Tattoos are permanent, often complex, creative, and original pieces of work created by a tattoo artist. Recently, litigation has come up regarding tattoos on famous athletes. While most issues involving tattoos on athletes are more easily handled — such as J.R. Smith’s tattoo of the brand Supreme on his leg1 — there are questions of whether a tattoo is subject to copyright protection when it is prominently displayed and reproduced on a famous athlete in a video game. This question is at the center of a lawsuit filed by Solid Oak Sketches against Take Two Interactive Software as well as two other producers of the popular NBA 2K video games based on the video games’ reproductions of players’ tattoos, including LeBron James.2
A similar issue arose in 2011, in which tattoo artist S. Victor Whitmill claimed to have copyright ownership of Mike Tyson’s face tattoo, with the tattoo in question given to Tyson in 20033. Whitmill sued Warner Bros., claiming that the popular film Hangover 2 infringed on his work when they reproduced Tyson’s tattoo on a main character’s face4. While Whitmill’s complaint failed to temporarily enjoin the studio from releasing the film in theaters, the case was settled out of court and now leaves an underwhelming amount of case law on the subject.5
The Copyright Act of 1976 gives protection to artists that establish that: (1) their creation is the type of work that is protectable; (2) their creation is an original and creative work; and (3) the creation is affixed to a tangible medium for expression.6 Further, § 202 of the Copyright Act states that “ownership of a copyright… is distinct from ownership of any material object in which the work is embodied.”7 This means that a tattoo artist does in fact have copyright ownership over original and creative tattoos that they give, even when those tattoos are on another person’s body. However, there is an implied license that allows people to freely and publicly display their tattoos — for example, on television, film, and magazines — so for most people, this is not a problem.8However, this issue has arisen because LeBron’s tattoos are not only being displayed, but they are being digitally reproduced in a video game, causing an issue for copyright infringement issue.9
The company Solid Oak Sketches obtained the copyrights for two of LeBron James’ four tattoos in question — the portrait of his child and the area code — before suing in 2016 because they were used in the NBA 2K series.10 Take Two argues a fair use defense, stating that the tattoos are covered under fair use and are not a critical component of the video games, seen only fleetingly or rarely.11 However, that argument may not hold water due to the time and energy put into recreating both the athletes and tattoos with incredible accuracy.12 Further, this argument did not survive the motion to dismiss, with Judge Laura Taylor Swain finding that the defenses presented by Take Two are fact-intensive and will require more evidence.13
New York University intellectual property law professor Christopher Jon Sprigman says to the New York Times that Solid Oak’s lawsuit “amounts to a shakedown and copyright trolling,” stating further that “[t]hey shouldn’t be allowed to tell LeBron James that he can’t take deals to license his likeness… the ability of the celebrity, or really anyone, to do that is an element of their personal freedom.”14 LeBron James states that his tattoos are a part of his “persona and identity,” saying that if he is not shown with his tattoos, it would not be an accurate depiction of himself.15 In a Declaration of Support for the defendants from LeBron James, he states that the four tattoos in question were “inked in Akron, Ohio,” and in each case, he had a conversation with the tattooist about what he wanted inked on his body.16
The outcome of this case will set an important precedent on whether or not tattoo artists can demand monetary compensation every time a celebrity’s likeness has been reproduced. Since the rise of litigation, players’ unions and sports agents have been advising athletes to secure licensing agreements before they get tattooed, in order to protect their future interests.17 This way, the athletes have secured their rights while giving artists have an incentive to sign rather than pass up a celebrity client who could be a walking advertisement for their art18.
1 Cam Wolf, NBA Tells J.R. Smith to Cover Up His Supreme Tattoo Or Else, GQ (Oct. 1, 2018), https://www.gq.com/story/jr-smith-supreme-tattoo-nba?verso=true (in which Cleveland Cavaliers’ J.R. Smith was told by the National Basketball Association that they would fine him for every game of the season that he failed to cover up the Supreme logo on his leg, citing the League’s Collective Bargaining Agreement, which states that ‘a player may not, during any game, display any commercial, promotional, or charitable name, mark, logo, or other identification… on his body.’).
2Jason M. Bailey, Athletes Don’t Own Their Tattoos. That’s a Problem for Video Game Developers, New York Times (Dec. 27, 2018), https://www.nytimes.com/2018/12/27/style/tattoos-video-games.html.
13 Thomas Baker, NBA 2K Tattoo Copyright Suit Offers Two Compelling Legal Arguments, but Only One Seems Practical, Forbes (Jan. 4, 2019), https://www.forbes.com/sites/thomasbaker/2019/01/04/lebron-smartly-sides-with-the-producers-of-nba-2k-in-tattoo-copyright-case-but-will-that-be-enough/#4e08f33c7663.
The reworked “fair use” defense has provoked debate because it provides excessively broad immunity to certain types of parodies and other expressive uses of trademarks.1 This Article will explore whether the Trademark Dilution Revision Act (TDRA) promotes a flawed treatment of parodies with regard to sub-clauses that provide selective shelter, and exonerating some parodies from liability while impugning others.2 The principal flaw that is discussed in this Article relates to the parody provision and its application of the trademark use test for determining whether a parody is fair. The provision is pliable in that it can be both lenient and strict on parodies.
I. Trademark Dilution Revision Act
The language of the TDRA appears to implicitly divide parodies into two distinct groups: source denoting parodies and non-source denoting parodies. Non-source denoting parodies are artistic parodies- that are not used as trademarks and are treated with leniency, whereas source-identifying parodies generally receive strict treatment3. A plain reading of the provision appears to confer blanket immunity to all parodies as long as they are not being utilized as indicators of source(s) for goods or services4. On the other hand, it imposes liability on parodies that function as trademarks without suitable inquiry into the nature or impact of the parody in question.5,6 This parody approach fails to adequately assess forms of harm since it focuses exclusively on the classification of the parody’s status, rather than the effect.
The focus of inquiry should be on the effect of the parody in relation to the original trademark’s distinctive quality or reputation, with consideration regarding the investment to establish such distinctiveness, and not just on the status and presence of commercial or trademark use. However, this is not the case because the TDRA’s fair use provision fails to appropriately distinguish parodies that convey an artistic or social message from those that tarnish a senior mark.7 The broad language of the exception allows tarnishing use to be exempt from liability so long as the parody in question is not utilized as a source indicator.8 The “fair use” provision appears to provide automatic immunity to non-source denoting parodies, as it stipulates that only these types of parodies that do not function as designators of source, are eligible for exemption under the provision.9 The exemption is justified by the First Amendment.
II. Exploring the TDRA Flaw
Parodies are expressive by nature.10 For this reason, some parodist choose to present their parodies as “works of art” to the public; such representations can be made without any connection to goods or services, and occasionally, without the expectation of commercial gains.11
Still, these parodies can be harmful to the original trademark owner when free-riding occurs, or some harm to the goodwill of the mark because of confusion or false misrepresentation. Free-riding occurs when the parodist receives a benefit from the association between their mark and the well-known mark12. Although some have argued these actions are permissible because they align with the First Amendment justification, and ensure that the original owner shall not be able to monopolize the famous creation, this view fails to consider the investment the original owner sacrificed to establish the identity of being “well-known” or “famous.” As a result, parodists can reap where they have not sown.
Courts have confirmed that the TDRA applies different treatments to parodies based on their categorial status. The TDRA enactment amended the fair use defense by adding an expressed defense for noncommercial use; this plain language of the provision explicitly excluded source denoting parodies. Therefore, courts relied on the main dilution factors provided by the Act, instead of the fair use exception, to immunize source denoting parodies from liability. 13
In Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, the court confirmed that the parody clause in the fair use provision is not exhaustive in its coverage of non-dilutive parodies.14 This case set a precedent which allows parodies that are being used as a trademark to sell goods in commerce to be exempted from liability for dilution, in certain circumstances.15 The court’s analysis indicates that a parody does not necessarily need to satisfy the fair use provision in order to be exonerated from liability.16
The courts affirmations justify the concerns with the TDRA’s fair use parody clause, as it demonstrates that the provision is both too broad in some respects, but also too narrow in others.17 The provision is broad as it largely immunizes all non-source denoting parodies from liability without assessing the message communicated by the parody and its effect on the reputation of the mark. If the message promotes a negative impact on the goodwill of the original trademark owner or free-riding occurs, the original owner will have no claim against the parodist, and the First Amendment justification trumps the original owner’s interest or disfavored effects. On the other hand, the provision is too narrow because it excludes certain source-denoting parodies that may not be deserving of protections because of the extraordinary investments original owners take to establish a specialized distinction for the mark.
Allowing protection under these circumstances, permits the parodist to take advantage of trademark owners marketing investments and efforts they may have taken years to establish. Further, the treatment permits free riding. Consequently, the approach to the treatment of parodies effectively ‘dilutes’ trademark owners of the right to obtain an appropriate remedy against parodist who have tarnished their marks by engaging in an unfair or offensive comparison, and parodist who has benefited from the original owner’s investments.
An example of these effects is demonstrated in Mattel, Inc. v. Walking Mountain Productions. In this case, the parodist is an artist who posed nude Barbie dolls in photographs that displayed Barbie getting attacked by vintage household appliances.18 Although the artist failed to use the term “Barbie,” the art itself irrefutably involved the trademarked doll and the titles reflected that fact.19 The message of the parody meant to diminish the Barbie persona that was established by Mattel through successful marketing.20 Mattel had purportedly established Barbie as “the ideal American woman” and a symbol of “American girlhood.”21 Is it unfair for a parodist to attempt to destroy the goodwill or reputation of the mark? The law certainly does not think so because such actions are viewed as an exercise of the First Amendment right.
But what if the only reason the parodist receives an audience or attention is because of “Barbie.” Is the original owner now entitled to a claim? Had it not been for the original owner, the parody would likely have never been created, nor would the parody have received the level of attention attained. But for the original owner’s investments toward establishing the mark’s goodwill, it is likely the parody would be non-existent, or at the very least would not have obtained the level of attention it received. If these photos only receive attention because of “Barbie,” does that mean the parodist is permitted to free-ride off of the famous mark owner’s marketing efforts and investments that may have taken the owner years to establish? Trademark law is permitting parodist to reap what the original owners have taken years to sow! It could take a trademark-owner years to establish a distinct attractiveness in the marketplace. However, a parodist need only use the famous mark under the guise of a parody and receive the same benefits of attractiveness through association, at a fraction of the time and monetary investment that was devoted by the original owner.
Under these protections lays the question of fairness, which arises when there is harm from the parodist belittling the reputation of the mark that is being ridiculed.22 Still, the current parody provision does not possess sufficient nuance to assess the type or extent of damage inflicted on the senior mark, caused by the tarnishing effects of the parody.23 Particularly, it fails to provide guidance on the level and quality of ridicule that is considered “acceptable” for a parody.24 This raises some concerns; virtually many cases of non-trademark expressive use would receive protection under the Act. The TDRA arguably tilts the balance too far in favor of non-trademark use parodies.
1 Eugene Lim, Of Chew Toys & Designer Handbags: A Critical Analysis of the “Parody” Exception under the U.S Trademark Dilution Revision Act, 35 CAMPBELL L. REV. 83, 90 (2012).
2 Id. at 92.
4 Eugene Lim, Of Chew Toys & Designer Handbags: A Critical Analysis of the “Parody” Exception under the U.S Trademark Dilution Revision Act, 35 CAMPBELL L. REV. 83, 92 (2012); Justin Gunnell, Evaluation of the Dilution-Parody Paradox in the Wake of the Trademark Dilution Revision Act of 2006, 26 CARDOZO ARTS & ENTERTAINMENT 441, 455 (2008).
5 Eugene Lim, Of Chew Toys & Designer Handbags: A Critical Analysis of the “Parody” Exception under the U.S Trademark Dilution Revision Act, 35 CAMPBELL L. REV. 83, 92 (2012).
6 It’s the courts duty to inquire about the nature or impact of the parody which is determined through the infringement factors discussed in the following section.
7 Eugene Lim, Of Chew Toys & Designer Handbags: A Critical Analysis of the “Parody” Exception under the U.S Trademark Dilution Revision Act, 35 CAMPBELL L. REV. 83, 93 (2012).
8 Eugene Lim, Of Chew Toys & Designer Handbags: A Critical Analysis of the “Parody” Exception under the U.S Trademark Dilution Revision Act, 35 CAMPBELL L. REV. 83, 93 (2012); Justin Gunnell, Evaluation of the Dilution-Parody Paradox in the Wake of the Trademark Dilution Revision Act of 2006, 26 CARDOZO ARTS & ENTERTAINMENT 441, 455 (2008).
9 Eugene Lim, Of Chew Toys & Designer Handbags: A Critical Analysis of the “Parody” Exception under the U.S Trademark Dilution Revision Act, 35 CAMPBELL L. REV. 83, 92-93 (2012).
Copyright Protection of Non-Utilitarian Designs under the Copyright Act of 1976
Designers in the high fashion industry face many obstacles in receiving intellectual property protection for the utilitarian aspects of their clothing. Congress has provided copyright protection only for original works of art, but not for industrial designs that embody utilitarian functions. See 17 U.S.C. 101. Copyright protection does not extend to utilitarian aspects of objects because it would open up a flood of litigation over exclusive monopoly rights that would “burden competition, raise prices, and also harm consumers.” SeeStar Athletica, L.L.C. v. Varsity Brands, Inc., Brief for United States as Amicus Curiae 5-6. This proves problematic, however, when art and industrial design are intertwined, especially in the fashion industry which combines aesthetic elements with utilitarian garments. Under the separability doctrine, these pictorial, graphic, and sculptural works on the design of a useful article are copyrightable so long as they “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” See 17 U.S.C. 101. But what happens when pictorial, graphic, sculptural works are inseparable from the utilitarian aspects of a garment? SeeStar Athletica, L.L.C. v. Varsity Brands, Inc.provided fashion designers with newfound intellectual property protection for aesthetic aspects that are incorporated into utilitarian aspects of their garments.
Obstacles Designers Faced in the High Fashion Industry Prior to the Star Athletica Decision
It is without a doubt that fashion, namely high fashion, has now become a status symbol that relies heavily on its branding and aesthetic more so than any utilitarian value its designs may serve. So much of the value that these high fashion designs derive is from its rarity and accessibility to only the elite and wealthy. Accordingly, it is not too surprising that fast fashion powerhouses have copied these high fashion runway looks along with several other brand elements available to the more general public.
Fast fashion brands, i.e. Zara or Mango, have often tried emulating high fashion ad campaigns by recreating the featured garments for an exponentially lower price. For example, Celine’s ad campaign for the 2011 fall and winter collection consisted of models in a natural setting surrounded by aloe plants. Zara later emulated this in black and white during the Spring and Summer 2014 season and again during the Fall and Winter 2015 season with a minimalist focus on a model in black and white and an aloe plant.
A few other examples of this are pictured below where Zara emulated Balenciaga’s Fall and Winter 2016 collection with its red parka and comparable styling to Lotta Volkova or a cream colored trench coat with athletic zip up wear underneath for the Burberry Fall 2016 season, which was a distinctive look for that season featuring model Chris Wu.
The similarities between the campaigns are not entirely identical, and even if they were, there were not rigidly defined protections under the Copyright Act. Zara and other fast fashion powerhouses such as Mango and Forever 21 have a legally cognizable right to provide their own independent expressions about their fashion ideas. Accordingly, they continue to use these similarities with the intention that consumers create a psychological connection between the high fashion brand and the fast fashion brand. Fast fashion powerhouses strengthen these connections by recreating the styling, colors, and design to produce the same high fashion look elite fashion designers were inspired by without infringing logos, patents, or trademark protected designs. This leaves high fashion designers left fairly powerless and unprotected by copyright laws. This all changed with the holding of Star Athletica, L.L.C. v. Varsity Brands, Inc., which provided high fashion designers with much more expansive intellectual property protection.
Star Athletica, LLC v. Varsity Brands, Inc.: Progress Toward Copyright Protection of Fashion Design
In March 2017, the Supreme Court established a test for determining the copyright eligibility of design elements in fashion in Star Athletica, L.L.C. v. Varsity Brands, Inc.Respondent Varsity Brands, Inc. obtained more than 200 copyright registrations for two-dimensional designs that appear on their cheerleading uniforms. Respondent employed designers who sketched design concepts of uniforms consisting of “original combinations, positionings, and arrangements of elements which include V’s (chevrons), lines, curves, stripes, angles, diagonals, inverted V’s, coloring, and shapes.” 137 S. Ct. 1002, 1007 (2017). RespondentVarsity Brands, Inc. sued Star Athletica, L.L.C., a competitor that also markets cheerleading uniforms, for copyright infringement for using 5 of Respondent’s copyrighted designs. Id. The District Court granted the petitioner summary judgment holding that designs could not be conceptually or physically separated from the uniforms, and therefore were not copyrightable designs. Id. The Sixth Circuit later reversed this and concluded that graphics “could be identified separately and were capable of existing independently” of the uniforms under 17 U.S.C. 101. Id. Specifically, they found that the graphic designs were separately identifiable because “the designs and a blank cheerleading uniform can appear ‘side by side’ and . . . are capable of existing independently.” Id. The Supreme Court found these conflicting perspectives on the separability analysis warranted certiorari to resolve this widespread disagreement over the proper separability test. Id.
The Supreme Court relied solely on a statutory interpretation of 17 U.S.C. 101, rather than a free-ranging interpretation of the best copyright policy for the case at hand. SeeMazer v. Stein, 347 U.S. 201 (1954). The Court looked at the “whole provisions of the law” to determine the meaning of 17 U.S.C. 101. SeeUnited States v. Heirs of Boisdore, 8 How. 113, 122 (1849). The statute provides that:
A pictorial, graphic, or sculptural feature incorporated into the design of a useful article is eligible for copyright protection if it (1) can be identified separately from, and 2) is capable of existing independently of, the utilitarian aspects of the article. 17 U.S.C. 101.
The Court focuses more on the second requirement, stating that the burden of proof for the first requirement is not that difficult to satisfy. SeeStar Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. at 1010. The Court states that the trier of fact must determine whether the separately identified feature can exist apart from the utilitarian aspects of the article. Id. This means that it has to be able to exist on its own if its imagined independent from the useful article. Id. If it cannot be imagined separately from the useful article, then it is not a pictorial graphic or sculptural feature of the article itself, but rather as part of one of the utilitarian aspects of the garment. Id.
The Copyright Act provides that the owner of the copyright can reproduce this work copies on any kind of article regardless of whether it embodies a utilitarian property. See 137 S. Ct. at 1005. The Court states that this is a mirror image of 17 U.S.C. 113(a) which protects an authorship fixed on some tangible medium that is non-utilitarian and then later applied to a utilitarian object. Id. On the other hand, 17 U.S.C. 101 protects the art that is first fixed in the medium of a useful article. Id. Accordingly, the Court holds that the copyright protection extends to pictorial, graphical, or sculptural objects regardless of whether they are affixed to utilitarian or non-utilitarian objects. Id.
The Court held that this interpretation of the statute is consistent with a past holding in the Copyright Act’s history. Id. In Mazer, the Court held that the respondents owned copyright protection for a statuette that served as the base of the lamp and it was irrelevant if can be identified as a freestanding sculpture or lamp base. Id. The Copyright Office used the Mazer holding in the modern separability test to copyright law in section 101 of the 1976 Act. Id.
Using statutory interpretation and case law, this Court held that the surface decorations on the cheerleading uniforms can be considered separate under the separability test mandated in Section 101 of the 1976 Act. See 137 S. Ct. at 1006. They reasoned that if the decorations were removed from the uniforms and affixed to another medium, they would not copy the uniform itself. Id. They analogized that just as two-dimensional fine art are aligned with the shape of the canvas on which it is painted, these decorations are aligned with the shape of the uniform itself. See 137 S. Ct. at 1012. Respondents may only prohibit the reproduction of these surface designs; however, the Court holds that they have no right to prevent others from manufacturing a cheerleading uniform identical in shape, cut, or dimensions. See 137 S. Ct. at 1006
Ultimately, the design of the uniforms satisfy the requirements of Section 101 of the 197 Act because they 1) can be perceived as a two- or three- dimensional work of art separate from the useful article; and 2) would qualify as a protectable pictorial, graphic, or sculptural work either on its own or in some other medium if imagined separately from the useful article. 137 S. Ct. at 1016. Based on this interpretation, the Supreme Court affirmed the Court of Appeal’s judgment. Id.
Now high fashion designers can turn to this holding when any aesthetic design is affixed to a utilitarian design. This holding has revolutionized high fashion designers’ intellectual property interests for their designs in the high fashion industry that is victim to fast fashion’s intellectual property theft.
It was only a matter of time before cryptocurrency  pervaded the music industry. The proliferation and potential applications of blockchain seem to be the perfect fit for the challenges struggling musicians face. While musicians are the creators of their art, it’s the record labels that distribute the music who tend to own the songs. It is for this reason Paul McCartney has now been fighting for 40 years for the rights to The Beatles albums. As technology evolves, some crafty music executives have been devising new ways for musicians to protect and sell their songs.
The Crypto Solution
Hakim Draper, cofounder of Boogie Shack Music Group, has been creating a new means for every artist in the music industry to have their very own digital currency. Boogie Shack has teamed up with Tao Network, a blockchain-based content distribution platform for the music industry, and plans to use XTO tokens (XTO = Tao Network’s abbreviation for it’s cryptocurrency) to create a unique currency for music artists. Each artist will be able to sell rights to their songs in exchange for XTO tokens.
The potential for musician’s intellectual property (IP) to be converted into monetized data will serve as a direct pipeline between artists and their fans. Artists and fans may very well collaborate on songs, merchandising, and tours, meaning the level of fan involvement will directly correlate to an artist’s success. The more artists rely on other funding sources, the more of their rights they are forced to give away. This has the potential to be a great step forward for artists in the music industry assuming that the fans who support these artists using cryptocurrency will have the artist’s best interests in mind. It should also be noted that cryptocurrencies such as XTO—especially in their early phases with limited funding—are controlled by a very small number of people who could potentially thwart/control the artist. It should also be noted—even despite all the traction it has been gaining—cryptocurrency is not regulated by the SEC, so it is new ground that many are skeptical about. There has been no legal entity or other organizational form that governs and protects the ongoing developments and ensures fair decision-making for cryptocurrencies in the United States.
Current Issues in the Music Industry
Most issues stem from the complexities around who “owns” a song. Ownership is critical as it secures the right to royalties for any use of the song for the owners fortunate enough to be royalty holders. As we are in the year 2018, it’s not surprising that streaming has emerged as the most important source of incoming royalties representing 62% of royalty revenue in 2017 (worth about $5 billion). Record companies tend to walk away with the lion’s share of revenue, while only the most popular artists and songwriters gain relatively small sums of money relative to the popularity of their output. To put it in perspective, struggling artists have complained that a million listens on a streaming service are worth about $100 to the writer of the song once the music industry has taken its cut.
Other Music Cryptos are starting to Join the Mix
There are a few blockchain-based solutions that exist for paying musicians via crypto-currency. Bitmark—a crypto startup that uses blockchain technology to enable property rights for digital assets—has partnered with Asia’s largest streaming platform KKBOX to create a mechanism for artists to see instant payments when their songs are streamed on the service.
Another huge startup crypto contender in the blockchain world goes by the name of Vezt. The Los Angeles-based blockchain startup brought in its funds via initial coin offering (ICO) worth $4.7 million, which it’s planning to use to launch its royalties management platform. The team at Vezt has already landed the rights to some 30 songs from music icons: Dr. Dre, Kanye West, Jay-Z, John Legend, and Drake.
The platform allows the rights holder to a song to sell their portion of the rights through an initial song offering (ISO). Artists and rights holders can then choose how much they would like to raise from a fraction of their song, set the reversion term and set a date for the ISO. Rights are purchased with the tokens issued by Vezt. Musicians are paid with the funds from the crypto offering (after Vezt takes its cut), and the digital rights to the song move to the buyer’s Vezt digital wallet. The song rights information is encoded on Vezt’s blockchain, and the startup will distribute purchaser royalties and allow users to store profits on the platform. It should be noted that changing those profits out of Vezt tokens and into fiat currency, or even another form of digital currency, comes with a fee of at least 5%.
Where do Music Cryptos Currently Stand?
Vezt still has a long way to go before it makes a name for itself among the ASCAPS and the BMIs. Drake and J. Cole’s, “Jodeci Freestyle” (strong verse from a younger Cole very Born Sinner) became the first song to ever be featured as an ISO as a Beta test for Vezt last November. However, Drake only offered 10% of the publishing of the song, not the actual master, which means artists are still hesitant to go all in on the platform.
At this stage it is an interesting idea, but one that is not likely to make a lot of money for either artists or investors in the near future until it gains some serious traction. While the current generation of musicians may not become fully acclimated with crypto currency, it is most certainly likely to only gain in popularity among the younger generations. In other words, as musicians from younger generations become pertinent, IP will be more commonly valued as monetized data. Thus, musicians and the music industry alike are looking forward to seeing how monetizing data will impact (and potentially revolutionize) the Intellectual Property industry as a whole.
 A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
 A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
On June 13, 2013, the Supreme Court issued a unanimous decision holding that “genes and the information they encode are not patent eligible simply because they have been isolated from the surrounding genetic material.” See Association for Molecular Pathology v. Myriad Genetics Corp. (AMP), 133 S. Ct. 2107, 2120 (2013). Attorney Sewell’s publication entitled “Unanimous U.S. Supreme Court and Angelina Jolie: BRCA1 & BRCA2 Patentability” is widely disseminated, well-received by his peers, and sparks considerable commentary.
In somewhat of a twist, the Supreme Court’s decision against the patentability of isolated DNA prompted more—not less—litigation by Myriad regarding gene patents. Between 1997 and 2013, Myriad’s revenue from its BRACAnalysis test steadily increased, and totals more than $2 billion. BRACAnalysis is a genetic test that confirms the presence of BRCA1 or BRCA2 gene mutations, responsible for the majority of breast and ovarian cancers. Myriad earned that revenue by carefully guarding its patent rights and preventing others from providing screening tests for the BRCA1 and BRCA2 genes. From the mid-1990s, until the Supreme Court’s AMP decision, Myriad was the lone provider of full-sequence BRCA1 and BRCA2 tests in the United States. Within days of the Supreme Court’s AMP decision, Defendant Ambry Genetics Corporation announced plans to sell tests less expensive than Myriad’s to screen BRCA1 and BRCA2 genes. Ambry Genetics Corporation is a clinical diagnostic and genomic services company in Aliso Viejo, California. Defendant now offers a menu of at least six tests that include screening for BRCA1 and BRCA2: a combined BRCA1/BRCA2 test, BRCAPlus, BreastNext, PancNext, Ova Next, and CancerNext. Defendant’s BRCA1/BRCA2 test is available for $2,200—substantially less than the price for comparable testing offered by Myriad.
Soon after Defendant Ambry made its announcement, Myriad filed a complaint in the District Court of Utah alleging that Ambry’s genetic testing infringes several of Myriad’s patents. Myriad also moved for a preliminary injunction to enjoin Defendant Ambry from sales or offers to sell “genetic tests including a BRCA1 or BRCA2 panel”. Ambry opposed the motion, alleging that the claims were invalid under 35 U.S.C. § 101 et seq. The district court divided the Myriad gene patent claims at issue into the Primer Claims and the Method Claims.
On March 20, 2014, the Utah District Court held that Plaintiffs are not entitled to a preliminary injunction because “although Plaintiffs have shown they are likely to be irreparably harmed if an injunction does not issue, Defendant has raised substantial questions concerning whether any of the patent claims at issue in Plaintiffs’ Motion are directed toward patent eligible subject matter under 35 U.S.C. § 101”. Myriad then appealed to the Federal Circuit the denial of its motion for a preliminary injunction.
U.S. Federal Circuit Court of Appeals
On October 6, 2014, Chief Judge Prost and Judges Dyk and Clevenger of the U.S. Court of Appeals for the Federal Circuit heard oral argument in the interlocutory appeal of the Utah district court’s denial of Myriad’s motion for preliminary injunction against Ambry Genetics. In re BRCA1- and BRCA2- Based Hereditary Cancer Test Patent Litigation, Case Nos. 14-1361, -1366. The two main issues that dominated the argument are: 1) the correct implementation of the test for patent eligibility; and 2) the application of this test to probes and primers. The impact on the biotechnology industry was also discussed.
Jonathan E. Singer, counsel for Myriad, began by arguing that both the Federal Circuit and the Supreme Court had previously acknowledged that Myriad was entitled to patent some applications of their newly-discovered gene sequence and tools designed specifically to utilize that sequence. Myriad argues that primer pairs are patent subject matter eligible under 35 U.S.C § 101 because the pairs are structurally and functionally different than a single fragment of DNA. Counsel for Myriad also argued that, as a whole, the method of screening for alterations on the BRCA genes involves steps of the method claims, when considered together, effect an improvement in a technical field – by using Myriad’s probes and primers that Myriad invented.
With respect to the primer claims, Ambry argues that these claims are patent-ineligible because, in addition to reciting patent-ineligible products of nature, the claims fail under Alice because they are a generic component used to amplify a person’s gene sequence to access the sequence information for the patent-ineligible sequence comparison. As for the method claims, Ambry argues that under Alice, “the combination of unpatentable subject matter and a generic physical application is no more patent eligible than a claim reciting only the unpatentable subject matter.” See Ambry Supplemental Brief at page 3.
What is clear from the district and appellate court arguments is that it does not appear likely that Myriad will be successful in its attempts to preliminarily enjoin Ambry. Additionally, the biotechnology industry is looking towards the Federal Circuit for guidance on the correct implementation of patent subject matter eligibility under Myriad, Mayo, and Alice.
Intellectual property (patents, trademarks, copyrights, trade secret) is all around us and is valuable. The things that we use, watch, and buy are items that were thought of and then put into practice. Attorneys at the New York LAW FIRM OF DAYREL SEWELL, PLLC protect your intellectual property, so that you can maximize value. The majority of our attorneys possesses scientific training and is well-experienced in the litigation and prosecution aspects of patents, trademarks, copyrights, trade secrets, licensing, unfair competition, and more. Our passion and commitment is unmatched and is one of several aspects that set us apart from our peers. We care. As a result, our clients receive legal expertise with individualized attention by attorneys who are invested in the outcome of your matters. Our clients realize the value that this law firm delivers and are committed to a long-term, rewarding, attorney-client relationship.
In an exemplary ruling, the United States District Court for the Southern District of New York has ordered the so-called patent troll, Lumen View Technology, LLC (“Lumen”), to pay opposing party FindTheBest.com’s legal fees and other expenses under the fee-shifting provision of 35 U.S.C. § 285. See Lumen View Technology, LLC v. FindTheBest.com, Inc., 1:13-cv-3599 (DLC) (SDNY 2014).
Lumen filed suit against FindTheBest in May 2013 alleging FindTheBest infringed on a computer-implemented method patent that facilitated bilateral and multilateral decision-making. Lumen also filed more than twenty other similar patent infringement claims against various other technology companies during 2012 and 2013. FindTheBest quickly noticed the Lumen claim was a sham due to the fact that FindTheBest technology did not use a bilateral or multilateral decision-making process. The Southern District found Lumen’s suit to be without merit and dismissed the case in November 2013.
After the dismissal, FindTheBest petitioned the court to find Lumen’s suit one of an “exceptional case” under Section 285 and the recent Supreme Court ruling in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014).
In the April 2014 unanimous decision penned by Justice Sotomayor, the Supreme Court ruled that an “exceptional case” under § 285 is one that stands out from others with respect to a party’s litigating position, considering the law and the facts of the case, or the unreasonable manner in which the case was litigated. See Octane Fitness, LLC, 134 S. Ct. at 1756.
The Court found the previous standard in Brooks Furniture Manufactuirng, Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (2005), to be overly restrictive and one that hampered the statutory grant of discretion given to the courts under Section 285. Section 285 imposes only one constraint on a district court’s discretion to award fees, one of “exceptional” cases. In Brooks, a case could only be deemed exceptional when there was material inappropriate conduct, or when parties brought cases in subjective bad faith and were objectively baseless. The Court found this framework to be inconsistent with the text of Section 285.
In step with the Supreme Court’s Octane decision, the Southern District found Lumen’s patent infringement suit to fall under the “exceptional case” standard. As such, the Southern District of New York granted FindTheBest’s motion and found the suit to be a “prototypical exceptional case” shifting payment of FindTheBest’s case fees to Lumen.
The LAW FIRM OF DAYREL SEWELL, PLLC is pleased to announce that Dayrel will be co-presenting a Continuing Legal Education (CLE) course called “Intellectual Property Fundamentals: What Every Attorney Needs to Know” on Monday, May 19, 2014 at the Brooklyn Bar Association.
Refreshments and networking will immediately follow the CLE presentation. The attached flyer contains further course and registration information. You are encouraged to attend this fun and informative event. We look forward to seeing you!
On January 14, 2014, the Office of the New York State Attorney General (OAG) made a significant contribution in combating the ignominious patent troll.
Attorney General Eric Schneiderman announced that MPHJ Technology Investments, LLC (MPHJ), a so-called “patent troll”, entered into an Assurance of Discontinuance (or settlement) with the OAG stemming from the OAG’s June 2013 investigation of potentially deceptive statements, and other abusive conduct, by MPHJ relating to its patent licensing program which targeted New York businesses as potential infringers of its patents. See Assurance No. 14-015. The Attorney General’s investigation focused on MPHJ’s use of deceptive and abusive tactics when it contacted hundreds of small and medium-sized New York businesses in an effort to strong-arm them into paying MPHJ for patent licenses of dubious value.
Thankfully, the State of New York is taking corrective measures against patent troll abusive tactics. The settlement establishes guidelines for entities who exemplify patent troll behavior. Amongst other things, the settlement contains guidelines for future patent assertion conduct that, in part, include:
good faith basis for asserting patents after conducting reasonable diligence;
providing material information necessary for an accused infringer to evaluate a claim;
material information necessary to evaluate a reasonable royalty rate;
no misleading statements about a license fee;
transparency of ownership of the patent holder and financial interest;
additional safeguards against deceptive patent assertion conduct; and,
material information necessary to evaluate the value of a proposed license
It is important to note that the guidelines in the OAG’s settlement are minimum standards and are not a safe harbor. OAG states that “[t]he requirements imposed on MPHJ in the settlement should be viewed by other patent trolls as the minimum standards that such entities seeking to contact New York businesses must follow to avoid liability for unlawful deceptive practices.”
MPHJ v. FTC
In addition to falling squarely within the crosshairs of the New York, Nebraska, Minnesota, and Vermont Attorney Generals, MPHJ is one of the first patent trolls to ostensibly catch the consumer protection watchful eye of the Federal Trade Commission (FTC). Prior to the FTC filing its draft complaint, MPHJ filed its own preemptive complaint on January 13, 2014 in the Western District of Texas against the FTC and its commissioners and directors. See MPHJ Technology Investments v. FTC et al.; case no. 6:14-cv-00011-WSS. As a bit of background, the FTC first sent a subpoena to MPHJ in July 2013, “seeking certain information regarding MPHJ’s patent-related correspondence and enforcement activity” prior to likely seeking a consent judgment or pursuing FTC Act litigation barring deceptive trade practices. FTC also served a subpoena on Farney Daniels, the law firm retained by MPHJ to help with its enforcement campaign.
MPHJ contends that its lawsuit against the FTC arises out of the “unlawful interference and threats by the FTC Defendants against MPHJ and its counsel directed at stopping or impeding the lawful, proper, and constitutionally protected efforts by MPHJ to identify and seek redress for infringement of its U.S. patents.”
To date, the FTC has not filed its reply to MPHJ’s Complaint. Notwithstanding, intellectual property enthusiasts and many interested others anxiously await greater, appropriate patent reform.
The LAW FIRM OF DAYREL SEWELL, PLLC is pleased to announce that Mr. Sewell’s recent, featured publication, The Ignominious Patent Troll, also prominently appears in the year-end publication of the Brooklyn Barrister.
The Brooklyn Barrister is the official publication of the Brooklyn Bar Association. Dayrel looks forward to continuing his leadership roles as Chair of the Brooklyn Bar Association Intellectual Property Committee and Vice-Chair of the Brooklyn Bar Association Real Property Committee.
The LAW FIRM OF DAYREL SEWELL, PLLC is pleased to announce that Mr. Sewell’s article, “The Ignominious Patent Troll”, found below is the featured publication on the cover of the current issue of Intellectual Property Today.
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