Weekly IP Takeaways

Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.

New York, New York …

1. In a noteworthy bit of case law that has recently appeared, several prominent district courts have held that in-line linking (or embedded linking) can constitute copyright infringement, specifically the Southern District of New York and Northern District of California have so held. In-line linking is where the code for a web page points to the source of the image, video, or content and instructs a browser to retrieve the source image, video, or content. Previously, in 2007, at least in the context of search engines, the Ninth Circuit in the Perfect 10 v. Amazon case held that in-line linking did not constitute copyright infringement. While this issue is going to need to be fleshed out with more court decisions, including at the appellate level, it does raise concerns about limiting the very free sharing of information on the internet (because of copyright infringement concerns) versus a broad reading of the Perfect 10 beyond the realm of search engines to limit liability for copyright infringement in connection with in-line linking. This is an issue into which virtually any website owner that might use in-line linking should consider to ensure they are not committing copyright infringement.

2. In an insurance coverage decision by the Second Circuit Court of Appeals, the Court affirmed a denial of a duty to defend where the underlying case did not include a claim for intellectual property (IP) infringement, but alleged intellectual property infringement in the context of an unfair competition claim. These allegations brought the matter within the scope of the IP exclusions in the applicable policy, and thus, coverage was properly denied, according to the Court. The takeaway here, and it is a significant one, is that business owners in IP-intensive industries, or industries in which trademark and copyright rights are valuable, should consider making sure that their commercial general liability insurance policies include advertising injury coverage and limited exclusions for IP violations.

3. In a recent decision from the Southern District of New York, a motion to dismiss a copyright infringement claim was granted because the subject matter of the registered copyright was determined to be non-copyrightable. The subject matter of the copyright was a control panel design for a clothing dryer. Even with a prima facie presumption of copyright validity because the copyright was registered within five (5) years of first publication of the design, the Court found that the control panel was a non-copyrightable, utilitarian article because it was “not capable of existing independently of the utilitarian aspects of the CloseDrier because the control panel itself is a utilitarian aspect of the CloseDrier.” In other words, the separable item itself cannot be utilitarian or something that is normally part of a useful article. This latter portion (“something that is normally part of a useful article”) is a bit troubling, as it would seem to allow separable design elements to be deemed uncopyrightable because they are part of a useful article. This would turn separability law on its head to some degree. I hope this is appealed to the Second Circuit.