Is Fair, Fair? A Look into the Supreme Court’s Landmark Decision in Google v. Oracle

Author: Ross Kirkbaumer

After a decade of back-and-forth battles in the district and circuit courts, the Supreme Court ruled that Google’s copying of Sun Java’s API was fair use, reversing the Federal Circuit’s ruling that Google’s copying was not a fair use.[1]

Facts

Google obtained a startup firm by the name of Android, Inc. with the goal to develop a software platform for smartphones. Google wanted the Android platform to be “free and open, such that software developers could use the tools found there free of charge.”

During this time, programmers were familiar with using a programming language known as Java created by Sun Microsystems (“Sun”) on its Java SE platform. Google began speaking with Sun about possibly licensing the entire Java platform for the Android smartphone technology, but negotiations were halted, and Google started building a new platform.

Since programmers were already familiar with Java, Google copied around 11,500 lines of code from the Java SE platform so that programmers would be able to easily work with the Android platform. The 11,500 lines of code were part of tool called an Application Programming Interface (“API”).

Specifically, Google copied the “‘declaring code,’ instructions that describe pre-written programs in Java.”[2] According the Court, “[W]ithout that copying, programmers would need to learn an entirely new system to call up the same tasks.”

Fair Use

Under the Copyright Act, 17 U.S.C. § 107:

“[T]he fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The Majority Decision

With Justice Breyer delivering the opinion for the majority, the Court decided not to take up the issue of whether the lines of code were copyrightable stating that “purely for argument’s sake . . . the entire Sun Java API falls within the definition of that which can be copyrighted.” As discussed below, the Court held that the four factors above weighed in favor of fair use.

First Factor

The Supreme Court stated that the copied declaring code “embodies a different form of creativity,” highlighting the fact that Sun’s intent was to attract programmers and to make its API “open.” Additionally, the Supreme Court contrasted the declaring code from computer programs by explaining the declaring code’s significance “lies in its efforts to encourage programmers to learn and to use [Sun Java’s API] so that they will use (and continue to use) Sun-related implementing programs that Google did not copy.”

Accordingly, the Court concluded that “the declaring code is, if copyrightable at all, further than most computer program[s] . . . from the core of copyright.” Because of this, the nature of the declaring code weighed in favor of fair use.

Second Factor

By examining the purpose and character of the work, the Court stated that Google’s purpose of using the Sun Java API was to create new products by expanding the use and usefulness of the Android-based smartphones. The Court explained that “[T]o the extent that Google used parts of the Sun Java API to create a new platform that could be readily used by programmers, its use was consistent with that creative ‘progress’ that is the basic constitutional objective of the copyright itself.”

The Court emphasized that the jury during the district court proceeding heard a variety of ways in which re-implementing an interface can further the development of computer programs: (1) shared interfaces are necessary for different programs to speak to each other; (2) re-implementation of interfaces is necessary if programmers are able to use their acquired skills; (3) reuse of APIs is common in the industry; (4) Sun had used pre-existing interfaces in creating Java; and (5) Sun executives thought that widespread use of the Java programming language would benefit the company.

Since the purpose and character of Google’s copying was transformative, this factor weighed in favor of fair use.

Third Factor

With respect to the third factor, the Court contemplated whether the 11,500 lines of code should be viewed in isolation or as one part of the greater whole. The Court noted that Google did not copy the lines of code because of their creativity or beauty, but because programmers had already learned to work with Sun Java API’s system and it would have been incredibly difficult to attract programmers to build its Android smartphone system without the lines of code.

The Court ultimately held that “Google’s basic objective was not simply to make the Java programming language usable on its Android systems. It was to permit programmers to make use of their knowledge and experience using the Sun Java API when they wrote new programs for smartphones with the Android platform.” Therefore, the substantiality factor weighed in favor of fair use.

Fourth Factor

For this particular factor, the Court pointed out that it must consider the amount of money that Oracle might lose, the source of the loss, and the public benefits the copying will likely produce.

With respect to the amount of money lost, the Court explained that the jury could have found that Google and Android did not harm the actual or potential markets for Java SE. The Court noted that based on the evidence, Sun was poorly positioned to succeed in the mobile phone market and there was evidence that Android and Java SE were operating in two distinct markets.

In addressing the source of the loss, the Court stated that Google’s copying helped it make “a vast amount of money” and enforcement by Oracle could have given Oracle “a significant share of these funds.” The Court, however, affirmed this sub-factor weighed in favor of Google because the “source of Android’s probability ha[d] much to do with third parties’ . . . investment in Sun Java programs.”

In discussing the public benefits, the Court noted strongly that Oracle’s enforcement would risk harm to the public because the enforcement could have inhibited “creative improvements, new applications, and new uses developed by users who have learned to work with that interface.”

Since all four factors weighed in favor of fair use, the Supreme Court reversed the Federal Circuit’s decision against Google.

What About Justices Thomas & Alito?

In the dissenting opinion,[3] Justice Thomas did not understand why the majority avoided the principal question of whether declaring code is protected by copyright law. According to Justice Thomas, declaring code is copyrightable.

Additionally, Justice Thomas opined that the Federal Circuit was correct in determining that the harm Google cause to Oracle was overwhelming because “Google eliminated the reason manufacturers were willing to pay to install the Java platform,” and “Google interfered with opportunities for Oracle to license the Java platform to developers of smartphone operating systems.”

Impact of Google’s Victory

While the Supreme Court hailed Google as the victor, the jury is still out with respect to who benefits most from this decision. Professor Johnathan Barnett from the University of Southern California, Gould School of Law stated that “the devaluation of IP rights under rulings such as Google v. Oracle is likely to discourage investment by (and in) the inventors, artists, and entrepreneurs who stand at the foundation of a robust innovation economy.”[4] Chicago-Kent College of Law professor Lori Andrews asserts that the Court’s decision was “good news for developers looking to further interoperability of programs” and can have potential benefits for consumers.[5] Further, the Copyright Alliance believes that the decision “‘has the potential’ to broaden the fair use doctrine, something that would open the door to greater unauthorized use of copyrighted material,” and possibly more lawsuits.[6]

A copy of the Court’s opinion can be accessed here.

About the author: Ross Kirkbaumer is an associate and member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property enforcement and litigation. His bio can be found here.
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[1] Justices Breyer, Roberts, Sotomayor, Kagan, Gorsuch, and Kavanaugh ruled in favor of fair use while Justices Thomas and Alito dissented. Justice Amy Coney Barrett did not take part in the consideration of the decision.
[2] Steven Tepp, Google v. Oracle Perspective: Google’s Android ‘Cheat Code’ was to Copy Oracle’s Code, IPWatchdog https://www.ipwatchdog.com/2020/08/05/google-v-oracle-perspective-googles-android-cheat-code-copy-oracles-code/id=123789/.
[3] Justice Thomas filed the dissenting opinion, in which Justice Alito joined.
[4] Johnathan Barret, Have tech platforms captured the Supreme Court?, The Hill https://thehill.com/opinion/judiciary/548813-have-tech-platforms-captured-the-supreme-court.
[5] Madeleine Carlisle, How Google’s Big Supreme Court Victory Could Change Software Forever, Time https://time.com/5952718/google-oracle-supreme-court/.
[6] Ted Johnson, Supreme Court Rules For Google Over Oracle In Closely Watched “Fair Use” Copyright Case; Industry Groups Express Concerns Over Impact On Content Protection, Deadline https://deadline.com/2021/04/google-supreme-court-oracle-motion-picture-association-1234727628/.

Supreme Court Refuses to Wade in to Federal Circuit Claim Construction Precedent

Author: Sean Flaherty

On Monday February 22, 2021, the Supreme Court denied certiorari to Akeva, L.L.C. in its dispute with Nike and Adidas regarding Akeva’s contention that the Federal Circuit applies separate and contradictory lines of authority to claim construction disputes. See No. 20-863, 2021 WL 666458 (U.S. Feb. 22, 2021)

In Akeva L.L.C. v. Nike, Inc., 817 F. App’x 1005, 1006 (Fed. Cir. 2020) a Federal Circuit panel of Justices Newman, O’Malley, and Chen ruled in a non-precedential opinion that the lower court “correctly construed ‘rear sole secured’ to exclude conventional fixed rear soles,” and thus affirmed the summary judgment decision of non-infringement issued by the District Court for the Middle District of North Carolina.

Pat No. 5,560,126 to Akeva, LLC provides that it “relates generally to an improved rear sole for footwear and, more particularly, to a rear sole for an athletic shoe with an extended and more versatile life…” Col. 1:9-12. Claim 25 reflected the exemplary dispute, which provided:

  1. A shoe comprising:
    an upper having a heel region;
    a rear sole secured below the heel region of the upper; and
    a flexible plate having upper and lower surfaces and supported between at least a portion of the rear sole and at least a portion of the heel region of the upper, peripheral edges of the plate being restrained from movement relative to an interior portion of the plate in a direction substantially perpendicular to a major axis of the shoe so that the interior portion of the plate is deflectable relative to the peripheral edges in a direction substantially perpendicular to the major axis of the shoe.

Akeva argued that the ’126 patent covered shoes having either (i) a flexible plate with a conventional / non-removeable rear sole, or (ii) shoes having a removeable or rotatable [ie non-fixed] rear sole.

The District Court disagreed and found that the term “rear sole secured” was construed to mean “’rear sole selectively or permanently fastened, but not permanently fixed into position,’ which would not include conventional rear soles that do not either detach or rotate.”

There was no dispute that the accused shoes had fixed rear soles, so summary judgment was awarded to Nike and Adidas.

On appeal, Akeva reasserted that the ‘126 Patent includes shoes having both conventional and non-fixed rear soles. Akeva argued for example that Figure 28 of the ‘126 patent disclosed only the flexible midsole plate and not a removeable / rotatable rear sole:

Akeva also argued that the specification’s statement ““[t]he graphite insert also need not be used only in conjunction with a detachable rear sole, but can be used with permanently attached rear soles as well” demonstrated that the patent included shoes with conventional rear soles.

The Federal Circuit disagreed, finding instead that the ‘126 specification “clearly disclaims shoes with conventional fixed rear soles.” Akeva L.L.C. v. Nike, Inc., 817 F. App’x 1005, 1012 (Fed. Cir. 2020). It reasoned that “the invention is ‘[a] shoe [that] includes a heel support for receiving a rotatable and replaceable rear sole to provide longer wear.” To Akeva’s argument about Fig. 28, the Federal Circuit concluded that the specification indicated merely that “the shoe may also include a graphite insert.” It was held that the specification’s statement about use of the graphite insert with “permanently attached rear soles” was limited to those “permanently attached” rear soles that were nonetheless rotatable. The Federal Circuit further observed that the “’purpose of the invention’ is to overcome rear sole wear with a shoe having a detachable or rotatable rear sole that may additionally include a graphite insert.”

In its petition for certiorari, Akeva argued that the Supreme Court should decide whether the Federal Circuit’s line of cases finding a “heavy presumption” in favor of the plain meaning of claim terms, or else, the Federal Circuit’s line of cases taking a “holistic” approach toward claim terms, should govern claim construction.

Akeva argued that the “heavy presumption” line of cases permit divergence from a claim term’s plain and ordinary meaning “only” if it meets an “exacting” standard and demonstrates (i) a “clear” disclaimer of claim scope, or (ii) “clear” lexicography. Akeva argued in contrast that the Federal Circuit’s “holistic” approach permits courts to depart from the plain and ordinary meaning of the patent claims even if there is not “exacting “disclaimer, for example when the specification describes “the present invention,” “disparages” prior art, describes certain embodiments “repeatedly” and “consistently,” or provides an “implied” definition.

Akeva argued that the Federal Circuit failed to mention or address the plain meaning of “rear sole secured,” let alone the “heavy presumption” line of precedent. Akeva claimed that the plain meaning of “rear sole secured” denoted having a rear sole “fixed” to the shoe regardless of duration, and therefore encompassed Adidas and Nike’s accused athletic shoes.

Akeva cited Hill-Rom Servs., Inc. v. Stryker Corp., 755 F.3d 1367 (Fed. Cir. 2014); Continental Circuits LLC v. Intel Corp., 915 F.3d 788 (Fed. Cir. 2019); and Absolute Software, Inc. v. Stealth Signal, Inc., 659 F.3d 1121, 1136-37 (Fed. Cir. 2011) in favor of the “heavy presumption” approach. For example, these authorities support contentions that a specification’s description of embodiments, use of the phrase “the present invention,” and disparagement of the prior art does not limit claim scope.

Akeva also recognized cases like Nystrom v. TREX Co., 424 F.3d 1136 (Fed. Cir. 2005), AquaTex Indus., Inc. v. Techniche Solutions, 419 F.3d 1374 (Fed. Cir. 2005), and Abbott Labs v. Sandoz, Inc., 566 F.3d 1282 (Fed. Cir. 2009) in applying the holistic approach. Akeva argued that “holistic cases are themselves often unpredictable as to what aspects of the specification or analysis thereof they might newly rely on to affect the scope of the claims-at-issue.”

According to Akeva, scholarly debate exists regarding the Federal Circuit’s “feuding” lines of authority on claim construction, citing Professors Bessen and Meurer in “Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk.”

Ultimately, the Supreme Court’s denial of certiorari means that there will continue to be substantial dispute over claim construction with each side likely to cite valid yet seemingly incongruous law at one another. District Courts will cite that body of law which is more supportive of its decision, and even though appellate review of claim construction decisions is usually de novo, Federal Circuit panels will find latitude to affirm District Court decisions governing construction, regardless of the methodology applied.

About the author: Sean Flaherty is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on litigation matters involving copyright, trademarks, trade secrets, and patents, as well as transactional matters related to intellectual property licensing. Mr. Flaherty is a registered patent attorney with a degree in Civil Engineering. Mr. Flaherty’s biography can be found here.

TTAB Considers Internet Archive Evidence in Opposition Proceeding

Author: Gregory Brescia

In Spiritline Cruises LLC v. Tour Mgmt. Serv’s, Inc., Oppo. No. 91224000, the TTAB held that use of the Internet Archive tool, known as the “Wayback Machine,” for evidentiary purposes was permitted. In making this determination, the Board addressed hearsay and authentication issues, and held: (1) the evidence fell within the business record hearsay exception; and (2) the affidavit submitted by Spiritline served as an appropriate means to authenticate the Wayback Machine printouts.

Background

Spiritline Cruises LLC (“Spirtline”) opposed the registration of the mark “CHARLESTON HARBOR TOURS,” owned by Tour Management Services, Inc. (“TMS”) for travel tours and boat charter related services. In its Notice of Opposition, Spiritline claimed that the “CHARLESTON HARBOR TOURS” mark is incapable of registration because it is geographically descriptive and has been used in its descriptive manner by many parties, in addition to Spritline, in the marketplace. In response, TMS claimed it made substantially exclusive use of the “CHARLESTON HARBOR TOURS” mark for at least five years prior to filing its application for registration and that the evidence submitted by Spiritline were largely recent uses in order to attempt to block registration of TMS’s application.

To support its claims, Spiritline submitted various printouts utilizing the Wayback Machine to illustrate third-party use of the “CHARLESTON HARBOR TOURS” mark between 2004 and 2015. The purpose of introducing this evidence was to discount TMS’s claim of substantial exclusive use of the “CHARLESTON HARBOR TOURS” mark. The evidence submitted by Spiritline was further accompanied by an affidavit instructing the Board of what the printouts were, how they were acquired, and the relevant dates associated therewith. The specificity provided by Spiritline’s affiant regarding the Internet crawling and archiving process was heavily regarded by the Board and served as a means to obviate authentication issues. Not surprisingly, TMS objected to the introduction of the Wayback Machine evidence claiming it was hearsay; however, the Board overruled and held that the evidence and supporting affidavit qualified under the business record exception. The Board further held that the evidence was properly authenticated and a proper foundation was laid via an affidavit to support the intended evidentiary use. As a result, the Board allowed numerous Internet printouts in to evidence to illustrate not only what they showed on their face, but to establish that TMS did not exercise substantially exclusive control over the “CHARLESTON HARBOR TOURS” mark. In fact, the evidence made it clear that the “CHARLESTON HARBOR TOURS” mark was frequently used on a number of third-party websites without challenge. Ultimately, after review and consideration of the various arguments and evidence submitted throughout the duration of the proceeding, the Board held TMS’s application for “CHARLESTON HARBOR TOURS” should be refused from registration.

The use of the Wayback Machine in this case is important because it provides specific instructions for properly authenticating and admitting such evidence in a TTAB action. As seen in this matter, the Wayback Machine evidence played a paramount role in establishing third party use of the “CHARLESTON HARBOR TOURS” mark. This tool can likewise be used to provide support on issues related to priority of use, abandonment, no bona fide use of the mark at the time of filing an in-use application, fraud, and issues related to a mark becoming generic. This TTAB ruling is instructive on avoiding potential hearsay and authentication related issues when using records from the Wayback Machine.

About the author: Gregory Brescia is a registered patent attorney and a Partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property prosecution and litigation. He also counsels clients on intellectual property enforcement and corporate transactions involving formation, compliance, and licensing. Mr. Brescia’s biography can be found here.

Supreme Court to Review Assignor Estoppel Doctrine

Author: Lara Garner

Assignor estoppel bars the seller of a patent from later attacking the patent’s validity in patent infringement litigation. The doctrine seems commonsensical. One shouldn’t be able to sell a patent and then later turn around and claim that that patent is worthless. It would seem reasonable, then, that the assignor should also be barred from challenging the validity of the assigned patent at the USPTO in an inter partes review. Not so according to the Federal Circuit.

Last April, the Federal Circuit “grapple[d] with the doctrine of assignor estoppel” in Hologic, Inc. v. Minerva Surgical, Inc. and affirmed, seemingly reluctantly, the decision of U.S. District Court for the District of Delaware. The district court had held that the assignor of a patent was not barred by assignor estoppel from relying on a Patent Trial and Appeal Board (PTAB) decision, affirmed by the Federal Circuit, invalidating patent claims in a inter partes review. Also affirmed was the district court’s holding regarding a second patent that the assignor was barred from asserting invalidity of that patent’s claims in the district court.

The Patents and the Parties

Hologic sued Minerva for infringement of certain claims of its U.S. Patent Nos. 6,872,183 and 9,095,348. Hologic had acquired the patents indirectly from the founder of Minerva.

In the late 1990s, Csaba Truckai, a founder of the company NovaCept, with his design team at developed a medical device called the NovaSure system and patented the technology. Both the ’183 and ’348 patents list Mr. Truckai as an inventor and Mr. Truckai assigned his interest in the patents to NovaCept.

In 2004, Cytyc Corporation acquired NovaCept for $325 million and in 2007 Hologic acquired Cytyc. Mr. Truckai left NovaCept and, in 2008, founded a competing company, the accused infringer, Minerva.

In the District Court and the Patent Office

Hologic brought its infringement suit against Minerva in 2015. Minerva asserted invalidity defenses in district court and also filed petitions for IPR in the Patent Office challenging the validity of both patents. Review of the ’348 patent was denied but the Board instituted review of the ’183 patent and eventually held the ’183 patent claims unpatentable as obvious. Hologic appealed.

The district court denied Minerva’s request to dismiss Hologic’s claim for infringement of the ’183 patent as the Board’s finding was “on appeal and does not have preclusive effect as to this action unless and until the appeal is resolved.” But Hologic’s motion for summary judgment was granted, for both patents, that the doctrine of assignor estoppel barred Minerva from challenging their validity in district court. The case then proceeded to trial and the jury found for Hologic.

Subsequent to trial, the Federal Circuit affirmed the Board’s decision that the ’183 patent claims are invalid as obvious. In the interim, the ’3348 patent expired.

In deciding post-trial motions, the district court determined that the Federal Circuit’s decision did not affect the jury verdict because invalidity of the ’183 patent did not affect the finding of infringement as to the ’348 patent, and the jury’s damages determination was adequately supported by the finding of infringement of the ’348 patent. The district court further held that invalidation of the ’183 patent did not affect its findings of assignor estoppel on the ’348 patent.” But the court denied Hologic’s request for supplemental and enhanced damages, and ongoing royalties for infringement of the asserted ’183 patent claims as moot.

At the Federal Circuit

On Appeal Hologic argued that assignor estoppel precluded Minerva from relying on the Federal Circuit’s Hologic decision to escape liability for infringement. It contended that “the final outcome of the IPR is irrelevant to the district court proceeding” and that “[t]o hold otherwise would be to hold that the America Invents Act (‘AIA’) abrogated the assignor estoppel doctrine in a district court infringement action.”

The Federal Circuit examined its precedent and disagreed.

The Federal Circuit had first examined and affirmed the vitality of the doctrine of assignor estoppel in 1988, defining it as “an equitable doctrine that prevents one who has assigned the rights to a patent…from later contending that what was assigned is a nullity.” Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988). The Federal Circuit noted that, while early Supreme Court cases had carved out exceptions to the general assignor estoppel doctrine, the Court did not abolish the doctrine. And, while some courts had questioned the vitality of the doctrine following a Supreme Court’s decision abolishing licensee estoppel, the Federal Court noted an important distinction between assignors and licensees: Whereas a licensee might be forced to continue to pay for a potentially invalid patent, the assignor has already been fully paid for the patent rights.

Assignor estoppel, serves important purposes including: “(1) to prevent unfairness and injustice; (2) to prevent one [from] benefiting from his own wrong; (3) by analogy to estoppel by deed in real estate; and (4) by analogy to a landlord-tenant relationship.”

The doctrine has since continued to be applied in various circumstance, often with the primary stated purpose of the prevention of unfairness and injustice. That said, the Hologic court reasoned that there are limits to the doctrine, including that it does not preclude an estopped party from arguing that the patentee is itself collaterally estopped from asserting a patent found invalid in a prior proceeding.

Based on those limitations, and expressly notwithstanding the seeming unfairness, the Federal Circuit concluded that assignor estoppel did not preclude Minerva from relying on the IPR affirmance to argue that the ’183 patent claims are void ab initio.

But it wasn’t all good news for Minerva. The Federal Circuit rejected its assertion that its invalidity challenge should not have been precluded in the district court, including declining Minerva’s invitation to abandon the doctrine of assignor estoppel entirely.

The incongruity of the result was not lost on the Court. Judge Scholl, who authored the opinion, wrote separately in the decision to highlight this “odd situation where an assignor can circumvent the doctrine of assignor estoppel by attacking the validity of a patent claim in the Patent Office, but cannot do the same in district court.” Judge Scholl concluded:

I suggest that it is time for this court to consider en banc the doctrine of assignor estoppel as it applies both in district court and in the Patent Office. We should seek to clarify this odd and seemingly illogical regime in which an assignor cannot present any invalidity defenses in district court but can present a limited set of invalidity grounds in an IPR proceeding.

Notwithstanding her suggestion, the Court denied en banc rehearing, the parties petitioned the Supreme Court, and last month the Supreme Court granted Minerva’s petition for certiorari on the question of: “Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.”

About the author: Lara Garner is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on Intellectual Property litigation and counseling for patents, copyrights, trademarks, and trade secrets, and in a broad range of matters, including contract, technology, and privacy issues. Ms. Garner’s biography can be found here.

Second COVID Relief Bill Brings Relief to Trademark Plaintiffs, Expressly Restoring Presumption of Irreparable Harm to Trademark Cases

Author: Patrick Mulkern

On December 27, 2020, the President signed the Consolidated Appropriations Act for 2021. Although this legislation garnered considerable attention for its COVID-related relief provisions, it also incorporated the Trademark Modernization Act of 2020 (“TMA”)—first introduced back in March of 2020 as H.R. 6196. The TMA makes several sweeping changes to the trademark examination process, including new methods to address the growing number of registrations covering marks not actually used in commerce; protects the administrative law judges of the Trademark Trial and Appeal Board against certain challenges; and reinstates the presumption of irreparable harm (for those Circuits that had rejected it in recent years). On the whole, commentators speculate the changes brought about by the TMA may turn out to be some of the most consequential changes in the last thirty years.

Part I – Restoration of Presumption of Irreparable Harm

First, and foremost, the TMA expressly restores the presumption of irreparable harm that trademark infringement plaintiffs used to enjoy prior to the Supreme Court’s decision in eBay v. MercExchange, LLC, 547 U.S. 388 (2006). Specifically, the TMA amends the Lanham Act to state a “plaintiff seeking an injunction shall be entitled to a rebuttable presumption of irreparable harm” upon a finding of a violation or likelihood of success. See H.R. 6196 § 6 (amending 15 U.S.C. § 1116) (emphasis added). This change directly addresses a circuit split in how some trademark plaintiffs were treated when seeking injunctive relief—codifying what some Circuits (i.e., Fifth and Eighth) already applied in trademark litigation, and rejecting what other Circuits (i.e., Third, Ninth, and Eleventh Circuits) had been doing post-eBay. Prior to the TMA, a trademark owner’s change of success in obtaining injunctive relief was therefore entirely dependent on the geographic location of its case—clearly encouraging forum shopping. Now, such inconsistencies should be resolved.

Two questions remain, however, with respect to the presumption. One, while the other sections of the TMA expressly state when they are to become effective (see infra), the irreparable harm portion of the TMA contains no such express language. Instead, Section 6(b) of the TMA simply states that this amendment “shall not be construed to mean that a plaintiff seeking an injunction was not entitled to a presumption of irreparable harm before the date of the enactment of this Act.” While not a paragon of clarity, this language appears to invoke arcane and technical rules regarding “enactment” more fit for Schoolhouse Rock1—all of which suggest the presumption was restored the moment the President signed the bill into law.2 It is possible this language may result in a deluge of motions for reconsideration similar to those seen in the patent context following the Supreme Court’s ruling on venue in T.C. Heartland LLC v. Kraft Foods Grp. Brand LLC, 137 S.Ct. 1514 (2017).

Two, there is uncertainty with respect to whether the “restored” presumption shifts the burden of persuasion or merely the burden of production. It would appear that the presumption that existed prior to eBay was merely one of production—with courts requiring the movant satisfy its burden of persuasion in establishing irreparable harm.3 The default, as provided for by the Federal Rules of Evidence, further supports such an interpretation—with Fed. R. Evid. 301 explaining that any presumption is one “of producing evidence to rebut the presumption” and “does not shift the burden of persuasion.” Ultimately, notwithstanding the presumption, a defendant could potentially put the onus back on plaintiff where the defendant is able to present prima facie evidence regarding the lack of irreparable harm.

Part II – Changes to TM Examination and Post-Registration Review Processes

Next, the TMA provides changes to both inter partes trademark examination procedures and ex parte challenges to existing registrations.

1. Codification of Letters of Protest Procedures

Section 3 of the TMA expressly permits submission of third party evidence, formalizing the previous “Letters of Protest” process. The new formalities now require the submission include a description/identification of the relevant ground for refusal and requires the PTO to act on any such submissions within two months. The amendments also permit the PTO to charge a fee for submitting such evidence.

2. Allowing Shortened Time to Respond to Office Actions

Section 4 of the TMA amends the previously ubiquitous six month deadline for responses to office actions, and grants the PTO authority to prepare and promulgate regulations which will govern how and what the new/different response periods will be. The new response deadlines will range from two to six months, and the TMA also allows for extensions of time under those same forthcoming regulations.

3. Ex Parte Challenges to Subsisting Registrations

Section 5 of the TMA creates two new avenues for cancelling registrations, both of which serve as ex parte alternatives to traditional cancellation proceedings—all meant to address the growing concern of an overcrowded registration. The first, creating a new Section 16A entitled “Ex Parte Expungement,” allows for the expungement of registrations that have never been used in commerce. Challenges under this new section can be filed during the first 3 years of a registration’s existence. The second, creating a new Section 16B entitled “Ex Parte Reexamination,” allows for a challenge to registrations that were not in use (a) as of the date of first claimed use, or (b) when the application was filed. Challenges under this new section can be filed during the first 5 years of a registration’s existence. As above, the PTO Director was also authorized to develop and promulgate enacting regulations.

Unlike the changes identified above in Section 6 (restoring the presumption of irreparable harm), the changes enacted in Sections 3, 4, and 5 are all set to take effect in one year. This will provide the PTO time to ramp up the administrative infrastructure needed to implement these changes.

Part III – Confirming Independence of TTAB ALJs

Finally, Section 8 of the TMA provides express statements regarding the scope of the PTO Director’s authority with respect to the administrative law judges (ALJs) of the Trademark Trial and Appeal Board (TTAB). Specifically, it amends the Lanham Act to entrust the Director with “the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board.” The changes, of course, do not require the Director to reconsider, modify, or set aside any particular TTAB decisions—it simply provides the Director authority to do so. These changes come in response to recent challenges in which litigants have attempted to argue that the TTAB’s ALJs are unconstitutional “Officers of the United States” (as they are not confirmed by the Senate) because of a perceived lack of control by the PTO Director.4

Conclusion

While the restoration of the presumption of irreparable harm may capture the most attention, and despite providing harmony to the circuits in resolving a long-standing split, it is unclear whether such a change will result in much change in practice. Its most lasting effect may simply be one of procedure—reducing the amount of forum shopping. For trademark prosecutors, the changes to examination procedures are much more likely to have real world, day-to-day impact—with suddenly differing deadlines (no longer uniform 6 month responses), formalized requirements for Letters of Protest submissions, and new methods of seeking cancellation of unused registrations.

About the author: Patrick J. Mulkern is senior counsel and a member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property litigation and transactional matters, with a particular emphasis on patent, trademark, and trade secret litigation. Mr. Mulkern is a registered patent attorney and his biography can be found here.
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1 See Lander and Berkowitz, P.C. v. Transfirst Heatlh Servs., Inc., Case No. 05-cv-527 (E.D. Mo.), Dkt. 21 at n.1 (holding the date of a law’s “enactment” was “the day when it was signed into law by the President” and observing: “Although it is certainly not binding precedent, the parties may recall a popular episode of the television series Schoolhouse Rock” titled I’m Just a Bill. In that episode, Bill sang, “I’m just a bill/Yes, I’m only a bill/And if they vote for me on Capitol Hill/Well, then I’m off to the White House/Where I’ll wait in a line/With a lot of other bills/For the president to sign/And if he signs me, then I’ll be a law/How I hope and pray that he will/But today I am still just a bill.”).
2 See, e.g., Gozlon-Peretz v. United States, 498 U.S. 395, 404 (1991) (“It is well established that, absent a clear direction by Congress to the contrary, a law takes effect on the date of its enactment.”); Garnder v. Collector of Customs, 73 U.S. 499, 406 (1867) (“The simple signing of his name at the appropriate place is the one act which the Constitution requires of [the President] as the evidence of his approval, and upon his performance of this act the bill becomes a law.”).
3 See, e.g., Peter Letterese & Assoc., Inc. v. World Inst. of Scientology Enterps., Inc., Case No. 04-cv-1178, 2005 WL 8167094, at *1 (S.D. Fla. May 27, 2005) (finding plaintiff failed to establish irreparable harm despite presumption).
4 See Schiedmayer Celesta GmbH v. Piano Factory Grp., Case No. 2020-1196 (Fed. Cir. No. 8, 2019); Coca-Cola Co. v. Somohano-Soler, Case No. 2020-1245 (Fed. Cir. Nov. 27, 2019).

Lady A vs. Lady A: (Trademark) Battle of the Bands

Author: Hannah Brown

The tragic death of George Floyd last summer sparked nationwide protests and activism. This response and demand for change led to noteworthy decisions by many corporations and entities. Quaker Oats announced its plans to rebrand its Aunt Jemima brand of syrup and pancake mix because the company recognized that “Aunt Jemima’s origins are based on a racial stereotype.” The companies that own Mrs. Butterworth’s and Cream of Wheat also proclaimed their intent to reshape the brands’ images. The Washington Redskins announced that they would no longer use the name and logo “Redskins” and the team (for now and maybe permanently) will go by the name the “Washington Football Team.”1

Further, in June 2020, a country band that had gone by the name “Lady Antebellum” since it was formed in 2006 officially changed its name to “Lady A.” The band issued a public statement, noting that they named the band after the southern “antebellum” style home where they took their first photos together, but they “did not take into account the associations that weigh down this word referring to the period of history before The Civil War, which includes slavery.” The band pledged to drop the word “antebellum” and “move forward as Lady A, the nickname [their] fans gave [them] almost from the start.”

Following this announcement, the band was criticized by blues singer Anita White, who claims she has recorded music and performed under the name Lady A for decades. The parties attempted to work out a way where they could both use the name, with the band offering Ms. White money for legal fees and a promise to help her with her career if she gave them rights to use the name Lady A. Ms. White did not agree to these terms and requested a $10 million payment to allow the band to continue to use the mark. The band did not accept and filed suit in Tennessee federal court, seeking declaratory judgment that the band’s trademarks incorporating “Lady A” do not infringe any of Ms. White’s rights in “Lady A.” The band claims it has been using “Lady A” interchangeably with “Lady Antebellum” since 2006. The band attached evidence to its complaint that it registered the trademark “Lady A” for musical records and for entertainment services in 2010 and 2011. Ms. White did not oppose or contest the registrations, which are now incontestable. See Section 15 of the Trademark Act, 15 U.S.C. § 1065. The band also notes that Ms. White never applied to register “Lady A” as a trademark. The band specifies in its complaint that it does not wish to prohibit Ms. White from performing as “Lady A” nor does it seek damages; instead, it wishes to peacefully coexist with her.

Ms. White countersued in Washington federal court, alleging that the band “usurped” her brand and caused her to lose business and status. She brings causes of action for trademark infringement and unfair competition, claiming that she has used the stage name and trademark “Lady A” for nearly thirty years and has thus accrued common law rights in the trademark. She seeks an injunction and damages.

Both cases are still ongoing and nothing on the merits has been decided. There seems to be no dispute that the band has been using the name “Lady A” for at least a decade; they submitted proof of online articles, clothing, and other evidence that they can be associated by the name as well as by the name “Lady Antebellum.” The band also registered the mark, while Ms. White did not. The band notes the incontestability status of their marks, but this is likely not something that will help them in this case. Incontestability relates to the validity of a mark, not the strength of the mark. The mark’s registration as incontestable is not relevant to the issue of whether the mark is sufficient to trigger confusion. An incontestable mark is also subject to the challenge that another party used the mark in commerce first—before the incontestable mark’s registration. This is what Ms. White is claiming, that she used the mark in commerce first through performances and music sales. Ms. White claims she released albums as “Lady A” since 2006 and has been performing using the name since at least the early 1990s.

The band also claims that Ms. White has never used “Lady ‘A’” as a trademark to identify her goods or as a service mark to identify her entertainment services, and, if she did use it as a trademark, it was after the band established their rights in the mark. Ms. White disagrees, stating she has used the name for decades.

Ms. White will need to prove the territory in which she has continued to use the mark without significant interruption since prior to the band’s use in that territory. The band is nationally, if not internationally, known, but, as of now, it appears that Ms. White’s territory of use is not so clear or established. If Ms. White can establish her territory of use (along with a zone of natural expansion), she will likely have rights superior to the band in that territory. If Ms. White’s use has been restricted to only one small area, such as Seattle, the band may be granted nationwide use of the mark, subject only to an exception in that area. Even the band’s incontestable registration would not grant it the exclusive right to use the mark where Ms. White has continued to use the mark and has established rights since prior to the band’s registration. It is unclear how such a division and exception could be made for the band who performs and sells music nationwide.

As of now, the only pending questions before both district courts in the parties’ cases relate to venue and the first to file rule. But eventually, the dueling trademark rights will be analyzed and this will be an interesting case for trademark lawyers to continue to follow.

About the author: Hannah Brown is an associate and member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group, specializing in trademark, copyright, and patent litigation. She is a former law clerk to the Hon. Janis Sammartino and Hon. Cynthia Bashant of the U.S. District Court, Southern District of California.
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1 As an interesting intellectual property-related side note, this is not the first time the Redskins have been criticized for their name. In 1992, several Native Americans filed a joint petition with the Trademark Trial and Appeal Board (TTAB) of the U.S Patent and Trademark office requesting the cancellation of the term “Redskins.” The petition claimed the term is “disparaging” to American Indians. The TTAB judges canceled the federal registration of the mark Redskins “on the grounds that the subject marks may disparage Native Americans and may bring them into contempt or disrepute.” The case underwent several rounds of appeals. Eventually, the Fourth Circuit Court of Appeals reinstated the trademark. See Pro-Football, Inc. v. Blackhorse et al., Case No. 15-1874 (4th Cir. 2015). The decision was based on a Supreme Court decision issued in June 2017 in an unrelated case involving a rock band, the Slants. The Supreme Court declared that a section of federal law banning trademarks that may disparage people was a violation of the First Amendment. It was this section of the Lanham Act that the Native Americans relied upon to argue that the Redskins’ trademarks should be cancelled. The Fourth Circuit therefore issued a decision consistent with the Supreme Court ruling that the disparaging trademark ban is unconstitutional.
Although technically a loss for the plaintiffs, the lawsuit alerted the nation to the Native Americans’ contentions and feelings regarding the team’s name. Now, their request has been granted and the “Redskins” are no more.

Are Commercial Parody Dog Toys Subject to the Heightened Rogers Test, and Do They Qualify As Non-Commercial Works under the Trademark Dilution Revision Act? Jack Daniels and Amici Ask the U.S. Supreme Court to Overturn the Ninth Circuit

Author: Benni Amato

The dog toy industry has drawn the ire of many famous brands; one of the latest examples is VIP Products’s “Bad Spaniels Silly Squeaker” dog toy, fashioned to resemble Jack Daniel’s Old No. 7 Black Label Tennessee Whiskey. The toy replaced “Jack Daniel’s” with “Bad Spaniels,” along with a drawing of a guilty-looking spaniel. Instead of “Old No. 7 Tennessee Sour Mash Whiskey,” the toy read, “Old No. 2 on your Tennessee Carpet.” Instead of “40% ALC BY VOL (80 PROOF),” the toy read, “43% POO BY VOL” and “100% SMELLY.”

Jak Daniel’s emerged victorious before the United States District Court, District of Arizona on summary judgment and after a bench trial on its trademark infringement and trademark dilution claims. However, while the Ninth Circuit Court of Appeals affirmed the validity of Jack Daniel’s trade dress, it vacated and remanded the judgment on the infringement claim, and reversed the judgment on the dilution claim.

The Infringement Claim

The Ninth Circuit noted that while trademark and trade dress infringement cases turn on likelihood of confusion, if the otherwise infringing goods involve “artistic expression,” a plaintiff must also show either that the defendant’s use of the mark is either “not artistically relevant to the underlying work,” or “explicitly misleads consumers as to the source of content of the work”—otherwise known as the Rogers test, named after Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) and adopted by the Ninth Circuit in Mattel, Inc. v. MCA Records, 296 F.3d 894, 900 (9th Cir. 2002).

Whether a work is expressive depends on whether the work “communicat[es] ideas” or “express[es] points of view.” The work need not be considered high art, nor do the work’s availability commercially vitiate any expressive qualities. The Ninth Circuit concluded that the Bad Spaniels toy was an expressive work that conveyed humor, and it thus vacated judgment and remanded the claim to the district court to consider the Rogers test.

Jack Daniels now seeks certiorari from the United States Supreme Court, arguing that the Rogers test should be limited to the use of trademarks in the titles or contents of expressive or artistic works, not a commercial dog chew toy.

The Dilution Claim

The Ninth Circuit noted that a non-commercial use of a mark is not subject to trademark dilution claims. Then, without any in-depth discussion, the Ninth Circuit concluded that because the Bad Spaniels product was protected by the First Amendment, VIP was entitled to judgment on the dilution claims in its favor.

Jack Daniels also seeks certiorari from the Supreme Court on this issue, arguing that a commercial product’s use of humor should not render the product “noncommercial” under 15 U.S.C. § 1125(c)(3)(C), and thus barring a dilution by tarnishment claim.

Previously, in the Mattel case, the Ninth Circuit held that as long as a work was not purely commercial (for example, the song “Barbie Girl”), then the First Amendment defense can apply to dilution claims. Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 907 (9th Cir. 2002). However, due to the lack of analysis in the Jack Daniels opinion, it is not clear how the Ninth Circuit found the Bad Spaniels squeaker toy as not purely commercial.

Jack Daniel’s and its amici—including Campbell Soup Company, Campari America, Alcohol Beverage Industry Associations, Constellation Brands, and International Trademark Association—expressed concern in their briefing that a defendant selling a commercial product may escape any liability under the dilution laws by simply making the product humorous.

Chewy Vuitton

One of the more famous dog toy cases is Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 263 (4th Cir. 2007), which involved a “Chewy Vuitton” dog toy. In fact, the Ninth Circuit cited to this Fourth Circuit case in supporting its own Jack Daniels opinion. However, in the Louis Vuitton case, while the dog toy’s parodic nature dominated much of the opinion, the Fourth Circuit found no likelihood of confusion in part because the products were different, and there was minimal overlap between advertising and sales channels. The Jack Daniels district court found the opposite, that likelihood of confusion existed, in part because Jack Daniels licensed its intellectual property for certain dog products.

As to the dilution by tarnishment claim in Louis Vuitton, the Fourth Circuit ruled that Louis Vuitton failed to satisfy its burden that the dog toy would harm its reputation. While reaching a similar result, the Ninth Circuit instead cited to the First Amendment and non-commerciality as its reason for reversing judgment on the dilution by tarnishment claim.

In other words, while both the Fourth Circuit and Ninth Circuit ruled in favor of the dog toy producers, the appellate courts relied on different analyses.

Case Status and Opinions

The Supreme Court has yet to grant certiorari to review the case. VIP Products and its amici—Trademark Law professors, including Rebecca Tushnet of Harvard Law School—filed their briefs on December 16, 2020, and Jack Daniels filed its reply brief on December 23, 2020.

While consumers may or may not confuse a famous whiskey brand with a potty-humored dog toy, and the dog toy may or may not tarnish the whiskey brand’s reputation, it appears that the main objections from the Jack Daniels amici and commentators stem from the Ninth Circuit’s reasoning, or lack thereof. The Ninth Circuit’s opinion could lead to an expansion of what constitutes “expressive” and/or “non-commercial” works, unless the Supreme Court decides to take on the issue and rule otherwise.

About the author: Benni Amato is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on litigation matters involving trademarks, copyright, trade secrets, patents, internet issues, cybersecurity, and contractual disputes, as well as domain name arbitrations and trademark and copyright prosecution and licensing. Ms. Amato’s biography can be found here.

Today’s No Patent Challenge Provisions in License Agreements

Author: John Vassiliades

In the years and days leading up to the seminal U.S. Supreme Court decision in MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118 (2007), it was common for licensors of patents to include a “no patent challenge” clause in the license that prohibited the licensee from challenging the validity of the patents that were the subject of the license. The U.S. Supreme Court put an end to that practice by holding in MedImmune that licensees have the legal right to challenge the validity and enforceability of the patents that are being licensed without first having to breach or otherwise terminate their license agreement. Under this ground-breaking decision, a licensee can successfully challenge the validity of the licensed patents after receiving immunity from infringement by the licensor. The decision seemed to encourage infringing parties to enter into license agreements in order to obtain immunity from infringement, then challenge the validity of the licensed patents without fear of being sued for infringement.

Prior to the MedImmune decision, licensors held the upper hand over licensees because the law permitted licensors the right to require that a licensee contractually waive its right to legally challenge the licensed patents, thereby locking in a licensee to pay royalties for the full term of the agreement which often amounted to the end of the last to expired licensed patent. This prior practice essentially forced a licensee to make the difficult choice between paying royalties for the term of the license or risk termination of the license and the filing of an infringement lawsuit if it did anything that sought to challenge the patents of the licensor.

In the years following MedImmune, sophisticated licensors have pivoted around the decision and have since deployed licensing strategies that place the licensor back in the driver’s seat. Savvy licensors are no longer requiring that their licensee contractually waive their patent challenge rights since to do so is illegal. Instead, they simply require that if you want to be a licensee, you must agree to a contract provision that says that if you or anyone on your behalf seeks to challenge the licensed patents, your license immediately terminates thereby making the licensee a target for an infringement claim by its former licensor. This strategy provides enough of an obstacle to the licensee to not want to challenge the validity of the licensed patents for fear of being sued for infringement by its former licensor once the license is terminated.

Interestingly enough, this licensing strategy has yet to be legally challenged by a licensee in court and while some commentators believe this contract strategy still violates the spirit behind MedImmune because it essentially discourages licensees from asserting their patent challenge rights, other commentators believe that the strategy is an enforceable effective tool for upholding the validity of patents during a time when the legal standards of what is patentable have become less certain, making it generally easier for infringers to challenge the validity of patents. These commentators instead say that this licensing strategy should be legal because unlike the old no challenge clauses (which are now illegal), a simple termination of license clause does not prevent the licensee from being able to challenge the validity or enforceability of a licensed patent if it ever wanted to. That is, under this licensing strategy, the licensee has to be willing to give up its infringement immunity by terminating the license before it seeks to challenge the validity of the licensed patents, something that the Court in MedImmune did not expressly say was illegal.

In any event, licensors of patents are well advised to include such a termination of license provision in their license agreements whether the license is a freedom to operate license, a technology transfer license, or a patent license negotiated in connection with a patent infringement litigation. That said, this basic licensing strategy has taken on many new forms and variations. For example, in some instances, the clause might be drafted in a way that triggers termination of the license if the licensee does anything to oppose the licensed patent even if the action in question is uttering an opposing or threatening statement that does not amount to the filing of a legal proceeding. In addition, the provision may state that a “challenge” includes more than a challenge to the validity or enforceability of the licensed patents but also to any claim that what the licensee may be doing no longer infringes a claim of the licensed patents. Still other variations include a requirement that the licensee give advance notice of any intent to challenge the licensed patents, an automatic increase in royalty rates, or other compensation, which may be in lieu of a termination or in addition to a termination should the licensee wish to resume its license after an unsuccessful challenge. Moreover, it is common for a challenge termination provision to state that termination is triggered not only if the licensee challenges, but also if anyone on behalf of the licensee, such as a sublicensee, a successor of the licensee (in connection with a merger or acquisition transaction involving the licensee), or even a third party working on behalf of the licensee, seeks to challenge.

All of these variations, whether used singly or in tandem, can offer an effective licensing strategy that mitigates the risk of potential future patent challenges by licensees. Since none of these strategies have been challenged in court, licensors are strongly recommended to implement them for all of their patent licensing deals.

About the author: John Vassiliades is registered patent attorney and partner in the firm’s Intellectual Property Practice Group, specializing in high-technology business transactions for the development and monetization of intellectual property rights. He regularly advises clients on patent, trademark, copyright, and trade secret licensing, and R&D, M&A, IT, software, and E-Commerce transactions in a variety of industries. He holds a master’s degree in Biotechnology from Johns Hopkins University.

A Positive Shift: The Music Modernization Act and Gaining Better Access to Royalty Payments

Author: Ross Kirkbaumer

Signed into law on October 11, 2018 the Orrin G. Hatch–Bob Goodlatte Music Modernization Act (“MMA”) was enacted “to address many of the ancient inequities in our copyright laws that stand between music creators and fair compensation.”1 The bipartisan bill finally recognized the need for the law to catch up with the music industry in the digital age. Recording Industry Association of America President Mitch Glazier stated that “[t]he public policy rationale for the bill’s reforms was demonstrable,” adding that “[t]he gaps or inequities in the laws we were seeking to change were obvious, glaring and indefensible.”2

Title I of the MMA was designed to better improve licensing and royalty payments for songwriters. Before the MMA, digital music providers (“DMPs”) such as Spotify, Apple Music, and Tidal served a notice of intention to obtain a compulsory song-by-song license to either the copyright owner or to the Copyright Office (the “Office”) if the owner was not identified. Instead of going through this process, the MMA now authorizes a blanket licensing system for DMPs to make and distribute downloads or interactive streams of music. These blanket licenses will be administered by a mechanical licensing collective (“MLC”). The purpose of the MLC is to “receive notices and reports from DMPs, collect and distribute royalties, and identify musical works and their owners for payment.”3 A digital licensing coordinator (“DLC”) was designated by the Office to represent licensees (the DMPs) in royalty proceedings.

Since the blanket licenses cannot be given until January 1, 2021, the MMA includes rules and regulations for DMPs during this “transition” period. During this period, DMPs seeking to obtain a compulsory license must continue to do so on a song-by-song basis and DMPs must also serve a notice of intention if the copyright owner is known. If the copyright owner is not known, however, the DMPs do not need to obtain a compulsory license as long as the DMPs, using good faith and commercially reasonable efforts, continue to search for the identity of the copyright owner. If the owner is still unknown on the first day of 2021, then the digital music provider must transfer the royalties to the MLC. This process is referred to by the Office as the limited liability exception.

In order to be eligible for the limitation on liability, one of three scenarios must occur. First, if the DMPs are successful in identifying and locating the copyright owner, they must provide statements of account and pay the royalties to the copyright owner. In the second and third scenarios, the DMPs are not able to locate and identify the copyright owner by the end of the calendar month in which the work was first used. If this is the case, the DMPs must accrue and hold the royalties. If the copyright owner is identified before the blanket license is available, the DMPs must pay the copyright owner the royalties. If the copyright owner is still not identified by January 1, 2021, the DMPs must transfer the royalties to the MLC along with a cumulative statement of account that includes information that would have been provided to the owner had the DMPs knew of the identity of the owner.4

When the transition period rule was publicized, the Office stated that “[t]he intent of the legislation does not signal to the [O]ffice that it should be overhauling its existing regulations during the transition period before the blanket license becomes available.”5 When the Office provided the opportunity for public comments, both the MLC and DLC responded.

The MLC recommended that the cumulative statements of account provided by the DMPs should be delivered at the end of the transition period instead of the pre-existing monthly statements. The MLC also proposed that the statements include additional information including per-play allocations, information about matched shares of a musical work where unmatched shares for the work are reported, information about any applicable earned interest, and information about any claimed or applied deductions or adjustments to the aggregate accrued royalties payable. The DLC claimed that the Office is restricted and cannot require DMPs to provide additional information since it is impractical for DMPs to provide such information and doing so went against the requirements of the MMA. The Office agreed with the MLC, stating that it is “necessary and appropriate to require DMPs to provide additional information to aid the MLC in fulfilling its statutory duty to identify and locate the copyright owners of unmatched works and pay the royalties due to them.”6

The DLC proposed that DMPs should not be required to accrue any royalties that are required to be paid to copyright owners pursuant to any agreements entered into prior to January 1, 2021. The DLC argued that because some DMPs will be required to pay some amount of accrued unmatched royalties to publishers with whom they have direct deals, it will create a conflict between the pre-existing agreement and the MMA. The MLC countered the DLC’s proposal, claiming that it conflicted with the MMA’s requirement that all royalties of the unmatched work be transferred to the MLC. The Office stated that this issue may be best resolved by determining whether a given agreement constitutes a valid license; if the work is matched, then it does not need to be reported to the MLC. Additionally, the Office stated the issue may be better resolved by the relevant parties looking at the language of the agreement rather than a blanket rule given by the Office. While admitting that the issue is nuanced and complicated, the Office declined the DLC’s proposal.

The last day for the public to provide comments on the proposed changes to the transition period transfer and reporting of royalties was on August 17, 2020. GRSM will provide relevant updates regarding the Office’s decision.

About the author: Ross Kirkbaumer is an associate in the Seattle office of Gordon Rees Scully Mansukhani and a member of the firm’s Intellectual Property Practice Group. With a background in intellectual property enforcement, Mr. Kirkbaumer’s interests include copyright and trademark litigation as well as anti-counterfeiting enforcement.
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1 House Introduces Comprehensive Music Licensing Reform Legislation, Sound Exchange https://www.soundexchange.com/news/house-introduces-comprehensive-music-licensing-reform-legislation/.
2 Mitch Glazier, The Music Modernization Act: An Industry Speaking With One Voice (Guest Column), Variety https://variety.com/2018/biz/news/music-modernization-act-guest-post-1202957944/.
3 Musical Works Modernization Act, Copyright.gov https://www.copyright.gov/music-modernization/115/.
4 Music Modernization Act Transition Period Transfer and Reporting of Royalties to the Mechanical Licensing Collective, 85 Fed. Reg. 43,518 (July 17, 2020).
5 Id.
6 Id. at 43,519.

Michael Skidmore v. Led Zeppelin et al., Case No. 20-142 (S.Ct. 2020).

Author: Richard Sybert

The greatest rock band in recorded history is back in the news. And who, hearing their music blast through the dormitory corridors of UC-Berkeley in the fall of 1969, could have predicted that a half-century later, Led Zeppelin would be at the center of a raging copyright law controversy on its way to the United States Supreme Court? Will Jimmy Page have to wear a tie?

Fresh from its sacrilege at being turned into elevator music, the band’s “Stairway to Heaven”—perhaps the closest heavy metal could ever get to a love ballad—is the subject of court rulings and a petition for certiorari filed August 11 over claims that it plagiarized the opening bars and intro from a 1967 song called “Taurus” by the band Spirit.

A Los Angeles jury cleared Zeppelin of this infringement charge in 2016. A Ninth Circuit panel reversed the verdict, but it was reinstated by an en banc panel whose decision has sent shock waves roiling through the musical copyright world.

Notably, the Court of Appeal ruled that music copyright—and, therefore, analysis of infringement allegations—is limited to the deposit copy of the music on file at the Copyright Office. (All copyright registration applications must include a “deposit” at the Copyright Office of the work, or a representation of it, being copyrighted.) In the case of music copyrights, this tends to be “bare-bones,” often simple sheet music which is a far cry from the final version(s) actually produced and recorded. Put another way, the Courts will not compare the accused music against derivative versions of the copyright.

Lawyers for the estate of Spirit’s front man, which brought the suit, claimed in their cert petition to the Supreme Court that this ruling would have dire consequences for the music industry and effectively divest writers and composers (or their publishers) of copyright protection of the fruits of their labors. No doubt this is overstated, but also no doubt if this ruling stands it will represent a major change in music copyright law.

It is rare, of course, that cert petitions are accepted, which requires the votes of 4 of the 9 justices; of the 7,000 to 8,000 petitions filed each term, only about 80 are granted. Given their age, however, maybe some of the Supremes are Zeppelin fans. All we know is that right now there doesn’t seem to be a whole lotta love in the music world.