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Weekly Issues in the News

By Geisa Balla

Gucci v. Guess

Gucci won $4.6 million in its trademark infringement trial against Guess. Gucci had alleged that Guess was trying to "Gucci-ize" its products by selling wallets, bags, belts, shoes and other items with designs similar or identical to Gucci's. The lawsuit alleged that Guess's products confused the consumers and diluted Gucci's brand. After three years of litigation, in April, three-week non-jury trial was held in the Southern District of New York before Judge Shira Scheindlin. Gucci was asking for $120 million in damages from the lawsuit. On May 21, 2012, Judge Scheindlin released a 104-page opinion, holding that Gucci may recover just $4.66 million in its lawsuit. The decision stated that while Guess infringed some trademarks, Gucci was not entitled to damages reflecting lost sales or harm to its brand, and an analysis from its damages expert was deemed "highly speculative." Judge Scheindlin also awarded Gucci a permanent injunction against Guess's use of three of the four challenged designs.

The permanent injunction applies to a design with green-red-green stripes, a stylized "Square G," and a group of four interlocking "G"s known as a "Quattro G." Guess is satisfied with the decision, and its CEO Paul Marciano said that the decision showed that Gucci had "overreached" and "misled the court with a number of facts that were unsupported by the evidence."


Microsoft and Motorola

On May 24, 2012, a German court ruled in a hearing that Motorola Mobility infringed Microsoft's patents by offering the option in its mobile phones to send a longer text in a batch of several messages. Microsoft said in a statement: "We're pleased the court agreed today that Motorola has infringed Microsoft's intellectual property, and we hope Motorola will be willing to join other Android device makers by taking a license to our patents." Motorola expects a written decision and will then explore its options, including a possible appeal. The two companies, as well as other makers of mobile devices, are involved in several disputes across the globe over software features of the latest smartphones.



On May 23, 2012, a California jury decided that Google's Android mobile platform did not infringe on Oracle's patents. In this lawsuit, Oracle alleged that Google's Android phone trampled on its intellectual property rights to the Java programming language, which connects programs and operating systems. The issue in question was whether such computer language can be copyrighted. Google argued that it did not violate Oracle's patents, and that Oracle cannot copyright certain parts of Java, which is publicly available software. The jury decided in Google's favor on the patent issue. Although the jury found earlier that Oracle had proven copyright infringement for parts of Java, it could not unanimously agree on whether Google could fairly use that material. Without a finding on fair use, Oracle cannot recover damages on most of its copyright claims.

U.S. District Judge William Alsup has not yet decided several issues that could determine how a potential mistrial on the copyright issues would unfold.


Net Neutrality Rules

The legal fight over the U.S. government's new Internet traffic rules will likely drag into 2013. In 2010, the Federal Communications Commission (FCC) adopted "net neutrality" rules that forbid broadband providers from blocking access to lawful content, while leaving flexibility for providers to manage their networks. The rules were seen as a compromise, but still upset both public interest groups and industry players, which have filed suits challenging the rules.

Verizon Communications Inc. filed suit in September 2011, asking the court to have the rules thrown out, arguing that the FCC was "arbitrary" and "capricious" and acted beyond its statutory authority. Public interest groups have criticized the rules as being too weak, saying that the FCC was swayed by industry players. These and other cases were consolidated before the U.S. Court of Appeals for the District of Columbia. On May 25, 2012, counsel for the numerous parties proposed a briefing schedule with the U.S. Court of Appeals for the District of Columbia, setting November 21, 2012 as the deadline for their final briefs. If this schedule is accepted, oral arguments will likely be scheduled in 2013. The FCC has expressed confidence in the legal foundation for the rules, and recently unveiled the members of a net-neutrality oversight panel that will monitor the impact of the rules and make recommendations. Netflix, Comcast, AT&T and Walt Disney Co are among the companies represented on the advisory panel, as well as advocacy groups such as the Internet Society and National Urban League.


Gaylord v. United States

The Federal Circuit held that artist Frank Gaylord is entitled to royalty damages against the U.S. Postal Service (USPS). Plaintiff Gaylord created "The Column," a group of 19 stainless steel columns that form the centerpiece of the Korean War Memorial on the National Mall in Washington D.C. In 2002, after securing a license agreement from the photographer, the USPS issued a 37-cent stamp depicting "The Column", commemorating the 50th anniversary of the signing of the armistice ending the War. Roughly 86.8 million stamps were sold, as well as retail goods containing the image. The USPS also licensed the image to retailers but did not seek Gaylord's permission (he typically licenses his work for a 10% royalty fee).

He filed suit in 2006 under 28 U.S.C. 1498(b) for copyright infringement. The Federal Circuit held that Gaylord owned the copyright and that USPS was liable for infringement, but remanded for determination of damages. On remand, the Court of Federal Claims limited Gaylord's damages to $5,000, finding that this was the upper limit in the "zone of reasonableness" around Gaylord's actual damages. The court denied Gaylord's claim for 10% royalties, find that neither 28 U.S.C. ยง 1498(b) nor the Copyright Act authorized a royalty-based award for copyright infringement. Instead, the court applied the "zone of reasonableness" approached used in Steve Altman Photography v. United States, and set the limit at $5,000 because the USPS argued that it had never paid more than $5,000 to license an image and had a policy against paying royalties. Gaylord appealed.

On May 14, 2012, the Federal Circuit reversed, vacating the lower court's damages decision and remanding for determination of market value of the infringing use and award of prejudgment interest. The Federal Circuit found that the lower court should not have relied only on the USPS's self-serving statements of its internal policies, but should have considered Gaylord's typical royalty rate of 8 to10%, the 8% royalty rate charged by the USPS to use "The Column", and the various ways in which the USPS used the image. The Federal Circuit also held that the lower court erred in denying prejudgment interest, as Section 1487(b) permits recovery of a plaintiff's "reasonable and entire compensation," which includes "delay compensation."


Slander in New York

The New York Appellate Division, Third Department held on June 1, 2012 that it is no longer slander in New York to falsely call someone gay. The decision stems from a lawsuit filed by Mark Yonaty, who alleged that a woman spread a rumor about him in hopes that Yonaty's girlfriend would break up with him. He said the comment hurt and ultimately destroyed the relationship. The decision wipes out decades of rulings that calling someone gay is defamatory. In a unanimous decision, Justice Thomas Mercure stated: "These appellate division decisions are inconsistent with current public policy and should no longer be followed," as qualifying being called gay as defamatory is "based on a false premise that it is shameful and disgraceful to be described as lesbian, gay or bisexual."


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This page contains a single entry from the blog posted on June 2, 2012 1:52 PM.

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