LIKELIHOOD OF CONFUSION®

LIKELIHOOD OF CONFUSION does not generally comment about active cases in which we are directly involved. But a very important and detailed (61 pages!) summary judgment decision came down in the U.S. District Court for the Eastern District of New York last week, in the case of S & L Vitamins, Inc. v. Australian Gold, Inc., 2:05-cv-1217 in which I represent the plaintiff. And while we will not comment on the decision, for obvious reasons, any reader of this blog involved in trademarks and the Internet will want to read it. So here it is. Credit to David Nieporent, co-author on the plaintiff’s brief!

UPDATE: Cogent commentary from Eric Goldman and Matthew Sag; now comes Rebecca Tushnet.

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!

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.

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.)

Fortunately 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…

On the occasion of the S&L Vitamins v. Australian Gold trial, I reposted what I wrote here six months earlier about the first of these these jointly evil twin litigation matters, conducted in appropriately welcoming environs, in which our client is entwined:

Yesterday I was here, in the stupidestly-designed courthouse on God’s brutally-baked brown desert earth — the Sandra Day O’Connor Courthouse in sunny Phoenix, Arizona. It is truly a marvel of architectural arrogance: Imagine being so utterly uninterested in anything besides how you’d like your box of Erector Set pieces to look like at the award ceremony that you design a massive building, notionally meant for human habitation, that is actually a gigantic greenhouse that grabs scorching-hot sunbeams from one of the hottest atmospheres on the continent and just plays them across a massive, uncoolable interior atrium.

This monster has an evil twin in my own neighborhood, named after the entirely more prosaic former U.S. Senator and ur-fixer Alfonse D’Amato, in his home turf in Long Island. The “other” U.S. Courthouse for the Eastern District of New York (its better-known and far-better-loved older sibling overlooks the Brooklyn Bridge) is every bit as soulless and unconnected to how people use built space. Like the Arizona torture chamber, this one features cold, ornament-free, angular hard white spaces, a soaring atrium and a complete denial of the human spirit. Both feature vast plazas requiring five minutes of walking from the curb to the front door that, when shown on the architect’s drawings, must have depicted lunchtime building workers gaily eating their lunches, taking in the sun, flirting and strumming guitars — a true communitarian dream in federal jurisprudential space, and far enough from any possible truck bomb to make those shared moments entirely carefree.

But no has ever relaxed in either one of these plazas. The one in Central Islip is too windblown to hang out in almost any weather.  The D’Amato tower truly epitomizes the concept of a white elephant; it is the only building of its scale for what must be 20 miles all around — a largely empty monument to federally funded megalomania. On almost any day the sun beats off the bright white surfaces so intensely that polarized lenses are de rigeur and blinded lawyers quickly scurry across the plaza through the revolving-door entrance and into the heartless, icy lobby.

But this same formula truly amounts to a miniature Judicial Conference death valley when applies in sunny Phoenix.  (Read more…)

LIKELIHOOD OF CONFUSION® has recently run up against the following issue in litigation and welcomes views from the house. We think we’re on the right side of it, but there’s no question some courts have waved it away, though not usually with a lot of analytical rigor:

It is known to be a common practice for plaintiffs to file copyright claims for unregistered works, file an expedited application for registration and amend the complaint to recite or incorporate the registration before anyone calls them on it. Frequently this is not too offensive because the copyright claim is one of a number of otherwise unproblematic counts. Some courts affirmatively bless this practice; others even sua sponte “deem” a complaint amended or supplemented if somehow the record reflects the subsequent registration. But others are not so lackadaisical about operating as time machines.

Because the Copyright Act (17 USCS § 411) explicitly requires that a copyright holder own a registration to “institute” a claim for infringement — because it is a jurisdictional requisite ][UPDATE: Not quite; see above] — there is an increasingly authoritative body of authority that even where an amendment to the pleadings may be appropriate under the usual (liberal) standard, amendment may not create jurisdiction retroactively. This appears to run contrary to earlier trends among the cases that allowed a retroactive cure in the spirit of the axiom that amendment of pleadings is to be permitted liberally.

Courts are increasingly questioning whether that kind of time travel works. In Harris v. Garner, 216 F.3d 970 (11th Cir. 2000), a case involving a statutory predicate for immigration appeals, the Eleventh Circuit held, very stridently — and over the objections of an equally assertive dissent — that where a statutory requirement for jurisdiction is not met at the time of filing, even if it is met until later an amended complaint cannot create jurisdiction retroactively. The Circuit Court discussed the application of the rule to an earlier copyright decision that suggested otherwise, and in dictum, rejected that analysis.

“When Plaintiffs initiated this action the Court,” the District of New Jersey ruled earlier this year, “was without subject matter jurisdiction to hear Plaintiffs’ copyright claims.” There was no registration. Continued the court:

As such, 28 U.S.C. § 1653, which provides ‘that ‘[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts,’ does not apply to help Plaintiffs here. Section 1653 ‘addresses only incorrect statements about jurisdiction that actually exists, and not defects in the jurisdictional facts themselves.’

Wellness Publ. v. Barefoot, 2008 U.S. Dist. LEXIS 1514 at *32 (D.N.J. Jan. 8, 2008), citing Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989). Also this year, in Walton v. United States, 80 Fed. Cl. 251, 264 (Fed. Cl. 2008), the Federal Circuit permitted retention of jurisdiction where an amended / supplemented complaint had been filed, but did not allow relation back to the original date of the complaint. The court wrote, “it appears that binding Federal Circuit case law has not departed from the established rule that jurisdiction is determined on the basis of the facts that exist at the time the complaint was filed.”

All things considered, it would seem to be a good idea for a copyright plaintiff under such circumstances to amend as early as possible and avoid objections of prejudice or undue delay — factors that can militate even against the routine grant of motions to amend. Liberality is one thing, but jurisdiction is bigger that than that, and in contrast a lack of subject matter jurisdiction can be raised substantively at any time, even on appeal. It cannot be waived; it’s constitutional; it’s existential: Federal Rule 12(h)(3) provides, “Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.”

That’s “whenever.”

Here are the papers.  Whatever.

UDPDATE continued:  The District of Arizona disagreed with our argument, as set out in the transcript appended to the embedded PDF, which starts with our “suggestion of lack of jurisdiction,” below.  That denial was one issue we were prepared to pursue as a cross-appeal in the Designer Skin case.  That appeal never happened due to a global settlement with indoor tanning lotion monopolist and gelded litigation bully New Sunshine LLC.

And now it turns out now to be a non-issue, because while dismissal on this ground would have been available under Rule 12(b)(6), that Rule does not have the broad, and arguably constitutional, power of the Rule 12(h)(3)’s “Whenever,” which our client needed to call on because of the unusual procedural aspects of this litigation.

Whatever.

UPDATE:  The U.S. Supreme Court negates this entire post, ruling that while a copyright registration is indeed a prerequisite to initiating a lawsuit to enforce a copyright, this is a statutory requirement and not, technically, a “jurisdictional” requirement.  See the box at the top.

This was first posted on July 18th:

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.)

Fortunately 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. Read More…

Phoenix eve

Originally uploaded by Ron Coleman

Unbelievable day at trial in the Designer Skin v. S&L case yesterday.  Maybe we’ll talk about it some day.

Let’s see how today goes! Have me in mind…