Monday, June 27, 2011

Supreme Court Overturns California Ban on Sale of Violent Video Games to Minors

Brown v. Entertainment Merchants Association , ___ U.S. ___ (June 7, 2011) [link]

On Monday, the U.S. Supreme Court struck down a California law that prohibits the sale of violent video games to minors. The Court used a fairly straight-forward First Amendment analysis, first concluding that video games qualify for First Amendment protection, then subjecting the California law to a "strict scrutiny" analysis because it imposes a content-based restriction on speech.

The California law in question prohibits the sale or rental of "violent video games" to minors, and requires the packaging for such games to be labeled "18." The Act covers games "in which the range of options available to a player includes killing, maiming, dismembering, or sexually assaulting an image of a human being, if those acts are depicted "in a manner that "[a] reasonable person, considering the game as a whole, would find appeals to a deviant or morbid interest of minors."

In order for the content-based restriction on video games to be upheld, California needed to show that the law was justified by a compelling government interest, and the law was narrowly drawn to serve that interest. California failed to meet that standard in several ways. First, California was unable to show a direct causal link between violent video games and harm to minors. The court rejected research studies offered by California, finding they "show at best some correlation between exposure to violent entertainment and minuscule real-world effects. " Because California did not restrict other media that depict violence to children (such as Saturday morning cartoons), the Court felt the law was "wildly under inclusive." The Court also found the law over-inclusive, because not all of the children who are prohibited from purchasing violent video games have parents who disapprove of their doing so.

The Court's decision is good news for the video game industry, which no longer has to worry about states and municipalities imposing new restriction or licensing schemes for "violent' video games. The decision does not prohibit all restrictions on video games, however, just those that cannot satisfy the "strict scrutiny" test. It is conceivable that a jurisdiction will come up with restrictions that do pass muster. But this is not likely unless the restrictions cover almost all of the media portraying violence to young adults, which is something jurisdictions have not been able to do so far.

Thursday, June 23, 2011

General Assembly Proposes Online Gambling for Twin River

Tuesday night, the House Finance Committee discussed the pending bill to authorize casino gambling at Twin River in Lincoln. The Providence Journal reports that the original bill has been revised to authorize online gambling at Twin River, as well as to provide some additional financial relief for Newport Grand, to permit the State Lottery to increase the license fees to the vendors that supply the video lottery terminals, and to instruct the General Assembly to determine the State's share of gambling revenues if the new table games are authorized by the voters.

Apparently, there was no vote on a revised bill, and there is no amendment available on the General Assembly's legislation website. The Journal article indicates that Committee Chairman Helio Melo may offer up the new proposal as an amendment to the $7.7 billion budget bill being debated later this week or next week.

Approval of any expansion in the existing gambling offerings at Twin River and Newport Grand would require voter approval of an amendment to the RI Constitution. Similar proposals were defeated by the voters, most recently in 1994 and 2006. Another proposal to put the question to a voter referendum passed the General Assembly in 2010, but was vetoed by Governor Carcieri.

It is not clear whether or not an online gambling offering would need to be approved by Congress as well. The Department of Justice takes the position that the federal Wire Act prohibits all forms of online gambling. At least one federal court, however, has held that the 1964 law only applies to sports gambling. The U.S. Supreme Court has not decided the issue.

The General Assembly should be wrapping up the 2011 session in the next week or two. Stay tuned for further developments.

Friday, June 17, 2011

Let the Merchandising Begin!

Minutes after the Boston Bruins won Game 7 of the Stanley Cup Finals Wednesday night, an e-mail arrived in my in-box from Modell's, offering the "official" locker room Championship T-shirts and caps.

Studies have shown that merchandising revenues for professional sports teams are greatly impacted by winning. The Bruins can expect a big jump in merchandise sales over the next year (especially given how their playoff run ended suddenly and unfortunately last year).

I have a pretty good idea what I am getting for Father's Day . . . and Christmas.

Thursday, June 16, 2011

New Design Patent Infringement Case Filed in DRI --- Kitchen Gadget Wars

Blair v. Media Brands Co., Ltd. , No. 11-cv-234S (D.R.I. filed June 8, 2011).

A new patent infringement case was filed in the District of Rhode Island last week. Barry Blair and Norman Blier own two design patents for a kitchen utensil that holds vegetables and fruit for easy peeling, cutting and slicing, marketed under the PREP N' POP brand. The plaintiffs sell their product on QVC. As the picture shows, the product looks vaguely like a bicycle pump.

In their Complaint, the Plaintiffs allege that the defendants, a Canadian company called Media Brands Co., and its owners, have infringed the design patents by marketing an identical but inferior product under a PREP-XPRESS brand. The Complaint also alleges that in order to promote the PREP-XPRESS product, Media Brands sent out a mass e-mail containing links to a QVC video and a YOUTUBE video in which the plaintiffs can be seen demonstrating their own products. The complaint also asserts claims for federal trademark infringement, federal unfair competition, and Rhode Island state law claims for misappropriation and dilution. The case has been assigned to Judge Smith.

Tuesday, June 14, 2011

New Trademark Infringement Case Filed in DRI --- Can Thrifty Stop the Use of a Blue Shuttlebus by a Competitor?

Thrifty, Inc. v. KDSB Rentals, Inc. d/b/a Payless Car Rental, No. 11-cv-235M (D.R.I. filed June 8, 2011).

A new trademark complaint was filed in the District of Rhode Island last week. In its Complaint, Thrifty Car Rental claims federal and state trademark rights in the color light blue (Pantone No. 300) for vehicle rental services and for its rental buildings. Thrifty claims that Payless is operating a light blue courtesy shuttle bus out of its Warwick rental location. Apparently, Thrifty has been trying since October to get Payless to repaint its shuttle bus, without success. Thrifty seeks injunctive relief and damages on counts of federal trademark infringement, federal dilution and federal and state law unfair competition. The case has been assigned to Judge McConnell.

Friday, June 10, 2011

Supreme Court Affirms 'Clear and Convincing' Standard for Invalidating Patents

Microsoft Corp. v. i4i Limited Partnership, No. 10-290 (U.S. Sup. Ct. June 9, 2011). [link]

Thursday's U.S. Supreme Court opinion in the Microsoft case did not make any significant changes to patent law or patent litigation as some observers had predicted. The Supreme Court affirmed the long standing rule that the invalidity defense to a patent infringement action must be proven by "clear and convincing evidence," even if relying on new evidence that had not been presented to the Patent and Trademark Office during the prosecution of the patent in question. But the opinion contained some language that indicates it might be easier to challenge the invalidity of patents in the future.


Section 282 of the federal Patent Act provides that "[a] patent shall be presumed valid" and that "[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity." In its 1984 decision in American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350 (Fed. Cir. 1984), the Federal Circuit interpreted Section 282 to require that the burden of proving invalidity is "to convince the court of invalidity by clear evidence." Since 1984, the Federal Circuit has been consistent in this interpretation.

In 2007, i4i sued Microsoft for willful patent infringement, claiming Microsoft's manufacture and sale of certain Microsoft Word products infringed i4i's patent. Microsoft asserted a counterclaim and sought a declaration that i4i's patent was invalid and unenforceable, alleging that i4i had sold software incorporating the patented inventions in the U.S. more than a year prior to filing its patent application. It was undisputed that the disputed evidence concerning the sale of the software has not been presented to the Patent and Trademark Office examiner during the prosecution of the patent application. At trial, Microsoft objected to the proposed jury instruction that the invalidity defense must be proved by 'clear and convincing evidence,' with respect to the prior art that was not examined by the PTO examiner. Microsoft proposed the following alternative jury instruction:

"Microsoft's burden of proving invalidity and unenforceability is by clear and convincing evidence. However, Microsoft's burden of proof with regard to its defense of invalidity based on prior art that the examiner did not review during the prosecution of the patent-in-suit is by preponderance of the evidence."

The District Court rejected Microsoft's proposed jury instruction. At trial, the jury found that Microsoft had willfully infringed i4i's patent, and that Microsoft failed to prove invalidity. The Court of Appeals for the Federal Circuit affirmed the ruling in 2010, relying on its longstanding interpretation of Section 282 in the American Hoist decision.

Supreme Court Decision

The Supreme Court affirmed the lower court decisions in an 8-0 ruling. (Chief Justice Roberts did not participate in the ruling, reportedly because he owns Microsoft stock).

Writing for the majority, Justice Sotomayor reviewed the history of Section 282 of the Patent Act. She found that in adopting Section 282 in 1952, Congress had codified the common-law presumption that patents are valid, and, implicitly, the heightened 'clear and convincing' standard of proof that attached to this presumption. She also found that Congress had had many opportunities to amend Section 282 and other patent laws since 1984, but apparently has never considered any proposal to lower the standard of proof for invalidity. As a result, any change to the standard of proof must be made by Congress.

Under an agreement between the parties, Microsoft must now pay i4i $300 million within 15 days.

Change for the Future?

One interesting part of Justice Sotomayor's decision addressed Microsoft's contention that the 'preponderance of the evidence' standard should apply where the evidence being presented in the trial was not presented to the PTO during the examination process. Her opinion found that there was no evidence that Congress intended to deviate from the 'clear and convincing evidence' standard in these circumstances. However, the Court's opinion noted that:

"[a] jury instruction on the effect of new evidence can, and when requested, most often should be given. When warranted, the jury may be instructed to consider that it has heard evidence that the PTO has had no opportunity to evaluate before granting the patent. When it is disputed whether the evidence presented to the jury differs from that evaluated by the PTO, the jury may be instructed to consider that question. In either case, the jury may be instructed to evaluate whether the evidence before it is materially new, and if so, to consider that fact when determining whether an invalidity defense has been proved by clear and convincing evidence."

As a result, the 'clear and convincing evidence' standard for proving the invalidity of a patent remains in place. But the Court's decision also clearly instructs lower courts to permit juries to consider new evidence, and the effect of new evidence when making their 'clear and convincing' determination. We will need to wait for a number of patent infringement cases to move their way through the lower courts to see whether or not this new evidence has any actual affect on the juries. In theory, however, it would appear that by endorsing the consideration of new evidence by juries, the Court's decision may make it easier to prove the invalidity of patents in the future.

Wednesday, June 8, 2011

Dunkin' Donuts Extends Naming Rights at The Dunk for Another 10 Years

Last week, the R.I Convention Center Authority announced that Dunkin' Donuts has extended its naming rights and sponsorship agreement for the arena formerly known as the Providence Civic Center for another 10 years. The total cost: about $5 million. In addition to exterior and interior signage, and inclusion in all press releases regarding the facility, DD also has the exclusive right to sell its "core products" in the building.

Sounds like a "win-win" for everyone involved!

Friday, June 3, 2011

New Patent Case Filed in DRI

A new patent case was filed in the federal District Court in Rhode Island last week. In its Complaint, Ira Green Inc. of Providence alleges that JL Darling Corp. of Tacoma, Washington, has sold products that falsely claim they are covered by patents, in violation of the federal Patent Act.

Both companies manufacture and sell weatherproof paper, and products such as books and notepads comprised of weatherproof sheets. Ira Green alleges that JL Darling is misleading the public by claiming its books and notepads are covered by a U.S. patent, when that patent does not cover the books and notepads in question.

The "false marking" provisions of the federal patent law make it illegal to put a patent number on a product that is not in fact covered by that patent "for the purpose of deceiving the public." The penalty is a fine of not more than $500. The statute also allows private individuals to bring "qui tam" suits against an alleged offender. If successful, the private plaintiff gets part of the fine and the government gets the other part.

For many years, the provision was not used very often, as it was interpreted to mean that a continuous false marking--such as the entire production run of a product--is a "single offense." So the fines were rarely worth the bother of filing a lawsuit. But in December 2009, the Federal Circuit Court of Appeals changed this interpretation and ruled that each wrongly marked item could be viewed as a separate offense under the statute. This ruling opened the floodgates for these "false marking" cases. In 2010, over 670 false marking cases were filed in the federal courts. Through the first quarter of 2011, an additional 199 cases were filed.

These false marking cases have been subject to question recently. In March, a federal court in Ohio reaffirmed a ruling declaring the provisions allowing a private individual to bring suit unconstitutional. Around the same time, the Federal Circuit held in In re BP Lubricants USA Inc. that conclusory allegations that a defendant is a sophisticated company, and "knew or should have known" that a patent had expired are insufficient, and that a complaint must "provide some objective indication to reasonably infer that the defendant was aware that the patent expired." Together, these two judicial limitations have substantially slowed down the filing of new false marking cases, as only 26 cases were filed in total in the federal courts in April and May 2011.

Whether or not the Ira Green complaint can overcome these limitations remains to be seen.

Wednesday, June 1, 2011

May 2011 IP Cases Filed in US District Court of Rhode Island

There were only 3 new intellectual property case (patent, trademark and copyright) filings in May 2011 at the U.S. District Court for Rhode Island. This brings the total to 7 new IP case filings (2 patent and 5 trademark) for the year to date, which is a 30% decrease over the same period in 2010. The new cases in May include one “false marking” patent case and two trademark infringement cases.

So far there have been no new copyright cases filed in 2011 in Rhode Island.

These numbers only include cases that have been designated in the court's database as a patent, trademark or copyright case. There are other cases pending where the complaint may include trademark or other intellectual property claims. But unless the case is designated as such, we are not counting it here.