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Obama administration proposes stricter IP laws

April 7, 2011 by · Comments Off
Filed under: Internet 

by Justine A. di Giovanni

In a March, 2011 white paper, the Obama Administration proposed changes to existing law that would enact harsher penalties for copyright infringement, as well as for pharmaceutical drug counterfeiting.  Though the regulations increase the penalties for copyright infringement across the board, the most interesting and controversial aspects of the recommendations are those which apply to internet intellectual property law and the methods law enforcement may use to unearth intellectual property crimes.

The Administration recommends that the law be clarified to state that, “in appropriate circumstances,” unauthorized live streaming of intellectual property should be recognized as a felony.  In addition, the Administration suggests that law enforcement should be given the authority to request a wire tap in cases of suspected criminal trademark and copyright infringements.  These new regulations strongly tighten the existing noose of the law around the necks of intellectual property criminals.  The serious tone struck by the administration is emphasized by the wire tapping recommendation, which, before this point, was a procedure only deemed appropriate in the investigation of a specific set of serious crimes.  Many individuals are concerned that such regulations have a high potential for governmental abuse, but intellectual property right-holders see the recommendations as increasing protection for their valuable assets.

Other recommendations outlined in the paper relating to intellectual property law include:

  • increasing  the statutory maximum for “economic espionage” from 15 years in prison to at least 20.  Numerous other property offenses have higher statutory maximums: mail fraud is punishable by up to 20 years in prison, bank fraud 30, smuggling goods 20 and counterfeiting currency 20.  These are all tangible property crimes, however, not intellectual.  Upping the maximum to 20 will make “economic espionage” via intellectual property crime a more serious offense (base offense level 7 versus level 6).
    • increasing the U.S. Sentencing Guideline range to include harsher punishments for:
      • the theft of trade secrets, including those transferred or attempted to be transferred outside of the U.S.
      • trademark and copyright offenses when infringing products are knowingly sold for use in national defense, national security, critical infrastructure, or by law enforcement
      • intellectual property offenses committed by organized criminal enterprises/gangs or that risk death or serious bodily injury
      • those offenses involving counterfeit drugs (even when those offenses do not present risk of bodily harm)
      • repeat intellectual property offenders
  • authorizing the Department of Homeland Security (DHS) and its component U.S. Customs and Border Protection to share pre-seizure information about products and devices with right holders to help DHS to determine whether the products are infringing or the devices are circumvention devices; and
  • creating a right of public performance for copyright owners for sound recordings transmitted by over-the-air broadcast stations which will allow copyright owners to obtain overseas royalties that are currently denied to them.

You can find the PDF text of the full white paper here: http://www.whitehouse.gov/sites/default/files/ip_white_paper.pdf

Calculating Damages for Copyright Infringement

November 5, 2010 by · Comments Off
Filed under: Copyright Articles, law 

Calculating potential damages for copyright infringement is critical in determining your legal strategy.  The analysis is the same regardless of whether you’re the one suing (the copyright owner/plaintiff), or the one being sued (the infringer/defendant).

The first question to ask is: ‘Has the infringed work been registered with the copyright office?’  The answer to this question will have a large impact on damages.  All creative works are automatically protected by copyright law (check out this page for a background on copyright law), but registered works are afforded much greater protection.  Copyright registration records are held in a free online database that you can access from the Copyright Office website.

There are 2 types of damages for copyright infringement: Statutory Damages and Actual Damages.  For a copyrighted work that has been registered prior to infringement the plaintiff may choose to claim Statutory Damages or Actual Damages (in addition to claiming for attorney’s fees).  A plaintiff who is claiming infringement for an unregistered work may only make a claim for Actual Damages.

Statutory Damages

The vast majority of plaintiffs in copyright infringement cases will choose to pursue Statutory Damages (if they can) because they are easier to calculate and will often be higher than Actual Damages.  Illegal file sharing cases, for example, will choose Statutory Damages because while their Actual Damages may be around $1 per illegally copied song, they are entitled to much higher damages through the use of Statutory Damages.  (This case awarded the RIAA $9,250 for each song, while this case awarded $22,500 for each song.)
Statutory Damages get their name because the amount of damages is set by law, regardless of the actual damages suffered by the plaintiff (17 USC § 504).  They usually range from $750-$30,000 per infringement, though awards can go as low as $200 per infringement for ‘innocent infringers’ and up to $150,000 per infringement when the court determines that the defendant acted ‘willfully’.  The court may not award damages outside of this range.
While a plaintiff will always ask for the maximum amount of damages, it is at the court’s discretion how much to award within the defined damages range.  Some factors the courts consider are:

1.      The purpose of the infringing use.  (e.g. – were you selling bootleg CDs on the street, or did you copy a CD for your Mom?)

2.      The value of the work that was infringed.  (e.g. – was it a $1 song or a $5,000 computer program?)

3.      The infringer’s state of mind or intent.  (e.g. – did you download a picture off the web unaware that it constituted copyright infringement, or did you know it was illegal and decided to copy it anyway?)

Statutory Damages are a powerful tool for the plaintiff in copyright litigation and infringers of registered copyrights should beware.

Plaintiffs for copyright infringement of registered copyrights are also allowed to ask the court for attorney’s fees (17 USC § 505).  If awarded, the defendant will owe all or part of the plaintiff’s legal fees, in addition to the fees for the defendant’s own lawyer.  When litigation costs can run upwards of tens of thousands of dollars this is another big stick that the plaintiff can hold over the defendant’s head.  While the awarding of attorney’s fees is at the courts discretion, the plaintiff of an unregistered copyright is never allowed to ask for attorney’s fees (17 USC § 412).

Actual Damages

This is the type of damages pursued by people who have had their work infringed, but didn’t have their work registered prior to the infringement (and in rare cases a registered copyright holder may also select to pursue Actual Damages over Statutory Damages).

Actual Damages is the quantifiable monetary loss the plaintiff has suffered, or the profit the infringer has gained, from infringing your copyrights.

There are 2 general ways courts determine Actual Damages.  One method involves seeing what the plaintiff’s average income from their copyrighted work was before (and after) the infringement and compare it to the income from when their work was being infringed.  The difference is the Actual Damages.  This method is useful when there are extensive financial records backing up average sales and clear evidence that the dip in sales was due to the infringing activity.

The other method looks at how many instances of infringement took place and awards damages based on what the copyright owner would have received had she sold or licensed the work instead of having it stolen.  This method is easier to use when the plaintiff does not have extensive sales records, because the only numbers that need to be determined are the number of infringements and the value of the work.  This still may be difficult, however, because of the problems associated with pricing a work if it has not been commercially sold (e.g. – a piece of original art from an artist’s private collection).

What makes claiming Actual Damages more difficult, however, is that the plaintiff must prove to the court that their amount for Actual Damages is accurate.  The plaintiff will likely have to have a forensic accountant testify as their expert witness, and often the opposing party will have their own forensic accountant testify that the damages are lower than the plaintiff claims.  To reach these conclusions the forensic accountants and the opposing party will take an in-depth look into the plaintiff’s financial records and many records may become a part of the public record.  It is possible to have the plaintiff’s financial records kept private from the general public (if the court is convinced there is good cause to do so), but the plaintiff will have no choice in turning over financial records to the opposing party.  As all of this arguing in court over damages takes more time, it will also result in increased legal fees (not to mention the fees for your expert witnesses).  As litigation costs are so high and there is no option to recover attorney’s fees, often a claim that would have been pursued if Statutory Damages were available will not be pursued if all the plaintiff is entitled to is Actual Damages.

The more documentation the plaintiff has for showing lost profits the stronger the case becomes. Historical sales records are very important for showing expected sales. As you can only claim lost profits (not revenue), you are going to have to be able to document the average profit you receive the sale of your work. While the plaintiff is going to claim that lost sales are the result of the infringing activity, the defendant is going to do their best to show other factors that caused the reduced profits.  Any documentation that was done in the normal course of business will carry more weight than documents generated specifically for the infringement claim.

Conclusion

The vast majority of copyright cases will never get to trial.  Many will never even leave the pre-litigation stages before there is a settlement.  With the large costs of litigation many clients will choose to settle before their legal fees grow too large.

So why does it matter how damages will be assessed in court?  It’s because the parties will always be assessing the strength of their own and their opponent’s case.  If the plaintiff can claim a large amount in damages, then the plaintiff is in a more powerful position for negotiating a settlement.

Doing a proper analysis of potential damages from copyright infringement will allow you to get a better understanding of your case’s strength, which plays an integral role in determining a legal strategy.

While this article will hopefully give you a basic understanding of calculating damages for copyright infringement, there is much more involved when determining a person’s rights or liability under copyright law.  If you feel that your work is being infringed, or you have been contacted for infringing another’s work, it is strongly recommended that you contact a lawyer.  The individual specifics of every case play a role in determining your best legal actions, and a lawyer will be able to help you determine your best course of action based on your unique circumstance.

Architectural Copyrights – When a building is more than the sum of its parts.

November 5, 2010 by · Comments Off
Filed under: Architecture, Copyright Articles, law 

A half-built house standing on a lot indefinitely is sometimes a result of bankruptcy, or shady contractors.  Sometimes, however, the unfinished house stands as a monument to a fundamental misunderstanding of architectural copyright law.  A thorough background in architectural copyrights is essential for prospective home owners, builders, realtors, and architects to ensure that their efforts and money don’t result in house that they can’t finish and can’t sell.

The typical example is when a family hires a contractor to build them a home.  The contractor shows them some plans and the couple picks the design they want for their house.  Half way through construction the couple fires the original contractor and hires a new contractor to finish the work.  Before the house is completed the couple finds themselves in court where a judge has just ordered them to cease all construction on the house.  Why can’t the house be completed?  Because while the couple owns all the wood and steel and glass that has gone into their house, they failed to ensure that they owned the design, as well.

In 1990 the US Congress passed The Architectural Works Copyright Protection Act which explicitly granted copyright protection for the architectural design of buildings.  Architectural works, however, have a few specific limitations.  First, registration is limited solely to “buildings”, and explicitly excludes “bridges, cloverleafs, dams, walkways, tents, recreational vehicles, mobile homes, and boats” in 37 C.F.R. 202.11.  Also excluded from registration are common design elements such as the standard placement of doors and windows.  Another exception peculiar to architectural works is that pictorial representations (photographs, paintings, etc.) of a building do not constitute infringement.

Generally, when an architect sells a design for a building they are actually only selling a license, while they maintain the copyright to the work.  Licensing agreements can be very complicated an great care should be taken in crafting the agreement to ensure that everyone understands and is satisfied with what they are receiving.  For a one-time home buyer a license to build a single home may be sufficient.  A construction company may want a license for them to build as many houses as they like.  They may want an exclusivity clause ensuring the architect can’t sell the design to a competitor.  They may want to buy the right to display the plans in advertising, a use that would not be granted in a simple agreement to simply build houses.  Another option might be to buy all rights from the architect, rather than simply a license.

A lawyer is essential for creating a well-crafted, custom tailored license agreement, and can be extremely helpful in explaining what the various provisions mean.  While a license agreement between the parties without the help of a lawyer is binding, it can often result in unforeseen consequences should problems arise down the road.  A good lawyer will ensure that the licensing agreement will predict all eventualities.

The couple in the example above cannot finish their house because the design for the house is owned by the contractor.  Even if the couple were to throw away the blue-prints and draw up new plans themselves it will likely constitute infringement.  Courts will infer there was copying if the old and new plans are substantially similar and the person that drafted the new plans had access to the old plans.  So what options does the couple have for finishing their house?  They can negotiate a license agreement with the old contractor, they can redesign the house to purposefully not look similar to the old design, or they can hire a new architect to design the unfinished sections of the house without him ever seeing the original plans.  All of these measures could have been avoided, however, if more care was taken when drafting the license agreement for the architectural work.

Antonio Vann joins Williamsburg, VA intellectual property law firm

August 17, 2010 by · Comments Off
Filed under: Business, Press release 

WILLIAMSBURG, VA        The law firm of Bambi Faivre Walters, PC hires Antonio G. Vann to join its Williamsburg, Virginia, legal team.  Vann focuses his practice on trademark, unfair competition, and copyright law as well as business and commercial transaction law.  He offers services to assist with protecting, commercializing, and enforcing intellectual property assets.

In this Internet era, Vann understands the value of protecting and rewarding creative works as well as balancing economic and business interests.  He counsels clients on the role of intellectual property in market recognition as well as managing and leveraging these assets.  Vann’s legal background lends expertise and strengthens the firm’s copyright, trademark, trade secret and complex business litigation practice areas.

Vann received his B.A. in political science from Hampton University and attended The John Marshall Law School in Chicago, IL, receiving his J.D. with specific instruction in the area of intellectual property law.  Prior to receiving his law degree, he worked for several large law firms in the Washington, DC area.  Vann has over eight years of experience in the area of trademarks and copyrights and has worked with businesses, individuals, federal government, and others.

Antonio Vann is admitted to the Virginia State Bar (VSB No. 79765).  He is a member of several professional organizations including the American Intellectual Property Law Association (AIPLA) and the Virginia State Bar Intellectual Property Law Section.

Mr. Vann is a Virginia native, born and raised in the Hampton Roads area.  He is a graduate of Maury High School and remains active with the Boys & Girls Clubs of Southeast Virginia.  If your organization is interested in discussing intellectual property or complex business issues, please feel free to contact the firm at 888-388-9614.

BUSTED….or NOT. Copyright and Trademark Infringement Claims against Online Auction Sellers

Online auction giant eBay has recently faced a number of copyright and trademark infringement claims both internationally and domestically. Well-known brands such as LOUIS VUITTON and CARTIER have charged that eBay is liable for secondary copyright or trademark infringement due to eBay’s users selling infringing goods on their website. However, despite the expanding number of cases and the similarity in evidence presented, these cases have yet to demonstrate a strong trend in policy towards the liability of online auction sites in their users’ infringement activities. Whether or not online auction sites are found liable appears to hinge on if the site can prove that it has taken sufficient measures to prevent and discourage infringing activities on its website. The ambiguous definition of “sufficient” leaves the central question to the judge’s discretion: Who is ultimately responsible for actively policing copyright and trademark infringement—the brand or the auction site?

Recent eBay cases in Europe and the United States demonstrate the difficulties presented in these claims.

eBay vs. Moet Hennessy Louis Vuitton (MHLV)

The case between online auction site eBay and the French luxury brand MOET HENNESSY LOUIS VUITTON has been a headliner in the French courts for the past five years. MHLV originally sued eBay over counterfeit MHLV goods being sold on the auction site, alleging that eBay was partially liable for its users’ infringement. The French judge sided with MHLV and required eBay to pay damages to the company. In January 2007, after being sued for a second time by the luxury brand, eBay upped its infringement prevention practices. From this point on, sellers in select categories, such as luxury goods and clothing, were limited to the number of items they could sell and were no longer allowed to use the one-day auction option popular with counterfeiters. The site also introduced restrictions based on the sellers’ locations, banning sellers in Hong Kong and mainland China (locations hosting the greatest number of infringers on the eBay site) from selling such items at all. In addition, some listings were delayed from being posted on the eBay site to give eBay employees time to review the items. As a result of these measures, eBay claims that 95% of infringing goods are now removed from the site before the auction ends.

In 2008, however, eBay got sued once again by the French brand, and was ordered to pay $60.8 million dollars to the French brand. Citing its increased prevention and policing measures, eBay appealed the French court decision. Yet again, the French court sided with the MHLV. Though the amount was decreased, MHLV has continued to fight, slapping eBay with several more lawsuits in the past two years, most of which end up requiring eBay to pay. It seems that on France’s end at least, eBay is considered liable for its users’ infringing actions despite the measures it takes to prevent infringement.

eBay vs. Tiffany & Co.

TIFFANY & CO. also got in on the action in a Manhattan court, charging eBay with secondary trademark infringement and alleging that 75% of the 325 advertised TIFFANY items that the company bought on eBay since 2004 as part of an infringement prevention program were counterfeit. TIFFANY claimed that eBay’s failure to stop the sale of counterfeit goods on its website made it liable for trademark dilution, false advertising, and unfair competition.

This time, however, the judge was on eBay’s side. Judge Richard Sullivan asserted that the responsibility for policing its goods fell to TIFANNY & CO., not to eBay, and that the luxury brand had failed to prove that eBay was liable for the infringement.

Unlike the French judges, the Manhattan court found that the online auction site could not be held responsible for the infringement activities of its users.

eBay Sellers Charged with Infringement

In addition to the company itself facing charges of infringement, the law has cracked down on individual sellers that sell illegal goods online. In 2004, CARTIER INTERNATIONAL and MONTBLANC-SIMPLO filed complaints about two eBay vendors—Marina’s Boutique Store and Verona Eyewear—in a California court. The two companies sought damages for trademark infringement, trademark dilution, and false advertising.

Another individual seller from Portland, Oregon was sentenced to four years in federal prison after he ran a counterfeit software operation through eBay. He pleaded guilty to copyright infringement, mail fraud, and identity threat after he used hundreds of stolen identities to conceal his own. He will also serve three years probation and community service after he is released, and forfeit the $220,000 in income he made selling the infringing software.

Whereas eBay’s liability in these cases remains unclear, the law has set a firm precedent in terms of individual infringers, doling out significant jail terms and financial penalties.