Intellectual Property News - OSBA | Ohio State Bar … Resources/pubs/Section...Intellectual Property News “ “ 4 To deliberately avoid knowledge, one must be subjectively aware

Intellectual Property News

On April 5, 2012, in what is certain to be an often quoted opin-ion—the arrival of which has had content creators and Internet service providers alike holding their breath—the U.S. Court of Appeals for the Second Circuit issued its much-anticipated deci-sion inViacom Int’l, Inc. v. YouTube, Inc.1 The appeal was taken from two cases consolidated before District Court Judge Louis L. Stanton in the Southern District of New York who, in June 2010, granted summary judgment in favor of the defendants YouTube, Inc., YouTube, LLC, and YouTube’s parent company, Google, Inc.2 A total of 28 amicus briefs were filed by key industry play-ers3—12 on behalf of the plaintiffs, 13 for the defendants, and three neutrals.

Fourteen years after the Digital Millennium Copyright Act was in-stalled, courts continue to strive to define the contours of its safe harbor provisions. The DMCA was enacted in part to enhance the protection of copyrighted works on the Internet and to provide

online businesses with a greater sense of predictability in their risks and liabilities with respect to copyright infringement claims stemming from online ventures.4 One of the tools created by the DMCA resides in Article II5 and creates a “safe harbor” from monetary remedies stemming from copyright infringement claims. In a well-written opinion, the appellate court shed significant light on the operation of various clauses present in the DMCA safe harbor provisions, and particularly the safe harbor found in §512(c).

Activities eligible for the safe harborFor a party to claim the benefits of a DMCA safe harbor, it must first show that it is a qualified “service provider” that performs at least one of four distinct activities: “transitory digital network communications,” “system caching,” “information residing on sys-tems or networks at direction of users” and “information location tools.”6 Service providers conducting transitory digital network

How safe is the harbor? The impact of the YouTube decision on safe harbor protections

Published by the Ohio State Bar Association Intellectual Property News

Summer 2012

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Annette Shaff / Shutterstock.com



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communication activities must offer “the transmission, routing or providing of connections for digital online communica-tions, between or among points specified by a user, of material of the user’s choos-ing, without modification to the content of the material as sent or received.”7 For the remaining three safe harbors, a service provider must be “a provider of online services or network access, or the operator of facilities therefore.”8

Thus, to be eligible for safe harbor protec-tion a party must show that it is a qualified service provider under subsection (k)(1), and that the infringing activity for which it is accused is an activity delineated in subsections (a)-(d).9 While these two steps were not addressed in this specific order in either the district court or appellate court opinions, it is clear that both courts agreed: the online services provided by YouTube qualified it as a “service provid-er” under subsection (k)(1)(B).10

The next step was to determine whether YouTube satisfied the requirements for a particular safe harbor. In this case, sub-section (c) was at issue.11 Section 512(c) “covers infringement claims that arise ‘by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.’”12 The court’s decision addressed four distinct YouTube software functions on which the plaintiffs’ copyright infringement claims were based: video conversion, video playback, the “related videos function” and third-party video syndication.13 The district court had held that all four functions fell within the subsection (c) safe harbor.14

Addressing and elaborating on the inter-play between the definitions in §512(k)(1) and the language of §512(c)(1), the court of appeals affirmed the district court’s holding as to the first, second and third software functions and remanded

for further consideration with respect to the fourth software function.15 The court noted that the narrower definition of a service provider contained in §512(k)(1)(A)—online services providing transitory communication or “conduit” functions—was limited to transmission services “with-out modification to the content of the material.”16 The court reasoned that absent an equally limiting provision in §512(k)(1)(B) pertain-ing to service providers asserting safe har-bor protection under subsection (c), such as YouTube, the safe harbor contained in §512(c) was “clearly meant to cover more than mere electronic storage lockers.”17

Software functions that are made avail-able to “facilitat[e] access to user-stored material” fall within the §512(c) safe harbor.18 The first two software func-tions addressed—conversion and play-back—were found meet this standard.19 Video conversion occurs when the video is uploaded to YouTube’s servers by a user and is performed to ensure that it is viewable over the Internet to most users in a standardized video format.20 Video playback likewise involves copying video to a user’s machine for caching and playback at the request of the user.21 The appellate court held that both functions facilitate access to user-stored material and affirmed the district court with respect to its finding that these software functions fell within the ambit of the safe harbor.22

The appellate court also found the third software function by which YouTube auto-matically identifies and displays thumbnails of videos related to the video selected by a viewer to be protected by the safe harbor.23 The plaintiffs argued that the function was more correctly classified as the “promo-tion” of the material rather than creating access thereto.24 The court dismissed this argument and turned again to the purpose and nature of YouTube’s provision of these services, explaining that the function “retain[s] a sufficient causal link to the pri-

or storage of those videos”25 by assisting users to “locate and gain access to material stored at the direction of other users.”26 It also noted that the software function was “fully automated and operates solely in response to user input without the active involvement of YouTube employees.”27 Finally, the court endorsed the Central District of California’s view by quoting UMG Recordings, Inc. v. Veoh Networks, Inc.28 as support for its holding that the related videos function falls within the safe har-bor. The UMG opinion required that, for a software function to fall within the safe harbor, it must (1) be “closely related to, and follow from, the storage itself;” and (2) “be narrowly directed toward providing access to material stored at the direction of users.”29 The appellate court concluded from its analysis that the related videos function met those two elements and consequently was an act protected by the safe harbor.30

The final software function—third party syndication—involved the conversion and licensing of videos to Verizon Wire-less and other companies.31 The plaintiffs argued that “business transactions” such as this did not occur at the direction of the user.32 However, none of the clips that were the subject of the suit were among those provided to Verizon.33 To avoid rendering an advisory opinion, the ap-pellate court remanded the issue to the district court to determine whether any of the clips-in-suit were ever licensed to other third parties.34

The opinion thus stands for the view that basic, automated35 manipulation and de-livery of user-submitted materials, so long as they are carried out with the goal of facilitating access to user-stored material, are acceptable acts encompassed by the DMCA safe harbor. The purpose of the actions taken by the service provider that would subject them to infringement liabil-ity if not for the safe harbor seems to be


Please accept this invitation to join your colleagues in the ac-tive improvement of state and federal intellectual property law. Through our Ohio State Bar Association Legislative Liaison and Board of Governors, the OSBA Intellectual Property Sec-tion promotes the enactment of sensible statutes governing our practice area, while opposing legislation that confuses or confounds the system.

Through the OSBA, we have a voice in such matters. Our sec-tion is active, and welcomes all practitioners and students to share information and ideas and to enjoy the comradeship of your fellow practitioners. As stated recently by immediate past

IP section chair Beth Ferrier, “Without my involvement in the OSBA (IP Section), I would likely never have met my active col-leagues, or had the opportunity to work closely with them” on the improvement of intellectual property law.

With thanks to Beth for her strong leadership, we invite you to join with us, share your ideas and experience, and enjoy one another’s company. Please join us at our next meeting at OSBA Headquarters in Columbus or by conference call on Saturday, Sept. 15, at 10 a.m. ◆

By Mike Stith, chair of the OSBA Intellectual Property Section.

Message from the chair

Get involved

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of primary importance. For practitioners with clients offering software functions that can be performed on user-provided digital information potentially subject to copyright claims, care should be taken to ensure that such functions are being of-fered predominantly for the purpose of facilitating access to the information and that the purpose can be clearly articulated.

Knowledge and awarenessPerhaps the most important guidance handed down by the appellate court in this case relates to additional prerequisites to safe harbor protection that are found in §512(c)(1)(A)36 and (C).37 These provi-sions outline three circumstances that, if shown, trigger an obligation of the service provider to expeditiously remove or dis-able access to the infringing material.38 A service provider’s failure to act accordingly in those circumstances operates to dis-qualify them from the statutory limitation on liability.39

The three conditions that will trigger the expeditious removal obligation of a service provider are actual knowledge of infringing material, awareness of facts or circumstances that make infringing activity apparent and the receipt of a statutory takedown notice.40 As YouTube was not accused of failing to expeditiously remove infringing material in response to properly issued takedown notices, the district court had addressed only the first two condi-tions and held that “the phrases ‘actual knowledge that the material or an activity’ is infringing, and ‘facts or circumstances’ indicating infringing activity, describe knowledge of specific and identifiable infringements of particular items.”41 The appellate court considered “the most important issue on appeal” as “whether the DMCA safe harbor at issue requires ‘actual knowledge’ or ‘awareness’ of facts or circumstances indicating ‘specific and identifiable infringements.’”42

The circuit court found that the lower court correctly held that §512(c)(1)(A) requires knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement, but ultimately remanded the case for further consideration after reviewing the record on appeal.43 In reaching this conclusion, it relied largely on statutory construction prin-ciples.44 The first indication that “specific and identifiable instances of infringement” is required was found by construing subsec-tion (c)(1)(A)(iii), which requires a service provider having knowledge or awareness to expeditiously remove access to the infring-ing material.45 The court reasoned that the obligation to remove must by definition be predicated on having specific knowledge or awareness because a service provider cannot disable access to “the material” if it is not specifically identified.46



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To deliberately avoid knowledge, one must be subjectively aware of facts or circumstances that would necessitate the deliberate avoidance.

Next, the contours of the “red flag” provi-sion in subsection (c)(1)(A)(ii) were given clarity. The “red flag” provision triggers the removal obligation when the service provider becomes “aware of facts or cir-cumstances from which infringing activity is apparent.”47 The plaintiffs argued that the court’s holding made this provision superfluous, as an awareness of specific and identifiable instances of infringement would simultaneously satisfy the actual knowledge provision.48 Dismissing this argument, the court found that “actual knowledge” is used to denote subjec-tive belief, while the “awareness of facts or circumstances” denotes an objective belief.49 Thus, “[t]he difference between actual and red flag knowledge is thus not between specific and generalized knowl-edge, but instead between a subjective and an objective standard.”50 Both provisions ask whether the knowledge or awareness was of specific and identifiable instances of infringement.

The court again reinforced its holding by citing to an agreeable interpretation in the Veoh line of cases—this time an appellate decision from the Ninth Circuit.51 It cited the opinion favorably in support of a stat-utory construction that does not place the burden of determining whether materials are infringing on the service provider.52 It concluded the analysis by collecting cases whose holdings were in concurrence with this view.53

While the court’s opinion with regard to the “red flag” provision is in accord with the majority view developing around the DMCA safe harbor provisions, this opinion provides solid reasoning and a well-written analysis of the issue. Using its holding, the court next considered the lower court’s grant of summary judgment given the record before it and remanded for further development.54

The record contained evidence that both internal and external reports known to company leaders indicated that a signifi-cant portion of the material accessible via YouTube’s services was unauthorized content subject to copyright protection.55 The lower court had even found that a jury could find that YouTube was gener-ally aware of, and welcomed, infringing material placed on their website.56 This knowledge by itself, however, was held insufficient to create a triable issue of fact with respect to specific instances of infringement.57

The decision to order remand was driven mainly by internal YouTube communica-tions that the court viewed as sufficient to lead a reasonable juror to conclude that YouTube had actual knowledge or aware-ness of specific infringing activity.58 In a footnote, the court pointed out that it ex-pressed no opinion as to whether YouTube could succeed on a renewed motion for summary judgment. It pointed to defi-ciencies in the record that, if remedied by YouTube, may lead to summary judgment being rendered in their favor on remand.60

Willful blindnessThe plaintiffs’ most arguably successful argument requested the application of the common law “willful blindness” doc-trine61 in the analysis of whether YouTube had knowledge or awareness of specific instances of infringing activity. The willful blindness doctrine will apply only if the statute does not abrogate the common

law principle by “speak[ing] directly to the question addressed by the common law.”62 The court considered subsection (m) to be the most relevant provision, which exempts service providers from monitor-ing or affirmatively seeking facts indicating infringing activity as a precondition to safe harbor protection.63 Finding that subsec-tion (m) abrogates “the broad common law duty to monitor … based on general awareness that infringement may be occur-ring,” the court concluded that the willful blindness doctrine was limited by subsec-tion (m), but not abrogated. The court remanded to the lower court with instruc-tions to consider “whether the defendants made a ‘deliberate effort to avoid guilty knowledge.’”64

The court’s opinion does not elaborate or speculate as to specific fact patterns that would meet a “limited” willful blindness doctrine. There seems to be room be-tween, on one hand, seeking out infringing activity by investigating the copyright pro-tection in a user-submitted video and, on the other hand, a service provider’s subjec-tive knowledge that a particular video is infringing. The latter meets the knowledge element of subsection (c)(1)(A)(i) while the former is clearly not demanded of service providers by the DMCA.

Subsection (c)(1)(A)(ii) (the awareness provision), however, requires a finding that the service provider “was subjectively aware of facts that would have made the specific infringement objectively obvi-ous to a reasonable person.” It is hard to imagine circumstances in which a service provider makes a deliberate effort to avoid guilty knowledge without being subjec-tively aware of facts that make infringe-ment objectively obvious. That is to say, to deliberately avoid knowledge, one must be subjectively aware of facts or circumstanc-es that would necessitate the deliberate avoidance. Thus, the willful blindness doc-


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trine would be encompassed by subsection (ii). Unfortunately, the court did not go into further detail and further clarity may have to await a possible renewed summary judgment motion in the district court.

Right and ability to control infringing activityThe final issue addressed by the appellate court was whether YouTube received “a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.”65 A positive finding under that subsection would remove You-Tube’s safe harbor protection. The lower court had given short shrift to the issue, holding that YouTube did not have the right and ability to control because that required having knowledge of specific instances of infringement, which of course the court had already ruled was not present.66

Here, the court disagreed with the Ninth Circuit and reasoned that importing the specific knowledge of infringing activ-ity requirement into the “right and ability to control” requirement would make the subsection superfluous.67 In other words, the need to analyze whether the defen-dants had control and received a financial benefit would be duplicative, because the item-specific knowledge and failure to re-move requirements will have already been met; subsection (B) would not exclude any additional service providers beyond those excluded from safe harbor protections by subsection (A).

The plaintiffs argued that the provision codified the common law doctrine of vicarious copyright liability, but the court did not find merit in the proposition. The common law doctrine equated “the ability to block an infringers’ access to a particu-lar environment for any reason whatsoever [to] the right and ability to supervise.”68 Such a reading is internally inconsistent

with the requirement that a service pro-vider disable access to infringing material when gaining knowledge or awareness of the infringing activity; a service provider would be disqualified from safe harbor protection by meeting a requirement for that very same protection.69 Thus, the court concluded, the right and ability to control requires “something more” than the ability to disable access to infring-ing materials.70

The court cited two cases for examples of when that “something more” might be present. In Perfect 10, Inc. v. Cybernet Ventures, Inc.,71 the California district court found control by a service provider that was very involved in its users’ activities by instructing them as to layout, appear-ance, and content.72 The service provider restricted certain types of content, which the appellate court found instructive.73 Whether prohibiting broad categories of content (such as, for example, porno-graphic videos generally) rises to the level of control remains to be seen.

The court cited Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.74 for the proposi-

tion that conduct that can be classified as copyright inducement and that rests on “‘purposeful, culpable expression and con-duct’ might also rise to the level of control under §512(c)(1)(B).”75 With that, the court remanded to the district court to recon-sider the issue given its holding.76 This holding may stand for the prospect that the right and ability to control should be premised on clear encouragement of users to post infringing materials, or a direct involvement in content screening. An analysis of the latter circumstance may be akin to analyzing government speech restrictions to determine whether they are content neutral. Again the court presented practitioners with clear articulations of what the right and ability to control is not, without explicitly stating what it is.

Ensuring protectionsThe Second Circuit’s opinion addresses several key elements of the DMCA’s safe harbor provisions. For some, it gives clear guidance in its interpretation. For others, it provides further clarity without defini-tive guidance. Overall, practitioners should address any activities taken by their clients with respect to the manipulation of user-


submitted digital works and compare thoseactivities with the opinion to ensure that safe harbor protections are not lost. ◆

By Matthew J. Schonauer, an attorney with Okuley Smith LLC in Columbus.

Endnotes

1 676 F.3d 19 (2d Cir. 2012). 2 Viacom Int’l, Inc. v. YouTube, Inc., 718 F.Supp.2d 514

(S.D.N.Y. 2010).3 Friends of the court briefs were filed by, inter alia:

the National Football League, Broadcast Music, Inc., CBS Corp., Microsoft Corp., the Motion Pic-ture Association of America, eBay Inc., Facebook, Inc., Yahoo! Inc., the Electronic Frontier Founda-tion, and the American Intellectual Property Law Association. Viacom, 676 F.3d at 23-25.

4 S. Rep. No. 105-190, at 8, 19 (1998). 5 Article II is separately titled the “Online Copyright

Infringement Liability Limitation Act.” Viacom, 676 F.3d at 27.

6 17 U.S.C. § 512(a)-(d), (k). 7 17 U.S.C. § 512(k)(1)(A). 8 17 U.S.C. § 512(k)(1)(B). This definition of a ser-

vice provider can also encompass those providing transitory digital network communication services. Id.

9 Matthew Schonauer, Let the Babies Dance: Strengthening Fair Use and Stifling Abuse in DMCA Notice and Takedown Procedures, 7 ISJLP 135, 139 (2011). Note that activities falling under subsection (g) may also qualify for safe harbor protection, but are not germane to this discussion. Id.

10 Viacom, 676 F.3d at 27, 38-39 and Viacom, 718 F.Supp.2d at 526-527.

11 Viacom, 676 F.3d at 27. 12 Id. (quoting 17 U.S.C. § 512(c)(1)).13 Viacom, 676 F.3d at 39.14 Id. at 38.15 Id. at 38-39.16 Id. at 39 (quoting 17 U.S.C. § 512(k)(1)(A)) (em-

phasis in original). 17 Id. (quoting UMG Recordings, Inc. v. Veoh Networks,

Inc., 620 F.Supp.2d 1081, 1088 (C.D. Cal. 2008)). 18 Id. at 39 (quoting Veoh, 620 F.Supp.2d at 1088). 19 Id. at 39. 20 Id.21 Id. 22 Id.23 Id. at 39-40. 24 Id. at 39.

25 Id. at 40. 26 Id 27 Id 28 620 F.Supp.2d 1081 (C.D. Cal. 2008).29 Viacom, 676 F.3d at 40 (quoting UMG, 620 30 30

F.Supp.2d at 1092). 30 Id. at 40. 31 Id.32 Id.33 Id. 34 Id.35 Note that the court included the “automatic”

modifier when concluding that the district court properly found that excluding the functions “would eviscerate the protection afforded to service providers by § 512(c).” Id. at 39. It also stressed the automatic nature of the related videos function. Id. at 40. The court did not, however, elaborate or speculate as to whether manual manipulation, if done for the sole purpose of facilitating access to user-stored materials, would be equally permissible. See Id. at 39-40.

36 The statute provides limited liability if the service provider “(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent.” 17 U.S.C § 512(c)(1)(A).

37 This subsection provides limited liability if the service provider “upon notification of claimed infringement…responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of the infringing activity.” 17 U.S.C. § 512(C).

38 Viacom, 676 F.3d at 27-28. 39 Id. 40 Id.41 Viacom, 718 F.Supp.2d at 523.42 Viacom, 676 F.3d at 30 (quoting Viacom, 718

F.Supp.2d at 523).43 Id. at 32.44 Id. at 30.45 Id.46 Id. at 30-31.47 17 U.S.C. § 512(c)(1)(A)(ii).48 Viacom, 676 at 31.49 Id.50 Id.51 UMG Recordings, Inc. v. Shelter Capital Partners LLC,

667 F.3d 1022 (9th Cir. 2011).52 Viacom, 676 F.3d at 32.53 Id.54 Id.55 Id. at 32-33.56 Viacom, 718 F.Supp.2d at 518.

57 Viacom, 676 F.3d at 33.58 See Id. at 33-34.59 Id. at n.9.60 Id. The deficiencies included that fact that no

evidence existed that searches mentioned in some communications were ever carried out, and that the class plaintiffs failed to prove that the infring-ing content that was the subject of certain com-munications remained on YouTube’s website. Id.

61 The “willful blindness” doctrine applies when a party avoids learning of a fact where it is “‘aware of a high probability of the fact in dispute and consciously avoid[s] confirming that fact,’” equat-ing such avoidance to knowledge. Viacom, 676 at 35 (quoting United States v. Aina-Marshall, 366 F.3d 167, 170 (2d. Cir. 2003)).

62 Id. at 35 (quoting Matar v. Dichter, 563 F.3d 9, 14 (2d. Cir. 2009)).63 Id. at 35.64 Id. at 35 (quoting In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003)).65 17 U.S.C. § 512(c)(1)(B).66 Viacom, 676 F.3d at 36 (citing Viacom, 718

F.Supp.2d at 527).67 Id. at 36.68 Viacom, 676 F.3d at 37 (quoting Arista Records

LLC v. Usenet.com, Inc., 633 F.Supp.2d 124, 157 (S.D.N.Y. 2009)).

69 Id. at 37.70 Id. at 38.71 213 F.Supp.2d 1146 (C.D. Cal. 2002).72 Id. at 1173.73 Viacom, 676 F.3d at 38.74 545 U.S. 913 (2005).75 Id. at 937.76 Viacom, 676 F.3d at 38.

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Next meeting

The next meeting of the Ohio State Bar Association Intellectual Prop-erty Section Council is at 10 a.m. on Saturday, Sept. 15, 2012, at OSBA headquarters, 1700 Lake Shore Drive, Columbus. All section members are welcome to attend. For further infor-mation, call (800) 282-6556. ◆


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Internet keyword advertising is big busi-ness. One plaintiff has estimated that Google’s AdWords program accounts for 97 percent of Google’s overall profits.1 Not surprisingly, through ever-changing policies, Google has attempted to protect its AdWords program from criticism by the courts while maximizing its profits. Google’s latest change, however, may have opened it up to liability from various trade-mark owners.

Google, Inc.’s AdWords program al-lows consumers to bid for and purchase keywords for Google’s search tool. The program allows the advertising link of the highest bidder for the keyword term to appear higher on Google’s results list when a user searches for the keyword. The buyer’s advertisement appears either at the top of the results list in a highlighted section labeled “Sponsored Links” or on the right side of the search results under a separate “Sponsored Links” section. Users of Google’s search tools often assume that links that appear higher on the results page are more relevant to their keyword search. As a result, it is highly desirable to appear first on the results page, and buyers are willing to pay a high price to appear at the top in the “Sponsored Links” section.

Prior to 2004, Google policy for its AdWords’ program prohibited the sale of trademarked terms to buyers unless the buyer was the trademark owner or an authorized seller of the trademark owner’s products. In 2004, Google changed its poli-cies. Realizing that it would see a 7 percent increase in profits if it allowed its buyers to purchase trademarked terms, Google began allowing buyers to purchase trademarked

terms regardless of whether they were the owner or an authorized seller as long as the buyer did not use the terms in the actual advertisement. Google’s internal docu-ments reveal that Google recognized that this policy change may cause an increase in complaints and lawsuits from trademark owners. Additionally, Google conducted an internal study to determine the likelihood of confusion from its AdWords program. The study concluded that users of Google’s search tool were likely to be confused if Google allowed its AdWords buyers to both purchase trademarks as keywords and use those trademarks in its advertisement in the “Sponsored Links” section.

Google’s most recent change to its policy occurred in 2009, when Google decided it would see a greater increase in profits if it allowed buyers to purchase trademarks and use the trademarks in the advertisements. This practice was only allowed if the purchaser met one of four qualifications: (1) the purchaser is a reseller of a genuine trademarked product; (2) the purchaser provides component parts for the genuine trademarked item; (3) the purchase offers compatible parts or goods for use with the genuine trademarked product; or (4) the purchaser provides information about, or reviews, the genuine trademarked prod-uct. Google developed an automated tool to check whether the purchaser’s use of the tool in the advertisement text was a legitimate qualified use. The automated tool checks the purchaser’s “landing page” and determines (1) whether the page uses the trademark prominently, (2) contains commercial information suggesting that the purchaser is a reseller, or (3) whether it is a review site.

In the recent case of Rosetta Stone, Ltd. v. Google, Inc, Rosetta Stone joined a number of other companies in challenging Google and its AdWords program. Unlike many of the other companies, however, Rosetta Stone entered the arena with a cadre of evidence that may be enough to make Rosetta Stone the David that brings down the Google Goliath. In its highly antici-pated decision, the Fourth Circuit reversed the district court’s grant of summary judgment to Google on direct trademark infringement, contributory infringement, and trademark dilution. Nevertheless, the Fourth Circuit affirmed the district court’s decision to grant summary judgment to Google on Rosetta Stone’s claim for vicarious trademark infringement and its decision to dismiss Rosetta Stone’s claim for unjust enrichment.

The Fourth Circuit’s decision was clear on one main issue, though; Rosetta Stone will have its chance to present its case to a jury. Until then, the question remains: Is Google’s AdWords direct trademark infringement, contributory trademark infringement or neither?

Direct trademark infringementTo prove trademark infringement, a trade-mark owner must prove that (1) it owns a valid trademark, (2) the infringer used an infringing mark in commerce, and (3) the infringing mark created a likelihood of confusion with the trademark owner’s mark. On appeal, Google did not argue that its use was not in commerce, which was a defense it had previously relied upon to avoid Lanham Act claims. After the Second Circuit’s opinion in Rescuecom, Corp v. Google, Inc., however, this defense was

Fourth Circuit’s Rosetta Stone ruling alters the face of direct trademark infringement


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significantly weakened. Although Google did not admit that the sale of trademarks through its AdWords program was “use in commerce” as contemplated by the Lanham Act, Google did not rely on this argument on appeal. As a result, the Fourth Circuit’s opinion on direct trade-mark infringement was limited to whether Google’s use of the infringing mark cre-ated a likelihood of confusion.

The Fourth Circuit recognized that there are nine factors courts consider in deter-mining a likelihood of confusion, but, in agreement with the district court, found that only three of the factors applied in this case: Google’s intent, instances of actual confusion, and the sophistication of the average consumer. In disagreement with the district court, the Fourth Circuit held that these three factors weighed in favor of likelihood of confusion and not against it. While the district court was will-ing to discount the overwhelming evidence of confusion presented by Rosetta Stone, the Fourth Circuit gave Rosetta Stone’s evidence the appropriate weight on a mo-tion for summary judgment.

IntentIf a defendant used an infringing mark with the intent of creating confusion, the likelihood of confusion from the use of the infringing mark is greater. To dem-onstrate Google’s intent, Rosetta Stone presented evidence that in 2004, when Google began allowing users to purchase trademarks as keywords, Google rec-ognized that the sale of trademarks as keywords would lead to a rise in trademark infringement suits. However, the sale of trademarks would also increase sales of AdWords, and Google decided that the additional sales outweighed the cost and risk of litigation. Additionally, Google’s own internal studies revealed that people searching the Internet would be confused if Google allowed competitors to purchase

trademarks as keywords and use trade-marks in the resulting advertisements.

In 2009, Google began allowing its Ad-Words users to use trademarks in their Sponsored Link advertisements as well as purchase trademarks as keywords. Google made this change in its policy with full knowledge that its 2004 study showed that allowing such a practice would result in confusion. Google had no evidence that the likelihood of confusion it found in its 2004 study decreased in the subsequent five years. Because Google knew that al-lowing its users to include trademarks in their advertisements, altering its program to allow just that is circumstantial evidence that Google had the requisite intent to cre-ate a likelihood of confusion.

Actual confusionTo show actual confusion resulting from Google’s 2009 AdWords program, Rosetta Stone presented evidence that consumers were confused by counterfeiters’ use of the Google AdWords program, including the deposition testimony of five average consumers, consumer complaints, Google’s own internal studies and survey evidence. The district court discounted this evidence, reasoning that it failed to show that con-sumers were confused as to the source of the product, because they knew that when they bought products from a seller under the “Sponsored Links,” they were not buy-ing from Rosetta Stone. Moreover, the dis-trict court found that the testimony of five confused consumers and Rosetta Stone’s survey evidence, which showed confusion among 17 percent of consumers, was de minimis evidence of actual confusion.

The Fourth Circuit held that the district court improperly weighed the evidence on summary judgment. Trademark infringe-ment recognizes actual confusion if the consumer is confused about the affilia-tion or sponsorship of the goods and the

trademark owner, not just confusion as to the source of the goods. Even though consumers knew that they were not pur-chasing products from Rosetta Stone, they often believed that they were purchasing from an authorized reseller of the product. Further, the Fourth Circuit found that five confused consumer depositions, which was the total amount of depositions allowed by the district court, combined with evidence of over a hundred consumer complaints was sufficient evidence to survive summa-ry judgment. Additionally, survey evidence that showed confusion among more than 10 percent of consumers was also enough to meet Rosetta Stone’s summary judg-ment burden.

Sophistication of consumersThe district court concluded that because Rosetta Stone’s product was expensive and required consumers to invest a significant amount of time in using the product, con-sumers of its product were sophisticated and less likely to be confused. The Fourth Circuit held that the district court improp-erly weighed the evidence on summary judgment and made a finding the district court should have only made after a trial on the merits. Further, although not recog-nized by the Fourth Circuit’s opinion, the five confused consumers whose testimony was presented by Rosetta Stone to show actual confusion were mainly well-educat-ed consumers who purchased products from a “Sponsored Links” seller believing that the seller was an authorized reseller of Rosetta Stone. This evidence showed that even sophisticated consumers were confused by the infringing use of Rosetta Stone’s mark, which renders this factor less important in determining a likelihood of confusion.

In conclusion, the Fourth Circuit found that the weight of the evidence was suf-ficient to survive summary judgment and present the case to the jury. While recog-


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nizing that Google may have an affirma-tive defense to trademark infringement, the Fourth Circuit’s opinion is a landmark decision for two main reasons: (1) it recog-nizes possible infringement even though Google is not a competitor of Rosetta Stone, and (2) it recognizes possible direct infringement even though the alleged infringing use is not Google’s own use of the mark.

The basic foundation of trademark infringement and the Lanham Act is to prevent unfair competition. In analyzing trademark infringement claims, courts have recognized that competition, whether direct or indirect, between the parties as essential. In fact, at least three of the likeli-hood of confusion factors in the Fourth Circuit are directed toward determining whether the parties sufficiently compete. The likelihood of confusion is lessened if the alleged infringer is not using the mark to market and sell a competitive good.

In this case, Google and Rosetta Stone are not competitors. Rosetta Stone sells software aimed at teaching a foreign lan-guage. Google sells advertising space on its Internet search service. Moreover, Rosetta Stone does not contend that Google’s sale of its trademark alone is infringement, but contends that Google’s sale of the mark combined with the buyer’s subsequent use of the mark is infringement. Thus, the use complained of is not Google’s use, but the use by the buyer of Google’s services.

In sum, direct trademark infringement is not a good “fit” to the facts of this case. Google is not Rosetta Stone’s competi-tor, and Google’s use of the mark is not the actual use that infringes the mark. Instead, it is Google’s sale of the mark to competitors of Rosetta Stone and those competitors’ use of the mark that infringes. Google’s connection to Rosetta Stone and the actual infringement is, on its

face, indirect. Direct trademark infringe-ment is inappropriate in this case. Google’s AdWords program is better analyzed under contributory trademark infringement.

The Fourth Circuit’s opinion, however, opened the door for possible direct trade-mark infringement against Google and for future direct trademark infringement claims against other such service providers. It essentially changes the face and analysis of direct trademark infringement. Perhaps the Fourth Circuit’s opinion was so cloud-ed by the overwhelming evidence of actual confusion and intent that it overlooked the necessity of actual competition and direct infringing use. Regardless, claims of direct trademark infringement against service providers can only increase as a result of the Fourth Circuit’s opinion, and Google’s policies may require a significant overhaul if Google wants to save its AdWords’ pro-gram and its profit margin.

Contributory trademark infringementThe Fourth Circuit also reversed the district court’s grant of summary judg-ment to Google on Rosetta Stone’s claim for contributory trademark infringement. Contributory trademark infringement imposes liability on those who facilitate others’ infringement. As explained by the Supreme Court in Inwood Labs., Inc. v. Ives Labs, Inc., 456 U.S. 844 (1982), contribu-tory infringement occurs when a party “intentionally induces another to infringe a trademark or if it continues to supply

its product to one whom it knows or has reason to know is engaging in trademark infringement.” The knowledge required for contributory infringement is more than just general knowledge, but must be specif-ic to identified individuals who the alleged contributor knows or has reason to know are engaging in trademark infringement. Moreover, the party alleging contributory trademark infringement must first establish the underlying direct trademark infringe-ment to prove that the contributor had facilitated the trademark infringement.

Rosetta Stone provided evidence that Google continued to supply AdWords to parties it knew or should have known were infringing Rosetta Stone’s regis-tered trademark. Rosetta submitted a spreadsheet reflecting the dates it advised Google of a fraudulent “Sponsored Link” purchaser, the domain name associated with the fraudulent link, the text of the advertisement, and the date and substance of Google’s response from Sept. 3, 2009 through March 1, 2010. The evidence showed that Google had continued to al-low these purchasers to use its “Sponsored Links” and Rosetta Stone’s trademarks to link to other websites. It also allowed these fraudulent purchasers to use Rosetta Stone’s trademarks in the linked advertise-ments for their other websites.

Despite this evidence, the district court held that Rosetta Stone failed to establish that Google had specific knowledge or should have known about the infringing activity. In support of this conclusion, the district court relied on the Second Circuit’s opinion in Tiffany (NJ) v. eBay, Inc., 600 F.3d 93 (2d Cir. 2010). In Tiffany, the plaintiff challenged the allowance of counterfeit sales by the Internet auction site, eBay. The plaintiff, however, did not have evidence that eBay had specific knowledge of infringement beyond those instances of actual infringement that eBay had prompt-

“ “ Rosetta Stone provided evidence that Google continued to supply AdWords to parties it knew or should have known were infringing Rosetta Stone’s registered trademark.


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ly addressed upon notice of them. The Fourth Circuit distinguished this case based on the procedural posture of the appeal. In Tiffany, the appeal was filed after a full trial on the merits. The appeal in this case was filed after a decision on a summary judgment motion. Because the evidence and all reasonable inferences are viewed in a light most favorable to the nonmoving party, i.e., Rosetta Stone, the decision in Tif-fany was inapplicable and the district court’s reliance was misplaced. Therefore, the Fourth Circuit reversed the district court’s decision on contributory infringement.

While inapplicable to this matter, the Tiffany decision is instructive for both this case and Google’s policies. Defendant eBay had instituted a number of policies directed at preventing trademark infringement, which helped in persuading the Second Cir-cuit that this was not a case of contributory trademark infringement. According to the record, eBay spent up to $20 million a year on tools designed to improve the safety and trust of its website. Any buyer of a good that was later discovered to be counterfeit would be reimbursed. In 2002, eBay em-ployed a “fraud engine” with the purpose of finding illegal sales, including counterfeit sales. At the same time, eBay conducted pe-riodic manual reviews of listings to remove listings that may be counterfeit.

Finally, and most importantly, eBay main-tained and administered a system in which trademark owners could report potentially infringing sales to eBay, and eBay would remove any such listings. EBay would remove the offending sale within 24 hours of receiving notice. If the sale had not ended prior to that time, eBay would cancel the bids, remove the listing, and inform the seller of the reason for cancellation. If the bidding was over, eBay would retroactively cancel the transaction and refund the fees it received in connection with the auction. Sometimes, eBay would reimburse the buyer

for the cost of the item if there was evi-dence the item was counterfeit. Beyond can-celing sales, eBay also suspended sellers who were repeat offenders. If the seller had three strikes against him, he would be suspended from the site. Nevertheless, if it was clear the seller was listing a number of infringing or counterfeit merchandise, the seller would be suspended after a single violation.

While the Second Circuit’s opinion held that eBay was not liable for contributory trademark infringement based on eBay’s lack of specific knowledge of identified in-fringers, eBay’s policy regarding the notice and takedown of infringing sales and the suspension of repeat offenders weakened the plaintiff ’s argument that eBay inten-tionally induced infringement or supplied services to a party it knew or had reason to know was engaging in trademark infringe-ment. EBay’s program is a good example of what a service provider should enact to prevent possible liability for contributory trademark infringement.

In sum, if Rosetta Stone’s evidence that Google knew or should have known that some of its AdWord purchasers were engaging in trademark infringement is as persuasive as the Fourth Circuit described, Rosetta Stone’s claim for contributory trade-mark infringement is a better “fit” for the facts of this case. Google, if found liable for contributory trademark infringement, may be required to completely overhaul its current policies and spend more resources and money ferreting out and ridding its Ad-Words program of infringers and counter-feiters in the same manner as eBay.

Perhaps the most significant aspect of this case is the Fourth Circuit’s recognition of the dearth of case law guiding its analysis in this area. Without any guidance from a previous case, both the district court and the Fourth Circuit struggled in the dark to fit these modern technological concepts into established Lanham Act claims, which

is much like trying to fit a square peg into a round hole. The solution may be a legisla-tive act, not a judicial one.

Congress has already enacted a provision for copyright law when it included a safe harbor provision in the Digital Millennium Copyright Act. The safe harbor provision protects service providers from copyright liability for infringing works posted by its users as long as the service provider has a repeat infringer policy that prevents repeat infringers from using the service and ac-commodates means for copyright owners to identify and protect their works. If a infringing work is posted on the service provider’s site, the service provider is safe from prosecution as long as it does not have actual knowledge of the infringing work; is unaware of any facts or circum-stances leading to the conclusion that the activity is infringing; removed the infring-ing work once it had notice of the in-fringement; and did not receive a financial benefit from the infringing activity if the service provider has the right and ability to control the activity. 2 A similar provision for trademarks would help significantly in guiding both courts and service providers through the ever-changing landscape of trademark law and technology. ◆

By John M. Skeriotis, an attorney with Brouse McDowell, LPA in Akron, and Anastasia J. Wade an attorney with Brouse McDowell LPA in Cleveland.

Endnotes

1 See Rescuecom, Corp. v. Google, Inc., 562 F.3d 123 (2d Cir. 2009).

2 See 17 U.S.C. § 512(c).


Everything is bigger in Texas, even toast. In T. Marzetti Co. v. Roskam Baking Co., evidence showed that such a perception is reality in the minds of consumers. The Sixth Circuit Court of Appeals affirmed the judgment of the Southern District of Ohio that “Texas Toast” is a generic desig-nation when applied to croutons, and thus not entitled to trademark protection.1

T. Marzetti Co. (“Marzetti”), an Ohio corporation, sells salad dressings, frozen garlic bread, vegetable dips, mustard and croutons. Marzetti has sold its frozen garlic bread under the title, “New York Brand the Original Texas Toast” since 1995. In an effort to transcend the success of its frozen garlic bread across its other product lines, Marzetti began marketing differ-ent varieties of “New York Brand the Original Texas Toast” croutons in 2007. Soon after Marzetti launched its “Texas Toast” crouton products, Roskam Baking Company (“Roskam”)—a direct crouton competitor—developed and marketed a similar product under the same “Texas Toast” descriptor. As a result, Marzetti brought suit against Roskam for trademark infringement, a violation of section 43(a) of the Lanham Act.

The district court determined that “Texas Toast” was a generic description of crou-tons, conveying to consumers something about the size of the product, and there-fore not entitled to trademark protection.2 On appeal, the Sixth Circuit affirmed the district court’s finding that “Texas Toast” was generic. The appellate court’s analysis of the trademark infringement claim ended there—it did not analyze whether Roskam’s use created a likelihood of confusion.3

Whether an unregistered mark4 is protect-able requires a determination of the mark’s distinctiveness.5 The spectrum of distinc-tiveness is divided into four categories: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary or fanciful.6 Generic marks—the least distinctive because they describe the type of product rather than the source of the product—are never pro-tectable as trademarks.7

In this case, Marzetti raised a question regarding what test the court shall apply to determine whether “Texas Toast” is gener-ic. Marzetti urged the court to follow the “primary significance test.” The Supreme Court first introduced it as the law of the land when it determined “shredded wheat” to be a generic mark.8 Subsequently, Con-gress mandated that the primary signifi-cance test determine whether a registered mark had become generic.9 Under this popular test, a plaintiff seeking to establish trademark validity “must show that the pri-mary significance of the term in the minds of the consuming public is not the product

but the producer.”10 Notwithstanding the statute only being applicable to registered marks, the same principles are determina-tive as to whether an unregistered mark is entitled to protection under §43(a).11

Federal courts of appeal differ in applying the primary significance test to evaluate the distinctiveness of unregistered marks. In the Third Circuit, “[t]he jurisprudence of genericness revolves around the pri-mary significance test … .”12 Despite this proclamation, the Third Circuit held that the primary significance test may only be applied if a product genus is distinguish-able from a product brand.13

Determining the relevant product genus is a threshold issue prior to running the primary significance test.14 To identify the appropriate genus for analysis, the Third Circuit established the following rule: “If a producer introduces a product that differs from an established product class in a par-ticular characteristic, and uses a common descriptive term of that characteristic as

11

Sixth Circuit Determines “Texas Toast” is a generic trademark


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the name of the product, then the product should be considered its own genus.”15 To protect a term that is merely a common description of a product genus would effectively preempt competition.16 Trade-mark law protects a mark only when neces-sary to enable consumers to distinguish one producer’s goods from another’s.17 Accordingly, a term that creates a product genus and that is necessary to describe a product characteristic is not protectable.18 In such cases, the Third Circuit makes the determination without running a primary significance test analysis.19

The Second Circuit viewed the Third Circuit approach as not a useful comple-ment to the primary significant test.20 In a dispute over the unregistered mark, “Honey Brown,” the Second Circuit adopted the Third Circuit analysis.21 The court explained that “Honey Brown” ales are merely one of numerous styles of beer in the marketplace denoted by the com-bination of a beer category and a creative flavor.22 The court determined that no name derived from such a combination is protectable, including “Honey Brown” ale. The Eighth Circuit and Ninth Circuit have also explicitly applied the primary signifi-cance test.23

Without detailed discussion, the Sixth Circuit swiftly rejected adherence to the primary significance test and announced the alternative test of the jurisdiction:

“[T]he test for whether a term is generic and therefore ineli-gible for trademark protection is ‘whether the public perceives the term primarily as the designation of the article.’”24 In the Sixth Cir-cuit, a generic mark is defined as one “primarily associated with a type of product rather than with the producer[.]”25

Nevertheless, the Marzetti court deter-mined that the evidence supported the district court’s conclusion that the term “Texas Toast” is generic under both the primary significant test and the test ordi-narily used in the Sixth Circuit.26 Evidence weighing most heavily in reaching this conclusion was witness testimony that established that “Texas Toast” is common-ly understood to describe a large bread product. To its own admission, Marzetti marketed its “Texas Toast” croutons to conform to this common understanding by referencing on its packaging “bigger bites” and “Texas-Sized bites.” Addition-ally, in its annual report, Marzetti even referred to its “Texas Toast” croutons as a type of product rather than a brand. Regardless of the test, evidence supported the conclusion that the mark was generic, and thus not protectable. ◆

By Corey Leggett, a student at Capital University Law School and a summer law clerk with Stand-ley Law Group in Dublin.

Endnotes

1 T. Marzetti, 680 F.3d at 634.2 The district court held that even if the mark was

deemed protectable, Roskam would still have been absolved from liability because its use did not create a likelihood of confusion.

3 See Tumblebus Inc. v. Cranmer, 399 F.3d 754, 761 (6th Cir. 2005) (“When evaluating a Lanham Act claim for infringement of an unregistered mark, courts must determine whether the mark is protectable, and if so, whether there is a likeli-hood of confusion as a result of the would-be infringer’s use of the mark.”).

4 Marzetti never sought trademark protection for either “Texas Toast” or “The Original Texas Toast” in connection with its popular frozen garlic bread products. In February 2009, Marzetti did seek registration of “Texas Toast” and “The Original Texas Toast” for use on croutons and tortilla strips. The Patent and Trademark Office initially denied both applications because of po-tential likelihood of confusion, but subsequently published the applications for opposition. Neither mark was ever officially registered as a federal trademark.

5 Tumblebus, 399 F.3d at 761.6 Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768

(1992) (citing Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976)).

7 See Park ‘N Fly v. Dollar Park & Fly, Inc., 469 U.S. 189, 194 (1985).

8 Kellogg Co. v. Nat’l Biscuit Co., 305 U.S. 111, 118 (1938).

9 Trademark Clarification Act of 1984 § 102, 15 U.S.C. § 1064 (2006).

10 Kellogg, 305 U.S. at 118.11 Two Pesos, 505 U.S. at 768. 12 A.J. Canfield Co. v. Honickman, 808 F.2d 291,

292–93 (3d Cir. 1986).13 Id. at 300. 14 Id. at 299. 15 Id. at 305–306. 16 Id. at 305. 17 Id. 18 Id. 19 Id. at 301. 20 Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d

137, 145 (2d Cir. 1997). 21 Id. 22 Id.(listing for example maple porter, pumpkin ale,

raspberry wheat, and oatmeal stout). 23 See Cmty. of Christ Copyright Corp. v. Devon Park

Restoration Branch of Jesus Christ’s Church, 634 F.3d 1005, 1011 (8th Cir. 2011) (holding that the primary significance to the relevant pub-lic of owner’s trademark, “REORGANIZED CHURCH OF JESUS CHRIST OF LATTER DAY SAINTS,” was not a description of religion, and thus owner’s rights were not cancelled on the basis of being generic); Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d 1143, 1147 (9th Cir. 1999) (applying the “who-are-you/what-are-you” test, which classifies a trademark as generic if its primary significance is to describe the type of product rather than the producer).

24 General Conference Corp. of Seventh-Day Adventists v. McGill, 617 F.3d 402, 413 (6th Cir. 2010) (quoting Bath & Body Works, Inc. v. Luzier Personalized Cos-metics, Inc., 76 F.3d 743, 748 (6th Cir. 2002)).

25 T. Marzetti, 680 F.3d at 634 (quoting NatronCrop v. STMicroelectronics, Inc., 305 F.3d 397, 404 (6th Cir. 2002)).

26 Id.


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“Dang Me”: It’s the law here too!A few years ago, I wrote an article for this newsletter about a ruling affecting renewal rights in copyrights, involving the song “Disco Inferno.” Recently, that ruling has been adopted by the Sixth Circuit, in a case involving the estate of country singer Roger Miller.1

Disputes involving copyright renewals are probably about as dead as the artists who composed the songs involved in these two cases. “Disco Inferno” was one of the last songs to be published under the 1909 Copyright Act, which was replaced on Jan. 1, 1978, by the 1976 Copyright Act.2 Copyrighted properties registered in 1977 were due for renewal by Dec. 31, 2005. The Roger Miller dispute dates to well before 2005 and involved some of Miller’s best known songs.3 In each case, the as-signee prevailed over the family because the author survived until the start of the renewal period, and the assignee filed a renewal application based on that survival. In some earlier disputes over the renewal right, the author died before the beginning of the renewal period.

Why, then, the interest in these cases? The answer, in my opinion, is that the statutory scheme involving copyright renewals carries forward into the “termination of transfer,” an analogue of the renewal system that arises under the 1976 Act.

The renewal statute for works covered under the 1909 Act establishes a specific hierarchy of who may renew a copyright.4 This hierarchy, which generally resembles the intestacy statute enacted in many states, cannot be disturbed by the author in a will. The author may, however, determine who has the right to receive royalties, based upon a will. The Miller family has already estab-lished Sixth Circuit law in a dispute over

that issue.5 Similar case law has also been es-tablished in the Second Circuit, in a dispute involving the works of John Steinbeck.6

Under the 1976 Copyright Act, there is no renewal of the copyright. If the work is not a “work made for hire,” the single term of copyright will extend, by its very definition, well beyond the author’s life.7 To give the author the “second chance to claim ownership” that the Sixth Circuit recognizes under the 1909 Act, the 1976 Act provides a right to terminate a trans-fer.8 This termination right exists during the period from 35 to 40 years after the transfer is made, which is much longer than the one-year time allowed for renewal.

Since the right to terminate a transfer involves the giving of notice directly to the current assignee, and not a race to the Copyright Office between the assignee and the estate, disputes that will arise starting in 20139 will most likely be between com-peting interests within the author’s family, as has already been the case in both the Steinbeck and Miller families. If anything, the assignees will be seeking declaratory judgment as to who the rightful party is to terminate the transfer.

The right to renegotiate copyright trans-fers in this manner is not covered in either foreign copyright law or in other U.S. intel-lectual property law. If you are involved in a copyright transaction, especially when the copyright is being assigned, make sure to advise the author of the implications of the law, especially with regard to estate planning. ◆

By Stephen L. Grant, a senior attorney with Standley Law Group in Dublin.

Endnotes

1 Roger Miller Music, Inc v Sony/ATV Publishing, LLC, 672 F3d 434 (6th Cir 2012)..

2 Under the 1909 Act, the initial term of 28 years was followed by a possible renewal term of another 28 years. This renewal term was extended from 28 years to 47 years (for a total term of 75 years) by the 1976 Copyright Act and twenty ad-ditional years of renewal term were added under the Sonny Bono Copyright Term Extension Act.

3 The songs covered by the dispute were registered in 1964 and include “King of the Road” (a No. 1 hit in the United States, United Kingdom and Norway), “Chug-A-Lug”, “Dang Me” and the unforgettable “You Can’t Roller Skate in a Buffalo Herd.”

4 To be very precise, the statute discussed next involves renewal rights for copyrights in their first term on January 1, 1978, which is found at 17 USC 304(a). If there has been a renewal executed prior to January 1, 1978, then there is a termina-tion of transfer of the extension granted under the Sonny Bono Copyright Extension Act, with this being found at 17 USC 304(c).

5 Broadcast Music, Inc v Roger Miller Music, Inc, 396 F2d 762 (2005).

6 Steinbeck v McIntosh & Otis, Inc, 433 F.Supp 395 (SD NY 2006), reversed Penguin Group (USA) Inc v Steinbeck, 537 F3d 193 (2nd Cir 2008).

7 The term is “the life of the author plus seventy years.”

8 The termination of transfer is found at 17 USC 203 and the hierarchy set forth there recognizes the longer term of copyright, in that it deals with rights of not only children, but also grandchildren of the author.

9 January 1, 2013 is 35 years after the effective date of the earliest copyrighted properties under the 1976 Copyright Act.

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Patent rights in commodity seeds, in Monsanto Co. v. Bowman 1

Monsanto Company and Monsanto Tech-nology LLC invented and developed tech-nology for genetically modified “Roundup Ready” soybeans covered its ‘6053 and ‘247E4 Patents. Since 1996, Monsanto has marketed and sold Roundup Ready soybean seeds under its own brands and licenses its technology to seed producers who insert the Roundup Ready genetic trait into their own seed varieties. Monsanto’s licensed producers sell Roundup Ready seeds to growers for planting. All sales to growers, whether from Monsanto or its licensed producers are subject to a standard form limited use license, called the technology agreement. Both the ‘605 and the ‘247E patents are listed as “applicable patents” under the technology agreement.

Monsanto restricts each grower’s use of the licensed Roundup Ready seed to a single commercial crop season, because the pat-ented Roundup Ready genetic trait carries forward into each successive seed generation.

Although the express terms of the technol-ogy agreement forbid growers to sell the progeny of the licensed Roundup Ready

seeds, or “second generation seeds,” for planting, Monsanto authorizes growers to sell second generation seeds to local grain elevators as a commodity, without requiring growers to place restrictions on grain eleva-tors’ subsequent sales of that seed.

In this case, grower Bowman planted Roundup Ready seeds as his first crop in each growing season during the years 1999 through 2007. Consistent with the terms of the technology agreement, Bowman did not save seed from his first crop during any of those years.

In 1999, Bowman also purchased com-modity seed from a local elevator for a late-season planting or “second crop.” Be-cause Bowman considered the second crop to be a riskier planting, he purchased the commodity seed to avoid paying the sig-nificantly higher price for Roundup Ready seed. In each subsequent year through 2007, Bowman saved the second seed har-vested from his second crop for replanting additional second crops in later years.

In 2007 Monsanto brought this suit against Bowman, alleging infringement of the ‘605 and ‘247E patents. The federal circuit

decided that the doctrine of patent ex-haustion did not bar Monsanto’s infringe-ment claims because, even if Monsanto’s patent rights in the commodity seeds are exhausted, such a conclusion would be of no consequence—because once a grower such as Bowman plants the commodity seeds that Monsanto’s Roundup Ready technology and the next generation of seeds develops, the grower has created a newly infringing article. ◆ By Bruce H. Wilson, an attorney in Akron. Endnotes

1 Monsanto Co. v. Bowman, No. 2010-1068 (Fed Cir. Sept. 21, 2011)

2 U.S. Patent No. 5,352,6053 U.S. Patent No. RE39,247E

Have your article published here

If you would like to contribute a case review or an article to the newsletter, contact Patricia A. Walker at Walker & Jocke, 231 South Broadway, Medina, Ohio 44256, by e-mail at [email protected] or by phone at (330) 721-0000. Check out past newsletters on the OSBA website for a guideline.

It will be great to see your contribution published in the next newsletter. ◆

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15

May 3, 2012 The meeting was brought to order by Sec-tion chair Beth Ferrier at 5:40 p.m. The meeting progressed as follows.

Treasurer’s reportThe report provided from OSBA indicated a total section membership of 636 and a balance of $12,971.72.

Election of officersThe following officers were nominated and have agreed to serve for the 2012-2013 year: Mike Stith (chair); Bret Hrivnak (vice chair); Steve Grant (treasurer); and Keith McCarthy (secretary).

Legislative issues updateMary Augsburger provided the section with an update on OSBA legislative issues, including the Collaborative Family Law Act.

Ohio Academy of Science/IP Section Patent awardsThe section participated with the Ohio Academy of Science in presenting two awards—the Legacy Award and the Impact Award. The section vetted several at-torneys eligible for receiving an award in conjunction with the Impact Award by checking the prosecution history, verifying the attorney’s residency and involvement with the patent, and also verifying that the patent had not been litigated and found invalid. The section’s sponsorship of the awards will be reviewed and voted upon at the September meeting. IP newsletter Articles for the newsletter will be posted on the section website, and a message will be sent to the section membership inviting

members to write an article. Deadline was July 9 for submissions.

Implied Warranty of Title (R.C. 1302.25) The section has been considering whether to propose legislation or take other action with respect to Ohio Revised Code Sec-tion 1302.25 (implied warranty of title). The problem with the implied warranty of title is that it is a trap for the unwary with regard to intellectual property, because this provision can be interpreted to mean that a seller is giving a warranty that a product does not infringe any third party patent rights. Most sellers would not be knowl-edgeable about the warranty or how to disclaim such a warranty in the sale, unless they had experienced counsel. Mary Augs-burger arranged a conference call between the UCC commissioners and members of the section’s executive committee in February to discuss this issue. The com-missioners were not aware of any pro-posed legislation in Ohio or other states to address this issue, nor had they been previously approached regarding this issue. No significant case law documenting abuse of the implied warranty was discovered by the Section members who researched the issue. After extended discussion, Ralph Jocke moved that the section consider options to more broadly educate certain groups (such as the Ohio Manufacturers Association, Chambers of Commerce and other related trade associations) of the implied warranty of title issue, and vote on next steps by the section on this issue at the September meeting.

Convention updateThe section thanks the following speak-

ers who presented at the CLE seminar on May 3: Dr. Helen Farrell and Sam Han (Dynamics for Personal Motivation and Chemical Addiction), Timothy Hagan (Your Guide to the America Invents Act) and Lynda Roesch (Trademark Enforce-ment for Small Businesses).

Next meetingThe next section meeting is Sept. 15 at 10 a.m. at the OSBA Headquarters in Columbus. ◆

By Beth B. Ferrier, chair of the OSBA Intellec-tual Property Law Section.

OSBA Intellectual Property Law Section Council meeting summary

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