TLJ News from January 26-31, 2006

Copyright Office Recommends Orphan Works Legislation

1/31. The Copyright Office (CO) released a report [133 pages in PDF] titled "Report on Orphan Works". It recommends that the Congress enact legislation limiting both monetary and injunctive relief in copyright infringement actions where the infringer had previously undertaken good faith, reasonably diligent, but unsuccessful searches for the owner of the infringed work.

Orphan Works. The report states that orphan works is "a term used to describe the situation where the owner of a copyrighted work cannot be identified and located by someone who wishes to make use of the work in a manner that requires permission of the copyright owner".

The report explains the problem created by orphan works. "Where the proposed use goes beyond an exemption or limitation to copyright, the user cannot reduce the risk of copyright liability for such use, because there is always a possibility, however remote, that a copyright owner could bring an infringement action after that use has begun. Concerns have been raised that in such a situation, a productive and beneficial use of the work is forestalled -- not because the copyright owner has asserted his exclusive rights in the work, or because the user and owner cannot agree on the terms of a license -- but merely because the user cannot locate the owner. Many users of copyrighted works have indicated that the risk of liability for copyright infringement, however remote, is enough to prompt them not to make use of the work. Such an outcome is not in the public interest, particularly where the copyright owner is not locatable because he no longer exists or otherwise does not care to restrain the use of his work."

The report attributes the problem, in part, to the 1976 copyright act, which provided that works are protected from the moment they are fixed in a tangible medium of expression, and need not be registered with the CO. (The report makes no recommendation to change this.)

The report concludes that "there is good evidence that the orphan works problem is real and warrants attention". It discusses proposed solutions, and offers proposed statutory language.

Summary of CO Proposal. The report notes that the CO lacks statutory authority to address this problem by rulemaking. The report recommends that the Congress enact legislation to address the problem. It proposes adding a new Section 514 to the Copyright Act titled "Limitations on Remedies: Orphan Works".

However, while the term "Orphan Works" appears in the title, this section neither defines the term, nor establishes a class of works known as "orphan works". Rather, the proposed language limits the monetary and injunctive remedies available to the copyright owner in an action for infringement where the infringer has been unable to locate the owner after a "good faith, reasonably diligent search". The CO's proposed language does not define this term.

Thus, no particular work is classified as an orphan work. Instead, remedies are limited in certain actions based upon the efforts of the infringer to locate the owner. Hypothetically, one work could fall within the scope of the Section 514 orphan works limitation in one action, but not fall within the scope of the orphan works limitation in another action. For example, the infringer in one action might have conducted a diligent search, but the infringer in another action might not.

The fair use and other limitations now in the Copyright Act operate similarly. That is, if two persons copy from the same copyrighted work, one may be protected by the fair use limitation, while the other may not, depending on the nature of their uses. But what is novel about the present CO proposal is that copying the same work, in the same manner, for the same purpose, and with the same harm to the owner, can be treated differently.

Fair use and other limitations on the exclusive rights of copyright are codified in Chapter 1 of the Copyright Act, titled "Subject Matter and Scope of Copyright". The proposed Section 514 would not be codified in Chapter 1. Rather, it would be placed in Chapter 5, titled "Copyright Infringement and Remedies".

Moreover, the report states that "The limitation on remedies we propose is not intended in any way to affect the existing scope of copyright protection ...".

The report does propose to limit injunctive relief, which is a limitation on the exclusive rights of copyright.

The CO proposal does not affect the duration of copyright, or procedure for registration of copyrights.

The CO proposal would prevent the owner from recovering either actual damages, statutory damages or attorneys fees. However, the owner would be able to recover "reasonable compensation for the use of the infringed work". The body of the report, but not the proposed legislative language, states that this term "is intended to represent the amount the user would have paid to the owner had they engaged in negotiations before the infringing use commenced".

The CO proposal would preclude injunctive relief for many infringements that are in the nature of creation of derivative works. It provides that in other cases, the court "may" (the CO language does not use the word "shall") impose injunctive relief. However, the "relief shall to the extent practicable account for any harm that the relief would cause the infringer due to the infringer’s reliance on this section in making the infringing use".

The CO proposal takes into consideration only the efforts of the infringer in seeking to locate the copyright owner, and not the efforts of copyright owner in attempting place the public on notice of the copyright, its owner, and contact information, or other efforts of the copyright owner to protect his interests.

Nor does the proposal take into consideration the extent or nature of the copying. Use of a quote from a large work would not be treated differently from copying the entire work, for the purpose of Section 514 analysis. Nor does the CO proposal take into consideration the age of the work, whether or not it has been published, or whether or not it has been registered.

The proposed language sets a broad statutory standard. It provides no instructions or authorization to the Copyright Office to write implementing regulations. It creates no new adjudicatory body. It would leave to the federal judiciary adjudication of disputes, and interpretation of Section 514's meaning -- and especially the meaning of the phrase "good faith, reasonably diligent search". Although, other terms and provisions would also require court interpretation, including "reasonable compensation", and wherein lies the burden of proof.

The proposed language may be in the nature of an affirmative defense. However, the language does not specify that it creates an affirmative defense, or that the burden of proof lies with the infringer.

It may be pertinent that the comment of the Glushko-Samuelson Intellectual Property Law Clinic argued that "the user would have the initial burden of proving the efforts that he or she made to locate the owner prior to commencing use", and that "Thereafter, the burden would shift to the copyright owner to prove that, under all the facts and circumstances, those efforts were not ``reasonable.´´"

Finally, the CO proposal contains a ten year sunset clause. This would compel the Congress to reexamine the issue within ten years, and make a determination as to whether or not to extend and/or amend the statute.

Proposed Statutory Language. The Copyright Office's proposed legislative language is, in full, as follows:

  (a) Notwithstanding sections 502 through 505, where the infringer:
    (1) prior to the commencement of the infringement, performed a good faith, reasonably diligent search to locate the owner of the infringed copyright and the infringer did not locate that owner, and
    (2) throughout the course of the infringement, provided attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances, the remedies for the infringement shall be limited as set forth in subsection (b).
      (A) no award for monetary damages (including actual damages, statutory damages, costs or attorney’s fees) shall be made other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work; provided, however, that where the infringement is performed without any purpose of direct or indirect commercial advantage, such as through the sale of copies or phonorecords of the infringed work, and the infringer ceases the infringement expeditiously after receiving notice of the claim for infringement, no award of monetary relief shall be made.
      (A) in the case where the infringer has prepared or commenced preparation of a derivative work that recasts, transforms or adapts the infringed work with a significant amount of the infringer’s expression, any injunctive or equitable relief granted by the court shall not restrain the infringer's continued preparation and use of the derivative work, provided that the infringer makes payment of reasonable compensation to the copyright owner for such preparation and ongoing use and provides attribution to the author and copyright owner in a manner determined by the court as reasonable under the circumstances; and
      (B) in all other cases, the court may impose injunctive relief to prevent or restrain the infringement in its entirety, but the relief shall to the extent practicable account for any harm that the relief would cause the infringer due to the infringer’s reliance on this section in making the infringing use.
  (c) Nothing in this section shall affect rights, limitations or defenses to copyright infringement, including fair use, under this title.
  (d) This section shall not apply to any infringement occurring after the date that is ten years from date of enactment of this Act.

Public Comments. In January of 2005 the CO issued a Notice of Inquiry requesting public comments on this topic. It received over 850 comments. However, many of these did not relate to orphan works. See, the CO's web pages with hyperlinks to initial comments and reply comments.

For example, the joint comment [10 pages in PDF] of the Association of American Publishers (AAP), Association of American University Presses (AAAP), and the Software & Information Industry Association (SIIA) proposed legislation containing a limitation of remedies for infringement where the infringer had engaged in a good faith diligent, but unsuccessful, search for the copyright owner. That is, their proposal is similar to what the Copyright Office now proposes. However, the CO proposal goes further in limiting injunctive relief than was advocated by these commenters.

The Public Knowledge (PK), an interest group that favors weaker intellectual property rights and remedies, argued in its initial comment [11 pages in PDF] in March of 2005 to the CO that there should be no award of injunctive relief or attorneys fees, and only token monetary damages.

Gigi Sohn, head of PK, stated in a release on February 1, 2006, that the CO should have gone further in its proposals to limit the remedies of copyright holders. She argued that the Congress should put a minimal statutory cap on monetary damages of $200 per use. See also, the PK's web section on orphan works.

The Glushko-Samuelson Intellectual Property Law Clinic (GS) of the American University law school submitted an intial comment last March that not only argued for shifting the burden of proof to the copyright owner, but also for allowing the infringer "to determine what constitutes a reasonable effort in each instance". It added that the CO "could provide general information for potential users on its website, including links to the sites of relevant professional organizations." It also argued that there should be no injunctive relief for qualified users, and only token monetary damages.

The NetCoalition, whose members include Bloomberg, CNET, Google, and Yahoo, submitted a comment [PDF] that supports the GS proposal. The NetCoalition wrote that it "strongly supports the amendment of the Copyright Act to eliminate the barriers it places on the dissemination of orphan works. A statutory framework for orphan works should be simple so as to avoid unnecessary transaction costs. It should apply to all categories of works in order to maximize the benefit to society. It should not place onerous burdens on owners to preserve their copyrights. It should contain safeguards to prevent abuse prejudicial to copyright owners. And it should contain a mechanism for providing limited compensation to owners who object to the unauthorized publication of their works." It added that the GS proposal "is one possible approach that meets all these criteria. We urge the Copyright Office to consider it carefully."

The Home Recording Rights Coalition (HRRC) and the Consumer Electronics Association (CEA) also submitted a joint comment [3 pages in PDF] in support of the GS proposal.

See also, comment of the Library Copyright Alliance, which includes the American Library Association, and other library related interest groups.

See also, comment of the Recording Industry Association of America (RIAA), comment of the Motion Picture Association of America (MPAA).

Availability of Copyright Information. The CO's recommendation focuses only on limitation of owner's remedies, based upon users' diligent searches. It contains no legislative proposals directed at increasing the availability of information about copyrights.

For example, many commenters proposed that various forms of databases containing copyright ownership information be created and maintained, with public access.

The CO report makes no legislative recommendations that pertain to registration, CO databases, or private sector databases. However, the CO report discusses, and rejects, various proposals. It states that "many of the proposed solutions involve registries or other databases of owner or user information, some of which would be administered by the Copyright Office. While it may be the case that such administrative mechanisms might ultimately be of great assistance in helping put owners and users of orphan works together, it is our view, at this time, that such systems would likely entail more resources and efforts than the proponents anticipate or are readily available without providing offsetting benefits, and therefore should only be implemented when a clear need for them is presented." (Footnote omitted.)

The CO report makes no recommendations that the Congress require and fund the CO to maintain any new databases. The CO report makes no recommendations pertaining to incenting authors to register copyrights, for example, by reducing registration fees, or by bringing clarity to the registration procedures.

The CO's proposal similarly contains nothing that would incent private sector entities to collect, organize, and make available to the public information about copyrights.

One impediment to the creation of private sector, publicly available, databases containing copyright information is that the cost of creating and maintaining such databases is high, yet copyright law affords little protection to  databases. The Congress has declined to enact such protection following the Supreme Court's 1991 opinion in Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340.

Section 514 Litigation. The CO proposal addresses the problem of meritorious use of orphan works following good efforts to locate owners. It does not address non-meritorious assertion of an orphan works defense as a dilatory litigation tactic.

Good faith, diligence, and reasonableness are all complex factual issues. Resolution could entail extended discovery, including requests for documents, interrogatories, depositions spread across the country, discovery disputes, and extensive briefing and affidavits in support of, and in opposition to, Section 514 motions for summary judgment. Also, for many years, the courts would be occupied with interpreting the meaning of Section 514. This would entail considerable time and expense for the parties to the litigation.

Litigation to enforce copyright interests is already more complex, time consuming, and expensive than litigation to enforce most other forms of property rights. The proposed Section 514 would provide relief to meritorious users of orphan works. It would offer the public benefits that would flow from this. It would also offer non-meritorious copiers another means to delay and burden litigation with a frivolous defenses. In this context, it would inhibit enforceability of copyrights, and hence, decrease the incentive to create and publish works.

Origins of the CO Report. Sen. Orrin Hatch (R-UT), Sen. Patrick Leahy (D-VT), Rep. Lamar Smith (R-TX), and Rep. Howard Berman (D-CA) requested the CO report. Sen. Hatch is a senior member of the Senate Judiciary Committee (SJC). Sen. Leahy is the ranking Democrat. Rep. Smith and Rep. Berman are the Chairman and ranking Democrat on the House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property (CIIP).

Rep. Smith stated in a release on February 1 that "The current process for dealing with orphan works inhibits the creation of new uses of these works ... This report will shed light on the problem and potential answers."

Numerous persons in the CO worked on this report. Jule Sigall (Associate Register for Policy and International Affairs) was the principal drafter of the report. Oliver Metzger (Attorney Advisor), Matt Skelton (Attorney Advisor), and Rob Kasunic (Principal Legal Advisor in the Office of General Counsel) also worked on research and drafting.

See also, CO's report with appendices [PDF] and the CO's web section on orphan works. This is a long and carefully drafted report. Readers interested in the topic should read the report.

Bush Announces American Competitiveness Agenda

1/31. President Bush gave a speech titled "State of the Union Address" at a joint session of the Congress. He announced and described in broad strokes an innovation, research and education initiative titled "American Competitiveness Initiative".

He also advocated extension of the expiring provisions of the USA PATRIOT Act. He also defended the National Security Agency's (NSA) extrajudicial surveillance of communications where one party is in the U.S. and one party is outside. He described this as a "terrorist surveillance program".

See, full story.

People and Appointments

1/31. The Senate confirmed Sam Alito to be a Justice of the Supreme Court by a vote of 58-42. See, Roll Call No. 2. He replaces Justice Sandra O'Connor. See, statement by President Bush.

1/31. The Senate confirmed Ben Bernanke to be Chairman of the Federal Reserve Board (FRB). He replaces Alan Greenspan. See, statement by President Bush.

More News

1/31. The Recording Industry Association of America (RIAA) announced that it has filed yet another round of civil complaints, on behalf of its member companies, in U.S. District Courts, against 750 individuals, alleging copyright infringement, in connection with their alleged distribution of copyrighted music on the internet via peer to peer services, including LimeWire and Kazaa. See, RIAA release.

1/31. Securities and Exchange Commission (SEC) Chairman Chris Cox gave a speech in which he addressed, among other topics, interactive data. He said that "the SEC’s commitment to foster interactive data is aimed squarely at helping the directors of public companies and the shareholders they represent to exercise stronger oversight of their company's financial performance. Interactive data will make it easier for directors and shareholders to analyze the numbers in financial statements." He added that "Interactive data will make the world of investment more democratic, and it will complement our collective efforts to constantly improve corporate governance."

DOJ Brings Another DRAM Price Fixing Action

1/30. The Department of Justice (DOJ) charged Elpida Memory by a two count criminal information filed in the U.S. District Court (NDCal) with bid rigging and fixing the prices of dynamic random access memory (DRAM) sold to original equipment manufacturers (OEMs), in violation of Section 1 of the Sherman Act. The DOJ and Elpida also announced that Elpida has agreed to plead guilty and pay a fine of $84 Million. See, DOJ release and Elpida release.

This is another in a series of actions taken by the DOJ regarding price fixing by DRAM makers.

Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1, provides, in part, that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine ..."

Count I of the information alleges that Elpida and unnamed coconspirators "entered into and engaged in a combination and conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices" of DRAMs to be sold to certain OEMs.

Count II alleges that Elpida and unnamed coconspirators "had discussions and reached agreements on how it would allocate and divide a bid offered by Sun Microsystems" in a DRAM auction in 2002. This count further alleges that the "charged combination and conspiracy consisted of a continuing agreement, understanding, and concert of action among the Defendant and its coconspirators, the substantial terms of which were to agree to allocate and divide a bid for the purchase of one lot of 1 Gigabyte Next-Generation Dual In-Line Memory Modules (``1 GB NG DIMM´´) by Sun."

Other DOJ DRAM Price Fixing Actions. On October 13, 2005, the DOJ charged Samsung with price fixing in the U.S. District Court (NDCal). See, story titled "DOJ Charges Samsung with DRAM Price Fixing" in TLJ Daily E-Mail Alert No. 1,233, October 14, 2005.

On April 21, 2005, the DOJ charged Hynix with price fixing in the U.S. District Court (NDCal). See, story titled "DOJ Charges Hynix with DRAM Price Fixing" in TLJ Daily E-Mail Alert No. 1,121, April 22, 2005.

On December 2, 2004, the DOJ charged four executives of Infineon Technologies AG, and its subsidiary, Infineon Technologies North America Corporation. See, story titled "DOJ Brings More DRAM Price Fixing Charges" in TLJ Daily E-Mail Alert No.1,030, December 3, 2004.

On September 15, 2004, the DOJ filed a criminal information in the U.S. District Court (NDCal) against Infineon Technologies AG. On October 20, 2004, Infineon pled guilty. See also, story titled "DOJ Charges Infineon With Felony Price Fixing; Infineon Pleads Guilty" in TLJ Daily E-Mail Alert No. 978, September 16, 2004.

Also, on December 17, 2003, the DOJ announced that it charged Alfred P. Censullo, a former employee of Micron Technology Inc., with violation of 18 U.S.C. § 1503 in connection with his "altering and concealing documents containing competitor pricing information, which were requested in a federal grand jury subpoena".

Elpida was formed in 2001 by Hitachi and NEC Corporation.

This case is U.S. v. Elpida Memory, Inc., U.S. District Court for the Northern District of California, San Francisco Division, D.C. No. CR 06-0059 MMC.

FRB People and Appointments

1/30. January 31 will be Alan Greenspan's last day as Chairman of the Federal Reserve Board (FRB). Ben Bernanke begins his term as Chairman on February 1.

On January 27 President Bush nominated Kevin Warsh to be a Member on the Board of Governors of the Federal Reserve System for the 2nd District, for the remainder of a fourteen year term expiring January 31, 2018. See, White House release and release.

Also on January 27, President Bush nominated Randall Kroszner to be a Member on the Board of Governors of the Federal Reserve System for the 5th District, for the remainder of a fourteen year term expiring January 31, 2008. He is currently an economics professor in the Graduate School of Business at the University of Chicago. See, White House release and release. See also, Kroszner's bibliography.

On January 25, the FRB announced that Michelle Smith will resign as Assistant to the Board and Director of the Office of Board Members. She has been chief spokesman. She will continue to work for Greenspan.

The FRB also announced the David Skidmore will become chief spokesman for the FRB on February 1, and that Pianalto Cameron will oversee other public information activities. See, FRB release.

More People and Appointments

1/30. Sen. John Ensign (R-NV) was a passenger in a car involved in a collision in Las Vegas, Nevada. The Senate Commerce Committee, of which he is a member, stated in a release that one reason for postponing the hearing on video franchising scheduled for Tuesday, January 31, is Sen. Ensign's absence.

1/30. President Bush announced his intent to nominate Edward Lazear to be a Member of the Council of Economic Advisers (CEA), and upon appointment designate him the Chairman. He is a professor at Stanford University's Graduate School of Business and the Hoover Institution. See, White House release.

1/30. President Bush nominated Ralph Basham to be Commissioner of Customs at the Department of Homeland Security's (DHS) Bureau of Customs and Border Protection. He is currently Director of the DHS's Secret Service. See, White House release and DHS release.

1/30. President Bush nominated Mark Sullivan to be Director of the Department of Homeland Security's (DHS) Secret Service. He is currently Assistant Director of the Secret Service's Office of Protective Operations. See, White House release and DHS release.

More News

1/30. Microsoft stated in a release that on January 27, 2006, the U.S. District Court (DAriz) ruled in Research Corporation Technologies v. Microsoft that Microsoft did not infringe three of the patents in suit. Microsoft stated that " the court found that three of six patents asserted by RCT were ``unenforceable due to the patent applicants' inequitable conduct in withholding material information from the Patent Office with an intent to deceive the Patent Office.´´ Today's decision follows a previous ruling in April 2005 in which the same court found that all claims asserted by RCT in three other patents were invalid."

1/30. U.S. Trade Representative Robert Portman and Swiss Federal Councillor Joseph Deiss released a joint statement that announces the formation of a US-Swiss cooperation council, and exploratory discussions on a potential FTA. The two stated that the two countries "have decided to establish a Swiss-U.S. Trade and Investment Cooperation Forum as we work to strengthen our already close bilateral economic relationship. To build on the momentum created by our intensive discussions over the past seven months, we will use this forum to pursue initiatives in specific areas where we share mutual interests with a view to concluding agreements or other arrangements that offer real opportunities for workers, farmers, service providers, manufacturers and consumers in our two countries. Our staffs will develop the details of this forum and an initial work program in the coming weeks. We will review progress on the forum and the work program by mid year." They added that "Our exploratory discussions on a potential Free Trade Agreement (FTA) have been very useful for both governments and provided the basis for the new Swiss-U.S. Trade and Investment Cooperation Forum. Both countries remain interested in a possible comprehensive free trade agreement and may resume discussions at a later stage."

ICANN Seeks Comments on Settlement of Litigation with VeriSign

1/29. The Internet Corporation for Assigned Names and Numbers (ICANN) released proposed agreements that would settle litigation between VeriSign and the ICANN.

The ICANN stated in a release that the just released proposed agreements include the following changes to the October 2005 drafts: "the elimination of the proposed registry-level transaction fee (which would have been passed through directly to registrars); a direct contribution from VeriSign in the form of significantly increased fixed registry-level fees (which VeriSign will not be permitted to pass through directly to registrars); a new limitation on the frequency of permitted price increases for domain name registrations; a revision to the ICANN consensus policy limitation relating to the introduction of new registry services; a clarification of the permissible uses of traffic data; and the incorporation of new service-level specifications for the .COM registry." (Parentheses in original.)

The ICANN requests public comments on these proposed agreements. The deadline is 12:00 NOON UTC on February 20, 2006.

Jonathon Nevett, VP and Chief Policy Counsel at Network Solutions, stated in response that "The ICANN staff's revised proposals on the VeriSign-ICANN settlement and the .com registry agreement are insufficient to address core problems with the agreements. Although Network Solutions welcomes changes that would prevent ICANN registry fees from being passed directly to registrars, relief is inadequate for two of the most troubling aspects of the proposals, including ‘presumptive renewal’ provisions and registration fee increases that would not have to be cost-based in most years. Allowing VeriSign to raise registry fees for the .com domain by 7 percent in four out of six years without cost-justification, and without any reasonable opportunity ever for the contract to be rebid elsewhere, would put the Internet community at risk by eliminating competition for the .com registry."

Network Solutions is a domain name registrar that was acquired by VeriSign in 2000.

Rep. Davis Writes USPTO Regarding NTP Patents and Patent Process

1/27. Rep. Tom Davis (R-VA) sent a letter to the Jon Dudas, head of the U.S. Patent and Trademark Office (USPTO), regarding the patent dispute NTP and Research in Motion (RIM) involving RIM's BlackBerry series of mobile communications and computing devices.

One of Rep. Davis's concerns is the termination of Blackberry service to government agencies and contractors. He is the Chairman of the House Government Reform Committee. He stated that "if RIM's reexamination requests had been acted upon more expeditiously, the current uncertainty could have been resolved long before it threatened critical service to the government and consumers". However, he added that the Congress has failed to adequately fund the USPTO. He asked the USPTO to provide an assessment of "current patent examination and reexamination processes".

On January 23, 2006, the Supreme Court denied RIM's petition for writ of certiorari. See, story titled "Supreme Court Denies Certiorari in Blackberry Patent Case" in TLJ Daily E-Mail Alert No. 1,295, January 24, 2006. This denial lets stand the August 2, 2005, opinion [75 pages in PDF] of the U.S. Court of Appeals (FedCir), which upheld the District Court's judgment for NTP on some claims. See, story titled "Federal Circuit Issues New Opinion in NTP v. RIM" in TLJ Daily E-Mail Alert No. 1,197, August 17, 2005. There is also a reexamination proceeding at the USPTO.

Rep. Tom DavisRep. Davis wrote that "Substantial controversy has surrounded patents held by NTP, Inc., particularly since the technology covered by those patents is also used by Research In Motion, Ltd. (RIM) to provide BlackBerry service to millions of federal government employees, contractors, and private users. While litigation and settlement negotiations between the parties are central to the controversy, the patent-approval and reexamination processes at the Patent and Trademark Office (PTO) have been significant factors in whether service continues uninterrupted to BlackBerry customers. The ability of government and private sector users to send and receive wireless email communication has become vital to our economy, global competitiveness, and quality of life."

He continued that "The adequacy of the initial review of NTP's patents has been called into question by the litigation and the pending reexamination process at the PTO. I understand the reexamination process was initiated by RIM in 2003. If adequate resources were utilized to determine the initial validity of the patents, this controversy could have been avoided. Additionally, if RIM's reexamination requests had been acted upon more expeditiously, the current uncertainty could have been resolved long before it threatened critical service to the government and consumers."

"The current patent controversy involving BlackBerry service is but one signal that our economy and ability to compete in a global economy are dependent on an efficient and competent system that brings new technological developments to the marketplace. A vital component of that system is a well-funded and efficient Patent and Trademark Office", said Rep. Davis.

He concluded that "we should not hesitate to make refinements to our own system. Because of this, I ask you to provide me with your assessment of the current patent examination and reexamination processes, what reforms are needed, and how current shortcomings impact bringing new technological developments to the marketplace, including the effect on the NTP/RIM controversy."

Rep. Davis is not a member of the House Judiciary Committee (HJC), which has jurisdiction over bills that would reform the patent process. The HJC and its members have devoted much time and hearings to patent reform in recent years. However, the HJC has not yet reported a bill in the present Congress.

1st Circuit Rules in Trademark Case

1/27. The U.S. Court of Appeals (1stCir) issued its opinion in Attrezzi v. Maytag, a trademark case. The Court of Appeals largely affirmed the District Court's judgment for Attrezzi.

Attrezzi, which operates a single kitchen products retail store, filed a complaint in U.S. District Court (DNH) against Maytag, which subsequently used the word Attrezzi to market a line of kitchen appliances. The Attrezzi business alleged violation of the unfair competition provision of the Lanham Act, as well as violation of the state of New Hampshire's trademark infringement, unfair competition, and trademark dilution statutes. The District Court found trademark infringement, issued an injunction (after a one year product sell off period), and $10 Thousand in damages. Cross appeals followed.

The Court of Appeals rejected Maytag's argument that Attrezzi was not entitled to a jury trial. It wrote that "An infringement claim for damages is a common-law rather than an equitable claim and such a claim would be triable to a jury even if joined, as here, with a request for equitable relief."

The Court of Appeals also rejected Maytag's argument that at trial there was insufficient evidence of a protectable mark and of likely customer confusion to permit a verdict for Attrezzi.

The Court of Appeals wrote, quoting from 1st Circuit precedent, that "a trade name is safeguarded by the Lanham Act only if the mark is ``distinctive´´, a term of art meaning that the mark must be arbitrary or ``suggestive´´ or, if merely ``descriptive,´´ must have acquired ``secondary meaning.´´ An arbitrary or suggestive term, being ``inherently distinctive,´´ can be appropriated by a first user, while a descriptive term is subject to such appropriation ``only if it has acquired `secondary meaning´ by which consumers associate it with a particular producer or source.´´ " (Footnote and citation omitted.)

"The jury found specially that Attrezzi LLC's use of the name Attrezzi for its goods was a suggestive, rather than a descriptive use, and that in any event the name had acquired secondary meaning. Both findings are treated as determinations of fact, ... and it is enough to qualify the name for protection if either one is established. Here, a rational jury could find the Attrezzi mark, as used to identify a service selling kitchen appliances, utensils, and dinnerware, to be suggestive."

Maytag also argued under the doctrine of foreign equivalents that since the word Attrezzi means tools in Italian, the word Attrezzi is descriptive. However, the Court rejected this, noting that the Attrezzi store sells chef's tools, not tools generally.

The Court of Appeals also rejected Maytag's argument that the evidence did not support a finding of likelihood of confusion. For example, the Attrezzi store produced eight e-mail messages mistakenly sent to its Attrezzi web site, rather than to Maytag, complaining of problems with Maytag's Attrezzi line of products.

This case is Attrezzi LLC v. Maytag Corporation, U.S. Court of Appeals for the First Circuit, App. Ct. Nos. 05-2098 and 05-2181, appeals from the U.S. District Court for the District of New Hampshire, Judge Paul Barbadoro presiding.

People and Appointments

1/27. The Securities and Exchange Commission (SEC) stated in a release that Chairman Chris Cox "will undergo surgery for removal of a thymoma on Monday, January 30. It stated that "The hospitalization is expected to last just a few days". It added that "A full recovery is expected, and it is anticipated that the surgery will complete the necessary treatment for this condition." See also, the National Institute of Health's (NIH) National Cancer Institute's web page on thyoma.

FTC Sues ChoicePoint for Sale of Consumer Data to Identity Thieves

1/26. The Federal Trade Commission (FTC) filed a four count civil complaint [14 pages in PDF] in U.S. District Court (NDGa) against ChoicePoint alleging violation of the Federal Trade Commission Act (FTCA) and the Fair Credit Reporting Act (FCRA) in connection with its sale of personal data to identity thieves.

The FTC and ChoicePoint simultaneously filed a joint proposed stipulated final judgment [29 pages in PDF]. It provides that "Defendant makes no admissions to, and denies, the allegations in the Complaint, other than the jurisdictional facts", but that it is enjoined from violating the FTCA and the FCRA, that it will pay a "civil penalty" of $10 Million, and pay $5 Million in consumer redress.

See, full story.

Korea Relaxes Trade Barriers to Foreign Movies

1/26. The government of South Korea announced in a release that it has "decided to halve its 40-year-old ``screen quota,´´ the mandatory period for theaters to show domestic films every year, to 73 days, to clear the way for its free trade agreement (FTA) with the United States." Korea also stated that this rules out the possibility of a complete abolition.

Bob Portman, the U.S. Trade Representative (USTR), stated in a release that "The decision by Korea to liberalize its restrictions on foreign films is good news for Korean movie-goers and the US film industry. The long-standing Korean requirement that domestic films be shown on local theater screens 146 days out of the year placed US movies at a significant disadvantage. Today’s move to reduce the requirement by half to 73 days will help level the playing field and increase movie choices for Koreans."

He added that "Over the years, the South Korean movie industry has become increasingly competitive and it has recently gained an international reputation for producing high quality material. Now is the right time to give Korean cinemas more flexibility regarding what they can and cannot show."

Bush Asserts Power to Use Technology to Protect the American People

1/26. President Bush held a news conference at the White House. He was asked about the National Security Agency's (NSA) extrajudicial surveillance of communications where one party is in the U.S. and one party is outside. Bush asserted that he has authority "to use technology to protect the American people".

He said also that "I'm going to continue using my authority. That's what the American people expect." See, transcript.

Bush added that "the FISA law was written in 1978. We're having this discussion in 2006. It's a different world."

People and Appointments

1/26. John Reardon was named to the National Association of Broadcasters' (NAB) Television Board. He is P/CEO of Tribune Broadcasting. See, NAB release.

More News

1/26. The Computer Law Association (CLA) announced that it has changed its name to the International Technology Law Association (ITLA).

Go to News from January 21-25, 2006.