Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
All Ninth Circuit…
1. The Ninth Circuit Court of Appeals affirmed summary judgment for an insurer and its right to reimbursement of defense costs where there was no duty to defend under the known injury rule (the inception date of the policy was after the insured received a demand letter), and because trademark infringement claims were excluded under the policy language. While it is typically wise to tender a trademark infringement complaint to determine if there is coverage, a thin rationale for coverage subject to a reservation of rights may permit the insurer to seek reimbursement of defense costs.
2. In an interesting decision from the Ninth Circuit, the Court considered post-trial motions on a number of issues including a jury’s award of $5 million in punitive damages where the jury did not award any actual damages. The interesting issue here is that the jury did not award actual damages because it did not find that the infringement was willful. Under then-prevailing Ninth Circuit law, willfulness was required for an award of damages. In this new decision, the Ninth Circuit acknowledged that the recent Romag Fasteners v. Fossil decision by the Supreme Court (which held that willfulness is not a requirement for an award of damages) overruled prior Ninth Circuit precedent. As such, the Ninth Circuit remanded the case to determine if disgorgement of profits is available absent willfulness, including to support the punitive damages award. This decision delineates the Ninth Circuit’s stance on Romag v. Fossil, and may open a door for challenge where recent jury verdicts denied a damages award because of a lack of willful infringement under prior Ninth Circuit law.
3. The Ninth Circuit Court of Appeals reversed the dismissal of a complaint for failure to plead a copyright infringement claim. While substantial similarity based on the “extrinsic test” can be considered on a motion to dismiss, the Ninth Circuit reversed here because there was enough potential similarity in non-generic elements of a screenplay that dismissal at the pleading stage was improper. In addition, the Ninth Circuit reaffirmed its rejection of the inverse ratio rule (i.e., the more similarity, the less access needed to show infringement, or vice-versa) from the Led Zeppelin case. The takeaway here is that to make it more likely to overcome a motion to dismiss in a copyright infringement case, one should plead several instances of substantial similarity in original, non-generic elements of the copyrighted work.
