Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

My latest IP for Your Business column, published in the Southeast Texas Record, and its sister publications the West Virginia Record and the Madison (Illinois) Record, focused upon protecting your company from the often overlooked danger of copyright infringement.  With the Record's permission I am reposting the article on the Blog.  Click here to read the column at the Record.  And if you are an executive or in-house counsel that is reading this and wondering how to protect your company from copyright infringement issues, the article provides a framework for doing just that:

You likely spend significant resources making sure you do not infringe your competitors' patents, trademarks and copyrights. No legitimate business would intentionally copy its competitor's manuals, or confidential business plans.

But despite that, many businesses are unknowingly infringing a wide range of copyrights each week as a part of their employees' normal corporate activities.

A media relations associate may photocopy news articles about the company or its competitors and distribute them to key executives who require the information. Another may add key articles to board books in preparation for a board of directors meeting.

A sales director may make a company-focused parody of a popular song to rally the sales force and boost sales. Or an engineer may copy a chapter or two of a useful engineering text.

In each of these cases, if you asked, the employee would be surprised to learn they were infringing a copyright.

But it is not just the infringement; they are also exposing themselves and the business to significant liability. And your employees would be shocked to learn that no matter how slight the infringement, the maximum statutory damages for infringing a single copyrighted work is $150,000. That's $150,000 for copying a single article.

Even more shocking to most people is that forwarding a newspaper article via the Internet for business purposes is also generally an act of copyright infringement.

It is easy to imagine the all-too-common scenario. You, as your company's president or general counsel, receive a letter demanding that the company cease and desist its infringement, in this case the alleged forwarding of an e-mail newsletter for which the company had only purchased a single use license.

After some digging, you learn that the forwarding was done by Jim in sales, at the direction of his immediate supervisor Sue.

Both Jim and Sue are floored. All they did was forward copies of an e-mail newsletter that they had legitimately purchased, and that their entire team needed.

Unfortunately, neither Jim nor Sue appreciated that forwarding the publication was only allowed if they purchased a group license.

Because they had forwarded one copy a week for 20 weeks, the company's potential infringement was $150,000/weekly copy or $3 million.

Most of all, the entire incident could have been avoided if the company had implemented a copyright compliance program. When I put on copyright compliance programs for clients, they are routinely amazed at how inexpensively and quickly we are able to both fix current issues like these and prevent future problems before they happen.

While you should consult a qualified lawyer to make sure your copyright compliance program is comprehensive and correct, here are the basic steps that are required:

1. Audit copyright use & policies

Start by auditing your corporate use of copyrighted materials.

Depending upon your company's size, you can do one company-wide audit or do audits by division or product line. Consider how you internally and externally use third party publications like trade magazines and newspapers.

Are you routinely photocopying copyrighted material to distribution lists? Do you pdf and forward copyrighted materials?

Do you have a corporate policy in the employee handbook explaining how you expect employees to handle copyrighted materials? If you do, when was the last time you reminded your employees of it?

Do you have reminders posted at copy machines and pdf stations?

Also, look at how your employees use the Internet. Forwarding links is generally fine, but copying and pasting Internet content can get you in trouble.

2. Educate

Once you have a realistic understanding of your corporate copyright use and any areas of concern, you need to educate your employees about copyrights.

In my experience, a presentation made directly to your employees in small groups of no more than 20 is exceptionally effective.

By laying out the copyright laws and the consequences of breaking them for the employees themselves and the company, you will accomplish two things: 1) you quickly stop some unintentional copyright infringement; and 2) copyright issues that you may not have identified in your audit rise to the surface.

It is critical that as part of your employee education you give employees a way to raise private questions about potential copyright issues.

When I give copyright compliance seminars, I have found that one series of 90 minute client-to-employee presentations can lead to two to three days of identifying and resolving potential copyright issues with the employees. But it is three days that can remove millions of dollars in future corporate liability.

3. Ask permission

Ask permission. This is the simplest step of a copyright compliance program and perhaps the least followed. When you need to use copyrighted material, ask permission first.

If you ask the copyright holder for permission to use, forward or reprint their material they often agree. More often than not they are so happy that their content is useful to you that there will be only a moderate charge or none at all.

The simple act of seeking permission will significantly reduce your copyright risk footprint.

4. Consider a Copyright Clearance Center License

If you find that your business requires employees to internally copy, distribute or forward copyrighted content like newspaper and magazine articles or textbooks, consider a Copyright Clearance Center ("CCC") license.

The CCC was created by a group of copyright holders to license "incidental" use of their copyrighted content.

Those copyright holders that join the CCC are paid a portion of license fees from the CCC licenses. In return, the licensees are free - depending on the particular license chosen - to copy and forward content that is part of the CCC.

The license is priced based upon the size of your organization and gives access to a significant amount of copyrighted content.

5. Rinse, lather & repeat

Finally, do not just set up your copyright compliance program and forget it. Continue to watch for copyright issues. Make sure to continue employee education.

At least every year, remind employees of your corporate copyright policy by memo or e-mail. Offer all new employees your copyright compliance program, as well as offering a periodic refresher for current employees. Post reminders of your copyright policy at copy machines and pdf stations where accidental infringements can be prevented.

The more you incorporate copyright compliance into the fabric of your company, the safer the company will be from the expensive threat of copyright infringement.

R. David Donoghue is an intellectual property litigation partner with Holland & Knight LLP in Chicago. He can be reached at (312)578-6553 or david.donoghue@hklaw.com.
 

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The 2010 Chicago IP Colloquium concludes next Tuesday, April 27, 2010.  The Chicago IP Colloquium is jointly sponsored by Chicago-Kent College of Law and Loyola University Chicago School of Law  to discuss a range of issues in intellectual property and cyberspace law based upon papers by six nationally renowned intellectual property scholars.  The sessions are uniformly excellent, and well worth your time.  The last session will be Tuesday, April 27 from 4:10 pm to 5:50 pm at Loyola, 1 E. Pearson, Maguire Hall, Room 260, Professor Wendy J. Gordon, Boston University School of Law, will present her paper: A Tale of Two Torts: Negligence and Copyright Infringement.

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A few weeks ago, I discussed how the Northern District of Illinois had become the false patent marking capitol of the world (okay, the United States) and how the Local Patent Rules may be playing into it. But Congress may be stepping in to limit false patent marking suits – click here for a Patent Docs post showing that similar amendments have been introduced in both the House and the Senate patent reform bills. The current versions of the amendments would require that false patent making plaintiffs have suffered competitive injury. And most significantly, the amendments would apply the standing requirement to both pending and future false patent marking cases. If passed and signed into law, these amendments would effectively end the vast majority of the 100+ false patent marking cases filed this year, including more than 50 filed in the Northern District of Illinois.

The Public Patent Foundation – a false patent marking plaintiff itself – has come out in opposition to the amendments. Presumably, most industry segments support the competitive injury requirement which still gives the false patent marking statute plenty of teeth.

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Ho v. Taflove, No. 07 C 4305, Slip Op. (N.D. Ill. Jan. 15, 2010 (Bucklo, J.). 

Judge Bucklo granted defendants' motion for summary judgment in this copyright and Lanham Act case involving the alleged infringement and misappropriation of plaintiffs, a Northwestern professor and a Northwestern graduate student, mathematical model of a 4-level z-electron atomic model with Pauli Exclusion Principle for simulating the electron dynamics of active media using Finite Difference Domain method (the "Model"). 

Copyright Claims

Plaintiffs copyrighted their thesis, notebooks, certain figures and a presentation, all embodying the Model. The Court held that the Model was uncopyrightable because it was fact and algorithm. The Court explained why the Model was a fact as opposed to a cartoon character like Mickey Mouse, as defendants argued:

But Mickey Mouse is not an idea, procedure, process, system, method of operation, concept, principle, or discovery, and his characteristics and personality are not intended to realistically mimic those of a real mouse (e.g., wears clothes, owns a dog, has jobs, etc.)  Simply put, Mickey Mouse does not have plaintiffs' merger doctrine or 17 U.S.C. §102(b) problems.

To the extent the Model was copyrightable based upon "unique considerations" underlying the Model, plaintiffs did not identify the considerations or support them with evidence. And the two copyrighted charts consisted of unprotectable elements such as lines, arrows and parabolas.   Additionally, Northwestern described the figures as "fairly conventional diagramatic representations."

Lanham Act Claims

Citing the Supreme Court's Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 123 S.Ct. 2041 (2003), decision, the Court held that the defendants were correct in identifying themselves as the originator of their papers, even if plaintiff originated the Model underlying the papers. The proper designation of origin is the producer of the work, not the author of the underlying idea. Because defendants prepared the papers, they were correctly identified. And the Court held that plaintiffs' common law unfair competition claim failed for the same reasons.

Conversion Claim

The Court granted summary judgment in defendants' favor as to plaintiffs' conversion claim because plaintiffs presented no evidence that defendants prevented plaintiffs access to their written works or to their intangible property – the Model or their research. Plaintiffs remained able at all times to continue their research.

Trade Secret & State Law Claims

The Court held that the Model was not a trade secret because plaintiffs published it in 2001 and 2002. The plaintiffs' remaining state law claims were also preempted by the Copyright Act.

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LegalMetric Research has been running an interesting series of reports on nationwide patent litigation statistics by district. And in each case, the Northern District remains among the top patent district courts. 2009 was the rare year that the Northern District slipped out of the top five districts in terms of filings, but it only fell to sixth. And the combination of the new Local Patent Rules and the false marking cases will change that significantly for 2010 (more on both of those issues in the next few weeks). Here are the top ten districts by the number of patent suits filed in 2009:

1. C.D. California

2. E.D. Texas

3. D. Delaware

4. N.D. California

5. D. New Jersey

6. N.D. Illinois

7. S.D. New York

8. S.D. California

9. D. Massachusetts

10. E.D. Virginia

The Northern District is also one of six districts that produce half of all claim construction decisions. Not surprisingly, the Eastern District of Texas, the Northern District of California and the District of Delaware produce the most, with the Northern District of Illinois, the Southern District of New York and the Central District of California filling out the six. And these six districts also issue 43% of all reexam stays.

Finally, Judge Pallmeyer is the lone Northern District of Illinois on the list of top 30 patent judges by the number of 2009 patent cases assigned to them. Pallmeyer came in at number 23. The top five spots were held by Eastern District of Texas and District of Delaware. It is not surprising to see only a single Northern District judge on this list because the bench is relatively large, in particular compared to some of the other top patent districts like the Eastern District of Texas and the District of Delaware. But more Northern District judges will likely be in the top 30 next year because of increased filings through the first quarter, as well as the fifty or so false patent marking suits filed in the Northern District beyond the usual patent cases.

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President Obama announced a couple of nominations this week impacting the Northern District of Illinois and the national patent bar.

First, President Obama appointed WilmerHale partner Edward DuMont to the Federal Circuit.  DuMont clerked for the Seventh Circuit's Judge Posner and was an Assistant to the Solicitor General where he briefed and argued Supreme Court cases.  DuMont currently has an appellate practice with a considerable focus on patent and intellectual property issues (click here for DuMont's firm bio).  DuMont also spent a year working for a law firm in Bangkok, Thailand.  DuMont's Supreme Court and varied appellate experience make him a very interesting choice to take Judge Michel's place on the Federal Circuit bench.

Second, President Obama has nominated the Northern District's Deputy U.S. Marshall Senior Inspector Darryl McPherson to become the Northern District's next U.S. Marshall.  McPherson has served as a Deputy U.S. Marshall since 1999 and won a Special Recognition award for his service as lead Deputy Marshall for Judge Lefkow. 

Both nomination must be confirmed by a vote of the U.S. Senate. 

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The Seventh Circuit's Electronic Discovery Committee is offering what appears to be an excellent CLE program, with one hour of Illinois credit, discussing when and how lawyers should communicate with their clients about e-discovery issues.  Click here to register for the April 28, 2010 noon CT webinar.  Here is the Committee's description of the program:

“You and Your Clients: Communicating About E-Discovery, How to Talk to Your Clients about E-Discovery and the Application of the Seventh Circuit E-Discovery Principles” should not be missed. It will provide an in-depth discussion regarding the following topics:

• When should communications regarding ESI begin with your client;
  
• What are the categories of discoverable ESI you need to discuss;
  
• How do you help your client assess where discoverable ESI might be stored;
  
• What steps should be taken to preserve relevant ESI;          
  
• When (and if) backup tapes should be considered an ESI source that needs to be preserved/disclosed/produced;
  
• How vendors can be used effectively in the collection/processing/production of ESI;
  
• Practical approaches for the production of ESI; and
  
• When to use and how to select an electronic discovery liaison.

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The annual Chicago IP Colloquium continues next Tuesday, April 12, 2010.  The Chicago IP Colloquium is jointly sponsored by Chicago-Kent College of Law and Loyola University Chicago School of Law  to discuss a range of issues in intellectual property and cyberspace law based upon papers by six nationally renowned intellectual property scholars.  The sessions are uniformly excellent, and well worth your time.  The next session will be Tuesday, April 12 from 4:10 pm to 5:50 pm at Chicago-Kent College of Law, Room 305, Professor Gregory N. Mandel, Temple University, will present his paper: Competing Conceptions of Creativity in Intellectual Property Law.

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The Northern District and the Federal Bar Association are seeking nominations for excellence in pro bono and public interest work. Nominations should be based upon work performed in civil cases before the Northern District which are no longer pending. Nominations should include:  the name and address of the nominee; a brief resume; the complete case title; case number and judge for each case; the work done by the nominee on the cases; and the brief summary of the reasons you believe the nominees pro bono work has been outstanding. 

Send nominations via email by next Wednesday, April 14 to ProBono2010_ILND@ilnd.uscourts.gov.  Contact the Chambers of Chief Judge James F. Holderman with any questions.

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Bergstrom v. Glacier Bay, Inc., No. 08 C 50078, Slip Op. (N.D. Ill. Jan. 22, 2010) (Mahoney, Mag. J.).

Judge Mahoney granted in part the parties' cross-motions regarding production of defendant Glacier Bay's source code, and denied Glacier Bay's other discovery motions. Plaintiff Bergstrom sought production of the source code as an OCR'ed tiff document, consistent with other production in the case. Glacier Bay offered to provide supervised access to the code for an expert and one lawyer on a laptop during business hours. The Court held that Glacier Bay's proposal was unnecessarily restrictive. It would have been unnecessarily burdensome to only allow Bergstrom's expert access to the 23,500 pages of source code on only a laptop, and to only allow screenshots of selected portions of the code. The Court, therefore, ordered production of the source code in the case-standard OCR'ed tiff format. 

The Court also denied Glacier Bay's request to prevent anyone involved in prosecuting Bergstrom's patents from viewing the source code. The Court held such a blanket ban was unnecessary, but did exclude one attorney that had both prosecution and litigation duties for Bergstrom from viewing the software.

The Court also denied Glacier Bay's motion to compel documents related to a failed settlement discussion between Bergstrom and a third party. The Court reasoned that while Fed. R. Evid. 408 was not an evidentiary rule, the spirit of Fed. R. Evid. 408 – protecting and promoting open settlement talks – counseled against production of the requested documents.

Finally, the Court denied Glacier Bay's motion to compel answers to requests for admissions regarding whether Bergstrom provided certain alleged prior art to its patent prosecution counsel. Compelling those answers would have potentially compelled Bergstrom to breach its attorney-client privilege with patent prosecution counsel.

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ImageCube LLC v. The Boeing Co., No. 04 C 7587, Slip Op. ( N.D. Ill. Jan. 22, 2010) (Dow, J.).

Judge Dow entered a final judgment as to defendant Boeing in this patent case and stayed the remaining claims pending a Federal Circuit appeal of the claim construction and summary judgment of Boeing's final judgment. The parties all agreed that the Court's claim construction and partial summary judgment ended the case as to Boeing. What was left of the case was the remaining defendants' affirmative defenses and noninfringement, invalidity and unenforceability counterclaims. "Mere defenses" are not sufficient to avoid a Fed. R. Civ. P. 54(b) final judgment. Once one defense is decided for defendant, additional defenses need not necessarily be considered. And the remaining counterclaims would all benefit, should they be tried upon remand, from the Federal Circuit's claim construction decision. An immediate appeal might also hasten resolution of the entire case. Plaintiff acknowledged that it was unlikely to pursue its claims if the Federal Circuit upheld the Court's claim construction.

Finally, the Court noted that defendants, over plaintiff's objections, sought and got the schedule they wanted addressing limited issues before full discovery. Defendants cannot, therefore, "complain too loudly" about seeking more definitive resolution of limited issues before turning to the remainder of the case.

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