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I've been shopping puppies this holiday season.  Still, I shouldn't have given Mr. Thrifty sticker shock this morning when I told him the puppy in the window over at puppies & babies on the corner of Third and Kings  retailed at $2K.

I don't know what makes one puppy garner two grand and another win a trip to the gas chamber at the local ASPCA, but I have located an expert who can value the patent in the window.

Coats and Bennett patent attorney Ed Green has a lot more letters after his name than "my" pedigreed  puppy does and a lot to say about valuation that I know Mr. Thrifty would respect.  

Because patent mediation -- which is a lot of what we do at IP ADR -- is all about valuing one's intellectual property rights and because Ed's an experienced and careful practitioner of the art,  we'll be posting an interview with him on negotiating the resolution of patent infringement litigation really soon -- before Festivus. 

To whet your appetite for more, we give you a bit of his wisdom on the topic culled from LinkedIn here.

[If you already have] a working knowledge of patents. . . so you know about the scope of the claims, perusing the prosecution history for the strength of the claims, how crowded the art is, the cost of designing around, etc.

The other side of the issue is the market: how many products or industries does the patent reach, what are their sales, who are the players, what are the consequence of an injunction, etc.?

It is impossible to value a patent the way one can, say, real estate. You have to put a patent lawyer and CPA together, both of whom know the technology and the market, and study the business issues on a case by case basis, and even then you'll only get an educated guess -- something to open negotiations with.

Other factors are whether the patent stands alone or is part of a family; the likelihood of litigation and the relative strength of the parties; whether the patent's validity has been tested by licensing or litigation; whether the technology it covers is in a standard or regulation; whether the deep pockets are direct or contributory infringers; how easily infringing activity can be moved offshore; and many more that don't come to mind right now...

As others mentioned, entire books have been written on this question. Having said all that, it is my firm conviction that most patents are ultimately worthless. The relatively few that are not, however, are waaaay not!

Look for the full development of Green's thoughts on patent valuation and our joint thoughts on negotiating the resolution of patent litigation before everyone leaves for the winter holidays. 

In the meantime, thanks to LinkedIn member Vinod Kumar Singh's blog Competitive & Technical Intelligence Toolbox, we give you this basic article on valuing patent rights -- Patent Valuation:  is Fair Market Fair by David E. MARTIN and Jason O. WATSON at M•CAM, Inc in Virginia. 

 Voice over Internet Protocol allows you place long-distance phone calls on your computer at very low cost.  There are many options in the showcase from which to choose when you need to decide what kind of voip is best for you.  One of those options is voip com -- a leading provider of internet phone service. If you are considering using the skype download, make sure the technology is up to date. Alternatives to skype are vonage and handheld ip phones, both of which can place voip calls.

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On the very same day that the Volokh Conspiracy was worrying about the potential for contributory infringement resulting from its posting a YouTube video to his highly respected blog, Google, YouTube's owner, was saying the following to its eighty gazillion bloggers:

Blogging from YouTube

November 26, 2007

As you videobloggers already know, you can upload your videos directly to Blogger. But for the rest of the video watchers out there, did you know you can just as easily post YouTube videos to your blog?

All you need to do is set up your YouTube account to post videos to your blog using the "Share" button. You'll enter your Blogger information once, and from then on it's one-click sharing from any YouTube video page!

If there were liability for contributory infringement, you'd think this encouragement by YouTube's owner to post YouTube videos to its owners' blog sites would fit the bill. 

So we're now resting even easier about posting YouTube videos.  We're relying on Google not to be steering its blog customers into acts of infringment when posting its subsidiary's videos on its Blogger blog sites.

At some point we imagine (as Howard Beale in Network was asked to) the existence of a single corporate entity, unable to sue itself, sounding litigation's death knell.  

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(photo:  The Kreation of Adam by Krystian Schneidewind)

Culture and consumers precede the law.  They rarely, if ever, conform themselves to the needs, interests and desires of business.  Culture and consumers govern business.  Business does not govern them. 

The law follows culture.  As we noted in Disputing Humor:  Comedy, Folkways and the Internet, "the law" is not just a set of rules, but a life condition "in which [people] are carriers of rights and duties, privileges and immunities."

No formal structure supporting the system of law need be visible. . . Law can be found any place and any time that a group gathers together to pursue an objective. The rules, open or covert, by which they govern themselves, and the methods and techniques by which these rules are enforced is the law of the group. Judged by this broad standard, most law-making is too ephemeral to be even noticed. /*

In other words, we govern ourselves more or less naturally, until a conflict within the group arises. When that happens, the group is "forced to decide between conflicting claims [and the] law arises in an overt and relatively conspicuous fashion. The challenge forces decision, and decisions make law." Id.  

There are 87 comments over at the Volokh Conspiracy -- many of them pretty heated -- about the practice of posting (or linking to) YouTube videos.  When there's this much dissent and passion, what the law will be is anybody's guess.

We also recently noted that the RIAA is waging a computer-sleuthing and intimidation campaign against its own customers in an effort to stop illegal downloading (apparently going so far as to notice the deposition of a ten year old girl).  When Goliath is going after Davy as if Davy were carrying a tactical nuclear weapon instead of a sling shot, cooler heads are not prevailing.

Enforce Your Rights by Suing Your Market or Adjust Your Business Practices to Changing Times?

Taking on just one of the legal issues raised by the 87 Volokh commenters is good only for people who like to tinker with the law (lawyers).  It is always bad for people who want to make a profit from selling stuff to the public.  

Take YouTube.  One of the commenters over at Volokh made this small but important point -- a "point of law" that could consume the energy of teams of well-paid lawyers for years if not decades.

You "link" to the YouTube clip, but the clip itself is stored on some YouTube server. The "link," however, plays directly from this blog. Is this different than (1) a link that opens a new YouTube window (requiring the additional step of the user clicking "play" from YouTube's website)? If so, why?

I think we'll all agree that it is different than, for example, (2) a blogger providing the following instructions:

"If you'd like to watch the video, google these terms: "Herbie Hancock" and "One Night with Blue Note." Then click on "I'm Feeling Lucky" and watch the video."

So ... is the embedded YouTube link more similar to (1), or is it more similar to (2)? Does copyright law have anything to say about this?

When you post a YouTube video to your blog what you are really doing is cutting a rectangular window in your blog template, letting the YouTube video shine through.  If YouTube "takes down" the video, it will no longer "show" through the window you've cut for it. 

Question.  Is this infringement or contributory infringement?  You have an hour.  You may begin writing your answer . . . . . NOW.  

Listen, lawyers love questions like this.  They allow us to ply our trade at its most creative -- to push the envelope or even to break the mold.  There's nothing we like more than asking ourselves and our colleagues whether the laws enacted, interpreted and enforced when copying machines were the primary means of reproduction should apply to the practice of virtually cutting holes in blog templates for videos to play through.  

Do Columbia and Warner Brothers want to spend their creative talent, business acumen and cold hard cash trying to maintain the past when the present and the future are so full of opportunity?  

Listen.  The producers and distributors will find a way to make a living in the new Millennium.  They're very very good at that.  They will, however, do so much more quickly if they focus on serving their customers by delivering a superior product.  Serving customers with a summons and complaint is applying a quill pen to a problem that requires a laser gun.        

UPDATE FROM CITIZEN MEDIA LAW PROJECT Embedded Video and Copyright Infringement answers most the questions raised here and over at Volokh in favor of the poster. 

*/  See, Weyrauch and Bell, Autonomous Lawmaking:  The Case of the "Gypsies" (1993) 103 Yale L.J. 323 (1993) quoting Thomas A. Cowan & Donald A. Strickland, The Legal Structure of a Confined Microsociety (University of California, Berkeley Working Paper No. 34, 1965).  The Weyrauch book on Gypsy Law can be found here.

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Check out the Law and Propriety of Posting YouTube Links over at the Volokh Conspiracy in response to commenter "Sonia Sturunch's" accusation that the posting of Herbie Hancock's Cantaloupe Island (below) "weakens the philosophical underpinnings of the [Volokh] blog's stated commitment to the rule of law and of the constitution."  

UPDATE ON THE VIDEO BELOW FROM COMMENTER CHRIS NEWMAN (WHOSE OWN WEBSITE IS HERE)  --  BLUE NOTE IS OWNED BY EMI AND EMI HAS LICENSED ITS MATERIAL TO BE VIEWED ON YOUTUBE.  For purposes of this post, we'll ignore the fact that this hot issue is no issue at all becaue it could be an issue and one lawyers like us like to think about.

We're fans of the rule of law and the United States Constitution here and over at the Settle It Now Negotiation Blog as well.  It certainly never occurred to us that posting a YouTube video on our blogs posed a threat to either the Constitution or the Rule of Law.  Frankly, when we started blogging, we didn't think anyone would take any notice at all. 

Now that our readership is growing, we have to admit we've had a low level of worry about the YouTube links. 

Mostly we've been thinking that the Rule of Law is experiencing some pretty rough growing pains in response to the re-ordering being done to the business and culture of art, music, literature and the like.  We don't know where it's going but it seems to us that it's giving more power to the artists and less to the producers and distributors.  We have nothing against making an honest buck from production and distribution.  But being really serious fans of art and artists, we've been thinking it's a good thing that the means of production and distribution have been more or less put back in the hands of the people who sing and play and draw and write and dance.

When the substance and application of the law is difficult because the culture it was devised for and applied to is radically changing, that's the best time to be a lawyer and legal scholar because you get back to first prnciples again.    

We like what the Volokh Conspiracy has to say about posting YouTube videos because it seems common sensical and intellectually sound way for the law to wrap itself around the new culture of the internet.    

Sorry for the long wind-up.  The excerpt below and the link to the entire post is above.    

First, let's examine the question of substantive copyright law. Is it copyright infringement to provide a link to a file hosted on YouTube that is likely an unauthorized copy, and to invite readers to view the file?

. . . [M]y sense of the answer is "probably not."

The primary issue is liability under the principles of contributory infringement. As the Supreme Court explained in Grokster, "One infringes contributorily by intentionally inducing or encouraging direct infringement." Contributory infringement generally requires (1) knowledge of the infringing activity and (2) a material contribution to the infringement.

The law here is really murky, in part because there are so few cases (DMCA notice & takedown letters usually address the problem before a lawsuit is filed), but I think I'm probably not liable.

First, I don't think a link in this context amounts to a material contribution to the infringement. The file I linked to is very widely and publicly known. If you google the song name, the file is the second link that appears (right after the Wikipedia entry). The clip has been viewed over 125,000 times in the last year. Further, YouTube is one of the most visited sites on the Internet, and everyone knows that you can get music clips there: just go to youtube.com and search for "cantaloupe island" and this clip is the first thing that pops up.

Given that, I don't think my linking to the file is a "material" contribution to any infringement.

Yes, my link singled out the widely known clip for its musical excellence; but I see that as pointing out which of the widely-known clips on YouTube is musically strong, not doing the work of locating and pointing out the infringing clip. Given that, I don't think linking to it materially contributed to any infringement: a YouTube link in this context strikes me as more like the link in Perfect 10 v. Google, Inc., 416 F.Supp.2d 828 (C.D.Cal. 2006) than the link in Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, 75 F. Supp. 2d 1290 (D. Utah 1999).

Second, I'm not sure I have the knowledge required for contributory infringement. The cases here are super-murky, but they seem to suggest that "knowledge" is not satisfied by a decent likelihood, but rather appears to require a pretty bright "red flag" showing that it is essentially certain (in light of the uncertainties of ownership, fair use, and the like) that conduct is leading to unlawfully infringing activity.  . . . 

(emphasis mine)

I'm going to follow the discussion of this issue over at Volokh and invite our readers to weigh in or there.  It's law-making time.  Join the fun!  

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(right:  Los Angeles IP and Entertainment attorney Richard Jefferson)

Some comments deserve their own post and this is true of Richard Jefferson's thoughts on our recent post Red Hot Chilis and Showtime Californicate in the Los Angeles Superior Court.   

After reading over the Complaint, I now see legally how the Red Hot Chili Peppers (the "RHCP") were able to get this case in Court without being accused of blatantly filing a frivolous complaint.

The RHCP have coupled a claim for unfair competition and dilution regarding the TV show title (which looks like a weaker claim on its face) with the stronger claim against the TV Show's soundtrack release (the Californication soundtrack). Of course, the media headline is going to pick up on the more publicized RHCP Album Name vs. TV Show element, but this is typical of the media game in Hollywood.

There are a number of issues that make this case an interesting case to follow, such as the claim that the RHCP's album title has acquired a "secondary meaning" that will transcend trademark categories and the fact that Showtime actually applied for a federal trademark for "Californication" in the TV series category.

Like most entertainment cases, it appears to me that this is just another case of "who has the bigger pockets to pay their lawyers". I suspect that there were extensive pre-litigation correspondence between the parties and Showtime never reached a settlement number that was high enough for the RHCP so they sued.

Also, not only is this good exposure for the band but the way that the media has spun the story so far, Showtime is getting some good pub as well by making it seem like this is a far fetched claim.

Thanks for the thoughtful analysis Richard!  Much appreciated.

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When a body as pro-business as the American Bar Association calls out an industry group for bullying, it's time for that organization to take a close look at its behavior in the marketplace. 

Remember, it's not just about the law. 

It's about civilization, community, ethics, even etiquette. 

It's about making allies rather than enemies.  It's even about -- gasp -- doing good.  Or at least not doing any harm.

(image from Will Blog for Experience -- RIAA:  Screwing You Since 1952)

So why is the Recording Industry of America Association the likely winnner of the IP ADR Dictionary's 2007 Bully Award?

Because it continues to act like a sixth grade kid shaking down the first graders for their lunch money on the primary school playground. 

But first the definition of a bully in his full social context.

In their 2005 article Bullying roles in changing contexts: The stability of victim and bully roles from primary to secondary school academics Mechthild Schafera, Stefan Korna, Felix C. Brodbeckb, Dieter Wolkec, and Henrike Schulzdam use as their "bully" definition the systemic one:

[the] repeated and deliberate . . abuse of power [which is] most likely to occur in relatively stable social groups with a clear hierarchy and low supervision, as is found in schools, the army, or in prisons.  

In this context, say the authors "[a]n aggressive individual’s search for dominance can be facilitated by a hierarchical structure in that it makes low-status individuals visible and easy to get to."

This definition of systemic bullying fits to a "T" the behavior described in the recent ABA Journal article Plaintiff to RIAA:  Download This! 

The attorney subject of the article who is litigating a malicious prosecution suit on behalf of a woman wrongfully sued for illegal downloading, says that the RIAA, 

targets people [for downloading infringement actions] without the resources to challenge the lawsuits. . . 

According to [the malicious prosecution filed on behalf of his client] a support center employee told [Plaintiff] that unless she paid the [RIAA] $4,000-$5,000, she would be ruined financially. Additionally, the action states, the claim center employee told Andersen that he believed she was innocent, but she should pay something anyway.

“He explained ... that defendants would not quit their attempts to force payment from her because to do so would encourage other people to defend themselves,” the complaint states.

At issue is the RIAA's methodology for identifying infringers, a methodology that is not "100 percent" according to law professor Jonathan Zittrain. 

According to Zittrain, a professor at Harvard Law School and the University of Oxford, none of the infringement actions has gone to a verdict.

Some suspect that many of the association’s suits have resulted in default judgments because many defendants cannot afford legal representation. Cases might settle for far less than the initial demand.

“I heard of a $300 settlement they just took,” says Jason Schultz, a senior staff attorney with the Elec­tronic Frontier Foundation. According to Schultz, the RIAA outsourced much of the copyright infringement litigation “factory style” to small law firms, and it hired nonlawyers to negotiate settlements.

Though Jonathan Lamy, RIAA’s senior vice president of communications, claims that the group’s investigation methods are sound and that it is not pursuing those who cannot afford legal counsel, everyone knows that few ordinary citizens could afford the legal representation necessary to defend themselves against the type of aggressive and well-orchestrated campaign described by the ABA article.

So why is this bullying?

Bullying, like pornography, is one of those things you know when you see.  That the RIAA's illegal downloading campaign perfectly fits the academic description of bullying therefore comes as no surprise.

The RIAA's "deliberate and repeated" use of powerful computer technology to investigate consumers' downloading activity, coupled with its well-orchestrated use of an army of low-paid attorneys and collection agents to deliberately and repeatedly bring suit against consumers who might be potential -- but certainly not proven -- illegal downloaders is marketplace bullying at -- frankly -- its most shocking.

And though the RIAA spokesman insists that it does not "target" those who cannot afford legal representation -- how many of us -- even the professionals among us -- could? 

This is systemic bullying at its most definitional

[the] repeated and deliberate . . abuse of power [which is] most likely to occur in relatively stable social groups with a clear hierarchy and low supervision, as is found in schools, the army, [] in prisons . . .

or simply in the marketplace.

Nobody likes a bully.  It's time for the RIAA to do a little soul searching about its place in the society that supports its members by buying their products.

When its the ABA  -- not the ACLU -- that marks you as a school yard bully, you're not making any friends -- only enemies.  And no organization, no matter how powerful, can afford that.

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(click on image for the RHCP website)

The following local news comes via the UK's IPKat post Hot Stuff for the L.A. Courts, linking to an Australian news source, picking up the item from the AP.  You'd think I'd know what's happening in my own back yard, but nooooooooooooooooooooooooooooo.

[T]he Red Hot Chili Peppers have sued Showtime Networks over the name of the television series Californication, also the name of the band's 1999 album and one of its singles of the same name.

The lawsuit, filed in a Los Angeles court yesterday alleges unfair competition, dilution of the value of the name and unjust enrichment, claiming the title is "inherently distinctive, famous ... and immediately associated in the mind of the consumer'' with the Red Hot Chili Peppers, the Associated Press reported..

''Californication is the signature CD, video and song of the band's career, and for some TV show to come along and steal our identity is not right,'' said the band's lead singer Anthony Kiedis.

Since there seems to be little likelihood of confusion between the television program and the record album and because the RHCP waited until Californication became a "hit show" before making its claim, is it possible that the lawsuit itself is a form of "free riding" on the success of the Showtime series -- that re-connecting the word "Californication" with the RHCP eight years after the album's release might well breathe new life into its sales. 

I mean, if you recorded an album awhile ago and a series of the same name suddenly became a big success, wouldn't you want the show's ubiquity to remind people of your album everytime the show was mentioned?  Is the filing of the Superior Court action -- which is certainly colorably meritorious -- nevertheless also a really really low-cost advertisement for the band?

And though I'm increasingly out-of-touch with pop culture, Californication does not seem to be out of touch with anything (I admit to being a fan).  In fact, it is awash with pop cultural references making it (in my geeky book at any rate) pretty darn "hip." 

And since the RHCP are also pretty darn "hip," the available synergies for both "products" seems obvious to me.

In other words, isn't this a business problem with a business solution rather than a legal problem with anything close to an answer that is easy enough to make it worth the parties' time and money to fool around with in the Courts.

I'd love to hear the opinion of Ron Coleman whose Likelihood of Confusion blog has convinced me he's one of the best in the field right now.  

Ron?

UPDATE FROM RON COLEMAN who you'll notice is now carrying an advertisement for our friend Charles Fincher's law mugs -- Mug the Judge!  Small world.

Ron writes: 

Well, titles of works aren't normally protected as trademarks. Here, look.

I vote "no" for the Chilis. Love the work, though!

Vickie Pynchon - November 25, 2007 9:01 PM

Thanks Ron! The link is to a terrific Hollywood Reporter article on the issue entitled Sam I Ain't by local trademark attorney Jonathon Sokol.

In this November 15 article, Sokol cites the Second Circuit concluding "that literary titles do not violate the law 'unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or content of the work.' 875 F.2d at 999.

Circumstances under which titles ARE potentially infringing are also included in Sokol's article.

Thanks Jonathon.  Great article!
 

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Lawrence Lessig.  You know who we mean.  We just posted his pitch-perfect power point presentation here just the other day.

But who could have predicted at any time before this very moment, a day on which an Austrian art-technology-philosophy group working at the "proto-aesthetic fringe [with] pop attitude, subcultural science, context hacking and political activism" (Monochrom) would make a video recording of a love song to an internet & society law school professor.  Who knew law schools would ever offer a course on the internet?  Who could have foreseen . . . oh, never mind . . . 

Thanks to Boing Boing (first) and Concurring Opinions (second) for allowing us to mark this staggering milestone in international-legal-cultural history. 

Skip the Mr. Wizard science experiment and go straight to the Monochrome Melody at 2 minutes and 30 seconds.

Take it away boys!

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(right: author and IP litigator and mediator Michael D. Young, an IP practitioner at Weston Benshoof and mediator with Southern California's Judicate West)

Is the IP world ready to mediate its disputes yet?

While many of us believe IP practitioners are late in coming to the mediation party, at least one prominent mediator is banking that the right time is now.

London's Mark Jackson-Stops, founder of In Place of Strife and a fellow Fellow with the International Academy of Mediators has recently established a specialty mediation panel for  disputes "in the UK and jurisdictions around the world in unfair competition and passing off, patents, trade marks and copyright and competition and anti-trust law, as well as franchise, music, media and domain name disputes."

Jackson-Stops noted "this is an excellent fit with the often cross-border nature of disputes in intellectual property and technology."

Obviously, I support the efforts of any mediators who band together in a specialty mediation practice or joint venture (or even simply a cross-pollination site like this one).

Mark's efforts do, however, raise a question that has been nagging me for some time.

Why has it taken IP attorneys and disputants so long to hear the siren call of negotiated resolution?

I have heard some disputants say that sophisticated high-stakes patent infringement disputes are so significant that the parties simply can't afford to "compromise."

Aside from the fact that negotiated resolutions needn't result in compromise, no one specializing in the field could give this explanation much credence.  

Almost all of these disputes end up settling -- sometimes before and sometimes after Markman hearings -- so compromise is a fact of life unless you're able, with the help of a great mediator, to expand the parties' opportunities to obtain better benefits from a negotiated agreement than they could obtain by victory at trial.  

Given the opportunties created by interest-based negotiation and the inevitability of compromise if the parties wait to settle on the courtroom steps, why does the mediated or negotiated resolution continue to be a "last step" and one of "giving up" and "giving in" rather than "finessing impasse by transforming it into an opportunity to make a deal" (as our friend Lou Meisinger so often counsels).

Are IP litigators pessimists who just don't believe that mediators are up to the intellectual challenge of mediating complex technology and business disputes?  Or are they overly optimistic, believing that they can win by turning over their own and their client's decision-making to a judge or a jury?

Whatever the reasons, reluctance seems to be the rule.  

Case in point.

In the Oracle v. SAP lawsuit concerning claims that SAP employees stole Oracle's copyrighted software by hacking into a website to steal software codes, the parties are preparing for a February 2009 trial. Despite the looming trial date (and the misery of the holidays caused by a February trial) the parties apparently had no intention of attempting to mediate their way into a happy holiday season with their families.  Rather, the Court took matters in hand and ordered counsel and litigants to proceed to mediation.  

Still, the parties resist.

Granted, there are often legitimate means to postpone a mediation -- particularly when information gathering is incomplete and necessary to asses the risks of trial.  But is seems to me that more arm-twisting is necessary to bring IP litigants to the negotiation table than required in most other civil disputes.  

Another case in point.

A few days ago, LeapFrog Enterprises settled an East Texas patent dispute involving devices that allow children to use blocks or other objects to control their computers. The details of the dispute (claims of patent trolling, forum shopping, etc.) can be found on any number of blog sites, including The Prior Art here.  

It was just reported yesterday that the plaintiffs in LeapFrog -- two attorney/inventors -- will share the $7.5 million settlement.  A very good day for plaintiffs.

For present purposes, I note that the settlement occurred, "literally on the courthouse steps in Marshall, Texas, with jury selection 15 minutes away." (quote from the Los Angeles Daily Journal which, unfortunately, requires a subscription to read). 

Again, why the wait? Wouldn't an earlier negotiation with a bang-up IP mediator have made more logical sense, not to mention far greater financial cents.

After all, preparing a patent litigation case for trial in East Texas is not for the feint of heart, or shallow of pocketbook.

Some say the attorneys are to blame -- that they are reluctant to bring a significant IP matter to mediation any earlier because it's "bad for business."  But I'm not that cynical.  And my colleague Victoria Pynchon has to be positively restrained when someone suggests that attorneys, by and large, settle late to maximize the dollar value of litigation.

"That strategy," she says, "is a recipe for client-retention failure and a cynical, not to mention, unsupported libel of some of the most ethical people I have ever had the pleasure to know -- litigators -- particularly those engaged in IP and other sophisticated commercial litigation."

I refuse to believe this explanation as well.

So I'd like to open the floor to our IP litigators to weigh in on this issue:

Why the hesitation to use mediation for complex IP disputes?

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Don't Miss This Talk:  it's Not Long and It's More than Well Worth Watching.

He says:  "let's make  being young legal again."

Here's the description:

Larry Lessig gets TEDsters to their feet, whooping and whistling, following this elegant presentation of "three stories and an argument." The Net's most adored lawyer brings together John Philip Sousa, celestial copyrights, and the "ASCAP cartel" to build a case for creative freedom. He pins down the key shortcomings of our dusty, pre-digital intellectual property laws, and reveals how bad laws beget bad code. Then, in an homage to cutting-edge artistry, he throws in some of the most hilarious remixes you've ever seen.

About Larry Lessig

Stanford professor Larry Lessig is one of our foremost authorities on copyright issues. In a time when “content” is not confined to a film canister, Lessig has a vision for reconciling creative freedom with marketplace competition.

Thanks to Stephanie West Allen of Idealawg and Brains on Purpose for hipping me to this video.

By the way, Larry exemplfies all of the great speaking techniques that I learned from Faith Pincus and Sandy Linville in their "must attend" Public Speaking seminar for WLALA yesterday.

If you don't do anything else for your legal career in 2008, find out where Faith and Sandy are speaking about public speaking -- Faith's site is SpeechAdvice.com -- easy url to remember -- as are all her tips for making you the best speaker at your next speaking event, court appearance, CLE seminar or firm picnic..

I've been speaking publicly, first as a college professor in the mid-80's, then as a NITA coach and then as an Adjunct Law Professor at Pepperdine U. School of Law for more than twenty years. 

Sandy and Faith's half-day seminar yesterday changed my speaking life immediately and forever. 

Don't miss it.

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It is hard for an ADR junkie like me to admit this (and don't spread this around please), but sometimes you just need to try the darned case. I am referring to, in particular, the trademark lawsuit between Internet giant eBay and scent seller PerfumeBay.

The lawsuit was fairly simple.

eBay, naturally protective of its distinctive "Bay" web-moniker when it comes to on-line sales, was none too pleased when "Perfume Bay" (aka "Perfumebay" and sometimes "PerfumeBay" sought to register the Perfume Bay trademark for use in on-line perfume sales.

The fact that "PerfumeBay" actually contained the entirety of "eBay's" name did not help matters.

As an eBay trial witness testified, eBay has a "fragrance section" which moved approximately $6 million in cologne and perfume during a 2-1/2 year period.  eBay was concerned that consumers might confuse PerfumeBay as an eBay affiliate of some kind. Or, it might dilute the eBay name.

PerfumeBay, for its part, argued that the "bay" in its name reflected "a bay filled with ships importing perfumes from all parts of the world and this bay would be the place where perfume lovers could go to locate its selection of fragrances . . . .”

Uh, okay.

In any case, the two parties entered into negotiations to resolve this dispute, without success and apparently without a mediator. There's a rant in this but I'll do that later.

PerfumeBay predictably brought a declaratory relief action in federal court, asking for a ruling that it was not infringing the eBay trademark. eBay prevailed at trial with the court finding a likelihood of confusion based upon survey evidence concluding that 70% of consumers, when faced with the word "Bay" and internet shopping, thought of "eBay."

The Court ordered Perfume Bay to un-conjoin the two parts of its name.

The Ninth Circuit affirmed in part and reversed in part, approving the order forcing Perfume Bay to separate the "e" in Perfume from the "B" in Bay.  

So what does this have to do with ADR?

On the one hand, the parties clearly could have settled this case with an equally good, or better, resolution for both sides. 

On the other hand, eBay possesses something it could never have obtained in mediation or arbitration: precedent, glorious, future-designing precedent, contained in a Ninth Circuit opinion suitable not only for framing, but also for demand letters to any other online company slipping little "e"-big-"B" Bay into its tradename.

For the price of a single trial, eBay earned itself a great tool for dominating the online market, one that shoud effectively dissuade other internet marketers who might have been thinking of climbing onto the eBay wagon as a portal to successful online sales.

Maybe that's why the names "WineBay" and "GameBay" are still available in the url market.

By NOT using an ADR process to resolve this dispute, eBay will, in the long run, likely save considerable grief, conflict, and legal fees.

It's difficult for an ADR junkie to admit this, but sometimes -- very rarely, I submit -- when important public policy issues are at stake or when precedent is needed to resolve likely future disputes, the alternative dispute resolution of the future -- litigation -- is often called for.

If you are interested in Perfume Bay's take on all this, the company's owner, Jacquelyn Tran, has a blog of her own at here.  Jacquelyn vows to continue the fight to the Supreme Court, stating:

This battle has been exhausting and expensive, but I refused to give up. Too often, Goliaths are victorious in these types of battles. I am fighting for small businesses everywhere, for our more than 300,000 customers (YOU!), and for my American Dream.

Coverage of this matter along the way has been provided by DomainNews.com here; the IP News Blog here; and a helpful article on How Entrepreneurs Can Survive Trademark Lawsuits here. 

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(right:  Time Magazine Cover of J. Craig Venter and his scientific competition -- Francis S. Collins -- in the race to sequence the entire human genome; which race, I understand, was declared a "tie" in the year 2000)

After spending the day hosting a research scientist/physician about town before returning him and his son to the airport for their trip home to the U.K., I heard this interview by Fresh Air's Terry Gross with J. Craig Venter.

The NPR web page describes Venter's claim to scientific fame as follows:

In his effort to decode the human genome, scientist J. Craig Venter volunteered his own DNA to be analyzed and made publicly available. . . Venter's early work to decode the genome through private research company Celera Genomics earned him both praise and criticism. His team competed with the National Institutes of Health publicly funded effort, the Human Genome Project.

Here's the reason I'm telling my readers about my semi-scientific day.

The first was my friend remarks about the way in which he believes the U.K.'s national health system is squashing dissent among U.K. physicians, which included this observation.  

The only way to reach consensus is to encourage dissent.

I've never heard this put quite so succinctly.  It impressed me.  

The second impetus for posting these matters is Gross' fascinating (and short) conversation with Venter, who describes the necessity of patent protection for the continued vitality of pharmaceutical research and development.  I've never heard patent protection and policy expressed as clearly as Venter did today.  It's worth a listen here. 

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If you're looking for a survey of who's blogging what's new in the IP world, check out this week's Blawg Review # 133 hosted by R. David Donoghue.

Donoghue, an IP litigator with DLA Piper US is the creator and author of the Chicago IP Litigation Blog which describes his practice as spanning

diverse technology areas including cellular telephony, computer software, automotive technologies, satellite radios, electrical and electronic products, television production equipment, nutritional supplements and numerous medical devices. He also has extensive intellectual property licensing experience.

Nice work David & thanks so much for the mention! 

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(photo:  Get Out of Jail Free Card by Mark Strozier)

Because there are criminal penalties for copyright infringement, the question whether the Plaintiff can agree to withdraw criminal charges in exchange for a civil settlement is often raised in an IP mediator's practice.

I am reminded of this issue by today's New York Times article "Insurer Sues Over Mississippi Inquiry."  As the Times reports:

State Farm Insurance is suing Mississippi’s attorney general, accusing him of violating an agreement to end a criminal investigation of the insurer’s handling of claims on the Gulf Coast after Hurricane Katrina, according to court papers unsealed Friday.

State Farm’s lawsuit claims that the attorney general, Jim Hood, reopened a criminal investigation of the company and its employees “for the purpose of harassment” and to coerce the insurer into settling civil litigation spawned by the Aug. 29, 2005, hurricane.

State Farm says Mr. Hood agreed in January to end his office’s criminal inquiry as part of a settlement agreement that called for the company to reopen and possibly pay thousands of policyholder claims.

State Farm suing Mississippi for failing to honor an agreement to drop a criminal inquiry in exchange for the settlement of civil claims?  

I must be missing something because the settlement sounds unethical and the lawsuit without merit because civil claims were settled in exchange for the termination of a criminal investigation.  (the first attempted settlement is reported by the Mass Tort Litigation Blog in Birmbaum, Scruggs and the Katrina Settlement here).

In California, the State Bar Committee on Professional Responsibility and Conduct has expressly opined that "An offer to dismiss a criminal prosecution may not be conditioned on a release from civil liability because that practice constitutes a threat to obtain an advantage in a civil dispute in violation of the Rules of Professional Conduct." (See Formal Opinion 1991-124 here)

Looking into the issue a little more deeply in the context of copyright infringement litigation, I found this excellent Manual -- Prosecuting Intellectual Property Crimes prepared by the U.S. Department of Justice containing this useful Chapter on Ethics and Obligations.

In regard to the question whether it is ethical to drop criminal charges in exchange for a civil settlement, the DOJ advises that the answer is "unclear."

X.B.2.a. Victims Who Seek Advantage by Threats of Criminal Prosecution

It is commonplace for an IP-owner's attorney to send a merchant a letter directing him to cease and desist sales of infringing merchandise. If the merchant continues to infringe, the letter will be solid evidence of the defendant's mens rea during any ensuing criminal case.

Sometimes the IP owner's letter will include an express or implied threat to seek criminal prosecution should the merchant persist. The extent to which a lawyer can ethically threaten to press criminal charges to advance a civil cause of action is not clear.

The lack of clarity stems in part from a patchwork of ethical rules. The ABA's Model Code of Professional Responsibility (1969, amended 1980) explicitly prohibited strategic threats of prosecution: “A lawyer shall not present, participate in presenting, or threaten to present criminal charges solely to obtain an advantage in a civil matter.” Disciplinary Rule 7-105(A). The ABA's Model Rules of Professional Conduct, adopted in 1983, omitted the rule as redundant or overbroad or both.” See ABA Formal Ethics Opinion 92-363 (1992) (allowing a lawyer to use a threat of a criminal referral to obtain advantage if the civil claim and criminal matter are related and well-founded).

Not all states have dropped the old rule, and some have adopted other specific provisions addressing the issue. Compare Office of Disciplinary Counsel v. King, 617 N.E.2d 676, 677 (Ohio 1993) (disciplining a lawyer under the old rule for threatening to seek prosecution unless opponent in property dispute paid disputed rent or vacated the property) with Disciplinary Rule 7-105(A) (Or. 2003) (allowing such threats “if, but only if, the lawyer reasonably believes the charge to be true and if the purpose of the lawyer is to compel or induce the person threatened to take reasonable action to make good the wrong which is the subject of the charge”).

This is a tricky area and one all IP counsel are advised to research prior to negotiating the termination of civil proceedings when criminal charges are also pending.  If you, like me, are fond of "templates," take a look at this negotiated Permanent Injunction settling the civil pretexting case brought agaisnt Hewlett Packard by the State of California. 

Note that the Attorney General's Press Release announcing this $14.5 Million Civil Settlement -- earmarked to help "Law Enforcement Efforts to Fight Identity, Intellectual Property Theft" -- expressly cautions that 

The filing and settlement of the civil complaint have no effect on the criminal case, which remains pending against all five defendants in Santa Clara County Superior Court.  

UPDATE:  Thanks to the Mass Tort Litigation Blog for Professor Erichson's generous and thoughtful post on the civil settlement/criminal prosecution ethical question -- link in comment below-- and for hipping us to David Rossmiller's post (including extensive links to the court documents) on the facts of the matter in his Insurance Coverage Blog  post State Farm Sues Mississippi AG Hood.  

From Rossmiller's post on this issue and many others I have read, I have to tell you that Rossmiller's Blog is the only one anyone concerned with coverage really needs to read.  I must also admit that anyone who says that "work is the curse of the blogging class" has captured my heart as well as my mind.

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(photo:  Victory is Mine! by Rentahamster)

Just a note for the moment when you need to convince your client that it's time to settle the patent litigation.  

No, I'm not suggesting you tell them about the potential for a patent malpractice action (this one in the news to tell us that patent malpractice litigation must be waged in federal, not state, court).

I leave the analysis of the case law to Patently O's coverage here.  My purpose is simply to remind everyone of just how endless patent litigation can be.  

First the patent litigation.  Then the motion to arbitrate some portion of that litigation.  Motion denied.  Appealed.  Reversed.  Litigation stayed.  Arbitration hearing conducted.  Decision made.  Reconsidered.  Rehearing.  Decision.  Litigation re-opened.  Trial.  Appeal.  Reversal.  Remittitur.  Retrial.  Final judgment. 

Then the malicious prosecution action. 

And if we're really really really unlucky, the patent malpractice litigation. 

Breathe in you win, breathe out you lose, breathe in, breathe out . . . . . wouldn't you really rather control your own destiny?

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(photo Quiet Please by Ian Grainger)

Post by Michael Young

Speaking of mediation confidentiality, there's a new horrible "opinion" from New York that is making the rounds in the ADR community. While in the context of a divorce case, the opinion could have ramifications for all New York mediated disputes, including IP cases.

But let's hope not.

In the one paragraph Hauzinger v. Hauzinger "opinion" (and I use that term generously, I'd prefer "mistake"), the Supreme Court of New York, Appellate Division, upheld a trial court order compelling a mediator to testify in court. While facts are sketchy, it appears that the mediator did nothing more than assist a divorcing couple negotiate a separation agreement, all pursuant to a signed confidentiality agreement.

After the mediation was concluded, one of the parties challenged the separation agreement in court.  New York law required the trial judge to determine whether the terms of the separation agreement "were fair and reasonable at the time of the making of the agreement." To prove this, the moving party subpoenaed the mediator to obtain his testimony about the confidential mediation negotiations.  

The appellate court's affirmance of the trial court's order requiring the mediator to testify was bad enough.  More troubling is the absence of any analysis to support this decision.  The "opinion" merely states that the Court rejected the mediator's contention "that the court abused its discretion in refusing to enforce the confidentiality agreement...."

Though providing no rationale to reject the mediator's adherence to the parties' agreement, the Court did state that its decisioon was "a matter of public policy,"  citing another one-paragraph opinion of the New York Supreme Court appellate division in which the court upheld the confidentiality of a mediation report pursuant to the parties confidentiality agreement.

Where is the discussion on the importance of mediation confidentiality to the entire mediation process? Where is the recognition that by simply ignoring mediation confidentiality, despite the parties' clear acknowledgment of confidentiality at the time, the court is undermining all future mediations in the State? How about an explanation for why this unspecified "public policy" is so important that it outweighs another appellate division's recognition that strong "public policy" favors keeping mediations confidential?  How about a citation to a precedent that supports the court's conclusion, rather than to authority that completely contradicts the ruling.

Any New York attorneys out there who can explain this to me? I would welcome your comments, because I just don't get it.

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(right:  Working by Mark Menzies)

Thanks to PHOSITA for introducing us to the Financial Aspects of Intellectual Property Blog whose current post is music to our IP ADR ears -- Business Strategy is Intellectual Property Strategy.

This recent post is right in line with our experience faciliating the negotiation of deals constructed in part to settle IP claims or litigation. 

We say "in part" because negotiated resolutions of IP litigation can serve as a doorway to the negotiation of a business deal that is far broader and further reaching than any result the parties could have achieved in Court.  

We're not alone in thinking this.  the FAIP Blog reports:

• Almost 70% of executives believe IP management is too often treated as a legal, not a strategic issue.
• Over 60% of executives believe current accounting practices understate the value of IP.
• Over 80% of royalty agreements are under reported.
• Over 60% of executives believe their companies could extract significantly more value from existing IP and IP formation if it devoted more assets and attention to relevant processes. 

We're pretty certain that some of the latter statistics arise from the first, i.e., that IP isn't achieving its potential because it is "too often treated as a legal, not a strategic issue." 

The truth is that IP is both a strategic and a legal issue.  It should therefore be treated as such by in-house and outside counsel in collaboration with strategic management personnel.

IP litigation is booming.  That's good news for IP llitigators but bad news for companies whose value lies primarily with their control of their creative property.

Collaboration and reciprocation are the watch-words of the internet.  The 21st Century is as much the century of the internet as the 20th Century was the century of industry.  That means 21st Century business and legal process will be required to move in the direction of collaboration and reciprocation and away from the current adversarial paradigm. 

That's a very very good thing for innovation and the law.

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(photo:  Sun Pavilion in Second Life)

When Law.com writes about open-source software, patent litigation, and blogging, we can't help but weigh in.    See Is Fighting Your Patent Case in Public Really a Good Idea?

The IP ADR's Patent Hero has been Sun Microsystem's CEO Jonathan Schwartz ever since he coined the phrase "innovate, don't litigate" in his famous "Advice for the Litigious" post.  Our esteem grew when he invited the opposition over to dinner -- "I'll cook, you bring the wine."

The only way that dinner invitation might have been more forward-looking would have been to include a mediator who could not only have brought the desert, but also the cloak of confidentiality for mediated conversations which are quite robustly protected in California by Evidence code section 1119 et seq. 

But we digress.

Now people (read:  lawyers) are questioning  the wisdom of blogging major patent litigation.  Those bloggers are pretty high-profile players in the tech market -- Dave Hitz, co-founder of NetApp on the one hand and Sun GC Mike Dillon and CEO Jonathan Schwartz on the other.

The concerns being expressed are the common ones

• CEO and GC comments could be "used as evidence down the road." (Stephen Yu, Macrovision GC).  
• GC comments risk the waiver of the attorney client privilege
• CEO remarks might broaden the scope of a deposition into matters that might not otherwise be "relevant" (these last two concerns raised by Edward Reines, a Weil, Gotshal & Manges partner representing NetApp).

Litigator George Newcomb of Simpson Thacher, however, brings to mind Google CEO Eric Schmidt's comment that patent litigation is just one "chip" in the "negotiation being conducted in the courts."  Although Newcomb would also advise his client not to publicly talk about litigation, he wisely notes that the potential "damage," if any, would be negligible because Sun's and NetApp's blog entries "had very little to do with the litigation -- [having been] directed at the tech community," i.e., the marketplace, which is where business lives.  

Because These New Litigation Players are Not Cautious by Nature and Their Patent Litigation will Likely Be Settled, They are Right to Be More Concerned about Their Market than their Potential Legal Liability

Lawyers are cautious by and large.  Even the best of us are risk-averse, taking jobs  upon the completion of Ivy League Law School educations.  Well-paid jobs, but jobs nonetheless. With a lot to lose if those jobs evaporated because of a misplaced modifier.  Hence the caution.  

Dillon, Jonathan Schwartz and Dave Hitz, on the other hand, are not cautious.  They are, however, savvy.  Hitz, for instance, took time in his blog to assure his customers and his work force that Sun's lawsuit would not leave employees jobless nor customers without support..  In response to Sun's request for a permanent injunction, Hitz wrote, among other things,

Your job is safe. Our products are all still for sale.

Can you ever remember a Fortune 1000 company being shut down by patents? It just doesn’t happen! Even for the RIM/Blackberry case, which is the closest I can think of to a big company being shut down, it took years and years to get to that point, and was still averted in the end. I think it’s safe to say the odds of Sun fulfilling their threat are near zero. 

Will this end up hurting Hitz in the litigation?  I cannot imagine a scenario in which any trial lawyer would stride toward the jury waving the printed blog entry in his hand saying "he assured his employees and customers that NetApp would survive, ladies and gentlemen!"  

The Problems Litigation Brings and Their Potential Solutions

Sun and NetApp have more in common than than they have apart.  Their management also seems committed to avoiding litigation if possible.  Once litigation begins, however, the parties stop communicating in a constructive manner and fall prey to all of the cognitive biases that an active dispute magnifies. 

• they search for and interpret information in a way that confirms their own factual and legal positions ("confirmation bias")
• to preserve their freedom of choice in the face of a coercive threat, they do the opposite of what their "opposition" wants them to do -- whether it's a good idea or not ("reactive devaluation")
• they see patterns of wrong-doing where none exist ("clustering illusion")
• they overestimate their likely chances of success ("overconfidence bias")
• they overestimate the harm they will likely suffer (in duration and effect) if they don't get what they believe they might be entitled to ("impact effect")
• they tend not to compensate for their own cognitive biases ("bias blind spot")

(For an excellent article on how biases such as these interfere with our ability to resolve conflict, see Judgmental Biases in Conflict Resolution and How to Overcome Them by Kellogg School of Business Professor Leigh Thompson and Janice Nadler, summarized at BeyondIntractability.org here.)

The best reason to bring a mediator into a patent dispute at an early stage, especially for companies that have so much at risk in the marketplace, is that the tech market and its products change more rapidly than the legal process can move. 

There are lots of truly gifted patent infringement mediators out there who understand both the law and the market.  Although a few of them appear on this site, there are many, many more who can help attorneys and executives negotiate a better business deal than the blunt instrument of litigation could possibly deliver.  I'm sure Sun, NetApp and their counsel all have short lists of these specialist mediators in hand.

Eventually, after a year or two or five, during which time the parties collectively expend several tens of millions of dollars in attorneys fees, Sun and NetApp will hire a mediator anyway. 

With so much at stake, why not start now?  I'm sure the mediator, whoever s/he is, will be happy to bring the desert.

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