July 16, 2014

Federal Circuit Affirms Broad Copyright Protection for Software

In May, the United States Court of Appeals for the Federal Circuit issued a decision in Oracle America, Inc. v. Google, Inc., holding that certain aspects of Oracle’s Java software were copyrightable.  The case dealt with several different pieces of code alleged to be infringed, but of particular interest is the appellate court’s analysis of the copyrightability of 37 packages of application programming interfaces, “API packages,” and of the verbatim copying by Google of nine lines of Java code.

No Small Amount of Software Can Be Copied Without Risking Infringement

One of the items that Google was alleged to have infringed upon was Oracle’s copyright in nine lines of code that made up a discrete function in the Android program.  The district court found that the two engineers that had originally written the Java code later worked for Google and contributed the nine lines of code to the Android platform. 

Google argued that its verbatim copying of those nine lines of code was too insignificant to amount to infringement on its own.  To put it in perspective, the copied code was only nine lines out of 2,800,000 (approximately .000321% of the code) in the various Java packages at issue (a subset of the entire Java platform, of which it would be a far smaller percentage).  

However, the appellate court rejected that argument, stating that there is no “minimum number of lines of code that must be copied before a court can find infringement.”  This may prove to be very useful to software developers contending that a third party has copied their code, and very frustrating to defendants accused of copying a few lines of code in a much larger program.  If there is no copying too small to be infringing, it may make it much easier for copyright holders to bring a cognizable claim asserting that a small amount of code was copied by a third party. 

Structure, Sequence and Organization of Code Can Be Protected

A major issue in the case was whether Google had infringed Oracle’s copyright by copying the “declaring source code” and the “structure, sequence and organization” (SSO) of the 37 API packages.  Essentially the API packages are code that allows computers to execute common tasks and communicate with each other.  The “declaring code” is the language that identifies the pre-written function – namely, it’s the code used by the programmer to call up the API and to command the computer to execute associated “implementing code,” which carries the more detailed instructions for the specific function.

Google developed the Android platform, which included 168 API packages, and had its own implementing code.  However, as part of the 168 API Packages, Google used 37 API packages that corresponded to the existing JAVA API packages.  The district court provided the analogy that “Oracle’s collection of API packages is like a library, each class is like a book on the shelf, and each method is like a how-to chapter in a book.”  In total, Google copied about 7,000 lines of declaring source code from the corresponding 37 Java API packages including the “elaborately organized taxonomy of all the names of methods, classes, interfaces, and packages.” 

This system of taxonomy was referred to by the court as the “structure, sequence and organization” (SSO) of the 37 API packages.  Software, by its nature, conflates the distinction between words and function.  This appears to be the root of the dispute between Oracle and Google with regard to the 37 API packages.  In broad strokes, one of Google’s arguments was that the simple commonplace words used to create these 37 API packages that identify and trigger each specific function are precluded from copyright protection as “functional” or an unprotectable “system.” Under Section 102(b) of the Copyright Act, copyright does not extend to any “system” or “method of operation.”  Essentially, among other arguments, Google asserted that because this code was a language already known by programmers, which served the utilitarian feature of calling up the implementing code and allowing the programs to communicate with each other, it should not be subject to copyright.

The court, however, disagreed with Google and held this “structure, sequence and organization” of the 37 API packages was copyrightable.  The court reasoned that because “the SSO is original and creative, and that the declaring code could have been written and organized in any number of ways and still have achieved the same functions, we conclude that [the Copyright Act] does not bar the packages from copyright protection just because they also perform functions.”

The appellate court sent the case back to the trial court to determine whether Google’s use was nonetheless allowed as fair use.  It will be interesting to see how this plays out.  The Federal Circuit’s decision is a very strong decision in favor of copyright protection for software.  It may still be that Google is able to assert a successful fair use defense with regard to the 37 API packages.  Even if it is, though, this decision will make it easier for copyright holders to assert claims of infringement arising out of software, more easily get the case before a jury (and past summary judgment), and force defendants to rely on a fact-intensive fair use defense.  It may also slow the adoption of standardized APIs, since a developer is more likely to be able to assert that its APIs are proprietary and cannot be used by another entity.  In the near term, this ruling is likely to cause more litigation asserting copyright infringement of software, drive up costs for the creation of new software, and strengthen claims of copyright holders. 

May 27, 2014

Smells like TM Spirit – String of Complaints Filed by Apparel Company Based on Supplemental Trademark Registration May Clarify Bounds of Law

In the United States, trademarks can be registered on either the Principal Register or the Supplemental Register.  The Principal Register is reserved for marks that actually distinguish a mark owner’s goods and services.  Registration there offers the full panoply of trademark rights – including presumptions of validity and exclusive rights to use.  Not all marks can be registered on the Principal Register.  Marks that are considered “ornamental” such as stitching on clothing, or marks that are descriptive, based on surname or geographical terms are often sent to the Supplemental Register when attempts to get them on the Principal Register fail. 

The Supplemental Register does not provide the presumptions of registration on the Principal Register, nor does it require the same burdens to be met before a registration will be issued.  Any mark merely “capable of” distinguishing a trademark applicant’s goods or services may be registered on the Supplemental Register.  But, registration on the Supplemental Register is not evidence that the mark actually distinguishes goods or services.  What are the exact benefits of registration on the Supplemental Register?  Very few courts have opined on this.  See, e.g., In re Bush Bros. & Co., 884 F.2d 569, 570 (Fed. Cir. 1989)(noting the lack of judicial clarity).

A recent string of court filings claiming infringement of a supplemental registration presents the possibility that a court will publish a detailed examination of these registrations in the near future.  On May 16, 2014, Spirit Clothing Company (“Spirit”) filed an action against Victoria’s Secret Stores, alleging infringement of its supplemental trademark registration, for a stitching design on dropped shoulder seams and across the chest and back of a shirt.  See Spirit Clothing Co. v. Victoria’s Secret Stores, LLC et. al., Civ. No. 14-3790 (C.D. Cal.).  This is at least the sixth complaint that Spirit has filed against various companies alleging infringement of this mark.  
The mark depicted above and at issue in these cases, Registration No. 4,280,977, is described by Spirit in its registration as follows:

[A] yoke stitched with cover stitch details on dropped shoulder seams and a yoke stitched across the chest and back of the shirt.  The drawing shows the word ‘NANTUCKET’ in dashed lines to indicate that such word does not form part of the mark, but merely indicates placement on the back portion of the mark a space where wording is presented.  The dashed lines running approximately horizontally across, and vertically in the dropped shoulder area, do form part of the mark, representing the yoke and cover stitch details set forth in the description of the mark.

What is particularly interesting is that the mark was refused registration on the Principal Register because, according to the USPTO the mark was “merely a decorative or ornamental feature of applicant’s clothing” and did “not function as a trademark to identify the source of applicant’s clothing [or] distinguish applicant’s clothing from that of others.”  The USPTO added that: “consumers would view the applied-for mark as a decorative or ornamental feature . . . rather than as a trademark to identify . . . source . . . .”   Spirit did not appear to contest this analysis with the USPTO and instead amended the application to registration on the Supplemental Register. 

While some of the cases brought by Spirit have appeared to settle and were dismissed without any significant judicial opinion, four of the cases remain pending in the Central District of California (along with a declaratory judgment action pending in Georgia).  Because counterclaims for invalidity and mark cancellation are pending in at least one of the active litigations, we may see a new court decision concerning not only the benefits of a supplemental registration, but also the liabilities of acceding to registration on the Supplemental Register, and the specific showings necessary to defend, invalidate or cancel a supplemental registration.  This type of additional clarity could help brand owners decide what steps to take when considering registration of a mark that might get sent to the Supplemental Register.

In the meantime, while brand owners watch whether the courts will further clarify the protection afforded by supplemental registrations in the Spirit cases, brand owners should still consider protecting their IP in other ways, such as seeking registration of brand names or logos on the Principal Register, filing copyright applications on any design elements of their goods, and applying for design patents on any new, original and ornamental (non-functional) designs.  These well-understood basic steps should be followed when possible, regardless of how courts further define the effects and/or drawbacks of registering on the Supplemental Register.   

By Jason Sanders and Wendy Stein

May 20, 2014

A Black Eye for MGM – Copyright Claim by Heir of Raging Bull Screenplay Writer Allowed to Proceed Despite 18-Year Delay in Bringing Suit


The U.S. Supreme Court reversed the Ninth Circuit Court of Appeals and held on Monday in Petrella v. Metro-Goldwyn-Mayer, Inc. that the defense of laches (unreasonable delay) cannot entirely preclude a copyright claim when any acts of infringement occur within the Copyright Act’s three-year statute of limitations.  Of the six circuit courts that had previously considered this issue, four had held that laches could be so invoked.

Petrella v. MGM revolved around the screenplay to the movie Raging Bull.  In 1963, Frank Petrella and Jake LaMotta (a boxer on whom the film is based) assigned their rights in the screenplay to Chartoff-Winkler Productions, Inc.  The rights were later acquired by a subsidiary of MGM.  Although the assignment included the rights to any renewal term, because Petrella died before the renewal term began, MGM’s renewal rights under the assignment arguably depended on a grant from Petrella’s heirs.

Petrella’s daughter renewed the copyright in 1991.  However, she waited until 1998 before contacting MGM.  In letters back and forth between their respective counsel over the next two years, she asserted her rights and MGM denied infringement.  Nine years later, in 2009, Petrella filed a copyright infringement action in California.  Apparently, Petrella had believed that the movie was making so little money in the previous years, that the cost of a lawsuit would be more than any potential recovery from a copyright infringement lawsuit.  MGM moved to dismiss on several grounds, including laches, based on Petrella’s 18-year delay in bringing suit.  The district court granted MGM’s motion, and the Ninth Circuit Court of Appeals affirmed.

In a 6-3 decision penned by Justice Ginsburg, the Supreme Court reversed.  The Court’s opinion centered on the central premise that the Copyright Act applies the separate accrual rule; namely, each time an infringing work is reproduced or distributed the infringer commits a new wrong.  Accordingly, each infringing act effectively starts the statute of limitations period for that act.  As stated by the Court “[u]nder the Act’s three-year provision, an infringement is actionable within three years, and only three years, of its occurrence.  And the infringer is insulated from liability for earlier infringements.” The Court stated that “[i]nviting individual judges to set a time limit other than the one Congress prescribed, we note, would tug against the uniformity Congress sought to achieve when it enacted [the statute of limitations].” 

Though sitting on their rights may not completely bar potential plaintiffs from bringing a copyright claim, the Court made clear that waiting could restrict what remedies are available.  For example, the Court cited a case where a building was built using allegedly infringing plans and the plaintiffs did not assert their rights until much of the building was built.  The Court noted that the court there had allowed a claim to go forward, but stated that under those facts, the plaintiffs’ remedies would be limited and destruction of the building would not be ordered.   Arguably inconsistently however, the Court stated that the relief sought by Petrella, including an injunction against future infringement “would not result in the ‘total destruction’ of the film, or anything close to it.”  It is hard to see how an injunction against future infringement - which would include barring MGM from any future reproduction or distribution of the film - is not tantamount to destruction, at least from MGM’s perspective.  The Court did note however that on remand, the lower court in Petrella could “allow MGM to continue to use Raging Bull upon payment of a reasonable royalty to Petrella.”

Interestingly, the Court appeared to condone the use of “equitable tolling” to lengthen the time available for a copyright plaintiff to bring suit.  That doctrine allows judges to extend the time for bringing suit when a potential plaintiff lacks the ability to bring suit in a timely fashion, for example, if he or she is incapacitated or is a minor.  The Court distinguished equitable tolling from laches, noting that tolling is “tied to [the statute of limitations]” but laches was originally conceived to be used as a guide instead of the statute of limitations. Aside from the history of these two doctrines, however, the practical distinction drawn by the Court is not entirely clear.   Equitable tolling extends the time for suit while laches contracts it, but both are equitable in nature and can alter the deadline for bringing a claim.  Indeed, as Justice Breyer points out in his dissent, it is hard to understand the logic of “preserving doctrines that lengthen the period for suit when equitable considerations favor the plaintiff (e.g., equitable tolling), but . . . foreclosing a doctrine that would shorten the period when equity favors the defendant (i.e., laches.)”

Another important point to note is that this decision comes shortly after the Second Circuit joined eight other circuit courts in adopting the “discovery rule” to control the statute of limitations in copyright cases.  See Psihoyos v. John Wiley & Sons, described in an earlier post here.  The discovery rule triggers the statute of limitations when the plaintiff knew or should have known of the infringement, as opposed to the injury rule, which starts the clock when the infringing act occurs.  Use of the discovery rule would seem to undermine the uniformity that the Court sought to impose in copyright actions by barring the use of laches. Indeed, in dicta the Court states that “[a] copyright claim . . . arises or ‘accrues’ when an infringing act occurs.”  The underlying reasoning of that Petrella v. MGM decision, as well as that dicta, may give lower courts in the nine circuits using the discovery rule reason to re-evaluate its application.

By Jason Sanders
© 2014 Jason Sanders Law PLLC

May 17, 2014

Second Circuit Formally Adopts “Discovery Rule” in Applying Statute of Limitations in Copyright Cases

Last month, the Second Circuit went against the tide of recent S.D.N.Y. decisions and instead joined the majority of circuit courts around the country to hold that the statute of limitations for copyright infringement claims runs from when the infringement is or should have been discovered, and not the date of infringement.  See Psihoyos v. John Wiley & Sons, Civ. No. 12-4874, 2014 WL 1327937, at *1 (2d Cir. Apr. 4, 2014). 

In Psihoyos, a plaintiff photographer sued the defendant for publishing his photos in textbooks and ancillary publications without his permission.  The Second Circuit affirmed the district court’s holding that the Copyright Act’s three-year statute of limitations did not bar the plaintiff’s claims because the plaintiff did not discover the infringements until 2010, less than three years before he filed the suit.

Under 17 U.S.C. § 507(b), civil actions for copyright infringement must be commenced within three years “after the claim accrue[s].”  Prior to Psihoyos, district courts within the Second Circuit were divided with regard to whether the “injury rule” or “discovery rule” applied.  Under the “injury rule,” a claim accrues at the time the infringement occurs while under the “discovery rule,” a claim accrues when the aggrieved party knows or has reason to know of the infringement.  At the time of the court’s decision in Psihoyos, the overwhelming majority of appellate courts subscribed to the “discovery rule.”  However, within the Second Circuit many courts continued to follow Judge Kaplan’s seminal decision in Auscape Int’l v. Nat’l Geographic Society, 409 F. Supp. 2d 235 (S.D.N.Y. 2004), along with Judge Buchwald’s decision in Urbont v. Sony Music Enter. et. al., 863 F. Supp. 2d 279, 282 (S.D.N.Y. 2012), applying the “injury rule.”

The Second Circuit stated that it agreed with its “sister Circuits that the text and structure of the Copyright Act . . . evince[d] Congress’s intent to employ the discovery rule,” and that policy reasons counseled in favor of adopting it.  See Psihoyos, 2014 WL 1327937, at *3.  In so doing, the court distinguished the Supreme Court’s decision in TRW Inc. v. Andrews, 534 U.S. 19 (2001) (refusing to inject a general “discovery rule” into statute of limitations provision of the Fair Credit Reporting Act). The court relied on the reasoning articulated by other circuits grappling with the issue since TRW had been decided.  Psihoyos, 2014 WL 1327937, at *3 & n.3.

Psihoyos raises several issues that will need to be decided in the Second Circuit.  For example, what will be the legal standard for inquiry notice of infringement in the copyright context?  Traditionally, while trademark owners have a duty to police their marks, copyright owners do not.  Thus some courts applying the “discovery rule” have held that a plaintiff is on inquiry notice only “once it possesses information regarding culpable conduct – ‘storm warnings’ - suggesting some reason to investigate.”  Design Basics, LLC v. Chelsea Lumber Co., Civ. No. 11-10854, 2013 WL 5539609, at *7-*8 (E.D. Mich. Oct. 8, 2013) (relying on opinions by the First and Third Circuits).  

Since the Psihoyos court relied on its sister circuits in embracing the “discovery rule,” it may also adopt their requirement for “storm warnings.”  If so, will a potential plaintiff be on inquiry notice if an accused infringer floods the Internet or Tweets, for example, an infringing photograph or recording?  While courts have held that public availability of potential infringements “does not, without some additional ‘triggering event,‘ put a plaintiff on inquiry notice,” see id., what constitutes a triggering event will likely be a ripe area for litigation in the Second Circuit now that the “discovery rule” is in place. 

On a practical level, the rule may also require copyright plaintiffs and defendants to allocate discovery resources to litigating statute of limitations issues.  For example, if “storm warnings” are required, litigants will fight over what they were, who received them, and whether a plaintiff acted with reasonable diligence, rather than the often much cleaner line based on the date of the act of infringement.  Thus, Psihoyos may require litigators to pay more attention to statute of limitations issues in copyright cases.

by Wendy Stein and Jason Sanders
© 2014 Jason Sanders Law PLLC