Who are you to sue?

Supreme Court, Appellate Division - BrooklynWhat’s the difference between standing — the right to seek judicial redress for an alleged wrong — in copyright and patent?

Who else, besides someone litigating the matter, but Pamela Chestak would ask that question, and understand how to answer it:

I’m curious about the different legal standards that the courts apply in patent versus copyright cases when deciding whether a plaintiff who acquired the rights through transfer has standing. Patent law seems draconian, as exemplified byAbraxis Bioscience, Inc. v. Navinta, LLC.

In Abraxis (blogged here and here), standing for a patent infringement suit was foiled by a complex transfer that would have been perfectly fine under New York law, the choice of law for the transaction, but that wasn’t under the law of the Federal Circuit. Even an assignment to a corporate family member, perhaps carefully worded for tax purposes, can deprive a party of standing for patent infringement, like here and here. Often there are attempts to fix the problem with confirmatory assignments, but often the effort fails.

Compare this to copyright cases. Twice in the past few weeks I’ve seen a statement like this, which I find somewhat remarkable: “When the parties to an assignment have no dispute over the transfer, third-party infringers lack standing to invoke Section 204′s writing requirement to avoid suit.” Malibu Media, LLC v. DoesNo. 12-2078 (E.D. Pa. Jan. 3, 2013). . . .

I don’t really see any support in the statutory language for the different treatment between patent and copyright cases. We have “patentee” and “owner”–equivalent terms–as the only ones who may bring suit. Transfers have to be in writing in both cases. In both cases, the burden is on the plaintiff to prove ownership–which is the point that I think the copyright cases play fast and loose with. I mean seriously, a defendant doesn’t have standing to ask that the plaintiff be put to its proof that it owns the rights it is asserting? Personally, I think that’s a bit of crazy talk.

And we hate it when judges talk crazy.

But how about the Righthaven cases?  One of the big deals about the Righthaven decisions was that holding that Righthaven didn’t really have anything to sue for infringement over, or had merely, as Marc Randazza and I put it in one (relatively insignificant) Righthaven brief, obtained a “chose in action,” which the Copyright Act does not authorize.  In other words, Righthaven didn’t have standing to sue.

The Court ultimately agreed with this argument, though not in our case, but in Righthaven LLC v. Democratic Underground, LLC,  791 F. Supp. 2d 968 (D. Nevada 2011), discussed by Eric Goldman here.  In that case, in which the plaintiff also wanted to rely on an ex post facto written assignment, the court wrote (some citations omitted):

Pursuant to Section 501(b) of the 1976 Copyright Act, 17 U.S.C. § 101 et seq., (the “Act”) only the legal or beneficial owner of an exclusive right under copyright law is entitled, or has standing, to sue for infringement.  In so holding, the Ninth Circuit followed the Second Circuit’s decision in Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir. 1982) . . .  Section 106 of the Act defines and limits the exclusive rights under copyright law.  While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights. Id. Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee.  One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright. Further, to obtain a right to sue for past infringement, that right must be expressly stated in the assignment. 

And how could the court have said such non-crazy talk if, in fact, defendants didn’t have standing to assert the defense of standing?  In fact, the court addressed that, too:

4. Democratic Underground’s Standing to Challenge the SAA [Strategic Alliance Agreement]

Righthaven also contends that Democratic Underground lacks standing to challenge the validity of the SAA. However, Democratic Underground does not actually attack the SAA’s validity, Democratic Underground only contends that the SAA prevented the Assignment from transferring the rights Righthaven and Stephens Media currently argue the Assignment transferred. In essence, Democratic Underground simply argues that, under the SAA, the Assignment only transferred one particular right, which failed to have the effect Righthaven wishes it had. Democratic Underground does not contest the SAA’s validity or argue that it should be undone in any way. Further, the Silvers court necessarily allowed the defendant to challenge whether the necessary rights were transferred from the rights holder to the plaintiff in that action. Otherwise the Ninth Circuit would not have been able address the plaintiff’s lack of standing in Silvers and hold that a mere right to sue is insufficient to bring a copyright infringement action.

Hm.  I wouldn’t call it crazy talk, now, but what the Nevada court seemed to be saying was, yes, defendants can’t challenge a plaintiff’s copyright standing under a putative assignment.  They can just say, hey, who are you to sue?

That’s different, right?  In other words, the Righthaven court didn’t want to “change the law,” it just wanted to change the  way the law worked against one particular third-party infringer, namely Righthaven — because (put on your Legal Realism hat) Righthaven was, the law began to figure out, a bunch of bums.  So the Righthaven court allowed Democratic Underground to attack the validity of the relevant assignment by calling it a “contention” that it “failed to have the effect” plaintiff contends it has.  “Democratic Underground does not contest the SAA’s validity or argue that it should be undone in any way,” wrote the Nevada court — it just says that it doesn’t in fact do anything.

How is that different from “attacking the validity” of an assignment?  It is different because by calling it something else, it managed not to seem to contradict Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27 (2d Cir. 1982) and avoided having that ruling be picked up by future courts, such as the one that wrote the Malibu Media decision Pamela quoted to initiate her asking exactly the right question here.  Reviewing the defendants’ papers on PACER, indeed, it appears that they did not cite to Righthaven either, seeking to avoid the issue by arguing that the validity of the license was a fact question not appropriate for a motion for dismissal on the pleadings.

I wouldn’t call that crazy talk, either, but it doesn’t seem to have been the right talk.  Because of you don’t have standing to raise an issue, it doesn’t matter if it’s a fact issue.  Even if you say it’s a fact issue as to whether it’s a fact issue.  Because that’s like arguing that you have standing to challenge standing.

Crazy talk, I know.

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Author:Ron Coleman

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