IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

The recent establishment of .XXX, a new Top-Level Domain Name (“TLD”) intended for adult-oriented content, has been met with some trepidation and sparked controversy from those within and outside of the adult-oriented industries. Although much has been made of the threat of .XXX cybersquatting relating to mainstream companies, institutions and brands, ironically, the first formal legal challenge to the .XXX TLD, comes from those within the adult industry.

Last week, the owners of two popular adult-oriented websites, YouPorn.com and Digital Playground, filed a federal antitrust lawsuit against the operators of the .XXX TLD, and the administrator of the Domain Name System (“DNS”), alleging antitrust violations related to the creation and maintenance of the controversial TLD. Plaintiffs complaint named the Internet Corporation for Assigned Names and Number ("ICANN") and its exclusive registry operator for the .XXX TLD, ICM Registry, LLC ("ICM") as defendants in the suit. ICANN is a non-profit corporation responsible for the domain names on the internet. It is responsible for administering the internet domain name system by controlling the creation of all TLDs and accrediting registrars for domain names. ICM is a for-profit registry operator providing services to domain registrants for fees.

The suit filed in the Central District of California, alleges monopolistic conduct, price gouging, and anti-competitive and unfair practices. Specifically, the plaintiffs allege that defendant ICM manipulated and intimidated ICANN into entering into an agreement which resulted in a monopoly by: naming ICM as the sole registrar for the .XXX TLD; agreeing to a prohibition on the creation of any competing TLDs for the adult industries; and, granting ICM control of pricing without any oversight by ICANN. As a result, the plaintiffs argue that ICM now maintains a monopoly over the sole adult-oriented TLD.

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Gibbons P.C. is proud to announce that two practices within its Intellectual Property Department have achieved national and metropolitan rankings in the 2012 edition of Best Lawyers®, the oldest and most respected peer-review publication in the legal profession. In addition, Department Chair David E. De Lorenzi has been individually ranked in three different IP categories.

The Department was singled out for national rankings in the categories of Patent Law (Tier 2) and Intellectual Property Litigation (Tier 3). In addition, the Intellectual Property Litigation practice was ranked in the first tier of the Newark, New Jersey metropolitan rankings, while the Patent Law practice achieved a second-tier ranking for Newark. Mr. De Lorenzi was ranked in three different categories: Intellectual Property Litigation, Patent Litigation, and Patent Law.

Because Best Lawyers is based on an exhaustive peer-review survey in which more than 41,000 leading attorneys cast almost 3.9 million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor. Corporate Counsel has called Best Lawyers “the most respected referral list of attorneys in practice.”

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On Monday, the International Trademark Association (“INTA”) filed an amicus curae brief  with the United States Court of Appeals for the Second Circuit in Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc.. In that brief, INTA argued that the lower court’s decision should be vacated and remanded on the basis that the court did not properly evaluate Louboutin’s federally registered trademark, failed to accord that mark the legal presumption of validity to which it is entitled under federal law, and did not use the appropriate test for aesthetic functionality.

The matter pending before the Second Circuit is an appeal from the U.S. District Court for the Southern District of New York’s denial of Louboutin’s motion for a preliminary injunction to halt the sale by Yves Saint Laurent America Inc. and its affiliates (“YSL”) of shoes having red soles. In the lower court’s decision, Judge Victor Marrero denied Louboutin’s motion, finding that Louboutin was unlikely to be able to establish that ownership of a protectable mark, since color cannot serve as a trademark if it is functional. Louboutin then filed the instant appeal. Gibbons summarized the lower court’s decision in an earlier blog.

In its amicus brief, INTA argues that the Southern District did not give due deference to Louboutin’s federal registration and the presumption of validity it confers, and that the decision was not based on a finding that YSL had shown “by a preponderance of the evidence” that Louboutin’s mark was not entitled to protection, as the law requires. The brief also criticizes the Southern District’s decision on the basis that it misconstrued Louboutin’s asserted trademark rights as a broad claim to the color red as applied to shoes. However, INTA noted, the mark is limited to a lacquered red that is specifically placed on the sole of a shoe.

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In the recent In re Klein decision, the Federal Circuit reversed the Board of Patent Appeals and Interferences’ decision because five separate obviousness rejections were not based on analogous art as compared to the claimed invention. In re Klein, 647 F.3d 1343, 1345 (Fed. Cir. 2011).

The claimed invention was a device for preparing sugar-water nectar for various species comprised of a vessel having a movable partition capable of separating water and sugar until it was desired to mix them. Id. at 1345-46. The partition could be inserted into the vessel at different tracks so that, when filled to a predetermined level, a nectar of the desired concentration of sugar would result from mixing the contents. Id. at 1350-51.

Three of the references (i.e., Roberts, Kirkman, and O’Connor) disclosed vessels, e.g. drawers, intended to retain dry objects each of which had the feature of movable partitions. Id. at 1348-51. The remaining two references (i.e., Greenspan and De Santo) disclosed vessels which would retain a liquid and mix it with a dry component or a second liquid to achieve a desired solution. These vessels contained barriers (also referred to as a “wall” or “partition” in the references) to prevent mixing of the contents until desired. Id. at 1351. The barriers were distinguished from the partitions of both Klein and the other groups of references (i.e., Roberts, Kirkman, and O’Connor) in that they were not movable. Id. at 1352.

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On the heels of National Cybersecurity Awareness Month in October, the second panel discussion at the Fifth Annual Gibbons E-Discovery Conference dealt with pressing issues involving cybersecurity and their effect on private industries.

Moderated by Gibbons Director and senior E-Discovery Task Force member Jeffrey L. Nagel, Esq., the panel opened with a presentation by Erez Lieberman, Esq., Deputy Chief of the Economic Crimes Unit and Chief of the Computer Hacking and Intellectual Property Section, Office of the United States Attorney, District of New Jersey. Mr. Lieberman discussed several cases of high profile cybersecurity breaches in recent years and the government’s role in those cases. Mr. Lieberman identified the various types of cybercrimes affecting businesses and provided the audience with a unique understanding of the interaction and coordination between his office, the Secret Service, the Federal Bureau of Investigations, and private companies. Mr. Lieberman also addressed the effect of data breaches on the public sector and the impact of public perception on the business.

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Cybercrime has increased tremendously in the digital economy. “According to the American Society for Industrial Security, American businesses [are] losing $250 billion a year from intellectual property theft since the mid-1990’s.”¹ There is a clear and growing threat of Chinese industrial espionage targeted at American companies. In a recent case, a Michigan couple was accused of stealing $40 million worth of trade secrets from General Motors and selling them to a Chinese car maker. Aside from hackers, the threat also exists within organizations from insiders. A recent study commissioned by Cisco found that “[i]n the hands of uninformed, careless, or disgruntled employees, every device that accesses the network or stores data is a potential risk to intellectual property or sensitive customer data.”

According to the Ponemon Institute, a privacy and information management research firm, incidents of data breach costs U.S. companies $204 per compromised customer record. This can quickly escalate to the millions of dollars, not including penalties and other fees that may be imposed by federal and state regulatory authorities. The high cost of a security breach can have a profound effect on an organization’s profit and loss, market presence and competitive advantage. It can also result in damage to brand and reputation. In light of the above, American companies need to exercise increased vigilance to protect their trade secrets and other valuable intellectual property (IP) that are strategic to organizational success and competitive advantage.

President Obama, recognizing the increasing toll of cybercrime on U.S. commerce, on May 29, 2009 issued a very strong statement titled “On Securing Our Nation’s Cyber Infrastructure.” He warned: “every day we see waves of cyber thieves trolling for sensitive information—the disgruntled employee on the inside, the lone hacker a thousand miles away, organized crime, the industrial spy and, increasingly, foreign intelligence services… . It’s been estimated that last year alone cyber criminals stole intellectual property from businesses worldwide worth up to one trillion dollars. In short, America’s economic prosperity in the 21st century will depend on cybersecurity.”

Stay tuned for an upcoming post on the Fifth Annual Gibbons E-Discovery Conference, where privacy and legal practitioners tackled the subject of cybersecurity . . . .

¹ Hazlewood, Sara. “Tech Firms Watching Trade Secret Trials,” Business Journal Serving San Jose & Silicon Valley, May 14, 1999, 17:2, p. 7.

Luis J. Diaz is a Director in the Gibbons Intellectual Property Department. John J. Cahill, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

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The New Jersey Intellectual Property Law Association (“NJIPLA”) will be hosting its first annual "Electronics, Telecom and Software Patent Practice Update" next Wednesday, November 9, 2011, from 12:00-5:15 pm at the New Brunswick Hyatt.

This informative event is co-chaired by Robert E. Rudnick, a Director in the Gibbons Intellectual Property Department and Vice President of the NJIPLA, who will also be a panelist at the event speaking on the recently enacted Leahy-Smith America Invents Act and its impact on patent protection in the electrical arts.

The full agenda for the event may be viewed here. To register for this event, click here.

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Following last month’s enactment of the Leahy-Smith America Invents Act (“AIA”), significant limitations on multidefendant infringement suits are now in effect. Specifically, the joinder provision of the AIA, 35 U.S.C. § 299, permits accused infringers to be joined in one action only if any right to relief is asserted against the parties jointly, severally, or arising out of the same transactions or occurrences; and, common questions of fact as to all defendants will arise in the case. Simply put, patentees can no longer sue multiple defendants in the same litigation based solely on allegations that they each have infringed the patent(s)- in-suit.

This provision was seemingly drafted to stem litigious practices by non-practicing entities (“NPEs,” sometimes called “patent trolls”) who name multiple defendants in order to press for nuisance value settlements. It likely will have immediate effects on the geographic distribution of patent infringement filings going forward. Notably, some practitioners believe the Eastern District of Texas -- a one time hotbed for multi-defendant litigations -- might see a decrease in such actions, with many of those suits instead being filed in Delaware, the State of incorporation for many litigants, as reported in IP Law360. Contesting venue in the District of Delaware would be an uphill battle for those entities already incorporated in the First State.

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