August 2014

Use of Copyrighted Software’s Output and Mere Downloading of Copy Held Not to Constitute Infringement

Neither using output from copyrighted software, nor downloading (but not installing or using) the copyrighted software, constituted actionable copyright infringement under the US copyright statute.  Design Data Corporation v.  Unigate Enterprise, Inc., No. 12-cv-04131-WHO (N.D. Cal. Aug. 6, 2014).  Accordingly, the court in this case granted summary judgment in favor of the defendants on the plaintiff’s claims of direct as well as contributory copyright infringement. The plaintiff “created and owns copyrighted structural steel detailing software called SDS/2.”  The plaintiff never sold licenses to SDS/2 to any of the defendants.  Although the defendants contended that they merely acted as intermediaries between Chinese contractors and US clients, and had never used SDS/2 themselves, it was undisputed that SDS/2 “appear[ed] to have been used to create drawings and images for five of” their projects.  Moreover, the defendants admitted that they had forwarded SDS/2 output files “to clients and prospective clients,” even while contending they had never used the software themselves. The defendants also admitted that one of them had downloaded the SDS/2 software.  The purpose of this download was in dispute.  The plaintiff contended that the download was of a “cracked” copy that then did not work.  The defendant averrred that she had… Read More »Use of Copyrighted Software’s Output and Mere Downloading of Copy Held Not to Constitute Infringement

Trade Secret Protection Requires Steps to Protect Trade Secrets

A defendant who misappropriated a plaintiff’s designs could not be liable for trade secret misappropriation no matter how nefarious the defendant’s conduct, where the plaintiff had not taken reasonable steps to protect prototypes embodying the designs. Accordingly, in Direct Technologies, LLC v. Electronic Arts, Inc., No. SACV 10-1336 AG (PJWx) (C.D. Cal. Aug. 4, 2014), the court granted summary judgment for the defendant on the plaintiff’s claim for trade secret misappropriation under California’s Uniform Trade Secrets Act (“CUTSA”). This case presented simple facts. Electronic Arts hired Lithomania to make a USB drive based on a SimCity character. Lithomania subcontracted design work for the USB drive to Direct Technologies. Then, after Direct Technologies provided prototypes embodying a design, Lithomania hired a different company to produce USB drives based on Direct Technologies’ design. Electronic Arts argued in its summary judgment motion that Direct Technologies had not taken reasonable steps to protect the prototypes, and therefore they were not trade secrets. Direct Technologies argued in response that it had provided “substantial communication” about an NDA to Lithomania and had tried to get Lithomania to enter into an NDA, that Lithomania knew sending the designs to Direct Technologies’ competitor was wrong, and that Direct… Read More »Trade Secret Protection Requires Steps to Protect Trade Secrets

Precedential PTAB Decision Provides Reminder That PG Patent Review Is Barred By Prior Civil Action Challenging Validity

On November 15, 2013, SecureBuy, LLC, petitioned the US Patent and Trademark Office for review of U.S. Patent No. 7,051,002 under the America Invents Act’s transitional program for covered business method patents. Two weeks earlier, on November 1, 2014, SecureBuy had filed actions in two different federal district courts seeking a declaratory judgment of invalidity of the ’002 patent. The Patent Trial and Appeal Board (PTAB), in a decision it has now designated as precedential, dismissed the petition because it was precluded by the prior civil suits. SecureBuy, LLC v. Cardinal Commerce Corporation, Case CBM2014-00035 (PTAB April 25, 2014). The PTAB explained that 35 U.S.C. § 325(a)(1) was controlling. Provisions of the America Invents Act provide for parties sued for infringing “covered business method patents” to institute post-grant proceedings. However, Section 325(a)(1) clearly states that “[a] post-grant review may not be instituted under this chapter if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.” Accordingly, the PTAB’s analysis was simple. The Board explained that SecureBuy, two weeks prior to filing its petition for post-grant review… Read More »Precedential PTAB Decision Provides Reminder That PG Patent Review Is Barred By Prior Civil Action Challenging Validity

Patent “Assignee” Lacks Standing to Sue

Clouding IP lacked standing to sue to enforce a set of patents it had purportedly purchased under a “Patent Assignment Agreement” because rights retained by Symantec, the seller, prevented Clouding from obtaining “substantially all rights” in the patents.  Clouding IP LLC v. AT&T Inc., No. 1:13-cv-01342 (D. Del. Jul 28, 2014). The Court’s consideration of the rights retained by Symantec, and the factors preventing Clouding from having standing to assert the patents, provide a helpful reminder for parties entering into patent assignment or license agreements.  Parties sued for patent infringement will take note as well. Clouding had sued over 10 defendants alleging that each defendant infringed claims of some or all of 14 patents.  Two of the defendants, Amazon and Google, brought motions to dismiss under FRCP 12(b)(1) for lack of subject matter jurisdiction, alleging that Clouding lacked standing to enforce the patents. The court granted the motions.  Clouding had constitutional standing (the Article III “case or controversy” requirement was satisfied).  However, Clouding lacked “prudential standing” because Clouding was not asserting its “own legal rights,” but instead relied “on the rights or interests of third parties.” The court quoted the Federal Circuit’s explanation of the patent as being “a bundle… Read More »Patent “Assignee” Lacks Standing to Sue