Exact Digital Models of Cars Not Protected by Copyright

Case: Meshworks v. Toyota, Tenth Cir. No. 064222 (June 17, 2008)

The One Sentence Summary: Exact digital models of cars were not copyrightable because there was no creativity involved in their creation.


Tenth Circuit Holdings:

• In derivative works cases, the court must separate out the preexisting work to determine what is copyrightable by the new author.
• Conveying reality does not create a copyrightable work.
  

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California Appellate Court Defines Statute of Limitations Period for Third-Party Trade Secret Actions

Case: Cypress Semiconductor Corp. v. Superior Ct. (Silvaco Data Systems), No. H032114 (Cal. Ct. App. May 30, 2008)

The One Sentence Summary: Court holds that the statute of limitations on a cause of action for third-party trade secret misappropriation begins to run when the plaintiff has any reason to suspect that the third-party knows or reasonably should know that the information is a trade secret.

What They Were Fighting About: Plaintiff Silvaco Data Systems had developed source code, which it held as a trade secret. A former employee with access to plaintiff's trade secret left for a competitor and used the secret source code in a competing software. Plaintiff sued the competitor for trade secret misappropriation and reached a settlement whereby the competitor admitted misappropriation. The competitor, however, had sold its infringing software to its customers. One customer, defendant Cypress Semiconductor Corporation, continued to use plaintiff's trade secret. Plaintiff sued for misappropriation under California's Uniform Trade Secrets Act (Civ. Code § 3426 et seq.). Defendant argued that the three year statute of limitations period had expired (Id. § 3426.6).

California Appellate Court Holdings:

• The court rejected the single-claim rule, whereby a plaintiff for misappropriation has but one claim and the clock on the statute of limitations commences when the plaintiff learns of the original misappropriation. Instead, the court held that "a plaintiff may have more than one claim for misappropriation, each with its own statute of limitations, when more than one defendant is involved."


• The court also rejected the plaintiff's argument that the statute of limitations should begin when a third-party defendant learns that it possesses plaintiff's trade secrets. Instead, the court held that the "proper focus, for purposes of the running of the statute of limitations, is not upon the defendant’s actual state of mind but upon the plaintiff’s suspicions." As such, the court held that the statute of limitations on a cause of action for third-party trade secret misappropriation begins to run when the plaintiff has any reason to suspect that the third-party knows or reasonably should know that the information is a trade secret.


• In the case at hand, the court concluded that whether the statute of limitations had expired was a factual question for the jury. The jury was tasked with determining "When did Silvaco first have any reason to suspect that a CSI customer had obtained or used DynaSpice [the infinging product] knowing, or with reason to know, that the software contained Silvaco’s trade secrets?
  
  

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Statutory Damages Were Not Available for Series of Infringements Where Work Was Registered After 1st Infringement

Case: Derek Andrew, Inc. v. Poof Apparel Corp., No. 07-35048, Ninth Circuit, June 11, 2008

The One Sentence Summary: Statutory damages for copyright infringement were not available where the first infringement in a series occurred before registration.


What They Were Fighting About: Defendant Poof had infringed hang tags on clothing, and default judgment was awarded against it, along with statutory damages and attorneys' fees.

Ninth Circuit Holdings:

• Statutory damages for copyright infringement were not available where the first infringement in a series occurred before registration.
• Attorneys' fees for willful infringement under Lanham Act were available where default was entered under complaint alleging willful infringement.
  
  

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Patent Exhaustion Doctrine Prevented Pursuit of Customers of a Licensee

Case: Quanta Computer, Inc., et al. v. LG Electronics, Inc., Supreme Court No. 06-937, June 9, 2008.

The One Sentence Summary: The patent exhaustion doctrine prevented an action against a buyer of a patented article from a licensee.



Supreme Court Holdings:

• The authorized sale of an article that substantially embodies a patent exhausts the patent holder's rights and prevents the patent holder from invoking patent law to control postsale use of the article. Here, LGE licensed Intel to practice any of its patents and to sell products practicing those patents. Intel's microprocessors and chipsets substantially embodied the LGE Patents because they had no reasonable noninfringing use and included all the inventive aspects of the patented methods. Nothing in the License Agreement limited Intel's ability to sell its products practicing the LGE Patents. Intel's authorized sale to Quanta thus took its products outside the scope of the patent monopoly, and as a result, LGE can no longer assert its patent rights against Quanta.
  
  

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Parody Web Site That Criticized Critics of the LDS Church Did Not Infringe Trademarks or Constitute Cyber-Squatting

Case: Utah Lighthouse Ministry v. Discovery Computing, 10th Cir. No. 07-4095 (05/29/2008)

The One Sentence Summary: The panel affirmed summary judgment in favor of parody web site and domain names that used the mark of UTAH LIGHTHOUSE, a site criticizing the LDS Mormon church, to direct internet users to sites with opposing views.



Tenth Circuit Holdings:

• Evidence of search rankings was not sufficient evidence of secondary meaning:

  A mark acquires a secondary meaning if the words “have been used so long and so exclusively by one producer with reference to his goods or articles that, in that trade and to that branch of the purchasing public, the word or phrase [has] come to mean that the article is his product.” Educ. Dev. Corp. v. Econ. Co., 562 F.2d 26, 29–30 (10th Cir. 1977) (internal quotation marks omitted) (modification in original). The number of search engine hits, standing alone, is inadequate to demonstrate that consumers associate the mark with a particular product or producer, or perceive UTAH LIGHTHOUSE as a distinctive mark.



• Links on accused infringer's site to commercial sites via roundabout paths did not render the defendants' use of the trademark a use in commerce.
• Mere interference with sales on the plaintiff's site due to diversion in traffic was not a use in commerce under the Lanham Act.
• The court declined to hold that any use of a trademark on the internet was use “in connection with goods or services.”
• District court correctly concluded that parody web site did not create a likelihood of confusion.
• Registration of a domain name identical to trademark was not a violation of anti-cybersquatting act in absence of evidence of distinctiveness of mark or bad faith intent to profit from mark. Parody of mark was not an attempt to profit.
• Safe harbor under ACPA applied. Provision of ACPA precludes a finding of bad faith intent if “the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii). Defendant's belief that this was a parody precluded a finding of bad faith attempt to profit.
  
  

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