Irwin IP’s pro bono representations have been an integral part of the Firm’s mission since our inception. In 2021, as part of the Firm’s commitment to ensure all our attorneys are actively involved in giving back to our Chicago community, we hired a dedicated Special Counsel for Entertainment Law and Pro Bono Services. In response, Irwin IP attorneys rose to the challenge by collectively providing 1,259 hours to pro bono representation in the first three quarters of 2023.
Although all attorneys’ volunteer efforts are valued, meaningful and necessary, Irwin IP’s Pro Bono Committee chose Ariel Katz as the Irwin IP 2023 Pro Bono Attorney of the Year. Please join us in sharing and celebrating the work of Ariel Katz who donated her time to provide 260 hours of free legal services.
Irwin IP remains motivated to fill the gap in legal services and provide equal access to justice, and we are all proud of Ariel Katz commitment to our Firm’s mission. Here is a spotlight of the clients that benefitted from Ariel Katz’s pro bono service:
Ariel defended a musician in a trademark infringement suit, won a Motion to Set Aside Default Judgement for the client after his previous lawyer abandoned him, and successfully negotiated a settlement.
Ariel assisted the founder of a non-profit aimed at stopping gun violence in Chicago to regain access to his hacked Instagram account and filed a Trademark application for the client.
Ariel assisted a music manager to pursue a breach of contract claim and a breach of fiduciary duty claim against his former client and former partner.
On November 27, 2023, U.S. District Judge Connolly ruled that patent monetization firm and de facto patent owner, IP Edge, and its affiliated business Mavexar, engaged in a fraudulent strategy of (1) conveying various computer and cellphone patents, and de minimis rights therein, to third-party shell LLCs, and then (2) having attorneys (allegedly) representing those LLCs—but who actually answered to IP Edge—file numerous inaccurate patent assignments with the PTO and file lawsuits to extract settlements from accused companies pursuant to IP Edge’s—not their shell LLC clients’—direction.
The first shell LLC, Nimitz Technologies (“Nimitz”), filed eleven cases in the District of Delaware. Nimitz’s sole owner was unable to describe the asserted ’328 patent or how it came into Nimitz’s possession from France Brevets, a French “sovereign state fund” that retained a partial interest in the patent via an assignment agreement it entered into with yet another IP Edge affiliate, Burley Licensing LLC (“Burley”). In the France Brevets/Burley Patent Assignment, France Brevets retained certain rights and financial interests in revenues from IP Edge’s enforcement efforts, and could reclaim the patents if the monetizing efforts did not reach certain levels. Judge Connolly observed that IP Edge had an interest in, and influence over, Nimitz. For example, IP Edge’s director identified targets, drafted claim charts, and instructed Nimitz’s lawyer to file the infringement suits. Additionally, the Nimitz Patent Assignment, which was filed at the PTO using an IP Edge email account, incorporated the Frances Brevets/Burley Patent Assignment, but also included a “Consulting Services” agreement between Nimitz and Mavexar, for non-legal services like patent monetization assistance.
Two other shell LLCs—Mellaconic and Lamplight—also executed Patent Assignment Agreements that similarly resulted in the LLCs bearing all liability but only receiving a maximum of about 5% of any recovery (the remaining over 95% being shared between France Brevets, IP Edge and its affiliates, and the LLCs’ lawyers). This transfer of liability, through which IP Edge and Mavexar attempted to eliminate their exposure to the risks associated with their aggressive (and potentially frivolous) lawsuits, presented a clear conflict of interest between the shell LLCs and IP Edge—conflicts that the LLCs’ lawyers entirely ignored and failed to point out to their shell LLC “clients.” Once the shell LLCs were created, and just before the patents were asserted, IP Edge directed the filing of fraudulent assignments with the PTO that spuriously indicated that the shell LLCs possessed all the rights in the assigned patents. In truth, IP Edge’s involvement was so complete that it directed the shell LLCs’ attorneys to enforce the patents and enter into settlements—purported on behalf of their “client” LLCs—without those attorneys having even met the sole shareholder of their shell LLC clients.
Judge Connolly found that IP Edge’s attorneys, Maxevar’s in-house attorneys, and the LLCs’ outside counsel violated the ABA’s Model Rules of Professional Conduct in their representation of their clients and referred them to the Texas Supreme Court’s Unauthorized Practice of Law Committee. He also referred these matters to the U.S. Department of Justice and the USPTO for further inquiry. This case is a stark reminder to all attorneys of our ethical obligations and the importance of always seeking to abide by not only the letter, but also the spirit, of our ethical duties to ensure that we always prioritize our clients’ needs over our own interests.
In a pivotal decision that could expand copyright protection in the digital media world, the United States Court of Appeals for the Ninth Circuit reversed and remanded the district court’s dismissal of world-renowned choreographer Kyle Hanagami’s complaint alleging Epic Games, Inc. infringes part of Hanagami’s dance that is registered choreographic work with the U.S. Copyright Office.
The dispute hinged on the allegation by Hanagami that Epic Games infringed his copyrighted choreographic work on its Fortnite video game platform. Hanagami asserted that Fortnite’s “emotes,” which are virtual cosmetic items acquired using real world money that allow the player to perform a short action, most commonly a dance, bore an uncanny resemblance to his original choreography. The issues before the appellate court were how to properly apply the substantial similarity test to choreographic works and whether Hanagami sufficiently alleged substantial similarity between his choreographic work and the allegedly infringing Fortnite emote. What was not challenged is whether Fortnite had access to Hanagami’s dance as it had received a million views on TikTok and YouTube.
To determine whether there was a substantial similarity, the appellate court applied the “extrinsic test”, which is an objective comparison of specific expressive elements. Using this test, the court highlighted the importance of considering the collective arrangement of dance elements, rather than isolating them as individual, unprotected moves. In rejecting the lower court’s findings, which isolated the choreography to mere individual poses, the appellate court reasoned that “reducing choreography to ‘poses’ would be akin to reducing music to just ‘notes’” and that the lower court’s limited analysis is fundamentally at odds with the way courts analyze copyright claims for other forms of art.
The appellate court further agreed with Hanagami that “poses” are not the only relevant elements underlying choreographic work. Other elements like body position, shape, action, use of space, pauses, energy, canon, motif, contrast, and repetition are also relevant in assessing the choreographic work. These discrete and technical elements are analogous to elements that courts have recognized in the field of music, such as melody, harmony, rhythm, pitch, tempo, phrasing, structure, chord progressions, and lyrics. But the court cautioned that there is no need to specify a discrete universe of elements from which a claim for infringement can be built. Rather, it is the court’s task to compare the selection and arrangement of elements in the registered choreographic work with the allegedly infringing work.
Lastly, the court emphasized that the proper inquiry is not simply about the length of the copied materials, but instead whether the similarity constitutes a substantial portion of the work. The court clarified that the inquiries on whether the four-count of Hanagami’s work allegedly copied by Fortnite had a substantial qualitative significance to the overall registered five-minute choreography and whether the copied materials are the most recognizable and distinctive portions of his work are questions for the jury to decide on remand.
As the dust settles, it seems evident that the Ninth Circuit’s ruling has charted new territory in copyright law. This decision sets a precedent for the broader realm of copyright law, especially concerning the digital replication of choreographic works. It delineates a clearer path for choreographers to protect their creative dance routines in the increasingly digital landscape of entertainment and art.
The consequences of pushing zealous advocacy beyond reasonable limits can be severe. A recent Federal Circuit decision illustrates just how severe: in In re PersonalWeb Techs, a three-judge panel affirmed a $5.2 million attorneys’ fee award to the alleged infringer after over a decade of patent infringement litigation.
The twelve-year saga began in 2011 when PersonalWeb sued Amazon alleging that its Amazon Simple Storage Service (or “Amazon S3”) infringed its patents (the “Texas Action”). After claim construction, PersonalWeb stipulated to a dismissal with prejudice without reserving any rights to litigate any issues. In 2018, PersonalWeb sued 85 Amazon customers, asserting the same patents against their use of Amazon S3 (the “Customer Cases”). Amazon intervened and filed a declaratory judgment action against PersonalWeb to bar re-litigation of the Texas Action. PersonalWeb counterclaimed against Amazon, alleging, again, patent infringement due to Amazon S3 and another Amazon product, CloudFront, a content delivery network. To streamline the Customer Cases, PersonalWeb represented to the court that the outcome of its case against Twitch, one of the Customer Cases, is tied to the rest of the Customer Cases but later withdraw this representation. Eventually, PersonalWeb lost to both Amazon and Twitch because PersonalWeb was barred from re-litigating Amazon S3, and as to CloudFront, PersonalWeb conceded it could not prove infringement after claim construction. Determining the case was exceptional under 35 U.S.C. § 285, the court granted Amazon’s and Twitch’s motion for attorneys’ fees and costs. PersonalWeb appealed the fee award.
The Federal Circuit affirmed, citing five findings as support that the case was “exceptional.” First, relying on claim preclusion and Kessler (bars patent infringement action against customers if seller previously prevailed), the panel found the claims related to Amazon S3 were objectively baseless and PersonalWeb’s “broad stipulation” in dismissing the Texas Action did not reserve any rights to litigate. Second, PersonalWeb’s frequently changing infringement theories undermined its trustworthiness and reliability before the court. Third, PersonalWeb unnecessarily prolonged the case when it “attempt[ed] to re-litigate” claim construction by offering expert opinion on certain alleged ambiguities in the district court’s claim construction. Fourth, PersonalWeb’s late reversal on its representation about the Twitch case supported a finding of exceptionality. And, finally, fifth, the district court did not abuse its discretion by considering two inaccurate declarations submitted by PersonalWeb, in which the declarants misrepresented the technology at issue in the Texas Action. As a result, the panel found that the district court did not abuse its discretion in awarding $5,187,203.99 in attorneys’ fees to Amazon and Twitch.
This case serves as a cautionary tale for patent litigators. Counsel should carefully examine their infringement theories and tread lightly to avoid having zealous advocacy turn to frivolous arguments. As this case has shown, counsel should be mindful of their representations to the court and quickly act to address them should they become inaccurate or are no longer supported by evidence. Failure to do so may push conduct from zealous representation to frivolous conduct. As the panel stated, “[e]xceptionality cannot hide behind a claim of zealous representation.”
On October 17, 2023, the Third Circuit held that Janssen Products, L.P. and Pharma Mar, S.A. (“Janssen”) could not immediately appeal the denial of its ex parte seizure application requesting the District Court of New Jersey (“District Court”) to seize various property. In doing so, the Third Circuit found that ex parte seizure orders under the Defend Trade Secrets Act (“DTSA”), which permits companies to ask courts to order law enforcement officials to seize property to stop propagation or dissemination of the trade secret, are not the same as injunctions and cannot be directly appealed.
Janssen, a pharmaceutical company, developed a stable, injectable version of the cancer drug trabectedin called Yondelis. Janssen considered its data, specifications, and methods for manufacturing the drug confidential and trade secrets. In 2017, Janssen discovered that two competitors were selling a generic version of Yondelis and sued them for patent infringement. During discovery, Janssen discovered information that led them to believe that the competitors also misappropriated Janssen’s trade secrets and sought relief under the DTSA and state law. Concerned that the competitors might spoliate evidence that would support its trade secret misappropriation claim, Janssen filed an ex parte seizure application under the DTSA requesting the seizure of the competitors’ servers, stored data, and some employees’ laptops and cell phones. Janssen argued that it met all eight requirements needed for an ex parte seizure order under the DTSA. The District Court denied this ex parte seizure application because Janssen had failed to show five of the eight requirements.
Janssen immediately appealed the denial of the DTSA ex parte seizure application. Janssen argued that the District Court’s order was immediately appealable because the denial of a DTSA ex parte seizure is the denial of a functional injunction. Janssen also argued that a DTSA ex parte seizure denial is appealable for the same reasons that Lanham Act ex parte rulings are immediately appealable. The Third Circuit disagreed on both issues. It found that the ex parte seizure denial failed to satisfy the three part functional test to determine whether the order was effectively injunctive, which considers whether an order (1) is “directed to a party,” (2) may be enforced by contempt, and (3) is “designed to accord or protect some or all of the substantive relief sought by a complaint in more than a [temporary] fashion.” The Third Circuit held that no DTSA seizure order can satisfy the first or second prong because the DTSA requires law enforcement officials to execute an ex parte seizure order, and thus, a DTSA seizure order is not directed at a party to the litigation and may not be enforced by contempt for failing to comply with it. Further, the Third Circuit distinguished ex parte seizure orders under the DTSA from ex parte seizure orders under the Lanham Act because the Lanham Act expressly lists ex parte seizure orders as a type of injunctive relief available whereas the DTSA does not have a section providing for injunctive relief.
Because ex parte seizure orders are not immediately appealable, the district court’s ruling on such orders will be more impactful as that order will not be revisited until the district court proceedings are terminated, something the parties should carefully consider when requesting or defending against such applications.
Irwin IP is pleased to welcome Alyssa Allegretti to the team. Alyssa joins us as a Project Assistant, where she will work collaboratively with the paralegal team. We look forward to seeing the positive impact Alyssa will have both on our projects and our clients’ success.
For the fourth consecutive year, Irwin IP is proud to share that the firm has once again been recognized as a “Best Law Firm of the Year” by Best Lawyers. Firms included in the “Best Law Firms” compilation undergo a thorough evaluation process and are acknowledged for their professional excellence based on assessments and feedback from both clients and peers.
This prestigious acknowledgment is a testament to the unwavering dedication, expertise, and passion of our team. It’s an incredible honor to be recognized by an organization renowned for its rigorous selection process and commitment to identifying top law firms in America.
Earlier this year, over 30% of the firm’s attorneys were recognized in the 2024 editions of The Best Lawyers in America® and the Best Lawyers: Ones to Watch® in America. Barry Irwin, Jason Keener, and Reid Huefner once again earned a place among the Best Lawyers honorees. Additionally, Victoria Hanson, Alexa Tipton, and Nick Wheeler were included in the Best Lawyers: Ones to Watch Category. We take great pride in the acknowledgment of our attorneys for their diligent efforts and contributions.
Irwin IP thanks all who where involved in the submission, evaluation, and review process!
Challenging years of perceived overreach, the Court of Appeals for the Federal Circuit (CAFC) recently questioned whether the Trademark Office had been operating beyond its sanctioned powers for years. After a trademark has been registered for five years, the owner can file a Declaration of Incontestability, providing robust protection for the mark. The CAFC concluded on October 18 that the Trademark Trial and Appeal Board (TTAB) does not have the authority to cancel a registration based on a fraudulent Declaration of Incontestability.
The dispute traces back to 2010 when Great Concepts filed a Declaration of Incontestability falsely stating that there were no pending proceedings despite an ongoing appeal regarding a 2006 petition for cancellation. However, Chutter, the opposing party, filed a new petition to cancel Great Concepts’ trademark in 2015, alleging that the 2010 declaration contained fraudulent statements. Consequently, the TTAB canceled the trademark registration under Section 14 of the Lanham Act.
The pivotal question before the CAFC was whether Section 14 of the Lanham Act permits the TTAB to cancel a registration due to a fraudulent Section 15 declaration. The TTAB has long believed it has this power; however, the CAFC disagreed. The CAFC interpreted Section 14 to allow a third party to seek cancellation of a trademark registration if the registration was obtained fraudulently but does not permit cancellation if the incontestability status was obtained fraudulently. The CAFC explained that Section 14 lists numerous bases for a third party to seek cancellation of a registered mark; fraud committed concerning a Declaration of Incontestability is notably excluded. In its reasoning, the CAFC employed traditional statutory interpretation and noted that where Congress set out a list, the omission of something from that list, like the alleged fraud here, is intentional.
Lastly, Chutter and the dissent argued that this precedent encourages fraud. According to the dissent, the majority opinion “instructs the agency, and the general public, that there exists a milepost in the trademark administrative continuum, a green-light, beyond which inequitable conduct is encouraged by the promise of great gain with little to no meaningful risk to the registrant.” The majority responded that the loss of incontestable status does not amount to nothing, as the mark owner will have more difficulty preserving a mark’s validity if it no longer has incontestable status. The majority also noted that TTAB has other remedies for fraud, especially in cases involving Section 15 declarations, including sanctioning attorneys, revoking filing privileges, and even criminal prosecution, given that these declarations are filed under penalty of perjury.
By distinguishing between fraud in obtaining a trademark and fraud in declaring its incontestability, the CAFC has clarified the limits of the TTAB’s powers, highlighting that certain fraudulent acts do not automatically allow for the cancellation of trademark registration. While it could be seen as potentially encouraging fraud, the majority balanced its decision by emphasizing the existing tools available to the TTAB to combat fraud, including sanctions and legal repercussions for attorneys.
Nothing can stop Fat Joe, he’s all the way up…except perhaps, the Second Circuit. On October 17, the Second Circuit overruled the S.D.N.Y.’s dismissal of a songwriter’s authorship claim to Fat Joe’s “All the Way Up” before any discovery could take place, based solely on the defendants’ assertion that a written agreement assigned the rights to the song, even though the agreement could not be found.
Plaintiff Eric A. Elliott claimed he created the song “All the Way Up” with performer and defendant Shandel Green in 2015 who later recruited defendant Joseph Cartagena (known in the industry as Fat Joe) to perform the song that was released on March 2, 2016. The parties agree that Elliott and Fat Joe met at an IHOP in Miami Beach on March 14, 2016, that Fat Joe gave Elliott a $5,000 check, and that Elliott signed but was not provided a copy of a document. This document has since been lost, and thus, the parties disagree over the contents of the document and the rights that Elliott maintained in the song. Defendants produced a draft version of the document that assigns all of Elliott’s rights in the song to R4 So Valid, LLC, Cartegena’s publisher, and claim that it is identical in substance to the version that Elliott signed.
But Elliott remembers the document differently. Per Elliott, Fat Joe told him that he would be paid some money up front for his contributions to the song, more money later as the song produced income, and that he would have an “incredible relationship” with Fat Joe going forward. Elliott claims that the document stated that he was going to be “compensated and credited as a writer” and that Fat Joe told him the document memorialized his representations.
The Second Circuit found that the District Court abused its discretion when, despite competing declarations regarding the contents of the signed document, it treated the draft document as direct evidence under Federal Rule of Evidence 1003, even though FRE 1003 requires that there is “no genuine issue of authenticity” before it can be admitted. However, Second Circuit also found that the district court did not abuse its discretion when it admitted the draft document under FRE 1004, which does not require such high guarantees of authenticity. Further, the Second Circuit found that the District Court abused its discretion in denying discovery and granting summary judgment because even though Elliott’s counsel’s declaration did not precisely state the information that he might learn during discovery, Elliott cannot be faulted for this when the defendants have exclusive possession over the facts, discovery has not occurred, and there is a genuine dispute of material facts.
To effect a valid assignment of copyright ownership under the Copyright Act, there must be a signed, written document memorializing the agreement. More often than not in the music industry, there is either no record of copyright assignments or the documents are lost. The Second Circuit’s ruling prevents recording and publishing companies that fail to properly maintain records of these agreements from simply asserting that they exist and earning quick dismissals on any suits brought by other musicians.