TABLE OF CASES (in alphabetical order)

Barrus v. Sylvania, 55 F.3d 468 (9th Cir. 1993)

Creative Technology, Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696 (9th Cir. 1995)

Hydranautics v. FilmTec Corp., 70 F.3d 533 (9th Cir. 1995)

Sebastian Int'l, Inc. v. Longs Drugs Stores Corp., 53 F.3d 1073 (9th Cir.), cert. denied, 133 L.Ed.2d 207 (1995)

Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902 (9th Cir. 1995)

Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995)

Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995)

Creative Technology, Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696 (9th Cir. 1995)

Sebastian Int'l, Inc. v. Longs Drugs Stores Corp., 53 F.3d 1073 (9th Cir.),

cert. denied, 133 L.Ed.2d 207 (1995)

Barrus v. Sylvania, 55 F.3d 468 (9th Cir. 1993)

Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902 (9th Cir. 1995) 5

Hydranautics v. FilmTec Corp., 70 F.3d 533 (9th Cir. 1995)

I. Copyright

A. Infringement And The Fair Use Defense - WARNING: Unauthorized copying of software, even for repair and maintenance purposes may be ILLEGAL.

In Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995), the Ninth Circuit held that an independent service organization's (ISO) copying of copyrighted software for the purpose of servicing the software supported a likely finding of copyright infringement, authorizing the grant of a preliminary injunction barring further copying. The ISO was not the owner/licensee of the copied software, but was maintaining the software licensee's system.Since the ISO's copying of the software did not lead to the origination of new creative works, or any other appreciable public benefit, and would have caused significant adverse impact on plaintiff's licensing and service revenues, the ISO's actions were not protected under the fair use doctrine.

1. Facts And Procedural Posture

Southeastern Express is an independent service organization that services and maintains computer systems sold by Triad Systems to the automotive parts industry. Triad and Southeastern compete for the business of servicing and maintaining computer systems. To a majority of its customers, Triad licensed its software, rather than selling it outright. Southeastern's technicians, in the process of servicing the computer systems, caused copies of Triad's software to be loaded into the computer's memory when the computer was in use. Southeastern also copied Triad's software stored on computer hard drives onto tapes.

Triad sued Southeastern for copyright infringement. During the first phase of trial, the district court granted a directed verdict in favor of Triad on Southeastern's fair use defense to copyright infringement. The jury found that Southeastern infringed Triad's software copyrights. The district court then granted Triad's motion for a preliminary injunction barring Southeastern from performing service or maintenance on Triad computer systems that contained licensed software. On appeal, Southeastern attacked the grant of the preliminary injunction

2. The Ninth Circuit Opinion

The Ninth Circuit, in an opinion written by Judge Sneed, upheld the grant of the preliminary injunction.

(A) The Ninth Circuit Preliminary Injunction Standard In Copyright Cases

The court first found that in a copyright action, a showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm required to impose a preliminary injunction. Triad made its showing of copyright infringement by establishing that: (1) it owned the copyrights for the software works in question, and (2) following MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 518 (9th Cir. 1993), cert. dismissed, 114 S. Ct. 671, 126 L. Ed.2d 640 (1994), Southeastern copied protected expression when it copied entire software works into computer memory.

(B) The Inapplicability Of The Fair Use Defense To Southeastern's Copying

The court found Southeastern's copying was not protected under the copyright fair use doctrine, codified in 17 U.S.C. 107. Southeastern did not develop any creative works based on Triad's software and did not provide any appreciable benefit to the public. Southeastern's actions only allowed Southeastern to compete with Triad, causing Triad to lose licensing and service revenues.

B. The Forum Non Conveniens Analysis Applies to Copyright Claims

In Creative Technology, Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696 (9th Cir. 1995) the Ninth Circuit held that the forum non conveniens analysis applies to copyright infringement claims and Singapore was an adequate alternate forum for a dispute between two Singapore companies.

1. Facts And Procedural Posture

Both Creative and Aztech have their principal place of business in Singapore. Creative sued Aztech in the Northern District of California for copyright infringement related to personal computer sound cards. Aztech filed an action in the High Court of Singapore seeking declaratory relief under the Singapore Copyright Act. Aztech filed a motion to dismiss the action in the United States, which the district court granted. Creative appealed.

2. The Ninth Circuit Opinion

The Ninth Circuit found the district court did not abuse its discretion in making its forum non conveniens determination, and affirmed the district court.

(A) The Forum Non Conveniens Doctrine Applies to Copyright Disputes

On appeal, Creative argued that the forum non conveniens doctrine is inapplicable because federal district courts are given exclusive jurisdiction over Copyright claims. The Ninth Circuit found that the forum non conveniens doctrine is inapplicable to certain federal statutes that contain special venue provisions. However, the exclusive jurisdiction of federal district courts have over copyright claims simply excludes state courts from hearing those claims, but does not render the doctrine of forum non conveniens inapplicable to copyright claims.

(B) Application Of The Forum Non Conveniens Doctrine Was Proper In This Case

The Ninth Circuit applied convention forum non conveniens analysis and determined that Singapore was an adequate forum and that the public and private interest factors favored dismissal.

B. Trademark

1. Resale Of Goods Under The Original Mark - Trademark owner/manufacturer cannot use a distribution membership program to limit the resale of genuine branded product. NOTE - such a program may also raise antitrust tying liability.

In Sebastian Int'l, Inc. v. Longs Drugs Stores Corp., 53 F.3d 1073 (9th Cir.), cert. denied, 133 L.Ed.2d 207 (1995), the Ninth Circuit held that resale of original articles under the producer's trademark by a purchaser is neither trademark infringement nor unfair competition.

(a) Facts And Procedural Posture

Sebastian manufactures hair care products and places its trademark on containers in which the products are sold. Sebastian also sought to limit distribution of its products to consumers through salons which become members of the "Sebastian Collective Membership Program." Members were required to agree to resell Sebastian's products only to other "Collective" members or salon clients. Longs Drugs purchased and resold Sebastian products without becoming a member of the "Collective."

Sebastian sued Longs for trademark infringement and unfair competition. The district court preliminarily enjoined Longs from selling Sebastian products and Longs appealed.

(b) The Ninth Circuit Opinion

In a three judge panel, per curiam opinion, the Ninth Circuit reversed the district court, finding that resale of original goods by Longs was neither trademark infringement nor unfair competition.

(1) The First Sale Doctrine

With certain limited exceptions, the first sale doctrine prevents a producer of a trademarked product from controlling distribution of the product sold under the mark after the first sale. The first sale doctrine ensures that producers gain the goodwill associated with the quality of its products and consumers get the genuine product of the producer. Additionally, the doctrine preserves competition by limiting the ability of the producer to control distribution of the product after the first sale. Because Longs only sold original articles under the original trademark, its acts were protected by the doctrine.

(2) A Showing Of A Likelihood Of Confusion Does Not Render The First Sale Doctrine Inapplicable

Sebastian also argued that the first sale is not applicable when resale creates a likelihood of consumer confusion as to the affiliation of the reseller with the producer. The Ninth Circuit disagreed with Sebastian, finding that a reseller who merely sells a trademarked article under the original trademark commits no actionable misrepresentation. Because there was no evidence that Longs did anything other than stock and resell genuine Sebastian products, the first sale doctrine excluded any liability under the Lanham Act.

2. Lanham Act - Standing Of Consumers To Sue For False Advertising - Consumers must have direct commercial injury or be actual competitors to sue under the false association / false advertising provisions of federal trademark law (15 U.S.C. 1125(a))

In Barrus v. Sylvania, 55 F.3d 468 (9th Cir. 1993), the Ninth Circuit held that consumers who failed to allege commercial injury or competitive injury lacked standing to sue for false advertising under the Lanham Act.

(A) Facts And Procedural Posture

Consumers brought an action against Sylvania alleging that Sylvania's advertising for its Energy Saver bulbs, which claimed the bulbs reduce pollution and conserve energy, was false and misleading because the only difference between the Energy Saver bulbs and the bulbs they were intended to replace was that the Energy Saver bulbs were of a lower wattage and produced less light. The consumers sought equitable relief and damages for the alleged false advertising. The district court found that the consumers lacked standing to sue under 15 U.S.C. 1125(a) and dismissed the claim under Fed. R. Civ. P. 12(b)(6).

(B) The Ninth Circuit Opinion

The Ninth Circuit explained earlier Ninth Circuit opinions and concurred with opinions in several other circuits holding that the consumers lacked standing to sue, affirming the district court. The court found that to sue under the "false association" prong of 15 U.S.C. 1125(a)(1)(A) the consumers would have had to allege commercial injury based on the defendants deceptive use of a trademark, or its functional equivalent. To sue under the "false advertising" prong, 15 U.S.C. 1125(a)(1)(B), the consumers would have had to alleged commercial injury based upon a misrepresentation about a product, and that the injury was "competitive" -- harmful to the consumer's ability to compete with Sylvania. Because the consumers alleged neither commercial injury nor competitive injury, they lacked standing to sue.

3. Analysis Of The Validity Of Trade Names And Trademarks - If a descriptive trademark / trade name is at issue, counsel will need to apply two separate legal analyses in advising the client.

In Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902 (9th Cir. 1995), the Ninth Circuit found that separate analyses for the validity of trade names and trademarks was proper, holding that the term "Self-Realization" was generic as a trade name, while "Self-Realization" was descriptive, without secondary meaning, as a trademark.

(A) Facts And Procedural Posture

The Self-Realization Fellowship Church (SRF) sued the Ananda Church of Self-Realization (CSR) for infringing SRF's trademarks and trade names. Both parties are Hindu-Yoga religious organizations. The district court initially enjoined CSR from using SRF trade names and trade marks. After CSR countered by successfully moving for summary judgment on the infringement claims, alleging SRF's trademarks and names were invalid the district court dissolved the preliminary injunction. SRF appealed.

(B) The Ninth Circuit Opinion

The Ninth Circuit first found that the district court's separate analyses of the validity of the trade names and trademarks was proper. SRF's trade names would have to be found invalid if they identified a general class of spiritual organizations, instead of a single, unique organization. SRF's trademarks would have to be found invalid if they did not create a direct association between SRF products bearing the mark and SRF itself.

1. Analysis Of SRF's Trade Names

CSR presented evidence that other Hindu-Yoga religious organizations considered "Self-realization" the goal of religious practice. CSR also presented evidence that SRF used the term "Self-realization" in a context applicable to all of Yoga. SRF offered only declarations by its employees and wholesalers that they thought of SRF when they heard the term "Self-realization". The court gave SRF's declarations little weight because trademark law presumes that attestations from persons in close association with the trademark claimant's business do not reflect the views of the purchasing public. Because CSR satisfied its burden of showing that "Self-realization" organizations are a class of spiritual organizations, and SRF did not raise a genuine issue of material fact, the Ninth Circuit affirmed the district court opinion that "Self-realization" was an invalid trade name.

1. Analysis Of SRF's Trademarks

CSR introduced evidence that "Self-Realization" described a generic state of spiritual attainment which is the purpose of Yoga. Thus designations on products as "Self-realization", the purpose of which products are to help users attain "Self-realization", are merely descriptive. Since SRF's marks did not require "imaginativeness" to make the connection between the marks and products, SRF's marks were not suggestive. Because SRF did not prove "Self-Realization" had any secondary meaning as to SRF's products, SRF's mark was merely descriptive and not a valid trademark.

III. Patent/Antitrust

A. Permissive Antitrust Counterclaims In Patent Infringement Suits - Accused infringers need not file their antitrust claim as a counterclaim in the patent infringement suit. A separate suit can be filed after the patent litigation is concluded.

In Hydranautics v. FilmTec Corp., 70 F.3d 533 (9th Cir. 1995), the Ninth Circuit held that an antitrust claim is not a compulsory counterclaim in a patent infringement suit. Thus, antitrust claims for predatory patent litigation may be brought as counterclaims, or may be brought as a separate lawsuit.

1. Facts And Procedural Posture

FilmTec first sued Hydranautics for patent infringement. The district found FilmTec's patent not invalid and infringed. On appeal the Federal Circuit reversed, finding FilmTec did not own the patent in suit. Hydranautics then sued FilmTec in a separate lawsuit for antitrust violations alleging FilmTec engaged in "predatory" patent litigation. The district court dismissed Hydranautics' suit as failing to state a claim under which relief could be granted. Hydranautics appealed.

1. The Ninth Circuit Opinion

The Ninth Circuit analyzed whether Hydranautics' claim arose out of the same transaction or occurrence as that giving rise to FilmTec's suit, whereby it would be a compulsory counterclaim. In reaching its decision, the court considered whether or not the essential facts of the various claims were so logically connected that considerations of judicial economy and fairness dictated that all issues be resolved in one lawsuit.

The court first noted that in "many" cases involving both patent and antitrust issues, the court severed the issues and resolved the infringement issue first. If the patent plaintiff prevailed at trial on the patent issues, the antitrust counterclaims were normally disposed of on motion. Additionally, the court noted that the facts giving rise to patent and antitrust cases are typically distinctive, as evidenced by the different appellate paths for patent and antitrust cases. Whereas the Federal Circuit has exclusive jurisdiction over patent appeals, regional circuits hear antitrust appeals. Moreover, antitrust claims attack the patent infringement suit itself as the wrong, instead of the acts corresponding to the alleged patent infringement.

Because of the significant difference between the facts which controlled the patent infringement claim and, those which controlled the antitrust claim, Hydranautics' antitrust claim was held not to be a compulsory counterclaim.