Lost Profits
February 7, 2012
The Obama Administration Keys in on SOPA & PIPA
The Obama administration has officially voiced its opposition toward parts of both the Stop Online Piracy Act (SOPA) as well as the Protect IP Act (PIPA). In the official response of the Obama administration made via the blog from “WhiteHouse.gov,” Victoria Espinel, Intellectual Property Enforcement Coordinator at Office of Management and Budget, Aneesh Chopra, U.S. Chief Technology Officer, and Howard Schmidt, Special Assistant to the President and Cyber-security Coordinator for National Security Staff stress “that the important task of protecting intellectual property online must not threaten an open and innovative internet.”
February 2, 2012
Will the Supreme Court Review the Ninth Circuit’s Copyright Misuse Decision?
Several weeks ago, Psystar filed certiorari to ask the Supreme Court to review the Ninth Circuit’s analysis of its copyright misuse defense. Psystar is a computer manufacturer that sells computers which use Apple’s operating system software, OS X. In 2009, Apple, Inc., prevailed on a copyright infringement claim against Psystar and also successfully convinced the district court for the Northern District of California that Psystar’s copyright misuse defense should not stand. The district court decided these issues on summary judgment. Psystar did not appeal the district court’s finding of copyright infringement. However, it did appeal the court’s ruling on the copyright misuse issue.
December 4, 2011
Sam Francis Files Class Action Suit against Art Galleries under California’s Resale Royalty Act
In 1976, Governor Jerry Brown signed into law the Resale Royalty Act, which allows artists to profit from the resale of their visual works in secondary markets. According to the statute, if the artist is a U.S. citizen or California resident for at least two years at the time of resale, if either the seller resides in California or the sale is held in California, and if the work is valued at over $1000, then the artist is entitled to a 5% royalty of the sale price. If the sale price depreciates in value, the artist is owned nothing. When a reseller cannot locate the artist, it is required to transfer the royalty payment to California’s Art Council. The concept that artists should profit from the appreciation of their visual works is called droit de suite, which was borrowed from French law and adopted into the European Union. California is the only state to recognize resale royalties to visual artists.
November 24, 2011
Ebay Sued Under the California Resale Royalties Act
The California Resale Royalties Act, codified in the California Code at § 986, provides that if certain conditions are met, an artist is entitled to receive 5% in royalties from a seller’s total purchase price. The artist is entitled to 5% in royalty payments if, at the time of sale: the artist is a U.S. citizen or a California resident for two years; the seller resides in California or the sale takes place in California; the artwork is an original drawing, painting, or sculpture, the work is sold by the seller for more than what he or she paid; the work is sold for more than $1,000; and the work is resold during the artist’s lifetime or within 20 years of the artist’s death. The burden is on the seller to locate the artist and pay the royalties.
November 19, 2011
Judge Throws Out Fraud Claim Against CBS by Cast of Happy Days
Five cast members, including the estate of Tom Bosley, from the hit sitcom Happy Days filed suit against CBS in April alleging that they are owed millions of dollars in payments for merchandise sales. The plaintiffs alleged that CBS committed fraud and breach of contract by not paying the cast members for their share of merchandising royalties. The cast members were contractually entitled to receive up to 5% of the merchandising revenue generated by Happy Days merchandise sales. Even though the show ended in 1984, its popularity continued to generate significant sales. Once Happy Days slot machines showed up in casinos, the cast members began to seriously question whether they were being properly compensated for use of their names and likeness. The plaintiffs claim that CBS improperly accounted for their royalties, but CBS claims that it only owes them between $8,500 and $9,000 for the last four years.
January 29, 2011
Patent Damages Lost by Failing to Transfer Title After Acquisition
Effective management of intellectual property requires the owner to consider a number of relevant and potentially competing factors. By transferring intellectual property, the owner may be able to earn income, reduce taxes, or improve its balance sheet. But it is also essential to keep in mind that the way in which title is held may have important effects on the owner’s ability to enforce intellectual property rights. For example, the ability to collect damages for infringement of a patent may be significantly affected by what entity holds title to the patent. The damages for patent infringement are either lost profits or a reasonable royalty. In many cases, the lost profits may exceed the royalty by a large amount–even millions of dollars. However, lost profits are available only to an owner or exclusive licensee that is competing with the infringer. Merely being part of the same corporate family as a competing entity is not enough, as the U.S. Court of Appeals for the Federal Circuit held in Poly-America, LP v. GSE Lining Technology, Inc., 383 F. 3d 1303, 1310-12 (2004). Therefore, important rights may be lost by transferring a patent from the operating company that uses the patented technology to another entity, absent appropriate license arrangements.
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