Snapshot of Trademark and Copyright Suits Filed and Closed in the Eastern District of Virginia

Ever wonder about the five-year trend for the number of trademark and copyright actions filed in the U.S. District Court for the Eastern District of Virginia (the “Rocket Docket”), and what the numbers may say about the state of trademark and copyright litigation.  Mod Law did. 

Here are the annual numbers for trademark or copyright infringement actions filed in the Eastern District of Virginia during the period January 1 through June 8 and the percentage of those same cases that were closed by June 8 of the same year:

YEAR	Cases Filed by 6/8	Same Cases Closed by 6/8 (%)
2006	54	30
2007	53	21
2008	32	28
2009	53	15
2010	38	16

On average, the numbers show that 2010 was fairly low in terms of the number of cases filed.  Not a big surprise.  The numbers also show that, of those cases filed by June 8, significantly less cases were closed by June 8, 2010.  Hmm.  One reasonable interpretation of the data may be that trademark and copyright owners are choosing their battles more carefully.  Another, non-exclusive interpretation may be that legal battles involving trademark and copyright issues are more important to both plaintiffs and defendants, and thus both sides are less willing to lose or settle.  Perhaps less is more during the first half of 2010. 

Ninth Circuit Holds Copyrights “Registered” When Copyright Office Receives Completed Application, Widening Circuit Split

For some time, copyright owners have had to struggle with the requisite issue of whether a copyright is “registered,” for purposes of filing a copyright infringement suit, at the time the Copyright Office receives a copyright holder’s application (the “application approach”), or at the time the Copyright Office acts on the application and issues a certificate of registration (the “registration approach”).  The Court of Appeals for the Ninth Circuit recently addressed this issue in Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, No. 08-56079, slip. op. (May 25, 2010), making it easier for copyright plaintiffs to advance their case in that jurisdiction.  In other jurisdictions, a split of authority exists: the Fifth and Seventh Circuits apply the application approach, the Tenth and Eleventh Circuits apply the registration approach, and district courts within other circuits apply both approaches. 

Is copyright registration a jurisdictional prerequisite to suit?

As an initial matter, the court quickly dismissed the notion that copyright registration is a jurisdictional prerequisite to suit.  The Ninth Circuit relied on the recent Supreme Court decision in, Reed Elsevier, Inc. v. Muchnick, No. 08-103, slip. op., _ U.S. _, 130 S. Ct. 1237 (2010), which held that a copyright holder’s failure to comply with Section 411(a)’s registration requirement does not restrict a federal court’s subject matter jurisdiction over infringement claims involving unregistered works.  (The Reed Elsevier decision is discussed in a prior Mod Law post.)

Is copyright registration an element of a copyright infringement claim?

Section 411(a) of the Copyright Act states, in relevant part, that “no civil action for infringement of the copyright in any United States work shall be instituted until pre-registration or registration of the copyright claim has been made in accordance with this title.”  17 U.S.C. § 411(a).   Unfortunately, the Copyright Act’s definition of the term “registration” in Section 101 does not shed any light on its meaning within the context of Section 411(a).  Moreover, the Ninth Circuit found that analyzing the language of the statute as a whole did not resolve the issue of whether a copyright should be considered “registered” under the application or registration approach.  The Ninth Circuit thus went beyond the plain meaning of the Copyright Act to determine which approach better carried out the purpose of the statute. 

The Ninth Circuit held that “receipt by the Copyright Office of a complete application satisfies the registration requirement of § 411(a),” based on the following findings: (1) the application approach avoids delay in litigation which could eventually proceed under the Act regardless of whether the Copyright Act accepts or rejects the application; (2) the application approach does not impair the goal of copyright registration to maintain a robust national register of copyrights; (3) the additional delay under the registration approach has a greater potential of causing a party to lose its ability to sue, due to the statute of limitations for copyright infringement actions; and (4) the application approach permits the processes of registration approval and litigation to proceed without any prejudice to the litigants or the Copyright Office, which may still have an opportunity to voice its opinion as to the registrability of a work during litigation. 

Perhaps one day, an authority higher than the Ninth Circuit will provide clarity on the issue for all litigants.  For now, copyright owners in the Ninth Circuit have one less obstacle to prosecuting their infringement actions without delay; other copyright owners still need to check the state of the law of jurisdictions in which an infringement suit is contemplated.  

Give Them an Inch and They’ll Claim a Footlong Trademark

If you have not heard, the owner of the Subway sandwiches restaurant chain owns the mark FOOTLONG for sandwiches.  Or at least that what it claims.  We know this because it became very public that Subway sent a demand letter to The Coney Island Drive Inn, putting the local company on notice “to cease and desist from using FOOTLONG™ in association with sandwiches.”  The demand letter also mentions that Subway “has applied for the trademark FOOTLONG™ in association with sandwiches at the United States Patent and Trademark Office (“USPTO”) bearing application number 77/324,228.”  (Not to be nitpicky, but Application Serial No. 77/324,228 is for the mark OKEI-SAN for wine, and it's registered to David Girard Vineyards, Inc.)      

It turns out, The Coney Island Drive Inn has been selling hotdogs called “footlongs” for over 40 years.  Ouch!  Not long ago, in prosecuting the application to register the mark FOOTLONG (Application Serial No 77/324,328), Subway even argued that “at least one web-based dictionary has defined footlong to mean a one foot long hot dog.”  Oops.  Not to worry, Subway now claims that the demand letter to The Coney Island Drive was a mere “clerical error.”  Currently, the company only takes issue with use of the term FOOTLONG in connection with sandwiches, not hot dogs.        

 

It also turns out that several competitors disagree with Subway’s claimed right to the term FOOTLONG for sandwiches.  Currently, nine proceedings are pending before the U.S. Trademark Trial and Appeal Board (“TTAB”), opposing Subway’s application to register the mark FOOTLONG.  Perhaps Subway’s demand letter to The Coney Island Drive Inn was a late effort intended to support its defense of the opposition proceedings.  Or perhaps it was just a clerical, tactical, or strategical error. 

In any event, even if Subway were to someday obtain its trademark registration and become the exclusive dealer of footlong sandwiches, the public backlash suggests it may have done so at the expense of consumers switching to the yardlong or some other measurement of a sandwich.

Is Net Neutrality Dead?

In Comcast v. FCC, No. 08-1291 (D.C. Cir. Apr. 6, 2010), the U.S. Court of Appeals for the District of Columbia held that the U.S. Federal Communication Commission (FCC) lacks authority to impose a "net neutrality" standard on Comcast, a cable network provider. Among other things, the FCC's net neutrality standard seeks to prevent ISP discrimination against particular content or applications. An apparent consequence of the court's decision is that the FCC is now powerless to prevent broadband providers from engaging in anti-competitive and anti-consumer behavior on the Internet, such as website blocking, though arguably the Federal Trade Commission could take up some broadband issues in this respect.

Claims Involving Ownership of Comic Book Heroes Lacked Standing, Barred By Doctrine of Don’t Wait A Decade To Assert Rights

In Abadin v. Marvel Entm’t, No. 09-0715 (S.D.N.Y. Mar. 31, 2010), Judge Crotty of the U.S. District Court for the Southern District of New York dismissed an eight-count complaint filed on behalf of Stan Lee Media, Inc. shareholders against Marvel and Stan Lee, creator of several iconic comic book super heroes including Spider Man, Hulk, Iron Man, and X-Men.

The complaint consisted of the following eight causes of action: (1) copyright infringement; (2) violation of the Lanham Act; (3) breach of contract; (4) tortious interference with contract; (5) breach of fiduciary duty; (6) aiding and abetting breach of fiduciary duty; (7) constructive trust; and (8) accounting of profits. The dispute centered on Stan Lee’s 1998 transfer to Marvel of rights in many valuable comic characters, claiming shareholders of Stan Lee Media, Inc. owned such rights and had been harmed by the wrongful transfer.

At the outset, the court held the plaintiffs lacked standing to bring a derivative suit because the transfer of rights occurred in 1998 and plaintiffs did not acquire shares until 1999, more than a year after the purported illegal transfer. In addition, the applicable statute of limitations barred each claim, and the court worked laches and estoppel into some of its analysis.

This opinion drives home at least one principal point: “Plaintiffs cannot wait a decade to enforce their rights,” especially when the complaint acknowledges that “defendants’ violations have been open and notorious.”

Supreme Court Addresses Jurisdiction Over Unregistered Copyright Claims In Class Action

Earlier this month, the Supreme Court overturned a Second Circuit decision which held, sua sponte, that the district court lacked jurisdiction under 17 U.S.C. § 411(a) to certify a class asserting copyright infringement claims for both registered and unregistered works.

The underlying facts in Reed Elsevier, Inc. v. Muchnick, No. 08-103, slip. op. (U.S. Mar. 2, 2010) involve freelance writers who filed a class action for copyright infringement against publishers who reproduced their works electronically without first obtaining permission. These facts are similar to those in the New York Times v. Tasini case, in which the Supreme Court made it clear that copyright law does not permit publishers to make electronic reproductions of the works of freelance authors without first obtaining express permission. The difference in the Muchnick case is that the freelance writers consist of both authors of registered copyrights and unregistered copyrights.

Relying on the Tasini decision, the district court pressured the parties to reach a settlement addressing an appropriate royalty for the class plaintiffs. The parties did reach a settlement, which was approved by the district court, but some of the freelance authors who did not hold registered copyrights objected to the terms of the settlement, and so they appealed to the Second Circuit.

Without any prompting by the parties, the Second Circuit held that, pursuant to § 411(a), the district court lacked jurisdiction to certify the class or approve the settlement because the claims included unregistered copyrights. Section 411(a) states that “no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”

Although Section 411(a)’s registration requirement is a precondition to filing a copyright infringement claim, the Supreme Court held that a copyright holder’s failure to comply with that requirement does not restrict a federal court’s subject matter jurisdiction over infringement claims involving unregistered works. According to the Court, a statutory requirement is considered “jurisdictional” only if Congress clearly states that it counts as jurisdictional, and Section 411(a) does not clearly state that its registration requirement is jurisdictional.

As a result of the Court’s ruling, owners of unregistered copyrights are not completely sidelined in the infringement arena. True, they may be precluded from filing an infringement suit on their own; but they are not precluded from joining settlement negotiations or class actions. Indeed, the Court’s decision should revive the possible settlement with $18 million at stake.

Fourth Circuit Upholds Abstention, Virginia Trademark Dispute Remains Local

The Court of Appeals for the Fourth Circuit just held, in Riley v. Dozier Internet Law, PC, No. 09-1044 (4th Cir. Mar. 24, 2010) (unpublished), that the United Stated District Court for the Eastern District of Virginia was within its discretion in abstaining from exercising jurisdiction over a Michigan resident’s (Riley) action seeking a declaratory judgment that he was not liable to a Virginia resident (Dozier) for defamation or trademark infringement.

DJ plaintiff Dozier filed suit against DJ defendant Riley in Virginia state court, alleging defamation and “statutory and common law” trademark infringement. (Dozier later argued that he did not bring a claim under the Lanham Act, though he could point to no other statutory basis.) Riley simultaneously sought to remove the Virginia action to federal court, claiming federal question jurisdiction under the Lanham Act, and filed the DJ action in the Eastern District of Virginia. Doubting it had subject matter jurisdiction, the district court remanded the request for removal and dismissed the DJ action stating that, even if it had subject matter jurisdiction, it declined to adjudicate the case under the doctrine of abstention. The district court’s decision regarding removability could not be appealed, see 28 U.S.C. § 1447(d), so Riley appealed dismissal of the DJ action.

In holding that the district court did not abuse its discretion in abstaining from exercising jurisdiction over the DJ action, the Fourth Circuit noted that the Declaratory Judgment Act provides a court with wide discretion in determining whether to adjudicate a case, especially since there was a pending, related state court action. Applying four factors previously set forth in United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493-94 (4th Cir. 1998), the Fourth Circuit found: (1) Virginia has a strong interest in having the issues decided in its courts; (2) the Virginia state court would likely resolve the issues more efficiently than the Eastern District of Virginia; (3) the state and federal proceedings involve overlapping issues of fact and law; and (4) Riley’s federal suit appears to be mere “procedural fencing” – i.e., forum shopping.

In a strong dissent, Circuit Judge Davis criticized the majority’s “rescue mission,” arguing that the district court (1) unquestionably had federal jurisdiction based on the Lanham Act, and (2) failed to exercise its discretion in declining to assert jurisdiction over Riley’s request for declaratory relief on abstention.

Regarding federal jurisdiction, Judge Davis accepted that the court could not review the district court’s erroneous remand of the removed case, but still noted that the “alleged lack of a federal claim was the very basis upon which Dozier prevailed in the district court in persuading the district court to remand the state court action and to dismiss this [DJ] action.”

Regarding abstention, Judge Davis found that the district court’s purported exercise of discretion was a “cursory afterthought,” stated in the alternative and applying the wrong legal standard. Judge Davis stated the majority had to “rummage[] through its treasure chest of abstention doctrines to find a basis on which to affirm the district court,” and found that it substituted its own version of discretion for the district court’s erroneous legal determination.

Farewell Howrey

Friends and colleagues,

It's been great working with all of you.

Stay focused!

JAC