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During the late 1990s and into the early new millennium, intellectual property rights grew like a bodybuilder on steroids. Whether courts were passing on the legitimacy of business method patents or Congress was writing laws for the Internet era, it was a good time to own IP. The times were still good for IP in 2001, but not quite as frothy. Courts looked more skeptically at expansive claims, and lawmakers and lobbyists began serious discussion of whether IP rights needed trimming. Sometimes policymakers flirted with the idea of sidestepping IP rights altogether. The U.S. and Canadian governments threatened to break Bayer Corporation’s patent on Cipro at the beginning of the anthrax scare in October. The threats were withdrawn quickly, but not before Bayer ended up offering Cipro to both governments at bargain-basement prices. The administrators of Margaret Mitchell’s estate learned about limits in May when the 11th U.S. Circuit Court of Appeals lifted a preliminary injunction against publication of Alice Randall’s “The Wind Done Gone,” a novel characterized by its publisher and author as a parody of and critical commentary on Mitchell’s epic “Gone with the Wind.” The book recreates several characters and scenes that appear in the original work. In SunTrust Bank v. Houghton-Mifflin Co., the court ruled that the preliminary injunction was an unconstitutional prior restraint. Houghton-Mifflin was ebullient. “[The appeals court ruling] says a lot about the importance of the First Amendment,” said the publisher’s counsel, Joseph Beck of Atlanta’s Kilpatrick Stockton. “No one will ever confuse ‘The Wind Done Gone’ with ‘Gone with the Wind,’ ” Beck said. Counsel for SunTrust Bank, which administers Margaret Mitchell’s estate, were stunned. Preliminary injunctions are a well-established remedy in copyright cases, and one that First Amendment arguments normally don’t trump. The plot thickened in October — five months after its original ruling — when the 11th Circuit issued a “comprehensive decision” that, in effect, re-explained its decision in straightforward copyright terms. The court found that SunTrust hadn’t adequately argued that the Randall book’s reuse of the Mitchell material stepped fully outside the bounds of fair use. Writing for the majority, Judge Stanley Birch acknowledged that the use of Mitchell’s work is transformative and critical. On the other hand, Birch wrote, “The Wind Done Gone” uses more of “Gone With The Wind” than is justifiable in pure parody terms. Still, he reasoned, the record (including the disappointing sales of Randall’s book and a renewed interest in Mitchell’s) suggested that Randall’s book had done little if anything to hurt the market for Mitchell’s. The case is set to go to trial in 2002. The new decision is likely to be a keystone in the developing law centering on the intersection of parody and copyright, which made its first big splash in the 1990s when 2 Live Crew, a rap group, parodied Roy Orbison’s popular song “Pretty Woman.” The U.S. Supreme Court unanimously ruled that the rap version constituted a fair use. In two other major copyright cases of 2001, it wasn’t the copyright holders’ rights that were limited, but the expansive claims of the publishers that were shot down. In Random House, Inc., v. Rosetta Books, federal judge Sidney Stein of Manhattan ruled that publishing contracts signed by authors long before the commercial development of the Internet did not prevent those authors from contracting with Rosetta Books to publish electronic editions of the same works. Random House was seeking to stop Rosetta from publishing well-known older books in electronic form. The case is on appeal to the 2nd Circuit. For the most part, the ruling might benefit writers who signed contracts long ago. Most authors don’t have that much bargaining power and would likely have to give away electronic rights during contract negotiations. However, those rights don’t mean much for now; electronic books are mostly a curiosity. There isn’t much of a market for them. Authors and publishers squared off again in New York Times v. Tasini, a case that gained national attention when it was argued before the Supreme Court. In late June, the Court held, 7 to 2, that free-lance authors who had not expressly granted The New York Times the right to include their articles in electronic databases retained those rights. Could this mean much more than a temporary windfall for a few writers? (The issue of damages due to the winning free-lancers has yet to be resolved.) That seems unlikely, according to copyright experts. In fact, so far the decision seems to be working against writers’ interests: The Times is removing from electronic archives articles by authors who haven’t waived their rights to receive payment. A lawyer for The Times claims its actions aren’t punitive, but are instead aimed at limiting damages and future litigation. What makes Tasini memorable is not so much the decision, but its ripple effects — that is, the removal of chunks of the historical record from the newspaper of record. Tasini may also signal the ascendancy of Justice Ruth Bader Ginsburg, who authored the majority opinion, on copyright matters. In previous copyright cases, the high court has balanced copyright interests against public policy and the Constitution’s mandates. ( See Feist v. Rural Telephone, 1991), which essentially abolished the “sweat of the brow” doctrine for copyright.) On a substantive level, Justice Ginsburg’s opinion in Tasini could have been written by her daughter, Jane Ginsburg, a copyright law professor at Columbia University. The younger Ginsburg, while not involved in the Tasini case for obvious conflict of interest reasons, is immensely influential in copyright circles, and is known to favor the claims of copyright holding creators over competing interests. Although there’s no reason to believe that the two Ginsburgs ever step outside ethical boundaries and discuss Supreme Court cases, it seems certain that the elder Ginsburg reads and is influenced by her daughter’s scholarship. Other memorable copyright developments: – The U.S. Court of Appeals for the D.C. Circuit rejected Microsoft Corporation’s copyright defense in the company’s appeal of the D.C. federal district court’s antitrust ruling. – A federal district court in California ruled that retail shrink-wrapped software is sold, not licensed — a crucial limit on software publishers — when it lifted a preliminary injunction in Softman Products Company v. Adobe Systems. Softman purchased bundled software from Adobe that was specifically discounted for educational resale. However, Softman sold the programs individually. Adobe said that this violates the shrink-wrapped licensing agreement. The court disagreed, saying that Softman’s purchase fell under the first-sale doctrine, and that Softman had the right to resell the software however it chose. The case marks a major retreat from the recently emerging doctrine, which claims that rights in copyright can be unilaterally limited by a software vendor’s shrink-wrap licensing agreements. – A Russian programmer, Dmitri Sklyarov, became the first person to be prosecuted under the Digital Millennium Copyright Act. Sklyarov developed the Advanced eBook Processor, an application that cracks a software lock on Adobe’s eBook Reader. The lock — also called digital management software — is designed to protect unauthorized copying of electronic materials. – Princeton University computer scientist Edward Felten challenged the DMCA’s civil provisions, arguing that the law as currently interpreted seems to bar lawful research and publication of information about the flaws in digital rights management schemes for music CDs. His suit was dismissed. – U.S. Sen. Fritz Hollings, a South Carolina Democrat, proposed hearings concerning the Security Systems Standards and Certification Act, which would require the manufacturers of all electronic devices, from computers to television receivers to Internet routers, to build digital rights management technologies into content. ‘FESTO’ SHAKES THE PATENT BAR For the past 20 years the U.S. Court of Appeals for the Federal Circuit has stabilized and harmonized U.S. patent law. But it will take the U.S. Supreme Court to perform that balancing act in the wake of the Federal Circuit’s decision in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. In November 2000, the Federal Circuit voted, 8 to 4, to limit “the doctrine of equivalents,” a concept that prevents would-be patent infringers from making minor changes to an invention in order to escape liability for infringement. The court created a ban against using the doctrine on parts of a claim that have been revised in the course of prosecution. The decision raised questions not only about how patents will be prosecuted but also about the extent to which prior patents are protected. The Supreme Court agreed to hear the case in July, and a decision is expected early in 2002. Organizations from the American Bar Association to the Institute of Electrical Electronics Engineers to Ford Motor Company and Cisco Systems Inc. have weighed in on both sides. And the “balance” of patent policy hangs, well, in the balance. Patent policy is poised between the need to protect an invention and the need to provide notice to would-be inventors as to what’s already protected. Protection is the rationale for the doctrine of equivalents — it prevents copycats from sidestepping patent law by making small changes to an invention. But what patent lawyers also call “the notice requirement” is just as necessary for inventors. If the doctrine of equivalents provides too broad or vague a protection for already-patented inventions, inventors won’t be able to know in advance whether they’re risking infringement on an existing patent. The Federal Circuit’s solution — a bright line rule — seems to sacrifice the doctrine almost entirely. Whether the Supreme Court can save that baby and just throw out the bath water remains to be seen. Other memorable patent developments: – The Federal Circuit decided in February to lift an injunction against Barnes & Noble Inc., against its use of a “one-click” method of online ordering. Amazon.com Inc. developed the system that allows buyers to purchase an item with one mouse click and had sought the injunction. – President Bush named former U.S. Rep. James Rogan of California as undersecretary of Commerce for intellectual property and director of the U.S. Patent and Trademark Office. – An arbitration panel awarded Boston Scientific, Inc., of Natick, Mass., $169 million in damages plus costs and attorney fees based on a claim of patent infringement against Medtronic Inc. of Santa Rosa, Calif. The patents covered rapid-exchange stent delivery systems (the tubes that prop arteries open), and a balloon-dilation catheter. THE TRADE WINDS WERE BLOWING If copyrights and patents were at the center of the big IP stories of 2001, the “trade” winds — trademarks, trade names, trade dress, and trade secrets — were blowing, too.In November the Court of Appeal for California’s 6th Appellate District removed a preliminary injunction barring Andrew Bunner from revealing the secret to decrypting DVD movies on his Web site. The case was brought by the DVD Copy Control Association, which argued that the potential damage caused by Web publication DVD decryption software source code was unlawful. The Court of Appeal, however, concluded that the defendant’s First Amendment rights to publish trumped the trade secret argument. Trade secret claims were a winner in a criminal case brought by the Santa Clara County district attorney’s office against Avanti Corp., its chairman, and half a dozen current or former employees. Avanti was accused of stealing software code from a competitor, Cadence Design Systems Inc. Avanti used that code to develop a competing router that wound up usurping Cadence’s dominant market share. On June 22, after five years of tense legal wrangling, the case ended when it was announced that Avanti and the individual defendants would collectively plead no contest to theft-of-trade-secret, securities fraud, and conspiracy charges. Avanti was fined $27 million, and seven individual defendants received fines ranging from $27,000 to $2.7 million. They all face between one and six years of jail time. An eighth defendant, Mon Yen Tsai, an Avanti cofounder and its first chief executive, had his charges dismissed. All individual defendants were former employees of Cadence. Sitting in the arcane area of law between patent law and trademark law is the law of trade dress. It’s not the kind of topic that normally comes to mind when you think either of big IP cases or of Supreme Court cases, but TrafFix Devices, Inc., v. Marketing Displays Inc. was both. The case turned on temporary road signs with messages like “Road Work Ahead” or “Left Lane Closed.” Such signs typically need to be designed to withstand high winds. Marketing Display’s patent for the original sign design had expired several years before. Marketing Display argued that the signs’ distinctive look was trade dress, protected under the Lanham Act. The Supreme Court, in an opinion authored by Justice Kennedy, had other ideas: “The Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity. The Lanham Act, furthermore, does not protect trade dress in a functional design simply because an investment has been made to encourage the public to associate a particular functional feature with a single manufacturer or seller.” Considering the amount of attention J.K. Rowling’s Harry Potter books are getting these days, it is not surprising that the Potter brand has surfaced in one of the biggest trademark cases of the year. Author N.K. Stouffer claims that her children’s books, published in the 1980s, some featuring a character named “Larry Potter” and one featuring creatures called “Muggles,” were appropriated by Rowling, who uses the term “muggles” in her books to refer to human beings. Scholastic Inc., Rowling’s American publisher, sued Stouffer in the federal district court in Manhattan in 1999, seeking a declaratory judgment that Rowling’s books were noninfringing; Stouffer has since countersued in the same court. The first major hearing of Stouffer’s case was scheduled for the unfortunate date of Sept. 11. The bulk of the pretrial and trial procedures will likely occur in 2002. Jeff Burgar, owner of such domain names as www.celebrity1000.com, brucespringsteen.com, kevinspacey.com and others, won two victories in domain name dispute cases in 2001. The rulings reversed the trend for arbitration panels and some courts to defer to the claims of celebrities who hadn’t yet registered domain names incorporating their names. In January a WIPO Arbitration and Mediation Center panel found that, although Bruce Springsteen has an indisputably famous name, it is not protected by the Uniform Dispute Resolution Policy. “[T]he users of the Internet do not expect all sites bearing the names of celebrities, famous historical figures or politicians to be authorized or in some way connected with the figures themselves,” the panel declared. “The Internet is an instrument for purveying information, comment, and opinion on a wide range of issues and topics. It is a valuable source of information in many fields and any attempt to curtail its use should be strongly discouraged.” A similar case, this time a federal one, was brought by the actor Kevin Spacey against Burgar in the U.S. District Court for the Central District of California. That case was dismissed on jurisdictional grounds, but part of the reasoning lay in the court’s finding that Spacey wasn’t harmed in California by Burgar’s ownership of kevinspacey.com.And so Springsteen’s name turns out to be treated like Mitchell’s book; as in Festo, Tasini, and even TrafFix, the courts tended to impose limits on the arguably overbroad claims of rights holders. Will this trend continue beyond 2001? Or has the trend of imposing limits reached its limit? Stay tuned until next year.

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