Supreme Court decides First Sale Doctrine applies for foreign-made works

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In a 6-3 decision, the Supreme Court overturned a controversial Second Circuit opinion and held that the first sale doctrine applies to a copyrighted work lawfully made abroad. This case, Kirstaeng v. John Wiley & Sons, is one that has been closely followed by many copyright scholars and publishers alike due to the potential implications on existing resale markets and foreign trade.

The petitioner-defendant, Kirtsaeng, is a college student who purchased foreign-made textbooks, which are less expensive than their U.S. counterparts but often contain identical material, and shipped them to the United States to sell to friends and other college students. Respondent-plaintiff publisher John Wiley & Sons filed a copyright infringement suit against Kirtsaeng, alleging that his shipment and resale of textbooks published outside of the United States was in violation of their copyright interests. At issue is the scope of the first sale doctrine, which is contained in Section 109(a) of the Copyright Act, the “importation” provision, Section 602(a)(1), and the meaning of the phrase “lawfully made under this title.”

The district court and Second Circuit held that Kirtsaeng could not benefit from the first sale doctrine because it did not apply to goods manufactured outside of the United States, and found Kirtsaeng liable for willful infringement of Wiley’s copyrights.

Supreme Court Justice Breyer’s majority opinion focused on the interpretations advocated by each party, and the decision, ultimately, turns on a combination of linguistic and grammatical considerations, the canon of statutory interpretation, along with the “deeply embedded” reliance on a non-geographical interpretation of the statute. “[T]he practical problems described by the petitioner and his amici are too serious, extensive, and likely to come about to be dismissed as insignificant—particularly in light of the ever-growing importance of foreign trade to America.”

For more information:

http://www.supremecourt.gov/opinions/12pdf/11-697_d1o2.pdf

http://www.techdirt.com/articles/20130319/08094922377/supreme-court-gets-it-right-kirtsaeng-you-can-resell-things-you-bought-abroad-without-infringing.shtml

http://www.law.cornell.edu/uscode/text/17/109

http://boingboing.net/2013/03/19/supreme-court-to-wiley-publish.html

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Laches, Trademark Enforcement, and Injunctive Relief

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One key aspect of protecting a trademark is policing the mark. A failure to police a mark may render the mark owner’s trademark unprotectable if another party begins infringing the mark without recourse, especially if the activity goes on unchallenged for a long period of time. However, a recent ruling by the 5th Circuit Court of Appeals demonstrates that even delayed enforcement can protect a trademark owner’s rights.

In Abraham v. Omega, the 5th Circuit Court affirmed a lower court’s grant of a partial injunction against the infringer, even though the infringer proved his laches defense, because imposition of an injunction would not expose the infringer to “substantial prejudice.”

Abraham, the plaintiff in this action, filed for a declaratory judgment that he and his business were not infringing on the defendants’ trademarks. The defendants in this action are 32 fraternities and sororities, and they asserted counterclaims for trademark infringement and unfair competition under the Lanham Act and under Texas state law.

Since 1961, Abraham has run a business that manufactures wooden paddles and decorations for sororities and fraternities; these products have remained the same since the business first started. The paddles are wood, with the shape of Greek letters and crests carved into the wood. Abraham operated unchallenged until 1990, when the Greek Organizations first contacted him about a licensing deal. Abraham declined to enter any license arrangement because he had been using the Greek marks and terminology for 29 years already without a license. Since then, the Greek Organizations have contacted him sporadically, complaining about his use of the marks, inviting him to enter into licensing agreements, and threatening to sue. During this time, Abraham continued business as usual, and also invested heavily into machinery and advertising, in addition to having to rebuild his business after several fires and a tornado.

In this suit and in response to the Greek Organizations’ counterclaim of trademark infringement, Abraham argued the defense of laches. At trial, the jury found that Abraham proved his laches defense. However, the court balanced the equities of issuing an injunction and determined that laches did not bar the entry of a permanent injunction on Abraham’s future use of the marks at issue, and fashioned a partial injunction. On appeal, the 5th Circuit affirmed, finding that the lower court did not abuse its discretion in fashioning the injunctive relief.

This decision turned on the issue prejudice against the infringer—both in terms of the laches defense and in terms of the permanent injunction. Laches has three elements: (1) delay in asserting trademark rights, (2) lack of excuse for that delay, and (3) that delay caused undue prejudice to the infringer. The jury found that Abraham had sufficiently shown undue prejudice by the delay, particularly in that Abraham rebuilt his business three times and would not have done so had he known that the Greek Organizations would later sue him.

Imposition of a permanent injunction requires the party seeking the injunction to prove: (1) irreparable injury; (2) inadequate remedies at law; (3) equity is warranted considering the balance of hardships; (4) an injunction is not against the public interest.

However, a finding of laches will not bar a permanent injunction by itself. Rather, the prejudice experienced by the infringer in a laches situation must be “substantial” in order for laches to bar an injunction. In this case, only one of Abraham’s products met the “substantial prejudice” test; for all other products, the permanent injunction is in place.

For more information:

http://www.forbes.com/sites/oliverherzfeld/2013/02/28/failure-to-enforce-trademarks-if-you-snooze-do-you-lose/

Abraham v. Omega, No. 12-10525 (5th Cir. Feb. 7, 2013)

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The Copyright Mystery of Sherlock Holmes

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Sir Arthur Conan Doyle wrote the Sherlock Holmes stories at various times between 1887 and 1927. Leslie S. Klinger is a living expert on the mystery and thriller genres in literature, including the Canon of Sherlock Holmes. The Canon “refers to the four (4) novels and fifty-six (56) stories by Sir Arthur Conan Doyle featuring the fictional character of Sherlock Holmes and other related characters and story elements,” according to a declaratory judgment lawsuit recently filed in federal court concerning the copyright status of the works.

Klinger believes that the Conan Doyle Estate, Ltd. is wrongfully claiming copyright ownership in the certain aspects of the Canon of Sherlock Holmes. Klinger was on the receiving end of an attempt at copyright enforcement by the Sir Arthur Conan Doyle Estate. Klinger was co-editing a collection of stories inspired by the Sherlock Holmes canon and feature characters and other elements from the Holmes stories. The Doyle Estate contacted the publisher demanding payment of a license fee, and claiming that the character is still protected under copyright until 2023, and asserting that if the book was published without payment of the license fees, it would block distribution of the book through many major distributors. The publisher subsequently dropped the book from publication. Klinger then filed a declaratory judgment action in federal court. The action seeks a judicial determination that the copyright for the works in question have expired in the United States and thus are in the public domain. The suit also requests that the court enjoin the Doyle Estate from further asserting rights in the works at issue.

Copyright in the United States confers exclusive rights to the copyright holder for a limited period of time. While that period of time lasts for quite a long time (for works created after January 1, 1978, life of the author plus 70 years), the work will eventually be released into the public domain. But for works published prior to January 1, 1978, there are different standards. For works published between 1923 and 1977 that were published with proper notice and renewed properly, they may be protected still depending on the year of publication. And for works published before 1923, as many of the Sherlock Holmes stories were, copyright has already expired and they are in the public domain.

Once the copyright term was expired, works automatically enter the public domain, meaning that anyone is able to copy, distribute, display, and create derivative works based upon the work.

These different standards can be the source of much confusion. However, many content owners resist this notion and maintain that certain works or characters are still protected under copyright law.

For more information:

Mike Masnick, “Arthur Conan Doyle Estate Sued to Show that Sherlock Holmes Is Public Domain,” http://www.techdirt.com/articles/20130215/15093722002/arthur-conan-doyle-estate-sued-to-show-that-sherlock-holmes-is-public-domain.shtml (Feb. 15, 2013).

http://lawprofessors.typepad.com/trusts_estates_prof/2013/02/suit-over-sherlock-holmes-copyright.html

http://www.mediabistro.com/galleycat/scholar-sues-arthur-conan-doyle-estate-over-sherlock-holmes-copyright_b65550

http://copyright.cornell.edu/resources/publicdomain.cfm

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