Legal Geek No. 31: Aereo's Failed Copyright Theories and Outlook Heading into 2015

Welcome back to Legal Geek. This week, we update one of the more compelling copyright law stories of 2014, that being the ongoing saga for cordcutting pioneer Aereo against the broadcast networks in court, to see where Aereo stands heading into 2015.

https://archive.org/details/LegalGeekEp31

Back in June before Nerdtacular, this segment reviewed the Supreme Court decision that deemed that Aereo's subscription service that intercepts broadcast signals with mini antennae was copyright infringement against the networks. I deemed that Aereo would not survive in its current form in that previous segment, but has that come true?

Aereo was defiant in response to the Supreme Court decision, indicating it still had legal theories and arguments to rely upon to try and stop the broadcast networks' motion for an injunction to shut the company down. More specifically, Aereo argued that Section 111 of the copyright act would provide a compulsory license that had to be granted by the networks just like for cable TV providers protected under this Section of the copyright act.

The U.S. Copyright Office refused to recognize such a right to a compulsory license in July, so the battle went to the New York District Court judge handling the motions for injunction against Aereo. In late October, that judge ruled similarly that Aereo and other web providers are not entitled to the cable company protections of Section 111 like the right to force a compulsory license on the broadcast networks.

To put it simply, the judge ruled that even though the Supreme Court deemed that the "public performance" requirement for copyright infringement was met by Aereo's service in a similar manner as it would for cable companies, that did not mean Aereo was actually a cable company. Instead, this decision confirmed the many years of case law holding that web companies like Aereo are not entitled to all specialized cable company protections in copyright law.

And with that, Aereo's last stand failed and a preliminary injunction stands against Aereo, at least as it pertains to rebroadcasting currently-airing television shows.

Aereo is now auctioning its web television technology under bankruptcy to help pay the bills, as $95.6 million of venture capital has dried up to a mere $3.6 million due to all this litigation. Aereo clearly still thinks there is a non-copyright-infringement use of its patented technology, and reports from Engadget say that at least 17 buyers are interested. However, it is clear that Aereo itself as an entity is waving the white flag and monetizing assets in bankruptcy to have money left over to finish litigation and pay damages, if necessary.

Bottom Line: Aereo is effectively dead, as expected. The legal arguments made by Aereo were not laughable in this process, and the Supreme Court was highly divided on the grounds for shutting this entity down, but the injunction and shutdown still occurred. If companies like this want to change the laws going forward, lobbying Congress will be the better avenue for change rather than fighting precedents in court.

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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy

Legal Geek No. 30: Beware the Promiscuous Licensor

Welcome back to Legal Geek! This week, we take a look at so-called promiscuous licensors, and what trademark owners can do to protect themselves from losing their IP rights by being labeled as promiscuous.

https://archive.org/details/LegalGeekEp30

A Michigan court hit the legal news cycle in September for deciding a trademark case based on the well-established doctrine that so-called naked licensing by a trademark owner can destroy the right to protect that trademark. "Naked licensing" is understood to mean the situation where a trademark owner licenses the rights to use the trademark to another party without exerting some control over the quality of goods and the use of the mark by the third party.

This practice is disfavored in trademark law because trademarks are protected for the primary purpose of avoiding consumer confusion, by properly identifying the source of well known trademarked goods. It logically follows that if a company allows others to use the trademark without exerting any real quality control over the use of that mark, then the line blurs for consumers about where the source of goods bearing that trademark is located. That makes the trademark not really identify the true source anymore, which undermines the primary reason we protect trademarks in the first place.

Returning to the Michigan case, a company called Movie Mania was suing to stop a rental service competitor from using the trademark, but the court discovered that Movie Mania had licensed the rights to use that trademark in many agreements since 1996 without any quality control provisions in the license agreements. Thus, these naked licenses ruined any trademark rights Movie Mania had to its own company name, and the competitor won the case and the right to continue using the mark.

This naked licensing was deemed by the court to make Movie Mania a "promiscuous licensor," a cute play on words that helped this case become a bigger news item, but this language may help solidify this often overlooked trademark concept in the public eye. Trademarks are based on some sort of exclusive use, otherwise the mark would not indicate the source of goods for the consumer to avoid confusion, so being "promiscuous" or running around "naked" with your licenses to third parties can clearly undermine that intellectual property.

One of my regular duties in my day job as an attorney is to review publishing and distribution agreements for video and board game designers, as well as other creative types who license the rights to make and sell what is covered by their intellectual property, such as the game in the game design context. Almost every single time, the license granting language for the use of copyrighted and trademarked material contains no real provision for quality control.

This is very bad, as signing such an agreement could wreck one of the client's most important business assets, specifically the trademark rights!

So if you want to learn anything from my past and current clients, learn this: (1) there is no such thing as a form contract, especially when written poorly and one-sided, and (2) there is no reason to sign a license agreement with no quality control provisions for trademarks, as doing so jeopardizes the trademark rights that both parties want to use and exploit.

Bottom Line: just like most IP rights, trademark law has some quirks which can lead the uninformed to make bad decisions that could kill assets like trademarks when conducting regular business agreements. Be careful out there, as you don't want to end up being the next "naked and promiscuous" party we hear about in the legal news.

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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy

Legal Geek No. 29: Will Spiderman Toy Dispute Overturn 50 Year Patent Law?

Welcome back to Legal Geek! This week, we mix all of our favorite things for this holiday season: toys for Christmas, superheroes, and 50-year old patent law precedents at the Supreme Court. The Supreme Court granted cert this week to decide the Kimble vs. Marvel Entertainment case, which involves all of these awesome things.

https://archive.org/details/LegalGeekEp29

In a 1964 patent case entitled Brulotte, the Supreme Court deemed that a patent licensee, who pays a patent owner royalties to be able to manufacture and sell goods covered by the patent, is absolved of any further duties after the patent expires following its normal 20 year term. In other words, for 50 years the law has been that a patent owner cannot continue to demand payment of royalties from licensees following expiration of a patent, because public policy dictates that the invention go into the public domain at that point.

That doctrine is now directly under fire thanks to complicated cases like the Kimble case the Supreme Court will hear in early 2015. Kimble received a patent in 1991 for gloves capable of shooting foam string from the palm, just like Spiderman. Or as Andrew Allen would put it...(insert theme music)

He approached Marvel with this idea and an oral agreement was reached that Marvel would not exploit this idea. However, in 1997, a Web Blaster toy which was exactly this type of Spiderman glove hit the market from Marvel.

Kimble sued for patent infringement and breach of contract, and when he won on the contract claims but lost on the patent claims, the parties settled before appeal. This settlement led Marvel to buy out the patent and pay royalties on all future sales of this type of toy. Despite the patent expiring in 2010, the settlement agreement had no set termination date.

A new dispute over this settlement agreement led to another breach of contract lawsuit two years ago, and Marvel asked for declaratory judgment in view of the 50-year old Brulotte patent doctrine. Basically, Marvel argued that the now-expired patent rights released Marvel of any further obligations to pay royalties.

The District Court and the Court of Appeals have ruled in favor of Marvel by using this 50-year old doctrine. The Supreme Court taking this issue means the status of the Brulotte doctrine is unclear, at best. This hybrid contract and patent set of facts is the perfect type of case to determine whether expiration of patent rights trump any other contractual agreements to pay royalties for an idea.

Though it is clear that patented ideas should go into the public domain after 20 years to keep the patent system working as intended, it is not clear whether this need to put things in the public domain is so strong as to override private contractual agreements between two parties. To this end, Marvel had the opportunity to negotiate and write this settlement contract better than it did, so it's unclear why this party should now benefit from a rule intended to protect everyone else in the public.

It's unlikely we will see Justices Scalia and Ginsburg shooting webs at one another during oral argument, but the business makers and innovators in our nerd world will help determine just how far 50-year old patent law precedent can be applied. And there may not be enough spiderwebs available to hold together this seemingly overreaching patent doctrine, at least as it is currently applied. 

Bottom Line: I personally expect some minor changes to be implemented to this doctrine for special fact situations just like this where a contract likely should not be disturbed by a patent expiring. If nothing else, this is another fun and nerdy set of toys and facts to see the Supreme Court grapple with this term.

Finally, Apologies for the brief hiatus, thank you for those who sent kind words and segment requests over the past two weeks.

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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy