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Orange County Business & Commercial Law Blog

"Happy Birthday To You" is now part of the public domain

Most people in California sing 'Happy Birthday To You" without thinking about copyright infringement. However, the famous song has only recently been added to the public domain. On Sept. 22, a U.S. District Court judge ruled that the copyright for 'Happy Birthday To You" was not valid, and the copyright owners can no longer collect royalties for the song.

After two sisters composed 'Happy Birthday To You" in the 1800s, Clayton F. Summy Co. acquired rights to the song and then sold those rights to Warner/Chappell Music Inc. in 1988. In the recent court case, the federal judge found that Summy Co. had never actually obtained the rights to the song lyrics, and no valid copyright of the lyrics ever existed. The judge's recent decision to release 'Happy Birthday To You" into the public domain was the result of a lawsuit that was filed by Good Morning to You Corp. two years before.

Lawsuits over trademarking search results

California investors might be interested in understanding more about how the judicial system manages trademark disputes associated with search engines. The focus of these court battles typically centers on third-party trademarks used in search returns and advertising. Critics argue that these types of trademarks may be used to confuse Internet users looking for a specific product or brand.

Several courts have already held that any of these third-party trademarks simply diverting consumers from sponsored results or keywords may not qualify as actual infringement. However, if the trademark owners proves that the results or keywords create confusion based on the presentation or use of the trademark, it may be considered to be infringement. One trademark owner recently accused Amazon of using algorithms to confuse consumers when searching for products not available on Amazon.com.

Trademark owners cautioned about issue preclusion

California businesses that own trademarks may be interested in a recent ruling by the U.S. Court of Appeals for the 8th Circuit that reversed its earlier decision after the case was remanded back to it by the U.S. Supreme Court. It deals with a long fight over trademarks between B&B Hardware and Hargis Industries. B&B, which owns the registered trademark SEALTIGHT, had filed opposition proceedings with the Trademark Trial and Appeal Board over the proposed registration by Hargis of the mark SEALTITE. At the same time, it filed a trademark infringement lawsuit against Hargis in federal district court.

The TTAB denied the registration of the proposed Hargis mark, saying in its finding that there was a likelihood of confusion between the two. Hargis did not appeal the TTAB finding, but it continued on with the federal court litigation. Three years later, it won a favorable decision from a jury that said the two marks weren't similar enough to be confused. B&B appealed, claiming that the earlier TTAB decision constituted issue preclusion. The 8th Circuit denied its appeal on the basis that the TTAB decision did not place sufficient weight on how the marks in question would be used in the marketplace.

Lawsuit filed over counterfeit Disney cake toppers

Lawyers for Disney, Marvel, Lucasfilm and Sanrio have filed a trademark infringement complaint against two eBay sellers in a California federal court. The complaint alleges that the two men have been using an eBay storefront to sell counterfeit cake toppers featuring the likenesses of the plaintiffs' trademarked images without permission.

According to the trademark infringement complaint, the defendant's edible cake frosting sheets are decorated with animated and live action characters such as Mickey and Minnie Mouse, Cinderella, Hello Kitty, Darth Vader and Captain America. The complaint includes about 15 pages with lists of the numerous unauthorized images that were allegedly added to products manufactured by the defendants.

Maker of the "The Cobbler" sues 11

California residents may have heard about a lawsuit filed in Oregon involving movie sharing service Popcorn Time. In August 2015, a movie studio filed suit against 11 people who used the site to download and share the movie "The Cobbler", which starred Adam Sandler and was released in 2014. Although no one has been singled out by name, the lawsuit does list the 11 anonymous defendants, their IP addresses and their service provider Comcast Cable.

Although Popcorn Time is a traditional BitTorrent site, it has become popular since its 2014 launch due to its easy to use platform. The site allows users to stream movies and television shows right from the application itself. However, since it does not use a private swarm, it was possible for the plaintiff to find those who were pirating the movie illegally.

Lilly wins another court battle against Teva over Alimta

California investors may have heard that a U.S. court has ruled that Lilly has intellectual property protection for the drug Alimta until 2022. The decision is the latest win for the drug manufacturer in its long-running patent battle with rival Teva over the popular lung cancer drug.

In an effort to win the right to make a generic version of Alimta, Teva launched a series of lawsuits over the validity of Lilly's patents for the drug. In 2012, a court rejected Teva's challenge to Alimta's chemical make-up. The company then sued Lilly over a method-of-use patent that covers the co-administration of Alimta with vitamin B12 and folic acid in order to protect patients from side effects of the drug, arguing that the combination was obvious. However, in an initial ruling in 2014, a judge found that combining Alimta with the nutrients was not obvious at the time the drug was developed.

Court case emphasizes importance of contractual details

In negotiating a contract, a California business owner may find that an agreement with a subsidiary of a company should also involve that entity's parent company as a party to minimize the potential for issues such as breach of contract. A recent case that reached the U.S. Court of Appeals for the 7th Circuit involved a suit against a parent company that was not a party to the actual contract in question.

The legal action occurred after the plaintiff company suffered losses because of a breach of contract by the subsidiary of the defendant. The subsidiary did not have assets that could be used to satisfy its contractual obligation, leading to the plaintiff's effort to recover its losses from the parent corporation. While the plaintiff did negotiate with the parent company to sell its business to the subsidiary, the actual contract did not include the parent. In filing the claim, the plaintiff alleged that the parent corporation was a direct participant in the matter. Further, the plaintiff suggested that the parent company was an alter ego for its subsidiary.

The importance of IP protection for startup companies

California is home to some of the nation's most innovative companies, and their success is often based largely on their intellectual property. Studies have found that intangible assets account for most of a company's value, and for businesses just starting out, such assets are often the difference between success and failure. Startup businesses often find it difficult to qualify for conventional financing, and they may also have a difficult time getting venture capitalists to back them if they have not taken adequate steps to protect their intellectual property.

When much of a fledgling company's value is based on its intellectual property, venture capitalists or angel investors will closely scrutinize patents, copyrights and trademarks for signs of legal vulnerability. One common mistake made by entrepreneurs is not including invention and proprietary information clauses in employee contracts. Investors may back out of even the most promising deals if ownership of vital intellectual property is dubious or subject to challenge.

Social media posts may be protected under copyright laws

Many businesses in California use social media to promote the products and services that they offer to customers. Although it is very common for Twitter and Facebook users to repost social media content, business owners may be able to protect their posts from redistribution. Intellectual property laws such as the Digital Millennium Copyright Act have been used to prevent social media users from passing off someone else's content as their own.

One freelance writer in Los Angeles was able to use the DMCA to protect the original jokes that she posted on her Twitter account. According to the writer, jokes that she posts on Twitter are her intellectual property, and she makes a living by writing them. She told Twitter that she did not give permission for others to repost her jokes without giving her proper credit.

Facebook prevails in IPO lawsuit

California is home to many of the world's most innovative technology companies, and investors are often eager to purchase shares when a Silicon Valley icon holds an initial public offering. Facebook grew from humble beginnings to become a social media giant, and its May 2012 IPO saw the firm's market value surge to over $100 billion. Facebook was the biggest IPO in Internet history, but some investors soon soured on the Menlo Park company.

The earnings posted by Facebook disappointed many analysts, and the company's stock price fell from its IPO price of $38 to just $17.55 by early September. A group of investors unhappy with the performance of their shares filed a lawsuit against Facebook and several of its senior executives as well as a number of financial companies involved in the IPO. The business litigation claimed that the social media giant had deceived investors by not divulging the impact that the use of mobile devices such as tablet computers and cellphones would likely have on the company's revenue.

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Klein & Wilson
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