Monthly Archives: May 2014

US House of Representatives Considers Copyright Protection for Standards

The House Judiciary’s Subcommittee on Courts, Intellectual Property and the Internet held hearings on whether privately developed safety standards later adopted as law can be protected by copyright.

Private organization such as the American National Standards Institute (ANSI) develop voluntary consensus standards for products and services in the United States, and coordinate US standards with foreign standards so that US products can be used all over the world.

The federal government often applies these voluntary standards in laws and regulations, as do local and state governments.

Some standards organizations have sought to exercise control over their standards under copyright law, even after the standards become part of the law.

Works of the US government, as well as those of state and local governments, are excluded from copyright protection and are in the public domain.  Building codes, for example, are in the public domain and may be freely copied by anyone.

At the recent hearing, the general counsel for ANSI noted that industry groups spend time and money to create complex systems of standards and that they would be unable to continue making this investment without the ability to charge for this content.

“If the government were to take that process away,” she said, “the government would have to provide that expertise … and ultimately the taxpayers would have to pay for that.”

The founder of Public.Resource.Org, a non-profit group that favors free online access to legal codes, testified that charging for access to laws was contrary to “a fundamental principal of our democracy.”

He said, “That the law has no copyright because it’s owned by the people is a principal that has been repeatedly reaffirmed by the courts.”

California Congresspeople Darrell Issa and Zoe Lofgren expressed their concern that citizens should have free access to the laws that they must live under.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

9th Circuit Tells YouTube to Remove Anti-Muslim Film Based on Copyright Violation

The 9th Circuit Court of Appeals ordered YouTube.com (owned by Google) to remove the 14-minute film trailer The Innocence of Muslims from its site.

The Court of Appeals reversed a decision by a federal district court that denied an injunction sought by Cindy Lee Garcia, an actress who appeared in the film for only about five seconds.

Garcia had sued YouTube, Google, and Naloula Basseley Nakoula, the film’s producer, among others.

Garcia had been cast in a minor role in a film with the working title Desert Warrior, a historical adventure with no religious content.  She received $500 for three-and-a-half days of work.

However, Desert Warrior was never released.  Instead, Garcia’s performance was used in a trailer for The Innocence of Muslims.  (A full-length film by that name apparently does not exist.)

Garcia learned how her performance had been used when the trailer was uploaded to YouTube.  Her lines had been partially dubbed over so that she appeared to be asking a question highly offensive to Muslims.

When Egyptian television aired segments of the trailer in 2012, violent protests broke out in several countries in the Middle East and Northern Africa, leading to dozens of deaths.  Garcia began receiving death threats after an Egyptian cleric called for the death of anyone associated with the film.

According to Judge Alex Kozinski of the 9th circuit, “While answering a casting call for a low-budget amateur film doesn’t often lead to stardom, it also rarely turns an aspiring actress into the subject of a fatwa.”

Kozinski wrote that Garcia was duped into providing a performance that was used in ways she could not have foreseen, leading to threats against her life.

The 9th Circuit held that the filmmakers had likely exceeded any implied license to use Garcia’s performance.

Google argued that Garcia’s “didn’t make a protectable contribution to the film” that would allow her to make a copyright infringement claim.  Google noted that Nakoula wrote the dialogue that Garcia spoke, managed the production, and dubbed over Garcia’s scene.

YouTube and Google contended that granting Garcia’s request for an injunction before deciding whether Garcia actually had a protectable copyright interest in the film was an unconstitutional prior restraint on freedom of speech.

The 9th Circuit responded that the First Amendment does not protect copyright infringement.

The district court had ruled that Garcia could not claim to be an author of the film and thus could not establish copyright ownership.  One member of the three-judge Circuit Court panel agreed, saying that Garcia’s performance was not a “work” protected by copyright law and that she was not an “author” of the film.  The two other judges on the panel disagreed.

Although Garcia only asked for her own performance to be removed from the trailer, the 9th Circuit ordered the entire trailer taken down.

Google issued a statement that it strongly disagreed with the ruling and would fight it.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Judge Rejects Most Trade Secret Theft Charges against Raytheon

A federal district court judge in Arizona has ruled that most of the trade secret theft claims made by Ordnance Technologies Inc. against Raytheon Co. are time-barred because Ordnance failed to sue within three years after first notifying Raytheon of the alleged theft.

Ordnance and Raytheon had entered into a technical assistance agreement in 2002, under which Raytheon was to provide services relating to integrating Ordnance’s Lancer Multiple Warhead System into Tomahawk cruise missiles.

This agreement included a provision under which Raytheon agreed not to disclose or use Ordnance’s proprietary information.  An amendment to the agreement gave Ordnance full rights to use and manufacture the warhead designs.

In January of 2009, Ordnance learned that Raytheon had made an agreement with the US government for a “Joint Multi-Effects Warhead System” to modify the Tomahawk.  Soon after, Ordnance accused Raytheon of infringing its intellectual property rights in the warhead designs.

In July of 2009, the US Navy awarded Raytheon a $12.8 million contract to develop the warhead.

After correspondence and meetings between the parties, Ordnance finally sued Raytheon in May of 2012.  Raytheon filed a motion for summary judgment on nine out of ten of Ordnance’s claims, including its claim for trade secret misappropriation, saying that they were barred by the three-year statute of limitation.

Raytheon also denied any theft of trade secrets, saying that no proprietary Ordnance information was used in its designs.

The court granted Raytheon’s motion, saying that Ordnance knew of the alleged trade secret misappropriation in January of 2009 and that the fact that Ordnance was not aware of the extent of the misappropriation until later was not relevant.

The judge also said that there was no evidence Raytheon caused Ordnance to delay taking action by failing to deliver documents showing that it had not misappropriated Ordnance’s trade secrets.

Only a single breach of contract claim now remains to be litigated in the case.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Jury Rules for Defendant in $80 Million Perfume Trade Secret Case

After a five week trial, a federal jury in New Jersey found that the fragrance company Mane USA Inc. had not conspired with a former Givaudan Fragrances Corp. perfumer to misappropriate over 600 trade secret Givaudan formulas.

James Krivda was a perfumer with Givaudan who created fragrances such as Celine Dion Enchanting and Britney Spears Fantasy.  He was the vice president of the company’s perfumery division.

Givaudan is the world’s largest fragrance company, with annual revenues over $4 billion.

Krivda left the company in 2008 and joined Mane USA.  Mane’s parent company is Mane SA, which employs 35 people in 30 countries and had sales of $841 million in 2012.

Givaudan claimed that as Krivda was leaving the company he printed out and took with him hundreds of trade secret formulas with the intent to use them at Mane.  Krivda said that he shredded the documents.

Krivda was also accused of taking trade secrets such as “head space” analyses prepared by a Gevaudan perfumer, and gas chromotographies used to analyze products.

Givaudan sued Krivda months after he left, saying that 38 of the stolen formulas appeared as similarly or identically named Mane fragrances.

Givaudan contended that its formulas were worth $80 million and threatened to bring criminal trade theft charges against Krivda.

Krivda and Mane denied the trade secret theft allegations and the ensuing litigation lasted five years.

In October of 2013, Mane obtained a partial summary judgment on Givaudan’s cause of action for computer fraud, since Krivda was authorized to access Givaudan’s proprietary database even though he was not allowed to print documents.

The remaining cases of action were addressed at the jury trial.

According to Krivda’s lawyer, his legal team was able to prove that the formulas Krivda created for Mane were independently developed and not stolen from Givaudan.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Judge Allows Headhunter to Delay Jail Time for Trade Secret Theft Charges

A federal judge in California has allowed a former executive headhunter to delay serving a prison sentence while appealing his conviction for theft of trade secrets, hacking, and conspiring to use proprietary information.  However, the judge also ordered the headhunter to pay a $60,000 fine immediately.

David Nosal, a former recruiter for Korn/Ferry, was sentenced to a year and a day in prison for violating the federal Computer Fraud and Abuse Act and the Economic Espionage Act.

Nosal was convicted by a federal jury of conspiring to gain unauthorized access to Korn/Ferry’s computer system to obtain the firm’s trade secrets.  Prosecutors said that he intended to use these materials to set up a new business.

According to the Assistant US Attorney, “At the end of the day, stealing is stealing, whether you use a crowbar or a computer.”

Nosal pleaded for probation, claiming that he had come from humble roots and worked three jobs to put himself through college.

The judge sentenced Nosal to less than the maximum prison term, but said sending him to prison would send a message to others and deter trade secret theft.

At his sentencing, Nosal said that he intended to appeal to the Ninth Circuit and that the sentence would not deter him from competing with Korn/Ferry.

Nosal was served with a federal 20-count indictment in 2008 after he convinced three of his former staff members to access Korn/Ferry’s database to obtain lists of executive candidates he wanted for his new company.   He was eventually found guilty of six of the charges.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Chinese Firm Accused of Using Stolen IMAX Technology

 

IMAX Corporation claims that one of its former software engineers stole the company’s technology and has used it to help a lower-cost Chinese giant-screen rival.

According to IMAX’s court filings, Gary Tsui worked for IMAX in Mississauga, Ontario from 1999 to 2009.  When he told his employer that he intended to quit, he was fired first when IMAX discovered that he had started a company that was bidding for giant screen business in China.

IMAX searched Tsui’s computer and allegedly found “rampant use” of the company’s trade secrets in starting his company.

Tsui is now the chief engineer for China Film Giant Screen (CFGS).  IMAX says CFGS misappropriated IMAX’s technology for converting 2-D movies into 3-D.

CFGS was co-developed by the China Film Group, which determines which foreign movies may be shown in China.

The CFGS system is used in 50 movie theaters in China, compared to 20 using IMAX.  The CFGS system is cheaper than IMAX, and ticket prices for CFGS theaters are lower.

In Ontario, IMAX obtained an injunction against Tsui which ordered him to stop competing with IMAX pending trial.  The court also ordered Tsui detained for failing to comply with its orders, but he has apparently remained outside Canada.

IMAX also filed suit in Los Angeles against a Burbank company associated with a Hong Kong-based parent company.  IMAX accuses the Burbank company of selling a CFGS system based on the IMAX technology allegedly stolen by Tsui.

The CFGS system is being used by Sony and MGM to exhibit the movie RoboCop in China.  Large-format movies are especially popular in China, and the number of IMAX theaters there grew 37% in one year.

The Chinese film market is now second only to the US market, and growing rapidly, with about $3.6 billion in ticket sales annually, compared to about $10.8 billion for the US and Canada combined.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

 

Circuit Court Revives “KC and The Sunshine Band” Copyright Case

The 11th Circuit Court of Appeals has reversed a lower court’s decision barring the heirs of a former member of KC and the Sunshine Band from bringing a copyright suit over royalties for the song “Spank.”

The case was filed in Florida by the heirs of late band member Ronnie Smith.  Smith died in 2012, and his estate claimed that Harry Wayne Casey, the founder and front man for the Sunshine Band, had failed to make royalty payments due to Smith.  The plaintiffs sought over $250,000 in damages.

The lower court had dismissed the case, on the grounds that Smith’s record label registered the copyright for him and thus that Smith (and therefor his heirs) lacked standing to sue for copyright infringement.

The Circuit Court said that Congress intended for composers of works owned by third parties to be able to sue for infringement, even if the third parties filed the copyright applications.

Under US copyright law, the author of a work such as a song may transfer some rights to a copyright owner (such as an employer or record label) while retaining a “reversionary interest” in the copyright.  Thus, an author can be the “legal” owner of a copyright while a third party can be the “beneficial” owner of the same right.

According to the 11th Circuit,

Were we to … hold otherwise, redundant registrations would be necessary for statutory standing purposes every time legal and beneficial ownership of the same exclusive right rested with two distinct parties, even if they joined together in filing suit against an alleged infringer.

The case will now go back to the lower court for a decision on whether the additional royalties are due to Smith’s estate.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.