Posts Tagged: "first sale doctrine"

Upcycled Goods: Considering When Restoration Crosses into Infringement

Two recent decisions dealing with high-end watches illustrate the fine line between permissible and infringing modifications when the final product bears a trademark of the original maker. As the trend of “upcycling” or “creative reuse” continues to grow, entrepreneurs should be aware of the potential pitfalls in modifying the products of others. Generally, the first sale or “exhaustion” doctrine protects a reseller of authentic goods from infringement liability—but only when the goods have not been materially altered in any manner and meet the trademark owner’s quality standards. There are, however, some circumstances where courts have found certain modifications to be permissible.

State Compulsory eBook and Audiobook Licensing Is Wrong on Law and Policy

The ability of copyright owners to experiment with different marketing strategies is fundamental to copyright law. Indeed, the U.S. Copyright Act promotes the public good by granting exclusive rights to copyright owners that incentivize the creation and dissemination of new works on their own terms. These exclusive rights are the reason why copyright owners invest time, energy, and money into creating new works, and why they have a chance to recoup expenses and perhaps make a profit. The Copyright Act has always celebrated the right and ability of copyright owners to choose whether, how, when, and where their works are distributed to the public. And under our dual system of government, where federal law reigns supreme, it is well-settled that the states are powerless to interfere in ways that conflict with the nationwide scheme established by Congress. Nevertheless, there is an alarming new trend of states pursuing laws that would force publishers, many of whom are also authors, to grant licenses to public libraries for access to their digital works, such as eBooks and audiobooks.

Satan Shoes: Trademark Blasphemy or Free Speech?

Though the parties have quickly settled their case, the question remains open: was Lil Nas X’s “Satan Shoe” an exercise of free speech or a trademark violation? What we do know is that sneaker giant Nike’s complaint filed in the Eastern District of New York on March 29, 2021 alleged a dispute of biblical proportions against Brooklyn art collective MSCHF Product Studio, Inc. Nike targeted its own Air Max 97 shoe, which it claimed MSCHF and its collaborator Lil Nas X (who was not named in the lawsuit) materially altered to feature an upside down cross, a pentagram, and an injection of human blood into the sole to create the “Satan Shoe” – 666 of them to be exact. The Satan Shoe still displays Nike’s famous Swoosh, which inspired calls to boycott the brand for its alleged association with the controversial shoes. Nike asserted claims of trademark infringement, trademark dilution, false designation of origin, and unfair competition, and sought a temporary restraining order, a permanent injunction, and damages.

Capitol Records v. ReDigi: No Fair Use or Lawful Resale of Music Files Under First Sale Doctrine

The Court of Appeals for the Second Circuit recently issued a decision in Capitol Records, LLC v. ReDigi Inc. affirming a previous finding out of the Southern District of New York that ReDigi’s digital music file reselling platform infringed upon the plaintiffs’ copyright to the music files being resold. The Second Circuit panel upheld the lower court’s decision over ReDigi’s arguments that its platform enabled the lawful resale of digital music files under the first sale doctrine.

Digital Resale & Copyrights: Why the Second Circuit Won’t Buy It

In 2011, ReDigi Inc. introduced technology that effectively attempted to establish a secondary market for “used” digital music files, where owners who had legally downloaded music files from iTunes could sell the music that they no longer wanted.  In a nutshell, the system allowed the owner of a digital file to transfer the music to ReDigi’s cloud storage locker, from which ReDigi could then sell it to a willing buyer for a lower price than the cost of an “original” purchase from the iTunes Store.  When a sale was made, Redigi would retain 60% of the sales price, while the seller and artist got 20% each. Although the process of transferring a file from an owner’s personal computer to ReDigi required that it be reproduced on ReDigi’s server, the system removed the file from the owner’s personal computer as the file was moved.  Capitol Records, the copyright owner of many music files sold over the ReDigi system, sued ReDigi for copyright infringement, alleging that the company reproduced and distributed its copyrighted works without permission.

Patent Exhaustion at the Supreme Court: Industry Reaction to Impression Products v. Lexmark

Bob Stoll: ”And it is the international exhaustion holding that is particularly troubling. Sales abroad act independently from the US patent system and there is no impact from the US patent system on those sales. Yet in this decision, the Supreme Court says that the foreign sale now diminishes patent rights in the US. All sorts of goods, including life-saving pharmaceuticals, are sold at lower prices in poor nations. This decision will encourage powerful foreign groups to gather products up and send them back to the US to get the higher prices. Or, companies will not be able to lower prices and sell their products in those countries. Both the poor in distant lands and the innovators in the US will suffer.”

Supreme Court rules Lexmark sales exhausted patent rights domestically and internationally

The Supreme Court determined that when a patent owner sells a product the sale exhausted patent rights in the item being sold regardless of any restrictions the patentee attempts to impose on the location of the sale. In other words, a sale of a patented product exhausts all rights — both domestic and international… Notably, the Supreme Court rejected the Government’s international exhaustion compromise, which would have been to recognize that a foreign sale exhausts patent rights unless those rights are expressly reserved. The Supreme Court found this to be nothing more than public policy, focusing on the expectations between buyer and seller rather than on the transfer of patent rights as required by the patent exhaustion doctrine.

Trader Joe’s and Extraterritorial Application of the Lanham Act

Trader Joe’s sued Hallatt (d/b/a Pirate Joe’s) for trademark infringement in the Western District of Washington, invoking the court’s federal question and supplemental jurisdiction. Trader Joe’s alleged that: (1) Hallatt misled consumers into falsely believing Pirate Joe’s was authorized or approved by Trader Joe’s; (2) utilized a confusingly similar “South Pacific” trade dress for his Pirate Joe’s store; (3) displayed Trader Joe’s trademarks in connection with the sale of products at Pirate Joe’s; and (4) resold Trader Joe’s products without authorization and without adherence to Trader Joe’s’ strict quality control practices. Trader Joe’s claimed Hallatt’s behavior diluted its trademarks, confused consumers, and damaged Trader Joe’s reputation by associating it with high price, lower quality products. Trader Joe’s sought damages and to permanently enjoin Hallatt from reselling its goods or using its trademarks in Canada.

What is a patent and where do patent rights come from?

A patent is a proprietary right granted by the Federal government pursuant to laws passed by Congress. The Congressional power to authorize patents is found in Article I, Section 8, Clause 8, of the United States Constitution. exclusive rights are provided for a limited time as an incentive to inventors, entrepreneurs and corporations to engage in research and development, to spend the time, energy and capital resources necessary to create useful inventions; which will hopefully have a positive effect on society through the introduction of new products and processes of manufacture into the economy, including life saving treatments and cures. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974).

Commerce Recommends Amendments to Copyright Act Statutory Damages Provisions

Earlier today the U.S. Department of Commerce issued a report titled White Paper on Remixes, First Sale, and Statutory Damages, which recommends amendments to U.S. copyright law that would provide more guidance and greater flexibility to courts in awarding statutory damages. However, the Task Force has found insufficient evidence to show that there is a change in circumstance in the markets or technology that requires action on amending the first sale doctrine.

Refocusing Kirtsaeng Analysis on Extra-Territoriality Principles

The parties and amici have filed over 25 briefs in this case, almost none of which address or even consider whether the actual right granted under Section 109(a)—to “sell or otherwise dispose of” copies—applies outside the United States; instead, they have focused almost exclusively on Section 109(a)’s “lawfully made under this title” preamble, resulting in unsatisfactory readings of the Copyright Act as a whole. As the American Intellectual Property Law Association has urged the Supreme Court in its amicus filing, applying long-standing extra-territoriality principles to the actual right created by Section 109(a) handily harmonizes both Sections 109(a) and 602(a)(1). It also avoids damage to the rest of the Act caused by undue emphasis on the prefatory “lawfully made under this title” language.

Copyright Issues on the Legislative Agenda for 2012-2013

Though they are unlikely to take center stage during the truncated session before elections or the post-election lame duck session, lawmakers will have to contend with several key copyright issues during the 113th Congress. Thus, no matter who wins on November 6, IP leaders in the House and Senate are likely to use the remainder of this calendar year to set the stage for next year’s copyright agenda. The priority copyright issues for the remainder of 2012 and 2013 are: (1) Anti Piracy Initiatives; (2) Internet Issues; (3) International Agreements; (4) Music Licensing; (5) Book Licensing; and (6) TV Broadcast Issues. Each is discussed more fully below.

Digital Music Reseller Partners with Apple iTunes and Artists

Those who have followed the digital music wars over the years no doubt recall the battles between the Recording Industry and various MP3 file sharing websites. Through the haze of these legal battles Apple started its iTunes® service as a legitimate and licensed service that offered a mechanism to purchase one song at a time for a reasonable price and without the fear of unknowingly downloading a virus and without the fear of being a copyright infringer that might one day be sued as an example. A deal between ReDigi and Apple should solve one potential problem for ReDigi, namely whether the resale of songs purchased from iTunes is legal. It would seem that Apple must be OK with the ReDigi platform, perhaps paving the way for the entire ReDigi business model to solidify as a legitimate offering.

Costco Prevails in First Sale Case Thanks to Copyright Misuse

On November 9, 2011, the United States District Court for the Eastern District of California, per Senior Judge Terry J. Hatter, Jr., granted Costco a summary judgment victory due to the fact that Omega engaged in copyright misuse. Yes, the plot thickened. The district court originally granted summary judgment to Costco on the basis of the first sale doctrine, which was overturned by the Ninth Circuit and then affirmed by the Supreme Court in the tie decision, or non-decision of December 2010. That meant that the case would proceed because the first sale doctrine summary judgment victory was erased. But not so fast! Judge Hatter had other ideas!

Apple to Patent Troll: Back Off Apple App Developers

Earlier today Apple, Inc. (NASDAQ: AAPL) poked a finger straight in the chest of alleged patent troll Lodsys, LLC, saying in no unmistakable terms — back off Apple App developers! For several weeks Lodsys has been sending threatening letters to Apple App developers and Apple has had enough and isn’t going to take it any more!