands it, the wrongful, unjustified withholding is actionable as conversion. See 5 Witkin Summary of Cal. Law Torts,§ 712(2) (10th ed.2005).

California does, however, recognize an innocent purchaser defense. ‘As a general rule, an innocent purchaser for value and without actual or constructive notice that his or her vendor has secured the goods by a fraudulent purchase is not liable for conversion.’ ” Express Media Group, LLC v. Express Corp.,No. C 06-03504, 2007 WL 1394163, at *5 (N.D.Cal. May 10, 2007) (quoting Witkin, supra, at § 716 (Innocent Buyer)). The law distinguishes between a purchaser whose vendor obtained title by fraud and a purchaser whose vendor obtained title by theft, because an involuntary transfer results in a void title, whereas a voluntary transfer, even if fraudulent, renders the title merely voidable. Id. (citing Cal. Com.Code § 2403(1)); see also State Farm Mut. Auto. Ins. Co. v. Dep’t of Motor Vehicles,53 Cal.App.4th 1076, 62 Cal.Rptr.2d 178, 181 (1997). Therefore, “an innocent purchaser for value and without notice, actual or constructive, that his vendor had secured the goods by a fraudulent purchase, is not liable for conversion.” 

 Oakdale Vill. Group v. Fong,43 Cal.App.4th 539, 50 Cal.Rptr.2d 810, 814 (1996)… .

“The key determination was thus whether [the original domain owner] lost control of [the domain at issue] as the result of theft or fraud. …”  On that basis, the Court “remand[ed] to the district court for further fact-finding to resolve Laxton’s claims that Mayberry lost due to fraud.” 

Id. at 1145-6


© 2009 Nissenbaum Law Group, LLC

A Professional Negligence Policy Will Not Necessarily Cover A Related Defamation Claim Against the Insured.

    On June 15, 2010, a Federal Court in Pennsylvania considered whether an insurance policy for professional negligence will cover a related claim for defamation. In Post v. St. Paul Travelers Ins. Co., __F.Supp.2d__, 2010 WL 2490750 (E.D.Pa.), the Court held it would not.

    In that matter, the insurance company that issued the professional negligence policy, St. Paul, argued that there was no basis for awarding attorneys’ fees for legal work performed in defending a defamation action against the insured. While it admitted that the claim against its insured for professional negligence was covered, the claim for defamation was not because “the general rule is that related matters pled in the same action are generally covered, while matters that are separate from the original action are not covered.”

    The Court agreed, holding that one has to show that the two lawsuits were “inextricably intertwined” which “is a higher standard to meet. To meet the standard, the two actions should be so related that it is difficult to separate the work completed for each, or to argue that the work done on the collateral litigation was not necessary to the defense of the litigation as a whole. …” The defamation action “was too separate and distinct to be considered inextricably intertwined with” the professional negligence action.


© 2009 Nissenbaum Law Group, LLC

A Federal Court Analyzes Whether One Manuscript Allegedly Violates the Copyright Protection of Another

A Florida Federal Court recently discussed the standard for determining if one manuscript violates the copyright of another. Brian Dodd v. Chris James Woods, Film Ranch International, Inc., 2010 WL 2367140 (M.D.Fla. 2010).
The Underlying Facts
The plaintiff in that case, Brian Dodd (“Dodd”), alleged several causes of action which “arose after Defendant Chris Woods allegedly stole Dodd’s manuscript entitled “Anonymity” and gave it to Defendant Film Ranch International, who allegedly used it in producing a film entitled “Brainjacked.” Id. at 1.
The Legal Standard for Alleging Copyright Infringement
The Court explained that “[t]o establish a prima facie case of copyright infringement, ‘two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.’ Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). ‘To satisfy Feist’ s first prong, a plaintiff must prove that the work … is original and that the plaintiff complied with applicable statutory formalities.’ Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1541 (11th Cir.1996) (citations omitted). A plaintiff may show copying by demonstrating that the defendants had access to the copyrighted work and that the works are ‘substantially similar.’ Oravec v. Sunny Isles Luxury Ventures, L. C., 527 F.3d 1218, 1223 (11th Cir.2008) … .If the plaintiff cannot demonstrate access, he still may establish copying by showing that the works are “strikingly similar .” Id. (citing Corwin v. Walt Disney Co., 475 F.3d 1239, 1253 (11th Cir.2007)).

“Substantial similarity exists “where an average lay observer would recognize the alleged copy as having been appropriated from the copyrighted work.” Id. (quoting Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F.2d 821, 829 (11th Cir.1982)). In particular, a copyright plaintiff “must establish specifically that the allegedly infringing work is substantially similar to the plaintiff’s work with regard to its protected elements.”   Leigh v. Warner Bros., Inc., 212 F.3d 1210, 1214 (11th Cir.2000). ‘Thus, in an action for infringement, it must be determined both whether the similarities between the works are substantial from the point of view of the lay [observer] and whether those similarities involve copyrightable material.’ Herzog v. Castle Rock Entm’t, 193 F.3d 1241, 1248 (11th Cir.1999).” Id. at 3.

The Court Determines That the Complaint Fails to State a Claim for Copyright Ownership Because it Failed to Allege Facts that the Manuscript was Substantially Similar

The Court held that the complaint failed to state a claim for copyright ownership because “[i]n a copyright action, the similarity between two works must concern the expression of ideas, not the ideas themselves. Oravec, 527 F.3d at 1224. Here, Dodd has only generally alleged that the two works are similar in concept and method, and that a character from Brainjacked has the same name as the main character from Anonymity. As an initial matter, copyright protection does not extend to Dodd’s ideas, concepts or methods. See 17 U.S.C. § 102(b) (“In no case does copyright protection for an original work of authorship extend to any idea, … method of operation, concept, … regardless of the form in which it is described, explained, illustrated, or embodied in such work.”). Therefore, aside from a character from each work sharing a name, (which by itself could not amount to substantial similarity), Dodd has failed to allege any other specific aspects of Anonymity and Brainjacked that are similar.” Id. at 4-5


© 2009 Nissenbaum Law Group, LLC