Tag Archives: Damages

Bratz, foiled again! (Bumped and updated)

Originally posted 2010-07-23 11:10:54. Republished by Blog Post Promoter

First, December’s 15, 2009′s story:

Remember the Bratz dolls case, and the phenomenal legal fees application that followed?

It’s back!   The Ninth Circuit Court of Appeals stayed the trial judge’s order basically liquidating the Bratz.  Here’s what the WSJ Law Blog reported last week:

The Ninth Circuit on Wednesday ruled that Bratz maker MGA Entertainment can continue selling its dolls, despite the stinging defeat it suffered last year a jury when a Riverside, Calif., jury awarded Mattel, Inc. $100 million in damages in a closely followed copyright-infringement lawsuit. . . .

The judges on the appellate panel, Alex Kozinski, Kim Wardlaw and Stephen Trott, questioned whether the trial judge went too far by awarding MGA’s Bratz doll franchise to Mattel and wondered why he didn’t instead award Mattel a royalty or ownership stake in the company.

I never played with dolls due to a household manliness mandate, and I’m already uncomfortable blogging about this for the fourth time, so let’s just note it and go back to what I was doing with this here mitre box and also I’m going to do some re-grouting on some tiles somewhere before bed.  Which I sleep in wearing a rustic burnoose emblazoned with my varsity letter. With the windows open.

Bratz-tip to Jaded Topaz!

UPDATE:  In response to certain inquiries, a clarification:  No, I did not actually earn a varsity letter in high school or otherwise.   But the one on my night-burnoose is “mine.”  It’s a kind of … trophy I took from the still-quivering hulk of the middle-linebacker I brutally beat up and left for dead in a Chicago alley, okay?

Now, today’s update:

No surprise here in light of the earlier ruling, but stunning nonetheless:  The Ninth Circuit kayos the award!  Choice quote — Kozinski, of course — via Bloomberg:

Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand.  It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names.

That’s going to ruin a lot of Big IP summers on Cape Cod this weekend.

UPDATE:  For Mattel, it only gets worse:

[Today a] U.S. jury decided that MGA Entertainment Inc is the rightful owner of the once-billion dollar line of pouty-lipped Bratz dolls.

The astonishing loss for the world’s largest toy maker concluded a case that began in 2004, when MGA’s line of dolls was all the rage among teen and preteen girls. Mattel accused Van Nuys, California-based MGA of stealing its designs by hiring away a key employee.

Mattel CEO Robert Eckert sat stone-faced, staring straight ahead as the verdict was read on Thursday in a Santa Ana, California, federal courtroom. He said afterward that he was disappointed by the verdict.

“We remain committed to protecting the intellectual property that is at the heart of business success,” Eckert said in an email.

What?  MGA’s intellectual property?

The opinion’s here.

Bringing big IP plaintiffs down a peg — or two

Originally posted 2007-06-01 01:13:36. Republished by Blog Post Promoter

Mike Atkins is paying attention to Microsoft’s IP docket, as a Seattle Trademark Lawyer will do. He’s reporting about a default judgment and award the software maker achieved in California, with a rather surprising anticlimax in the dollars-and-cents category:

Microsoft sought more than $3 million in statutory damages. However, the court only awarded $12,500 in damages and $2,000 in fees and costs. The court explained its decision by stating: “Plaintiff asks for the maximum enhanced statutory damages for the infringement of each of seven copyrights and two trademarks. At $150,000 per copyright and $1,000,000 per counterfeit trademark, the tab comes to $2,050,000. Plaintiff has identified a grand total of three units of counterfeit software that defendant sold. It is true that Microsoft could not conduct discovery to determine its damages, but that in itself does not support levying a statutory damages award in excess of three million dollars. … Statutory damages are intended to serve as a deterrent, but that does not justify such a windfall.

Well. True enough, when we got the judgment for seven (theoretical) figures in Louis Vuitton v. Veit, which was a counterfeiting case (and thus also implicated statutory damages), we could point to a major online counterfeiting operation, from which the court could deduce not only massive sales but the sort of massive wrongdoing that those huge swinging statutory damage options are meant to punish. Even then the court wanted as much proof as we could get our hands on of what was going on there.

But only $2,000 in fees and costs? That doesn’t sound right. The attorneys’ fees provisions of the Copyright Act are supposed to make a successful plaintiff at least whole in terms of the cost of enforcement — regardless of the number of units sold. Two thousand dollars doesn’t even cover scribes and sealing wax.

Sounds like something else was going on here. Any suggestions?

Designer Skin v. S&L Vitamins trial update

Originally posted 2008-07-17 11:39:17. Republished by Blog Post Promoter

The remaining issues in the case, you may recall, were copyright infringement and Arizona unfair competition. Here is the status per this morning’s minute entry in the court’s electronic case filing docket:

Minute Entry. Proceedings held before Judge James A Teilborg on 7/16/2008: Jury Trial – Day 2 held. Plaintiff’s case continues. Evidence and testimony presented. Plaintiff rests. Defendant rests. The Court grants defendant’s oral Rule 50 Motion as to statutory damages, actual damages and unfair competition claim. The Court grants defendant’s oral Rule 50 motion to dismiss defendant Lawrence Sagarin as a defendant. The remaining issue in the case is the injunction issue. Closing arguments. Jury deliberations. Jury to return at 9:00 a.m. 7/17/2008 to resume deliberations. (Court Reporter David German.) (TLB )

A tad terse and bloodless — quite unlike how trial has gone.  Not terse or bloodless at all.  [UPDATE:  Here's the transcript.  Dismissal of the damages claims were stipulated; see the ruling from the bench at page 124 of the PDF for the ruling as to Sagarin.]

“The Court grants defendant’s oral Rule 50 Motion as to statutory damages, actual damages and unfair competition claim” means “The Court grants defendant’s’ oral motion to dismiss Designer Skin’s claims for statutory damages, actual damages and unfair competition. (Earlier on the court declined to take our “suggestion” of a lack of copyright jurisdiction.)

So, so far: No damages, no plaintiff attorneys’ fees in play. Jury (advisory per Rule 39(c) of the Federal Rules of Civil Procedure; injunction against further use of Designer Skin’s “electronic renderings” is not a jury issue, but they are charged with deciding whether there was copyright infringement) is out; they return this morning, Phoenix time, at 9.

We will update and backfill…

UPDATE: The jury returned a verdict of infringement on 42 of the 54 copyrights. In post-verdict interviews, interestingly, the jurors reported they would have awarded no damages, or nominal damages, had the judge permitted them to consider damages. (Per the above the damages claims were dismissed.) The jurors rejected the idea that a manufacturer is entitled to damages in connection with the sale by third parties of merchandise the manufacturer already sold once before, regardless of the legal theory. This came as quite a surprise to the plaintiff’s legal team, whereas the advisory verdict of infringement (which the court indicated he would adopt) was not particularly surprising to us… considering.

RELATED POST: Two Cities.

Legal in Phoenix, liable in Central Islip

Originally posted 2009-01-21 18:24:42. Republished by Blog Post Promoter

UPDATE: All the below is still very relevant, very important and very significant — except as to the final judgment, which has been vacated by consent and replaced with this Agreed Injunction and Order.

D'Amato Federal courthouse EDNYMy client S&L Vitamins and I just suffered a devastating loss in its Eastern District of New York litigation against Australian Gold (now owned by a holding company called New Sunshine, LLC) after a five-day jury trial on claims by AG for tortious interference with contract and trademark infringement.  I posted both sides’ trial briefs here.  The jury instructions in the Australian Gold case are here.  I will post more documents later.

Before sharing the verdict and recounting some extraordinary highlights of the trial, here’s some background.  I am focusing on the contrast between this outcome and the mirror-image rulings on virtually identical operative facts in the Designer Skin case, discussed below, also involving my client — not because it must be the case that the court in Designer Skin was right and the court in Australian Gold was wrong, but to point out the utter inconsistency of these rulings and the impossibility of doing business in such a legal environment: Read More…

Designer Skin v. S&L continued: “S&L had a perfect right to sell this product”

Originally posted 2008-07-18 13:50:34. Republished by Blog Post Promoter

Unfortunately for future defendants in the position of our client, Internet retailer S&L, U.S. District Judge James Teilborg’s decision from the bench in the District of Arizona dismissing the damages claims of suntan lotion manufacturer Designer Skin will not be officially published, being an oral opinion. Well, it will not be published unless and until it is quoted and affirmed by the Ninth Circuit, which a Designer Skin lawyer has promised will happen soon — though not exactly in those words. (Earlier post here.)

Bronze AnarchyFortunately we can mitigate some of the sting of the lack of officially published precedent, for now, and on our electronic mimeograph machine “publish” that opinion. The ruling is below; an example of the subject “electronic renderings” is at left; the transcript of the entire colloquy, including the striking of the would-be “damages” testimony of the company’s president, Beth Romero, and the argument of counsel can be downloaded here.

Disclosure: Neither counsel nor court had prepared particularly thoroughly for these oral motions or the ruling from the bench, which came up earlier in the proceedings than had been anticipated for reasons we will discuss next week. Therefore, in contrast to a situation where one can read each side’s thoroughly researched and argued written briefs and then a meticulously sourced judicial opinion, the oratorical edges in the transcript linked to above as well as the opinion also set forth below may appear somewhat rough all around. Be kind to all of us as you consider them.

The Court has, obviously, heard the evidence and heard the arguments of counsel and I have previously granted the motion to strike certain of the damage evidence from Miss Romero and set forth my reasons why. The Court has now granted the unopposed motion to dismiss the claim for statutory damages. I now grant the Rule 50 motion with respect to actual damages on the bases that there has been no showing of actual damages suffered as a result of the alleged copyright infringement.

As I pointed out earlier, there has been a witting or unwitting conflation between the alleged lifting of the electronic image from Designer’s website and pasting it on the S & L website, and yet we’ve heard virtually all the evidence, in fact, I think it’s fair to say all the so-called damage evidence, directed at product. In other words, the difference here is between the alleged copyright infringement in connection with the image and the product distribution issues.

It is clear that the beef, if you may, on the part of the plaintiffs is the selling of product by S & L, and we’ve heard evidence in terms of how much money Designer has spent in their product development, how much they’ve spent in their product image, the money they’ve spent in their diversion program, and it would appear that is all directed at seeking out product distributors such as S & L.

But even if one could assume that somehow it is to seek out and take action against a copyright infringement of its images, there is no basis for this jury or any reasonable jury to attempt to connect how much of those expenditures are connected to the images themselves as opposed to the product distribution issues. Read More…

Aw, shucks

Originally posted 2008-06-12 12:50:01. Republished by Blog Post Promoter

We already covered the Designer Skin v. S&L Vitamins summary judgment decision, and linked to commentators Greg Beck, Bill Patry, Rebecca Tushnet, Eric Goldman and Jason Lee Miller.

But it’s positively nerve-wracking reading the commentary of someone like Evan Brown! ;-)

Goodbye, dolly

Originally posted 2009-01-17 23:52:25. Republished by Blog Post Promoter

Bratz litigation.

Best of 2012: Little claims, big idea?

Originally posted September 12, 2012.

A major theme around here is the proposition that copyright law encourages litigation of even the most tenuous plaintiffs’ claims, mainly because of the rules regarding fee-shifting for “prevailing” parties.  Similarly there are claims that are not so tenuous, on the merits, but are nonetheless still economically trivial.  The creators of such works are entitled to protection, of course, but providing that protection should not be a source of windfall fees for lawyers.

Evidently the Copyright Office has been thinking some thoughts along these lines, as reported by the Fashion Cloture blog:

The U.S. Copyright Office recently issued a second request for public comments regarding the adjudication of small copyright claims. The Copyright Office’s notice is important for the fashion industry, since there is currently copyright protection for certain aspects of fashion (such as fabric prints and jewelry).

At the request of Congress, the Copyright Office is currently conducting a study on the current legal system for small copyright claims. The Copyright Office published its first request for comments in October 2011, and the Office recently issued a second request to gather further input as to how a small claims system might be structured. The Copyright Office is particularly interested in comments that address the appropriate tribunal/court to handle small copyright claims, whether the small claims process should be voluntary or mandatory, and the roles of mediation and arbitration. Comments must be received by September 26, 2012.

Sounds like something worth looking into, and talking to the Copyright people about.  (One hopes they listen better than the trademark people.)  To put in your two cents, click here.

UPDATE:  Remember Jammie Thomas?

Appeals court sides with RIAA, Jammie Thomas owes $222,000 – The U.S. Court of Appeals for the Eighth Circuit vacates a lower court’s decision and rules that Thomas-Rasset, an admitted music pirate, must pay the top four labels $222,000. . . .

We conclude that the recording companies are entitled to the remedies that they seek on appeal. The judgment of the district court is vacated, and the case is remanded with directions to enter a judgment for damages in the amount of $222,000, and to include an injunction that precludes Thomas-Rasset from making any of the plaintiffs’ recordings available for distribution to the public through an online media distribution system.

I’m not saying that illegal music downloading is trivial.  It is and it isn’t.  And I’m not saying the Constitution really has all that much to say about copyright damages for music downloading.  But as I’ve said before in connection with this case, and others… something is out of whack here.

Little claims, big idea?

A major theme around here is the proposition that copyright law encourages litigation of even the most tenuous plaintiffs’ claims, mainly because of the rules regarding fee-shifting for “prevailing” parties.  Similarly there are claims that are not so tenuous, on the merits, but are nonetheless still economically trivial.  The creators of such works are entitled to protection, of course, but providing that protection should not be a source of windfall fees for lawyers.

Evidently the Copyright Office has been thinking some thoughts along these lines, as reported by the Fashion Cloture blog:

The U.S. Copyright Office recently issued a second request for public comments regarding the adjudication of small copyright claims. The Copyright Office’s notice is important for the fashion industry, since there is currently copyright protection for certain aspects of fashion (such as fabric prints and jewelry).

At the request of Congress, the Copyright Office is currently conducting a study on the current legal system for small copyright claims. The Copyright Office published its first request for comments in October 2011, and the Office recently issued a second request to gather further input as to how a small claims system might be structured. The Copyright Office is particularly interested in comments that address the appropriate tribunal/court to handle small copyright claims, whether the small claims process should be voluntary or mandatory, and the roles of mediation and arbitration. Comments must be received by September 26, 2012.

Sounds like something worth looking into, and talking to the Copyright people about.  (One hopes they listen better than the trademark people.)  To put in your two cents, click here.

UPDATE:  Remember Jammie Thomas?

Appeals court sides with RIAA, Jammie Thomas owes $222,000 – The U.S. Court of Appeals for the Eighth Circuit vacates a lower court’s decision and rules that Thomas-Rasset, an admitted music pirate, must pay the top four labels $222,000. . . .

We conclude that the recording companies are entitled to the remedies that they seek on appeal. The judgment of the district court is vacated, and the case is remanded with directions to enter a judgment for damages in the amount of $222,000, and to include an injunction that precludes Thomas-Rasset from making any of the plaintiffs’ recordings available for distribution to the public through an online media distribution system.

I’m not saying that illegal music downloading is trivial.  It is and it isn’t.  And I’m not saying the Constitution really has all that much to say about copyright damages for music downloading.  But as I’ve said before in connection with this case, and others… something is out of whack here.

Fat lady sings: Findings of Facts and Conclusions of Law in Designer Skin v S & L Vitamins

Originally posted 2008-09-05 17:01:27. Republished by Blog Post Promoter

The District of Arizona ruled today in a case we defended through trial and have reported on here extensively.  The decision is here; the minute entry on the electronic docket reads as follows:

FINDINGS OF FACT AND CONCLUSIONS OF LAW – that S & L Vitamins has infringed Designer Skin’s copyrights in the electronic renderings of the 42 products styled [by various brand names] and that Designer Skin is entitled to a permanent injunction enjoining S & L Vitamins from any such future infringement of these copyrights;

FURTHER ORDERED that S & L Vitamins has not infringed Designer Skin’s copyrights in the electronic renderings of the 12 products styled [by various brand names];

FURTHER ORDERED that each party shall bear its own costs in this matter.

Signed by Judge James A Teilborg

No attorneys’ fees for either side.  The injunction reads as follows (per the minute entry); prefatory language is omitted and emphasis is added:

FINAL JUDGMENT AND PERMANENT INJUNCTION in favor of Designer Skin, LLC against S&L Vitamins, Inc. . . . S & L Vitamins . . . are hereby immediately and permanently ENJOINED from publicly displaying, using, copying, or otherwise infringing Designer Skin’s copyrights in these electronic renderings for any purpose whatsoever. Nothing herein, however, shall be construed to enjoin S & L Vitamins from taking, using, or displaying original photographs of the physical Products themselves in connection with S & L Vitamins’ sale of the Products on the internet.

Signed by Judge James A Teilborg

Interested persons may wish to ponder how, and to what extent, the Court addressed the issues framed by the counsel for the respective parties, including identification of what indeed are “Designer Skin’s copyrights in [its] electronic renderings,” by considering the proposed findings and facts and conclusions of law submitted by the plaintiffs, and by the defendants, respectively.

For practitioners interested in the law of injunctions, the most interesting part of the decision concerns the court’s application of the rule in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) that there is no automatic entitlement to an injunction upon a finding of infringement to a copyright infringement case.  We have made a separate post addressing that part of the decision.

S&L’s website is here, by the way.  Buy Designer Skin lotion from S&L!  It’s the way both sides pay their lawyers!

Suing bloggers for dollars

Originally posted 2010-07-23 10:58:24. Republished by Blog Post Promoter

Interior of rotunda, New York Supreme Court, New York CountyGlenn Reynolds links to a an article in Wired about a newspaper “chain”‘s — actually, lawyer Steve Gibson’s — “new business model”:  Suing bloggers who post newspaper articles, evidently more or less intact ones, on their sites.  Glenn says suing bloggers “seems like a poor business plan” — mainly, of course, because most bloggers are broke, or pretty close to it.

The article also explains why these one-off claims by outfits such as the Las Vegas Review-Journal are unlikely, in the long run, to pay off.  One reason is that at least the music industry, through the Recording Industry Association of America, is theoretically going for some degree of bulk in its litigation trawling against unlawful file sharing.  And we did say “theoretically”:  Remember, in 2008 the RIAA managed to spend about $16 million on legal fees to reel in a whopping $391,000.  As the article says, “You’d have to go after a lot of people for a relatively small amount of money,” says Jonathan Band, a Washington, D.C. copyright lawyer. “That is a riskier proposition.”

So, yes, it is hard to comprehend the return on investment here.

There are other reasons this doesn’t seem to make sense.  ”Defendants might be less willing to settle a lawsuit stemming from their posting of a single news article, despite the Copyright Act’s whopping damages,” says the article.  But no, not quite on the “whopping damages” stuff.  Contrary to myth — and to the threats routinely uttered by copyright plaintiff attorneys — statutory damages are not meant to be a windfall, as I explain at some length here.  Now it is true that some juries think intellectual property infringement damages are a jackpot unrelated to actual harm — usually because judges don’t instruct them properly.  But other judges in high profile cases are refusing to be part of the copyright shakedown.  Thus in the recent Tannenbaum copyright case, the District Judge reduced the jury’s damages award of $675,000 for infringement of 30 songs to $67,500, ruling that the amount awarded was unconstitutional under the Due Process clause.

Still, $67,500 is a lot of money, a lot, and still pretty darned distant from any plausible quantum of loss to the copyright owner.   Read More…

Best of 2009: “Infinity Dollars” — IP damages and the jury”

Originally posted 2009-12-28 23:30:33. Republished by Blog Post Promoter

This post, which is the first of two parts (the second part can be found at the link at the end) was first posted on June 19, 2009.

A lot of people, including judges, lawyers and civilians, don’t seem to really understand what statutory damages are all about. They are not supposed to be a windfall (discussed more here). But just tell that to the jury that awarded “infinity dollars” — practically — to the Lords of Music for what was indeed knowing copyright infringement of two dozen songs, and to the person on whose head the jury just laid that award.

I’m not an “information wants to be free” nutter, and musical compositions aren’t “information” anyway except to the most heartless utilitarian, but Stan Schroeder (presumably no nutter either, but probably to my left on this issue) hits it right on the head:

In one of the most ridiculous verdicts I’ve seen, the jury decided that Jammie Thomas-Rasset, the first woman who was charged with copyright infringement and offered to settle but decided to fight the RIAA, is guilty and owes the recording industry 1.92 million dollars, or $80,000 per song.

As we mentioned in our original article, Jammie’s case was full of holes, and she probably would have done better if she had just settled with the RIAA. But what’s striking here is the amount of money awarded to the recording industry for infringing the copyright for just one song.

It reminds me of a recent Penny Arcade comic which mocks Microsoft’s Zune Pass, which offers unlimited selection of music for 15 dollars per month; since time never ends, this technically amounts to infinity dollars. Since the music is DRMed, if you ever stop paying, you lose all your music.

It’s just a joke, but it makes a good point. How much is one song worth to you? How much is it worth to the author? How much is it worth to the recording industry? You can push arguments to favor each side, and ultimately you can always claim that a song never fully loses its value and it can therefore be set to an arbitrary, insanely high amount of money.

The problem with this approach is that it results in cases like the one against Jammie Thomas-Rasset, who now has (there are indications that the RIAA is still willing to settle with a much lower amount of money, but it’s irrelevant; what’s important is the principle of the matter) to pay 1.92 million dollars for infringing the copyright of 24 songs.

In a word, it’s stupid.

As this fine roundup of the legal issues from the EFF explains, there are lots of problems with this outcome, including a two-pronged constitutional one — is this unconstitutionally excessive, and is there a different standard on that question when it comes to statutory damages? — as well as the whole issue of what has happened to statutory damages in the hands of the Copyright Congress. Of course, there’s the fact that, as Fred von Lohmann explains, “I assume these arguments will first be submitted to the trial judge in post-trial motions. After all, this judge has already indicated that he found the previous $220,000 award to be “unprecedented and oppressive.”

Seems that way, doesn’t it? (Part II is here.)