Troy & Schwartz Attorneys-At-Law

This September 2021 decision addresses complex aspects of Copyright Law involving both copyright ownership issues and termination rights wherein the Creator of a work can reclaim rights in an originally assigned copyright 35-40 years after the work’s assignment.  The commentator has previously posted blogs discussing the importance of properly categorizing the work’s Creator as a work-for-hire under the Copyright Act.   Failure to do so may result in a situation wherein the plaintiff in a copyright infringement case may actually not be the owner of the registered copyright. Under such circumstances, a copyright infringement case may be dismissed because the plaintiff, as a non-owner, may not have standing to sue for copyright infringement.

The public policy underlying the Copyright Act’s termination right under 17 U.S.C. § 203 is to give Creators a second chance when the work they licensed or sold (assigned) becomes more valuable than anticipated. Improper classification of the Creator also impacts a Creator’s termination rights because the Creator of a work-for-hire cannot invoke a termination right. Disputes over termination rights often turn on an analysis of the nature of the Creator’s relationship to the work.

The defendant in Horror (Victor Miller) was the screenplay writer of the 1980 horror movie “Friday the 13th”.   The screenplay was created for Manny, Inc. which later transferred its copyright in Miller’s screenplay to Georgetown Productions, Inc.  It was Georgetown Productions that registered the screenplay as a work-for-hire.  The rights were later acquired by Horror, Inc.  In 2016, Miller notified both the “first” company which had retained his screenplay writing services decades before and Horror, Inc. that he planned to exercise his termination rights.

Horror filed an action in the U.S. District Court of Connecticut, seeking a declaration that the screenplay was a work-for-hire by an employee and not subject to termination. The district court disagreed with Horror’s position, finding that Miller had instead been an independent contractor and the screenplay did not qualify as a work-for-hire.  Horror appealed. The Second Circuit affirmed the lower court’s decision.

Employment Status Analysis

In arriving at its “independent contractor” conclusion, the Second Circuit discounted the plaintiffs’ position that Miller had been an employee at the time he wrote the screenplay.  The plaintiffs’ argument focused on Miller’s membership in the Writers Guild of America (WGA) at the time he was hired to create the screenplay as grounds for his designation as an employee and the registered work’s classification as a work-for-hire.   Miller’s original agreement with Manny was conducted under a collective bargaining agreement governing WHA’s writers and signatory employers like Manny.

The Second Circuit concluded that Horror wrongly relied on labor law’s framework defining “employee.” Instead, Copyright law controls the analysis; its concept of employment is grounded in the “common law of agency” and serves different purposes from labor law.

The Second Circuit relied on the Supreme Court’s 1989 seminal case of Community for Creative Non-Violence v. Reid where the High Court laid out the scope of employment framework for establishing copyright ownership under 17 U.S.C. § 102.   In discussing CCNV, the Second Circuit noted that “the Copyright Act uses a more restrictive definition of employment” in order to protect authors whereas labor law construes employment broadly “to serve workers and their collective bargaining interests and establishing rights” including safety and pay rights.  Thus, Miller’s membership in the WGA and Manny’s status as a signatory employer to their collective bargaining agreement did not create an employment relationship that converted the screenplay into a work-for-hire.

In determining that Miller was an independent contractor who had the right to terminate Horror’s copyright, the Second Circuit considered CCNV’s enumerated factors for establishing whether the Creator of the work was indeed an employee:

• Miller’s previous screenwriting employment and graduate degree in theater established his expertise and skill in screenwriting requiring little oversight/direction;
• Manny, Inc. never provided Miller with typical employment benefits such as health insurance of paid vacation time;
• Manny, Inc. never withheld or deducted any taxes or social security payments from the two lump sums he received for his screen-writing services.
• Nothing in Miller’s employment agreement with Manny, Inc. could be construed as granting Manny the right to assign additional projects.
• Miller was the only person credited as the screenplay writer.

Certain types of commissioned works may also qualify as a work-for-hire under the Copyright Act when the Creator is an independent contractor and not an employee but only if the Creator and the commissioning party have both signed an agreement stating that the work is a work-for-hire. Additionally, the work must fall into one of the Copyright Act’s nine enumerated classifications for this type of work-for-hire.  Screenplays are not one of the enumerated classifications. Here, the agreement between Manny and Miller never specified that the screenplay would be a work-for-hire.  Even if the screenplay would have qualified as one of the enumerated classifications, the absence of the required agreement eliminated any chance of establishing the screenplay as a work-for-hire under the “independent contractor” scenario.

As a result of the Second Circuit’s decision, Miller now has the right to terminate his copyright.  He will presumably try to negotiate a licensing agreement seeking royalties commensurate with the movie franchise’s success.

Comments

Copyrights enjoy a long lifetime but  nobody has a crystal ball.  Parties who are contemplating obtaining the rights to a copyrighted work(s) should consider the money-making potential with the knowledge that the work’s Creator (including his/her estate) could seek to terminate the copyright 35-40 years into the future. Parties who are acquiring the rights as a successor-in-interest should consider the possibility of termination and determine if the work was a bona fide work-for-hire: 1) by an employee; or 2) via a “work for hire” agreement signed by both the Creator/independent contractor and the hiring party for certain classifications of works.   Why?  Because a “true” work-for-hire is not eligible for termination.  On the other hand, independent contractors may not wish to have their work designated as a work-for-hire and instead assign the rights in return for monetary compensation to preserve their termination rights.

As the Horror decision shows, a registration which specifies a work as a work-for-hire does not necessarily make it so. Had this been a copyright infringement lawsuit brought by Horror against another party, chances are that an astute copyright infringement attorney would have challenged Horror’s ownership and standing as the owner of the registered copyright.  Why?  Because the Creator was never an employee.  Nor would the work  have likely qualified as a work-for-hire under the “independent contractor” alternative provided for under the Copyright Act.

Copyright law is complex even though at first blush it appears relatively simple due to the ease of completing a copyright registration application.  However, numerous pitfalls abound for the unwary and even the issuance of a registration does not mean that the registration is absolutely immune from problems as the Horror decision demonstrates.

Copyrights can be extremely valuable intellectual property assets.  Make sure you understand the pitfalls to avoid problems down the road where your ownership may be questioned or the Creator may have the right to exercise termination rights.   Contact us for a complimentary consultation on your copyright matters.

WE THANK YOU READING THIS BLOG AND HOPE YOU FOUND IT INFORMATIVE.  HOWEVER, THE CONTENT IS PROVIDED FOR INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE OR AN ATTORNEY-CLIENT RELATIONSHIP.  

©2021

Troy & Schwartz, LLC

Where Legal Meets Entrepreneurship™

(305) 279-4740

On Jan 8, 2021, the U.S. Supreme Court granted certiorari in Minerva Surgical, Inc. v. Holigic, (Fed. Cir. 2020), a case dealing with patent law’s doctrine of assignor estoppel.  The doctrine applies when a patent assignor is sued for patent infringement by the assignee of the previously assigned patent in federal district court.  The assignor (the defendant) is estopped from claiming as a defense that the assigned patent is invalid.

On the other hand, assignor estoppel apparently does not currently apply to a post-grant administrative proceeding before the Patent Trial & Appeal Board (“PTAB”) brought by an assignor to invalidate the assigned patent.  Indeed, 35 U.S.C. § 311(a) provides that “a person who is not the owner of a patent” may file an inter partes review (IPR) proceeding to address validity issues.  The commentator opines that a straight-forward reading of the statutory language can hardly be interpreted to mean that “non-owner” includes a patent assignor.  Unfortunately, the statute does define “owner.”  Nevertheless, the Federal Circuit Court of Appeals has held that “assignor estoppel has no place in IPR proceedings.”   That is, an assignor is free to seek patent invalidation in an IPR proceeding. Arista Networks, Inc. v. Cisco Sys., Inc.  (Fed. Cir. 2018).

Currently, assignor estoppel as used by the federal courts does not preclude reliance by the assignor-defendant on a prior invalidity decision by the PTAB.  In Minerva, alleged infringer Minvera Surgical, Inc. (a company later started by the patent assignor), which sold a surgical procedure system competing with Plaintiff-Assignee Holigic’s own system, managed to invalidate one of the patents originally assigned to Holigic’s predecessor-in-interest in an IPR administrative proceeding.   Although the district court could not itself invalidate the patent under the doctrine of assignor estoppel, it could rely on the IPR’s invalidation.  At the district court level, the PTAB’s earlier invalidation prevented the possibility of on-going royalties payable to Holigic by Minerva and an injunction blocking sales of Minerva’s system.

The Federal Circuit Court of Appeals reluctantly affirmed the district court’s judgement in April 2020, mindful of the seeming unfairness to Holigic.  For example, Judge Kara Stoll’s opinion stated: “Given the odd circumstances created in this case, I suggest that it is time for this court to consider en banc the doctrine of assignor estoppel as it applies in the district court and in the Patent Office.”

The Federal Circuit did not take up her suggestion, but the Supreme Court now has.

This commentator is on the side of the Assignee’s successor-in-interest (Hologic) and would argue an Assignor should not be eligible to invalidate a patent in an IPR proceeding.  For good and valuable consideration, the patent inventor sold his patent rights, originally assigned to the company he founded (Novacept), to Cytyc Corp. for $325 million in 2004.  Cytyc was in turn acquired by Holigic.  Presumably the valuation was based on the value of the patents being acquired and the inventor’s company was adequately compensated through arms’ length dealing.  Also, good faith and fair dealing are supposed to be “built in to” any contract.   In fact, assignment is a way for many inventors to receive good and valuable monetary consideration when they do not have the financial resources or desire to commercialize their invention.  The ability to assign patent rights also encourages innovation.

Then, after collecting a lot of money, and, instead of developing a patently distinct system, the inventor started Minerva Surgical to sell the very system disclosed in the assigned patents.  Patent Owners, and by extension Patent Assignees, ought to be entitled to stability in patent law during the patent’s lifetime.    Unfortunately, this stability is being routinely eroded through both IPR proceedings and the courts particularly with respect to lawsuits stemming from the infamous Alice v. CLS decision and its progeny.

Allowing patent assignors to invalidate assigned patents would only further erode patent stability.  It is one thing for an invalidation IPR proceeding to be commenced by an infringer with no former contractual relationship with the patent owner as in an assignor-assignee relationship; it’s quite another situation where the alleged infringer is the original assignor as in the Minerva Surgical v. Holigic case.  Even Judge Stoll opined that the IPR’s invalidation of the assigned patent was unfair.  Additionally, potential acquirers of patents may well question whether the assignor will behave nefariously and may have information (e.g., knowledge of prior art) that could be used to invalidate the patent he is assigning for a “pretty” sum whether by the assignor or a third party.

Although “tight” assignment contracts can be written, any contract is only as good as the fair-dealing of the contracting parties.   Accordingly, the commentator hopes that the Supreme Court concludes that the doctrine of assignor estoppel is found to be applicable to both IPR proceedings and patent infringement lawsuits brought in a court of law.   Common sense should tell us that Congress was not intending that the word “non-owner” includes the assignor of a patent who would later turn against the assignee and seek patent invalidation of the assigned patent.  If the Court concludes otherwise, perhaps patent assignment contracts should start including a provision that for good and valuable consideration received, the Assignor/successor in interest will not seek to invalidate the patent being assigned in an IPR proceeding.

WE THANK YOU FOR READING THIS BLOG AND HOPE YOU FOUND IT INFORMATIVE.   HOWEVER, THE CONTENT IS PROVIDED FOR INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.

©2021

Troy & Schwartz, LLC

Where Legal Meets Entrepreneurship™

(305) 279-4740

Patent Law Alert from the Law Offices of Troy & Schwartz, LLC

April 30, 2020

New Guidance by the Patent Trial & Appeal Board on Overcoming Obviousness Rejections:  Part I  – Lectrosonics, Inc. v. Zaxcom, Inc

One way for the patent applicant to try and overcome an obvious rejection is to prove nonobviousness through secondary considerations (also known as “objective indicia of nonobviousness”). Yet, proving nonobviousness through secondary considerations to the satisfaction of the Patent Trial & Appeal Board (“Board”) has always been challenging even before Supreme Court’s KSR decision.  On April 14, 2020, the Board issued guidance in arguing secondary considerations by designating its most recent decision as precedential (Lectrosonics, Inc. v. Zaxcom, Inc., Case IPR 2018-00129 (P.T.A.B. Jan. 24, 2020)) and two earlier decisions as informative (Ex parte Thompson, Appeal 2011-011620 (P.T.A.B. March 21, 2014) and Ex parte Whirlpool Corp., Appeal 2013-008232 (P.T.A.B. Oct. 30, 2013)).

This blog discusses the precedential decision in Lectrosonics, Inc. v. Zaxcom, Inc., Case IPR 2018-00129 (P.T.A.B. Jan. 24, 2020). Given the importance of this topic, the two other decisions will be summarized in a forthcoming blog. The three decisions address nonobviousness issues in three different proceedings before the Board: an applicant’s exparte appeal, an AIA trial, and a reexamination proceeding.

Secondary considerations involve evidence “outside” the four corners of the application with a caveat: the applicant must demonstrate a nexus between the proffered evidence and the claimed invention.  If established, the Board will consider the strength of the objective-indicia evidence itself.

The Board’s Discussion of the Threshold for Establishing “Nexus”

Secondary considerations are generally related to the invention’s commercialized product. For objective indicia of nonobviousness to be accorded substantial weight, its proponent (the applicant or patent owner) must establish a nexus between the evidence and the merits of the claimed invention.  This means that the proponent must show that the asserted objective evidence is actually tied to a specific product and that product indeed “embodies the claimed features and is coextensive with them.”

Courts have considered the following secondary considerations in determining obviousness; (1) the invention’s commercial success, (2) long felt but unresolved needs, (3) the failure of others, (4) skepticism by experts, (5) praise by others, (6) teaching away by others, (7) recognition of a problem, (8) copying of the invention by competitors, and (9) other relevant factors.

The product for which objective evidence is presented must be claimed in its entirety within the patent or application.  CAFC precedent, which the Board must follow, requires that a nexus between the invention and evidence of secondary considerations is only presumed “when the product is the invention as fully disclosed and claimed – that the product embodies the claimed features and is coextensive with them.”  See Fox Factory, Inc. v. SRAM, LLC, 944 F.3d 1366 (Fed. Cir.  2019). 

Nevertheless, all is not lost if an “automatic” nexus presumption is deemed inappropriate.  The patent owner is still afforded an opportunity to prove nexus by showing that the proffered evidence of secondary considerations is the “direct result of the unique characteristics of the claimed invention.”   The ultimate decision depends on the fact finder who “must weigh the secondary considerations evidence presented in the context of whether the claimed invention as a whole would have been obvious….”

Secondary Considerations as to the Original Claims

The Board considered the nexus requirements twice  – first with respect to the patent’s original claims and again with the patent owner’s proposed substitute claims as discussed below.  Relying on Fox, the Lectrosonics Board found that the patent owner had not demonstrated a nexus between the evidence presented and the merits of the invention as originally claimed because the evidence presented was directed to an unclaimed feature of the invention.  Secondary evidence is inapplicable if it does not apply to the patent’s actual claims.

Secondary Considerations as to the Substitute Claims

The patent owner filed a contingent motion to amend the patent to replace the six problematic patent claims with six substitute claims; the written description had disclosed features that had not been claimed and the patent owner now sought to claim these features.    The Board first held that the Motion to Amend complied with the statutory and regulatory requirements for amending found in a previous precedential order for assessing the merits of a Contingent Motion to Amend in Feb. 2019.

The Board then considered whether the proposed substitute claims were obvious, finding that the Petitioner’s (the party seeking claims invalidation of the patent) proposed prior-art combination (the combining of references in an obviousness rejection) “at best only weigh slightly weigh in favor of a conclusion of obviousness.”

The Board then turned to the patent owner’s secondary consideration case but now focusing on the substitute claims.  Had the inquiry only involved the original claims, the patent owner would have been out of luck.  The Board found, however, that the substitute claims shared a nexus with the patent owner’s proffered secondary consideration evidence: the affidavit of two declarants tying long-felt need directly to the newly added claim limitations and an industry award.

After finding a nexus, the Board then considered the secondary consideration evidence itself.  As to long-felt need as a secondary consideration, the Board was convinced that the two declarations demonstrated “a persistent need, recognized by those of ordinary skill in the art.”

Next, the Board considered the evidence of industry praise, citing the testimony of one of the patent owner’s declarants who stated that he “can’t emphasize enough the revolution these recording radios brought on.” The Board recognized that the award also “specifically praises features of the proposed substitute claims including the digital recording of microphone signals in the wireless transmitter.” Although some of the industry praise the patent owner supplied was “directed to features not explicitly recited by [the proposed substitute claims],” the patent owner’s evidence of industry praise ultimately weighed in favor of nonobviousness.

Lastly, the Board considered the evidence of the failure of others. Here, the Board determined that the patent owner’s testimony submitted in support of this factor was “conclusory and without adequate [evidentiary] support for the proposition that others failed.” This factor thus weighed in favor of the Petitioner’s obviousness arguments.

The Board ultimately concluded that, although the failure of others weighed in favor of the Petitioner because of lack of evidentiary support favoring the patent owner, the long-felt need and industry praise weighed heavily in favor of nonobviousness.  The Board concluded that the substitute claims were nonobvious, thereby saving the day for the patent owner.

Take Home Points

It has been historically very difficult to win on a secondary consideration argument before the Board and appellate courts. The following lessons can be drawn from the Lectrosonics decision:

• In presenting an objective-indicia case, practitioners during patent prosecution or the patent owner in a post-patent proceeding must present solid evidentiary support (e.g., long-felt need, failure of others, industry praise, copying, etc.).
• Conclusory statements are not evidence. Additionally, the nexus between that evidence and the claimed invention must be proven in those cases where the Board or a court determines that the patent applicant or patent owner are not entitled to a nexus presumption.  Such a nexus will be found lacking if the evidence does not relate to the patent’s claims.   Here, the patent owner’s win is because the Board agreed that the patent could be amended to include substitute claims after finding that the original claims had no nexus with the proffered objective evidence.
• The Lectrosonics decision is also a good reminder for practitioners to claim everything the applicant is entitled to claim based on the written disclosure to help ensure that the required nexus between the claims and secondary considerations will be found in any “obviousness” contest. Here the patent owner won because the Board first granted its contingent motion to amend the claims to include substitute claims which then were found to be “covered” by objective secondary consideration evidence.  If a patent owner plans to file such a motion during a patent claim contest, it would be well advised to review the Board’s requirements for granting this type of motion as set forth in the decision available here. The outcome would have been far different absent the Board’s approval of the motion to amend.

©Troy & Schwartz, LLC

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

WHO’S AT FAULT FOR YOUR CAR ACCIDENT?

THE SUDDEN AND TRAUMATIC IMPACT OF A CAR ACCIDENT CAN LEAVE YOU INJURED AND CONFUSED.

Understanding what just occurred is one thing- understanding the how and why of the accident is important.  The officer who arrives at the scene is responsible for determining fault.  The documentation of a police report can serve as important evidence when it comes to possible litigation. While Florida’s no-fault law may cover some of your expenses, it will not cover them all, especially in cases involving catastrophic injuries.  Seeking the advice of a Florida auto accident attorney is one way to determine your course of action.  No matter what type of accident you experienced, consulting with an attorney can help you understand the legal process.

SIDE IMPACT ACCIDENTS

Intersections top the list of places where most side-impact crashes occur.  When a driver fails to yield the right-of-way or races through a red light, the result if often a T-bone, or side-impact collision.  A T-bone collision is so-called because of the front of one car striking the middle of another, resulting in a serious crash.

Another type of side-impact crash is an angle crash when another car strikes you at an angle.  Studies show that rear-seated passengers are typically more vulnerable to injury than front-seated passengers.  This is due, in part, to the availability of safety features that better protect the driver and a front-seat passenger.

A speeding, drunk, or distracted driver can easily run a stop sign, causing a serious crash that results in life-changing harm for your passengers.

REAR END ACCCIDENTS

A rear end collision is often the result of another driver simply not paying attention to the traffic in front of them.  By the time a distracted driver realizes stopped traffic is ahead, it is too late.  Depending upon the speed and weight of the vehicle, a rear-end collision is catastrophic for those hit by the sudden force against their gridlocked vehicle.

CHAIN REACTION CAR ACCIDENTS

The force of an initial rear-end accident can push your car into the car in front of you, creating a chain reaction.  Three or more cars become involved due to the actions of one driver.

ROLLOVER CAR ACCIDENTS

An accident with a rollover tends to involve a truck, such as semi-truck or a tanker truck.  For a truck carrying hazardous material, the danger of fire or poisoning is real.

If a truck driver takes a turn too fast and their load shifts, everyone around them is at risk for serious harm.  Tanker trucks that leak upon impact may delay first responders from reaching you due to dangerous conditions.

DETERMINING FAULT OF A CAR ACCIDENT

Defensive driving is always a good idea, however, drivers who participate in reckless behavior surround us every day.  No matter how careful you are, someone near you chooses to operate their vehicle in one or more of the following dangerous ways:

Visual- taking your eyes off the road

Cognitive- taking your mind off driving

Manuel- taking your hands off the wheel

Texting and driving encompass all three components of distracted driving: visual, cognitive, and manual.  Distracted driving also includes such actions ad reaching for an item, eating while driving or applying makeup.

Drunk driving:  Despite numerous public safety campaigns, people continue to drink and drive.

Aggressive driving ranges from running red lights to changing lanes without signaling.  This type of dangerous driving quickly escalates to road rage when one driver forces another driver off the road or throws objects at a car.

When a driver loses their cool to the point of running a red light, there is a high probability of a side-impact collision.  No one should suffer extreme physical, financial, and emotional stress due to another driver’s anger and reckless actions.

CALL THE LAW OFFICE OF TROY AND SCHWARTZ, LLC TO DISCUSS ANY OF THE ISSUES NOW!  305-279-4740 OR TOLL FREE- 1800-559-4320

OFFICES IN MIAMI

Have you ever opened a piece of mail, only to discover that you were caught on a traffic camera running a red light or speeding?  Even though it might seema that a photograph is the ultimate form of evidence, there are still ways to dispute it.

WHAT SHOULD YOU DO IF YOU RECEIVE A CAMERA TICKET?

If you open your mail and note that your car was photographed running a red light, the first thing you should do is look carefuly at the ticket.  Check the date, time, and location and determine whether or not it was you driving the car.

Take note of what section you are being accused of violating.  Make sure that if your penalites are listed in the code section, that the code section violations match the fines assessed on your ticket.

Check for any dates and further instructions.  Remember to abide by any specified dates.  If you miss your window to pay, your fines could almost double.  If you wait too long, your license could be suspended.

HOW CAN YOU DISPUTE A TRAFFIC CAMERA TICKET?

If you have determined that you were not the one driving your car at the time the ticket was taken,  then you have reasonable cause to fight it.

If your license plate is not legible, you’ll have even more cause to fight the ticket.  If the license plate is not clearly visible, then you really can’t be charged with the ticket at all.

In Florida, even though the owner of the vehicle is the first person deemed responsbile for a ticket.  The device that takes photos is not always accurate.  The enforcing agent should be able to provide evidence that the sensors and the camera were working accurately on the day in which the photo was taken.  If they can’t do this, you may be able to suggest or claim a device malfunctino.

YOU MAY NEED A LAWYER TO HELP WITH A TRAFFIC CAMERA TICKET

If you received a traffic camera ticket in error, or you believe that your reasons for running a light were valid, you have more than enough cause to fight your ticket.

Are you worried about how much it will cost or want to know how we may be able to help, call us now!  1-800-559-4320. LAW OFFICE OF TROY & SCHWARTZ, LLC.

CALL US TODAY!  1-800-559-4320- OR 305-279-4740.

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