October 2015

Managing Partner Daniel M. Cislo named 2015 Trusted Advisor in the San Fernando Valley Business Journal

The San Fernando Valley Business Journal has named Managing Partner Daniel M. Cislo as a 2015 Trusted Advisor.  Award winners were announced at an award reception held by the San Fernando Valley Business Journal on August 13, 2015.

This award recognizes attorneys and other business professionals in the greater San Fernando Valley region for their ongoing efforts as outstanding business advisors.  Cislo & Thomas LLP congratulates Managing Partner Daniel M. Cislo for another well-deserved accomplishment.

United State Patent and Trademark Office Offers a Portal for IP-related Information for Startups

As stated on the United States Patent and Trademark Office (“USPTO”) website, many startups are facing IP-related challenges, such as receiving patent or trademark cease-and-desist letters or having IP portfolio requirements to secure funding.

The USPTO has accumulated resources for startups in particular that goes over patents and trademarks, scam prevention, and possible pro-bono opportunities. The portal is a part of the USPTO’s Startup Partnership Initiative—putting key resources and critical information for startups in a single place in order to help bolster more innovative startups in the United States.

Bikram Yoga Poses and Its Series of 26 Yoga Poses are Not Copyrightable Expressions Under Ninth Circuit Decision

The Ninth Circuit held in Bikram’s Yoga College of India, L.P. v. Evolation Yoga, LLC that a particular series of 26 poses of “hot yoga” practices is not copyrightable in light of Section 102(b) of the Copyright Act.

Bikram Choudhury, a well-known yoga practitioner, wrote Bikram’s Beginning Yoga Class in 1978 that focused on a series of 26 yoga postures done in a particular sequence, named the “Bikram Yoga System” that was to be done with two breathing exercises, a rote dialogue delivered by a yoga instructor, and in a 105° Fahrenheit environment.

He created yoga franchises to train new yoga teachers, including Mark Drost and Zefea Samson who subsequently started Evolation Yoga that had an almost identical copy of the Bikram yoga program.  In July 2011, Choudhury’s training school brought suit against Drost, Samson, and Evolation, alleging various IP and contractual claims, with only copyright issues at the Ninth Circuit.

The Ninth Circuit sided with Evolation Yoga and relied on the U.S. Supreme Court case Baker v. Selden, 101 U.S. 99 (1879), stating that the sequence of poses is an unprotectable idea.  The court focused on copyright only being accessible as protection over expression rather than functionality, which was what the 26 yoga postures was intended for—increased health benefits.

The Ninth Circuit also considered if the individual poses were copyrightable as compilations of public domain elements or under choreographic works. However, the Ninth Circuit denied both possibilities, focusing on the core limitation of copyright, being that the 26 poses themselves as well as their compilation were functional rather than expressive.

This case is a reminder that the concept of copyright focuses on expression and expressive intent as opposed to functionality.

EMI’s Copyright Rights in “Santa Claus is Coming to Town” Terminates in December 2016 Under Second Circuit Ruling

In Baldwin v. EMI Feist Catalog, Inc., the Second Circuit ruled that EMI’s rights to the song “Santa Claus is Coming to Town” will terminate, and the song’s copyright will return to the heirs of John Frederick Coots, the original author, in December 2016.

Coots wrote the song in 1934 and made a deal with Leo Feist who ran a publishing company that was eventually acquired by EMI.  In 1951, the Coots family and EMI’s predecessors made a renewal agreement, which was then followed by another $100K agreement in 1981 that allowed the publisher to continue use of the song.

However, Coots never recorded the termination of the 1951 agreement and based on that fact, the district court sided with EMI that the Coots family lost its right to terminate.  The Second Circuit reversed the district court’s decision and ruled that even though some of the required formalities were not fulfilled, the “1981 Agreement made it sufficiently clear that the parties intended to replace the earlier contract.”

Under the 1976 Copyright Act, songwriters have a right to terminate their publishing contracts after 35 years; meaning that in 2017, Coots’ heirs may utilize its termination rights to terminate its publishing contract with EMI.

Thomas K. Landry, an attorney for the heirs, stated that the decision was “a milestone in the development of this increasingly important area of copyright law.”

Another Aircraft Seating Arrangement Patent Application Filed

airIt seems like there has been an increasing effort by large corporations to file dystopic aircraft seating arrangements.  This time, Airbus has “preserved the innovation and idea” for a half-leveled tier arrangement that seems to be just as uncomfortable as it looks.

Airbus files hundreds to thousands of patents each year and this particular one caught more attention than the rest. To ease the public, an Airbus spokesperson stated that “[t]his does not mean [it is] necessarily going to be adopted into an aircraft design.”

Airbus wrote in its patent application that “[i]n modern means of transport, in particular in aircraft, it is very important from an economic point of view to make optimum use of the available space in a passenger cabin.”

However, when it comes to the term “optimum,” potential passengers would probably disagree with that word choice.

Jay Z and Timbaland’s “Big Pimpin’” Copyright Infringement Case Dismissed

jzOn October 21, 2015, Judge Christina A. Snyder of the U.S. District Court for the Central District of California dismissed the copyright infringement suit against Jay Z and Timbaland. Judge Snyder stated that Plaintiff Osama Fahmy, the nephew of the Egyptian composer Baligh Hamdi, lacked standing to sue over allegations that Jay Z and Timbaland illegally used a flute sample of his uncle’s “Khosara, Khosara” for their song “Big Pimpin’.”

In March, the court held that a jury should decide if Jay Z had the right to the flute sample in the Egyptian song.  Hamdi’s heirs argued that Jay Z and Timbaland violated Hamdi’s rights based on moral rights per Egyptian law when they failed to ask Hamdi’s family for permission to use the flute sample.

However, after hearing testimonies of Egyptian law experts during the weeklong trial, Judge Snyder discharged the eight-person jury and stated that she was convinced that the rapper and producer had a valid license to use Hamdi’s song.

Egyptian experts for both parties acknowledged that moral rights were permanent, inalienable rights a creator possessed to protest any modification considered to be a “distortion or mutilation” of his or her original work.  The question for Judge Snyder to decide was whether or not Egyptian moral rights would apply.

Robert Jacobs, a partner at Manatt, Phelps & Phillips stated, “The judge’s decision, which is still forthcoming, will clarify this further, but from what I’m understanding went on, the judge came to understand that the claim was not a traditional copyright infringement claim, but was a moral rights claim, and under U.S. law, [such claims] are limited. … It doesn’t apply to music.”

Further Jacobs said an appeal “could be groundbreaking. I don’t believe there are any court of appeals decisions addressing this. … I think it will be helpful for all of us who practice in infringement, and in the music infringement area in particular, to get clarification from the [U.S.] 9th Circuit Court of Appeals on this.”

Start-up NASA Initiative Opens Patent Portfolio to Start-ups with No Up-Front Payment

nasaIn an effort to generate more revenue while encouraging innovation, NASA’s Technology Transfer Program has initiated a new service that has little to do with its well-known ventures of space exploration.

Addressing two common issues that start-ups face, NASA start-up initiative will help raise capital and secure intellectual property rights for those that are interested in using one of the more than 1,200-patented NASA technologies for new products and services.  NASA’s patented technologies range from materials and coatings to sensors, aeronautics technologies, instrumentation and more.

On the Start-Up License Request form, a start-up would state the technology and patents it plans on licensing, the proposed technology use, and plans for development and marketing along with projections of expenses and income.

NASA pledges to waive at least the first three years of a company’s product development cost and once the product or service is brought to market, NASA will collect a “standard net royalty fee” without impedance to the inventors’ rights to their invention.

“The start-up NASA initiative leverages the results of our cutting-edge research and development so entrepreneurs can take that research — and some risks — to create new products and new services,” said David Miller, NASA’s chief technologist.

NASA also set a couple of guidelines for start-up companies to adhere in order to obtain a license to their patented technology.

Apple Ordered to Pay $234 Million for Infringing University of Wisconsin’s Patent

Earlier this month, a federal jury in Wisconsin held that the Wisconsin Alumni Research Foundation (WARF) patent, which improves processor efficiency, was valid and that Apple’s microchip technology in its A7, A8 and A8X processors, found in the iPhone 5s, 6 and 6 Plus, as well as several versions of the iPad, infringed WARF’s patent.

After the liability stage, Apple was facing as much as $862 million in damages. U.S. District Judge William Conley, who presided over the case, scheduled the trial to proceed in three phases: liability, damages, and finally, whether Apple infringed the patent willfully, which could lead to enhanced penalties.

For the damages stage, the jury ordered that Apple Inc. pay $234 million, with much of the dispute focused on whether a certain portion of Apple’s chips that were placed in devices sold abroad, rather than in the United States, also violated the WARF patent—the jury found that it did. For the last stage of the trial, Conley held that there was no finding of willful infringement, eliminating the possibility to triple the damages.

In 2008, WARF used the patent to sue Intel Corp., which was subsequently settled. WARF also recently launched a second lawsuit against Apple, targeting the company’s newest chips, the A9 and A9X, used in the just-released iPhone 6S and 6S Plus, as well as the iPad Pro.

Expectedly, Apple stated that it would appeal.

Michelle K. Lee, Director of the United States Patent and Trademark Office Delivers Speech About the Impact of 3D Printing

Director Michelle K. Lee of the United States Patent and Trademark Office (“USPTO”) gave a speech at Microsoft Tech Lab, stating that 3D printing has been a “subject of keen interest to [her], as well as Commerce Secretary Pritzker and President Obama.” Her speech focused on the role 3D printing plays in shaping the future of patents and innovation.

She shared a video about 3D printing (https://www.youtube.com/watch?v=nWXhLUic9IE) that was developed in collaboration with the National Science Foundation and NBC Learn.  Lee mentioned another innovator in the field named Charles Hull. He created the stereolithography, the first commercial rapid prototyping technology now known as 3D printing.  He was inducted into the National Inventors Hall of Fame Museum, created by the USPTO, and one of his earliest 3D printers, the SLA-1, is on display at the entrance to the museum.

Lee stated that the “USPTO has received about 1,700 applications per year over the last five years in the field of additive material technologies; and in hundreds of different patent classification areas, due to the varying types of end products that can be manufactured with this technology.”

Lee is hopeful that with the formation of an Additive Manufacturing Partnership, members of industry and academia can come to the USPTO to share their experiences and insights with 3D printing, and to provide the patent examiners technical training on the latest state of the art.

Google Books Service Protected By Fair Use Under Second Circuit

The US Court of Appeals for the Second Circuit has affirmed a New York court judgement and ruled that Google Books’ service is protected by fair use, as its snippet function is a “transformative use” and therefore not an infringement of copyright.

The court stated that the Google Books Library Project has indexed more than 20 million books since its creation in 2004. Users can search for books and look at portions of the text through Google’s snippet function.

The Authors Guild brought a case arguing that the snippet function infringed its members’ copyright and deprived authors of potential revenue from other sources online.

However, the Second Circuit stated that “[t]he purpose of the copying is highly transformative, the public display of text is limited, and the revelations do not provide a significant market substitute for the protected aspects of the originals.”

Additionally, with this decision, the Second Circuit has added “search” to the list of uses that qualify as a fair use defense to claims of copyright infringement.  This means that protected material that results from searches using Google, Bing and other search engines will have a viable defense to a claim of infringement by the search engines.

Supreme Court Will Review Federal Circuit Willfulness Standard

On October 19, 2015, the Supreme Court granted petitions for writs of certiorari in two cases: Stryker Corp. v. Zimmer, U.S., No. 14-1520, and Halo Electronics, Inc. v. Pulse Electronics, Inc., U.S., No. 14-1513. The Court has agreed to decide whether the Federal Circuit standard for enhancing damages for willful infringement must be overturned in light of the Court’s decision to overturn the Federal Circuit standard for awarding attorneys’ fees.

In Octane Fitness, LLC v. Icon Health Fitness, Inc., 134 S. Ct. 1749, 1758 (2014), the Supreme Court lowered the evidentiary standard applicable to proving an “exceptional” case under 35 U.S.C. § 285 to a preponderance of the evidence, instead of the clear and convincing standard that the Federal Circuit previously required.  Also, the Supreme Court rejected the Federal Circuit’s test for when a case was “exceptional” and required that there is a totality of the circumstances analysis rather than a two. Id. at 1756-58.  Lastly, in Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1749 (2014), the Supreme Court held that awards of attorney fees should be reviewed on appeal for an abuse of discretion, overturning the Federal Circuit’s previous application of de novo review.

In light of the aforementioned three issues, the Court granted review of the first question in Halo, which states as follows: 1. Whether the Federal Circuit erred by applying a rigid two-part test for enhancing patent infringement damages under 35 U.S.C. § 284 that is the same as the rigid two-part test this Court rejected last term in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) for imposing attorney fees under the similarly-worded 35 U.S.C. § 285.

The Court also granted review of both questions presented in Stryker, which state as follows:

1. Has the Federal Circuit improperly abrogated the plain meaning of 35 U.S.C. § 284 by forbidding any award of enhanced damages unless there is a finding of willfulness under a rigid, two-part test, when this Court recently rejected an analogous framework imposed on 35 U.S.C. § 285, the statute providing for attorneys’ fee awards in exceptional cases?

2. Does a district court have discretion under 35 U.S.C. § 284 to award enhanced damages where an infringer intentionally copied a direct competitor’s patented invention, knew the invention was covered by multiple patents, and made no attempt to avoid infringing the patents on that invention?

In the concurrence opinion for Halo, Judge O’Malley joined by Judge Hughes wrote separately to note that “it is time for the full court to reevaluate our standard for the imposition of enhanced damages in light of” OctaneHighmark, and “the terms of the governing statutory provision 35 U.S.C. § 284 (2012).”  The concurrence also noted that the Seagate test is analogous to the test the court prescribed for awards of attorney fees under § 285 that was overruled by Octane.

The Supreme Court’s grant of certiorari in the Stryker and Halo case suggests that in light of Octane and Highmark, enhancement of patent infringement damages may experience a shift in its standards—to what degree remains to be seen.