Category Archives: Intellectual Property

Claim Preclusion and the TTAB

Today, the Supreme Court handed down its decision in B&B Hardware, Inc. v. Hargis Industries, Inc.. This decision has a real impact on companies that are applying for and challenging federal trademark registrations. While the full history and details of this case have been going on for almost two decades and, according to the Court, “could fill a long, unhappy book,” the important facts are fairly straight forward. In 1993 B&B registered its trademark “SEALTIGHT” for “threaded or unthreaded metal fasteners and other related hardwar[e]; namely, self-sealing nuts, bolts, screws, rivets and washers, all having a captive o-ring, for use in the aerospace industry.” In 1996, Hargis sought to register its trademark “SEALTITE” for “self-piercing and self-drilling metal screws for use in the manufacture of metal and post-frame buildings.” Eventually in 2002, The United States Patent and Trademark Office (“USPTO”) published Hargis’s mark for opposition and B&B filed an opposition which prompted a proceeding before the Trademark Trial and Appeal Board (“TTAB”). However, B&B had also filed a trademark infringement action in the circuit court.

This is where the issue before the Court comes in. B&B was arguing before both the circuit court and the TTAB that Hargis’s mark was so similar to its mark that it would create a likelihood of consumer confusion. Before the circuit court could rule on this matter, the TTAB agreed with B&B and ruled that the marks were so similar as to cause a likelihood of consumer confusion and refused to register Hargis’s mark. Hargis did not appeal the TTAB decision. B&B then argued in front of the circuit court that since the TTAB has already ruled on likelihood of confusion, that decision should apply to the circuit court and that Hargis should not be able to raise the defense that there is no likelihood of confusion. This is called claim preclusion, when once Court rules on an issue, other Courts are bound by that ruling. Today’s Supreme Court decision confirms that B&B is correct and that TTAB rulings would prevent those same issue from being argued in circuit court.

Hargis’s decision not to appeal the TTAB ruling, in effect, bound it to the ruling for any subsequent lawsuits. This is important. Proceedings before the USPTO can have a preclusionary effect. Hargis, by not appealing the TTAB decision, is now precluded from arguing one of its main defenses.

This ruling enforces that issues before the USPTO are serious matters that should not be taken lightly. If you have a trademark issue, contact the professionals at Smith & Associates for a free consultation.

BitTorrent Lawsuits Filed Today

Today in the Middle District of Florida, a litany of John Doe lawsuits were filed alleging that BitTorrent users violated copyright law by downloading and making available certain copyrighted films. The first set of lawsuits is by Good Man Productions, Inc. for a Steven Seagal film entitled ‘A Good Man.’ Read a copy of one of the complaints here. The second set of lawsuits is by Poplar Oaks, Inc. for a movie entitled ‘A Certain Justice’ now titled ‘Puncture Wound.’ Read a copy of one of the complaints here.

These lawsuits are ‘John Doe’ lawsuits because, at this time, the copyright holder does not know the name of the party they are accusing of infringement. Right now, all they know are the accused infringer’s IP address. From here, they copyright holders will subpoena the ISPs to determine who had the IP address at the time of the alleged infringement. Once that is determined, the copyright holders will update the lawsuits to name the correct individual.

Fortunately, most ISPs inform users before they give up their information. If you receive a letter informing you that you are the subject of a John Doe lawsuit, you should contact an attorney immediately. Damages in a copyright infringement suit are determined by statute and, if willful infringement is shown, can be as much as $150,000.00 per infringement plus opposing counsel’s attorney fees and costs. It is imperative that you act quickly to protect your rights.

At Smith & Associates, we not only understand litigation and copyright law, we understand the technology at the heart of these issues. We understand BitTorrent and the issues associated with associating an IP address to an individual. If you need help addressing this or any other copyright issue, please contact us for a free consultation.

Software Licensing and Enforcement

Software is rarely sold anymore, it is usually licensed. These licenses restrict how the software can be used and if the software can be resold. Even open source licenses, which convey rights to the users instead of take them away, have conditions on how the software can be used. When considering what to include in a software license or which open source license to use, it is important to consider how software licenses are enforced and what terms you want in your license.

License Terms vs. Covenant Terms

The enforceability of the license depends on what clause in the license is being breached and what remedy the developer is seeking. When someone breaches a copyright license, the courts look to the term that was breached to determine if it limited the scope of the license or if it was a mere covenant in the contract. For example, if the term limited the distribution method of the code, it would most likely be considered to be restricting the scope of the license. However, if the term involved how warranty claims were to be submitted, it would most likely be considered a mere covenant.

If the term being breached is considered a mere covenant, the remedies available are the traditional breach of contract remedies. While there are many of these remedies, for the most part this means that the remedy will be actual damages – how much money was actually lost because of the breach. This is not very easy to determine as the amount must be proven by evidence. For example, terms regarding the warranty of the software are usually considered covenants.

If the term being breached is limiting the license, then the breach is considered copyright infringement. This has advantages over a breach of contract action. The most important being that if the copyright was registered with the Copyright Office before the infringement, the copyright holder may be entitled to statutory damages between $750.00 and $150,000.00 per infringement. The copyright holder may also be entitled to attorney’s fees and costs. If the work is not registered before the infringement, the copyright holder is usually stuck having to prove the actual damages from the infringement. Whether or not the work was registered before the infringement, the copyright holder can also ask the court for an injunction to prevent the infringer from continuing to use the software.

When a developer is ready to license her software, what should she look out for?

  • Register the software with the Copyright Office. As stated above, having the work registered opens the door to remedies that do not require proof of damages. To make this even more attractive, it only costs $35.00 to register. There is no reason not to do this.
  • Ensure that your goals are met by the license. Whether you are using an open source license or a custom license, make sure that the terms that control the way your software is distributed are written in a way that actually accomplishes what YOU want to have happen with your software. Do not settle on a license because it is popular. Ensure that its terms meet the goals of your software project.
  • Consider a liquidated damages clause for covenants. Proving actual damages, especially with software licenses is extremely difficult to do. A liquidated damages clause can give a number to the actual damages in the case that one party breaches.
  • Prepare for if things go bad. You may want to disclaim any liability and warranties. You may also want to add a clause for attorney’s fees and costs. Also, you may want to add a choice of forum or arbitration clause to determine where or how any dispute would be handled.

What if someone is breaching your license?

  • If you have not done so already, register your work with the Copyright Office. To bring a claim in federal court, the work must first be registered. Get that process started as soon as possible.
  • Consider alternate options. If you have not registered with the Copyright Office prior to the infringement, or if the infringer has no money, a federal lawsuit may not be worth it financially. However, the Digital Millennium Copyright Act (DMCA) may offer some cheaper alternatives. This act offers a takedown procedure that asks web hosts to remove infringing material. If they refuse, they can be held liable for infringement. If the infringing work is being distributed via the Internet, a DMCA takedown notice may be a viable alternative to prevent the infringer from continuing to distribute the work without breaking the bank.
  • Talk to an attorney. Every situation is unique. An attorney can help you understand your situation and what your rights and options are.

If you or your company need help writing or enforcing a software license, contact us at Smith & Associates.

Software Audit Demand from the BSA

Recently, radio stations have started playing advertisements informing the listener that if they report software piracy at their place of work, they could receive a reward. While I do not condone software piracy, the Business Software Alliance (BSA), the company running the ads, along with the Software and Information Industry Association (SIIA) use very heavy-handed tactics when dealing with potential pirates. So what should you do if your company receives an audit request from the BSA, SIIA, or some other software company?

  • Don’t Ignore It – While it may be a valid strategy to ignore some demand letters, it is not the case with these audit requests. These companies will follow through with court cases. This can increase the costs of defense and possibly limit your options for the future.
  • Retain an Attorney – The BSA and SIIA have attorneys working for them with the goal of maximizing the payments made by potential infringers. You need an attorney working for you. An attorney can help ensure that the audit cannot be used against you in court and help you keep certain knowledge confidential. An attorney can help explain the copyright infringement laws – which don’t always agree with what the BSA and SIAA believe constitute copyright infringement. If infringing software is discovered, an attorney can also help you with negotiating the settlement agreement, ensuring that BSA and SIIA cannot publish your infringements publicly and the terms of any re-audit.
  • Don’t Buy New Licenses – Once you receive the audit demand, you may feel the need to go out and buy licenses for any non-licensed software. This will not fix the problem and will most likely just end up being a waste of money. The BSA/SIAA will look at the install date and the purchase date to ensure that the software was licensed for the entire time it was installed.
  • Don’t delete infringing software – Destroying evidence is never a good idea. This can lead to a presumption of infringement and possibly sanctions. This along with the fact that computer experts can recover deleted information makes deleting the infringing software a bad idea.

If you or your company have received a letter from the BSA, SIAA, or any other software company demanding an audit, contact us at Smith & Associates. The BSA/SIAA will use attorneys against you – don’t go it alone.