Lessons on Intellectual Property Litigation From the Baltimore Ravens Defense
This is a great story on long running copyright litigation between the Baltimore Ravens football club and a security guard and doodler, over the rights to the Ravens’ emblem. The court bifurcated the case, with liability being tried first. The jury in the liability portion of the case found infringement, but the next jury, in the damages portion of the case, awarded nothing in damages, finding that the plaintiff was not injured by the infringement. I bring this story up for three reasons. The first is that it is a just plain, good old fashioned read, even if you don’t care one bit about copyright law or, perhaps even more unforgivably, the Ravens.
The second though, is the more important one. I have done a fair bit of patent and copyright litigation (especially the latter) over the years, almost exclusively for defendants, and it is a lot harder to actually win and recover significant money on copyright infringement claims than many people – including most lawyers – believe. The headline stories of massive awards in patent infringement cases lead people to extrapolate across the board to other types of intellectual property cases, but those cases don’t actually extrapolate well. The various defenses available to defense counsel in copyright infringement cases makes for a tough road in that area for plaintiffs (much to my happiness, I admit, when I am representing copyright defendants).
And finally, the third point the article drives home is this one. When representing plaintiffs in intellectual property cases, always think twice before deciding to accept bifurcation without a vigorous battle. Its hard enough to convince a jury to find infringement, but once having done so, it is better to move onto damages in front of that same jury, with whom you have presumably already established credibility. Bifurcation forces the plaintiff to reestablish that credibility, and any sympathy, all over again in front of a new jury, and causes the plaintiff to lose whatever momentum led to the liability verdict in the first place. All trial lawyers have their own pet theories; that is one of mine.
A Personal Reflection on Iqbal
When it comes to the law, I am conservative by nature, in the “if it ain’t broke, don’t fix it” meaning of the word. I am not speaking here of substantive legal rules, or case outcomes, and how to view them, but instead of the bread and butter elements of a litigator’s life, evidentiary rules, rules of civil procedure, pleading requirements, burdens of proof, and the like. If something of that nature is working well enough in the real world, in places like the courtroom where the rubber meets the road when it comes to any high minded thinking about legal issues, I tend to be skeptical of proposed changes, whether that concerns new rules of expert disclosure or a doctrinal shift in a particular exception to the rule barring hearsay testimony.
What brings this to mind at this moment is the issue of Iqbal, and the requirement imposed by it that plaintiffs plead facts that could actually support a cause of action, with the accompanying instruction - or at least implication - to federal judges to look, in essence, critically at the facts as pled to determine whether there is a viable case that should be allowed to proceed. Even though such a rule adds to the arsenal of the lawyer representing a corporate defendant, of which I am one 80-something percent of the time, I had always felt the prior rules of initial pleading worked well enough, and that there was probably no need to mess around with it, although I always recognized that it made dismissal at the initial stages something that could almost never occur except in the instance of a plaintiff either truly erring in pleadings or pleading a cause of action that simply doesn’t exist.
But I have come to believe, as I have continued to read the plaintiffs’ bar’s criticism of Iqbal - see here for instance - and the academic analysis of it - see here - that the rule makes sense, and that Iqbal represents a change for the better. As in most things in the law, my take is based on my own experiences in the litigation of cases, which I think is the best laboratory for analyzing any particular rule of law - theory is all well and good, but what happens when you actually put something into practice, and how it affects the litigants and the administration of cases, is what matters. Years before Iqbal - and even Twombly, for that matter - I litigated a copyright infringement action in which I represented one of the defendants, and the court dismissed the action on a 12(b)(6) motion on the thesis that the complaint showed that the statute of limitations should bar the claim because the plaintiff had constructive notice of the infringement at a much earlier date than the actual date of discovery pled in the complaint. Although we did not have the language of Iqbal and Twombly to use at that time to describe such an investigation into the factual merits of a complaint at such an early stage, the court was in essence Iqbal-ling the complaint, and dismissing the action. This being pre-Iqbal, the action was eventually reinstated on appeal, on the ground that the then applicable rules for pleading a cause of action were satisfied and the grounds for a dismissal at that stage - which were very high prior to Iqbal - had not been met; in essence, the appeals court concluded that a determination on that issue would have to be made at a later date, and could not be done on a motion to dismiss under the pre-Iqbal rules. Remanded, then, to the district court, the case then proceeded through discovery, extensive motion practice, and a trial, after which the jury found the exact same thing that the court had concluded in reviewing the complaint: that the plaintiff should be found to have had constructive notice of the infringement at such an early date that the statute of limitations barred the claim. Thus, pre-Iqbal, you had one appeal and a trial to reach the exact same conclusion that the judge could see just from the face of the complaint, right at the beginning of the case.
Iqbal, now, prevents this scenario, and allows the court to make an early ruling of that nature, and it would have been the right way to handle that case. Who benefits from allowing such a case to go forward? My own view is no one, except maybe the lawyers billing on the case. The defendant has to litigate for years to get to the same conclusion that could have been reached at the beginning, and which Iqbal now allows the court to reach early on, while the plaintiff spends years chasing a claim that a court can rightly determine early on will never come to fruition. Iqbal, in the hands of careful jurists, protects both sides of the v. from such a Quixotic quest.
What Patry Has to Do With ERISA
Permalink | Geez, I hope it isn’t something I said. Some of you may remember that a little while back, in a post discussing why I blog predominately on ERISA and insurance issues but only occasionally on intellectual property issues, I mentioned that there were a lot of terrific intellectual property blogs already out there, mentioning in particular William Patry’s copyright blog. Mr. Patry responded by quitting blogging.
I don’t really think I had anything to do with that, because he gave his primary reason for stopping, and it is one that is telling. He explained that:
my final reason for closing the blog [is] my fear that the blog was becoming too negative in tone. I regard myself as a centrist. I believe very much that in proper doses copyright is essential for certain classes of works, especially commercial movies, commercial sound recordings, and commercial books, the core copyright industries. I accept that the level of proper doses will vary from person to person and that my recommended dose may be lower (or higher) than others. But in my view, and that of my cherished brother Sir Hugh Laddie, we are well past the healthy dose stage and into the serious illness stage. Much like the U.S. economy, things are getting worse, not better. Copyright law has abandoned its reason for being: to encourage learning and the creation of new works. Instead, its principal functions now are to preserve existing failed business models, to suppress new business models and technologies, and to obtain, if possible, enormous windfall profits from activity that not only causes no harm, but which is beneficial to copyright owners.
What is interesting about this is I think that anyone who works on copyright or other intellectual property cases and who looks at things with clear eyes -rather than on the old mantra of where you stand depends on where you sit - knows there is some deep truth to what he is saying, and it is interesting in and of itself for that reason. But it becomes even more interesting when you tie it back in to this blog, and my prior discussions of my skepticism about the patenting of ERISA strategies, which, much like Patry’s comments about copyright, seems to me -as I discussed here- to serve only to lock down for one party the opportunity to pursue a specific business/ERISA related strategy, without any accompanying benefits to the public as a whole, such as encouraging innovation in the field, etc. Maybe I am just ERISA-centric, and I see everything as circling back to that topic, but that’s what I thought of when I read Patry’s post resigning from the blogosphere.
Insurance and the World at Large
Permalink | I am asked on occasion about the topics of this blog and their connection to my practice, more particularly how I ended up focusing the blog on its two primary subjects. For years, my litigation practice has focused primarily on three areas: intellectual property, ERISA and insurance coverage, in no particular order. A joke which I have long used and which always fails to elicit anything more than a pained half-smile is that 50% of my practice is insurance coverage, 50% of my practice is ERISA litigation, and 50% of my practice is intellectual property litigation.
Why did the blog end up focusing on two of those topics - ERISA and insurance coverage - and not the third, intellectual property? Well, one reason is that my experience is that intellectual property cases are heavily fact driven more than they are a product of interesting evolution in case law, limiting the appeal of blogging on them, and another is that, as a very knowledgeable legal blogging guru told me when I started the blog, there were already a lot of - mostly very good - intellectual property focused blogs; all you have to do is take one quick look at William Patry’s copyright blog to see how well tilled that soil already is.
But beyond that, and in contrast, I have found that my other two primary areas of practice, which are the central focuses of this blog (although as the digression section over on the blog topic list on the left hand side of your screen reflects, I do on occasion venture here into intellectual property issues of interest to me), provide a rich vein of endlessly interesting topics and legal developments. ERISA litigation, for instance, is a remarkably and endlessly evolving area of the law, as the courts develop what is in essence a federal common law covering the field, and as the courts deal with new types of retirement plans, plan investments, and increased litigation over both. And the intersection of insurance and the business world is a truly fascinating place to be, as the two come together at every major point in the economy and at every major issue in it as well. Here’s a good story, about the general counsel at Lloyd's of London, that makes that point.
What the Copyright Act Teaches Us About ERISA Preemption
Permalink | Mixing up two of my professional interests and litigation specialties, ERISA and intellectual property, the United States Court of Appeals for the First Circuit just decided a case involving the scope of preemption under the Copyright Act. What’s particularly interesting to me is the characterization by a dissenting member of the panel about the scope of preemption under that statute as opposed to the scope of preemption under ERISA. The judge explained:
Unlike the few federal statutes which have been found to effect complete preemption (e.g., the governance of the Employee Retirement Income Security Act (ERISA) over all plan-"related" causes of action, see Metro. Life, 481 U.S. at 67; Hotz v. Blue Cross and Blue Shield of Mass., Inc., 292 F.3d 57, 59 (1st Cir. 2002)), the Copyright Act does not encompass all claims simply because the parties' dispute happens to involve a copyrighted work. See Venegas-Hernandez v. Asociacion de Compositores y Editores de Musica Latinoamericana, 424 F.3d 50, 58 (1st Cir. 2005) ("The Copyright Act does not draw into federal court all matters that pertain to copyright."); Royal, 833 F.2d at 2. . . .Unlike ERISA, 29 U.S.C. § 1144(a) (providing that ERISA "shall supersede any and all State laws" to the extent that those laws "relate to any employee benefit plan") (emphasis added), the Copyright Act's preemption provisions are not even remotely panoptic. The Copyright Act preempts only those "legal and equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified in § 106." 17 U.S.C. § 301(a) (emphasis added). Further, "[n]othing in [the Act] annuls or limits any rights or remedies under the common law or statutes of any State with respect to -- . . . activities violating legal or equitable rights that are not the equivalent to any of the exclusive rights within the general scope of copyright as specified in section 106A with respect to works of visual art." Id. § 301(b)(3) (emphasis added); see Blab T.V. of Mobile, Inc. v. Comcast Cable Commc'ns, Inc., 182 F.3d 851, 857 (11th Cir. 1999) (finding no complete preemption because the federal Cable Act contained language which "preserv[ed] state authority except in areas in which the exercise of this authority would be inconsistent with federal law"); cf. Metro. Life, 481 U.S. at 65-66 (citing -- as affirmative evidence of complete preemption -- legislative history that "[a]ll such actions in Federal or State courts are to be regarded as arising under the laws of the United States in similar fashion to those brought under section 301 of the Labor-Management Relations Act of 1947").
What’s interesting in this comparing and contrasting of the scope of preemption under ERISA and the Copyright Act is the focus on the deliberately broader language of preemption contained in ERISA and the deliberately narrower language of preemption contained in the Copyright Act. Many complain about the expansive scope of ERISA preemption that courts have applied, but as the dissenting judge's analysis here of preemption under the Copyright Act reflects, there is a sound statutory basis for imposing broad preemption of state law theories pursuant to ERISA, as Congress can and does expressly declare a statutory scope of preemption to be narrow when that reflects its intent and ERISA doesn’t contain that type of language.
The case is Cambridge Literary Properties v. W. Goebel Porzellanfabrik G.M.B.H., which you can find right here.
Advertising Agencies, Copyright and Dead Pitchmen
Permalink | Does copyright matter in the real world, or is it just about billion dollar disputes between media companies and Google? In my own practice I see that it does, trickling right down to employee/employer relations in knowledge based industries. This article here is a perfect, and highly entertaining, example, discussing the improper use of a dead celebrity’s image in an advertisement, a brouhaha that grew, apparently, out of a misunderstanding as to the scope of copyright clearance actually obtained by the ad agency. And not only do you see in this article how a problem of this type can arise, but you also see the costs of not recognizing and avoiding the problem in advance - in this instance, the loss of a large account by the ad agency.
Architects and Copyrights - Who Holds the Rights in the Design of a Building?
Permalink | I have a confession to make: I like houses. I remember an old Arlo and Janis cartoon, in which they respond to a bad day by pulling out the plans for their dream home, which they know they will never build, and add another elaborate room to it: that’s me. And so I greatly enjoy this blog about a couple’s attempts to build their dream home. Now normally, this would not be grist for this blog, for obvious reasons, but for one thing - in a post yesterday, they mirrored reality for me, touching on issues in a case I greatly enjoyed litigating recently, which was a dispute over the right to use plans drawn up by an architect who was subsequently terminated from the project. Given my interest in architecture and copyright law, this case was an absolute ball from where I sit. And in this blog post, the authors are astounded when they learn that the contract forwarded to them by their architect was, first, one sided in that it protected the architect but not the party retaining the architect, and, two, made the plans the property of the architect, even though the authors were paying for them. Their shock falls right in line with what I have always thought of as the three take aways from that recent case I handled. First, that the standard architecture contract, drafted by the architects’ trade group, is completely one sided, was drafted that way intentionally, and should never simply be signed off on, without changes, by anyone retaining an architect to design property for them. Two, that the most egregious part of that standard contract is that it gives all rights in the design of the building to the party designing it, the architect, rather than the person who should hold it, the one paying for that design. And three, that the consumers of the services, unless represented by counsel, don’t know any of this, would be shocked if they did, normally just sign on the bottom line to get the project started, and never learn this unless and until something goes wrong with the project. That standard contract should never be signed off on as is, without changes made to some of these more one sided terms. And at the end of the day, for purposes of this post, it is simply fun to find these truths documented by this couple’s experience, discussed in their blog.
Intellectual Property, Advertising Injury Coverages, and Licensing
Permalink | At the risk of turning this into blog reader month, I thought today I would pass along this article on the use of intellectual property in growing a business that was passed along to me by blog reader Mike Kraft of Customer Standpoint, who specialize in the analysis of the customer experience. It may not be entirely on point for this blog, but for those of you who may come here looking for information on advertising injury coverages, which, as I have discussed before, can cover some intellectual property claims against insureds, it is a good overview of how any business, including insured companies, put intellectual property assets to use.
Moreover, you can see in the article the range of activities - beyond just inventing technology, which is the popular image of intellectual property development - that businesses engage in involving their intellectual property assets and, if you think about it, you can spot all the different possible points of liability exposure in those actions. Advertising injury coverage can insulate a company against liability on at least some of those fronts, and the question for lawyers and brokers who represent insureds who engage in these types of activities is how to structure an insurance program that protects against all the other liabilities as well.
Patent Infringement, Copyright Infringement, and the Costs of Doing Business
In addition to litigating ERISA and insurance coverage cases, I have maintained a pretty active intellectual property litigation practice for a number of years. Routinely, when I meet with business people to discuss intellectual property problems, the subject of the expense of protecting intellectual property rights and how to control legal costs in doing so comes up. This is especially the case when I talk with entrepreneurs and people at small start ups who feel that the intellectual property at the heart of their business plans has been misappropriated by someone else - often a more established competitor - but don't think they can afford to do anything about it given the high hourly rates often charged by lawyers.
Now I have written before about better ways to fund insurance coverage litigation than simply paying counsel by the hour, and when it comes to protecting intellectual property, I tell these people the same thing, that they should not let the billable hour model frighten them off from protecting their intellectual property and vindicating their rights. There are, or should be if the lawyers they are talking to are willing to put a little skin of their own in the game, other ways to pay counsel, that are more economically feasible for businesses that don't already have the deepest pockets in the world, but hope to some day, than paying lawyers by the hour to prosecute a patent or copyright infringement action.
And this article here presents those options quite nicely, although in more words than I use when I discuss the same topics with business folk.