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Week in Review

By Martha Nimmer

Fifty Shades of Gray Goods

The U.S. Supreme Court has ruled that copyrighted materials manufactured abroad can be resold in the United States. The 6-3 decision, issued on Tuesday, affects a multibillion dollar "gray goods market," in which parties import copyrighted or trademarked goods into the U.S. In some cases, these "gray goods" are then resold online or at discount retailers across the country. The goal behind this practice is to acquire goods made and sold abroad at lower prices, and then sell them at a profit in the U.S. Companies such as eBay and Costco have engaged in this practice for years, despite arguments that this practice violates American law.

The case, Kirtsaeng v. John Wiley & Sons, Inc., decided on Tuesday, involved a mathematics student from Thailand who helped pay his tuition at Cornell and the University of Southern California by selling textbooks that friends and relatives had purchased in his home country and then sent to him. The student, Supap Kirtsaeng,then resold the books on eBay. He is said to have made about $100,000 profit. Unsurprisingly, one publisher, John Wiley & Sons (Wiley), was not pleased, and sued Kirtsaeng for copyright infringement. Wiley won $600,000, with the lower court ruling that Kirtsaeng had violated U.S. copyright law by importing books without the permission of the copyright owner. Kirtsaeng appealed to the U.S. Supreme Court, arguing that his actions were permissible under the first sale doctrine. Under that doctrine, "buyers of books and other copyrighted goods may lend or sell them as they wish." Fearing the extension of the first sale doctrine to goods purchased abroad and then resold on the American market, a bevy of companies in publishing, software, and other industries warned the Court that a decision in favor of Kirtsaeng would harm their ability to sell products at lower prices in developing nations, and could possibly result in higher prices overall.

The high Court, however, was unmoved. Writing for the majority, Justice Stephen Breyer noted that Congress did not intend to limit the first-sale doctrine with a "geographical interpretation," which "would threaten ordinary scholarly, artistic,commercial and consumer activities." Consequently, the goods, once sold lawfully abroad, can now be resold in the U.S. without the copyright holder's permission. Justices Ruth Bader Ginsburg, Antonin Scalia and Anthony Kennedy were in the dissent. Calling the majority's opinion a "bold departure from Congressʼ design," Justice Ginsburg wrote that the majority was casting aside an explicit goal of American copyright law -- "to protect copyright owners against the unauthorized importation of low-priced, foreign-made copies of their copyrighted works." Justices Elena Kagan wrote a concurring opinion, in which Justice Samuel Alito joined. Acknowledging the dissent's concerns, Kaganʼs opinion noted that Congress is free to modify the law if it feels that copyright owners need more protection.


Read the opinion here: http://www.supremecourt.gov/opinions/12pdf/11-697_d1o2.pdf

Shape Up

With names like "Spanx" and "Yummie Tummie," you know youʼre in for an interesting legal battle. Things get even juicier when you add a "Real Housewife" to the mix. Enter the case of Spanx, Inc. v. Times Three Clothier, LLC. Filed in Atlanta federal court by billionaire (yes, with a B) shapewear creator Sara Blakley against The Real Housewives of New York City member Heather Thomson, the Spanx suit seeks a declaratory judgment that Spanx has not infringed Yummie Tummieʼs design patents. This suit comes shortly after Thomson publicly "accused Blakely of copying several of her camisoles . . . She specifically demanded that Blakely stop selling items called Spanx Total Taming Tank and Top This Cami," according to Business Week. A Spanx spokesperson responded that Spanx "was making shaping camisoles long before Yummie Tummie." Blakely started Spanx in 2000, while Thomson created her line in 2008. The earliest of Thomsonʼs camisole patents is from 2009.

What makes this case particularly notable is that it involves a dispute about design patents, not trademark or copyright law, which are the more frequently looked to fields in the realm of fashion design protection. In fact, some observers believe that this emphasis on patents signals a new trend in design protection: yoga clothier Lululemonʼs fight with Calvin Klein late last year, as well as Apple Samsung Electronics legal drama, have also been over design patents.

Given the barbs that the parties have traded, it looks like this case is "shaping up" to be a dramatic legal battle.


Read the complaint here: http://www.businessweek.com/pdfs/Spanx_v._Times_Three_Clothier.pdf

Have You Seen This Priceless Work of Art?

Twenty-three years ago, two thieves pulled off a $500 million dollar art heist at the famed Isabella Stewart Gardner Museum in Boston. The thieves, who posed as police officers, overpowered the museumʼs night security guard, tied him up and made off with 13 priceless works of art, including pieces by Vermeer, Rembrandt, Manet and Degas. The crime remains unsolved, but investigators are getting closer to cracking the case.

On Monday, federal officials went public with news that they had learned the identities of the thieves, who allegedly belong to a criminal organization based in New England and the Mid-Atlantic states. Although officials did not reveal the exact names of the alleged thieves, the FBI did say that the paintings had been traced to Connecticut and the Philadelphia area 10 years ago. A special agent in charge of the FBIʼs Boston office added that the bureau planned to launch a publicity campaign aimed at gathering leads from the public, "and possibly from acquaintances of the thieves, [or] anyone who may have glimpsed one of the paintings over a mantel, say, or in an attic," writes The New York Times. The FBI plans to put up billboards in Connecticut and Philadelphia that feature images of the pilfered art work. Following the FBIʼs announcement, museum representatives reiterated the museumʼs earlier promise of a $5 million reward for information leading to the recovery of the works, with the understanding that they be in good condition.

Perhaps seeking to counter fears of criminal prosecution, attorney Carmen Ortiz added that the statute of limitations had expired for the crime of art theft. Anyone in possession of the art could, however, still face charges for the possession of stolen property. The FBI agent in charge of the Gardner heist also said it was possible that the people in possession of the works may not even be aware of their significance, or that they were stolen.

So, if youʼre in Connecticut or Philadelphia and you come across one of the missing paintings and it looks too good to be a reproduction, itʼs probably not.


Masks, Swords, and Smoke & Mirrors

Zorro is in the public domain and belongs to the masses, at least according to a lawsuit filed last week in Washington State federal court. The suit, brought by playwright Robert Cabell, asserts that defendants have "built a licensing empire out of smoke and mirrors" even though the copyright interests in the Zorro works expired years ago. Cabell claims that a 1919 story by Johnston McCulley, "The Curse of Capistrano", was "the first Zorro story." Cabell published a musical--"Z--The Musical of Zorro"--in 1996, and was threatened with litigation by Zorro Productions, Inc. owner John Gertz after licensing the musical last year to a performance company in Germany. The plaintiff claims that his work is based on author Johnston McCulleyʼs first Zorro story from 1919 and the 1920 Douglas Fairbanks film. Fearing legal action, Cabell has gone to court in the hopes of having it declare Zorro to be in the public domain. Specifically, the plaintiff avers that the "Defendants have fraudulently obtained federal trademark registrations for various Zorro marks and falsely assert those registrations to impermissibly extend intellectual property protection over material for which all copyrights have expired. Defendants also fraudulently assert that copyrights for later-published material provide defendants with exclusive rights in the elements of the 1919 story and the 1920 film." The complaint continues: "[n]early one hundred years later, the character is well-known as the masked outlaw who defends the public against tyrannical officials and other villains . . . Although Mr. Cabell's rights to use these public domain works is clear, the defendants have engaged in a campaign of intimidation and coercion aimed at preventing Mr. Cabell (and any other third party) from the legitimate use of this public domain material."

In support of the claim, Cabell points to a lawsuit filed by Sony Pictures over a decade ago against Paramount Studios over the television series Queen of Swords. (Sony, as readers will recall, made the 1998 Zorro film starring Antonio Banderas.) The plaintiff also relies on a footnote from a 2001 federal court decision, wherein the judge said, "[i]t is undisputed that Zorro appears in works whose copyrights have already expired, such as McCulley's story The Curse of Capistrano and Fairbanks's movie, The Mark of Zorro."

Cabell seeks a declaratory judgment that his musical does not violate any intellectual property rights held by defendants, and a preliminary and a permanent injunction against defendants prohibiting them from making claims that the musical infringes any of their intellectual property rights. Cabell also demands the cancellation of defendants' federal trademark registrations for the mark Zorro.



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This page contains a single entry from the blog posted on March 22, 2013 9:51 AM.

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