IP ADR Blog

Generally, we mediators like to consider mediation as a safe process, one where the parties can be candid with one another, where they can say what they think, where they can develop and explore options, where they can even apologize if necessary, all without fear that their statements will be used against them later in court.  After all, if they know their statements might be admissible in court, who would say something like:  “I’m sorry I took out your spleen rather than your liver.  But seriously, once you are in there, all those organs begin to look the same.  Especially after a few beers.”?  And yet, an apology like this (o.k., maybe not quite exactly like this) may be just what is needed to help the parties begin to heal, and break a settlement impasse. 

 

Hence, many of us in the mediation world (affectionately and respectfully known as Mediation Geeks, according to IP attorney Casondra Ruga) believe that mediation confidentiality is not just an aspiration, but an absolutely critical component to the effective use of mediation for conflict resolution.  Not just settlement of litigated disputes, but true resolution of conflict.

 

Which is why it was so unusual for a party in Florida to find himself in jail based on what he had to say in a confidential mediation.

 

Of course, the fact that this party was the king of parties himself, Joe Francis, founder and auteur of the soft porn Girls Gone Wild video franchise, may have played a role in the whole affair.

 

I wrote an article last year (Mediation Gone Wild: How Three Minutes Put An ADR Party Behind Bars) chronicling the bizarre twists and turns that led Mr. Francis from the warm and fuzzy confines of a private and confidential mediation room to the slightly more austere federal penitentiary in northern Florida.  And in the article, I questioned some of the decisions and rationale of the federal judge, Richard Smoak of the Northern District of Florida.  (For an audio discussion of the case, click here.)

 

I thought that would be the end of things.  An unusual amalgamation of events leading to an unusual result, leaving MG’s like me with something to talk about at those wild and crazy MG parties (where we keep our tops on, and don’t invite the cameras). 

 

But it wasn’t.

 

I had forgotten that judges have blogs of their own.  Only they don’t call them blogs.  They prefer the terms “Order” and “Opinion.”

 

It seems that Judge Smoak obtained a copy of the article questioning the propriety of some of his decisions, and he used his own blog – I mean he issued an opinion in a different case (Pitts v. Francis) in which he sought to rebut some of the criticism.  (In Pitts, Francis had sought to have the judge recuse himself for bias, an effort the judge rebuffed, leading to the new opinion.)

 

Was his rebuttal convincing?  Has he better justified his decision to jail Mr. Francis for statements and conduct at a confidential mediation?  I think you should decide for yourself.

 

Here you will find the original article in Alternatives chronicling and questioning the judge’s decision to jail Mr. Francis for his mediation conduct.

 

Here you will find Judge Smoak’s opinion in Pitts v. Francis in which the judge defends his decision to pierce mediation confidentiality and, ultimately, jail Mr. Francis.  (See page 24 of the opinion.)

 

And here you will find an article in CPR’s Alternatives magazine summarizing the opinion and responding to the judge’s comments.

 

In the end, I would ask that you let us all here at the IP ADR blog know what you think.  Was the judge right in what he did?  Was he convincing?  Or does it seem like he may have been trying just a little too hard to justify his actions and espouse his neutrality?

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I've always said that the biggest lie in any business is "I don't take it personally."

It seems that some personal-offense-taking may be one of the reasons the lawsuit between billionaire J.K. Rowling and Fan-Lexicon-Site-Builder Steve Vander Ark has not settled (covered by our own Mike Young here and here). 

See Tim Yu's Talk of the Town piece Fan Feud in this week's New Yorker for the slight that may account for taking this spat to the bitter end.  Excerpt and link to full column below.

Last summer, at a “Harry Potter” convention in Toronto, a fan named Steve Vander Ark made a similar mistake when he dared to compare himself to Joanne (J. K.) Rowling. “It is amazing where we have taken ‘Harry Potter,’ ” he said to a crowd of dedicated “Potter” fans. Many readers dislike the epilogue in the final book; Vander Ark urged them to disregard it entirely, and even invented his own spell to do so (“expelliepilogus”). “Jo’s quit, she’s done,” he told the audience. “We’re taking over now.”

Comparing yourself to a living god can be risky, and Vander Ark has suffered cruel fates, in court and in the world of “Potter” fandom . . .

Continue reading here.

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R. David Donoghue over at the Chicago IP Litigation Blog is hosting a "Carnival" of Blogs that is new to me -- The Carnival of Trust.  

As David explains:

The Carnival of Trust is a monthly, traveling review of ten of the last month's best posts related to various aspects of trust in the business world. It is much like the weekly Blawg Reviews that I post links to and have hosted, but those generally contain far more than ten links. My job this month was to pick those ten posts for you and provide an introduction to each post that makes you want to click through and read more.

We're pleased that our sister blog -- Settle It Now -- is included in the category Trust in Leadership and Management along with Charles H. Green's Trust Matters; George Ambler's Practice of Leadership;  and Stephen Albainy-Jenei's Patent Baristas  (if they gave awards for blog template design, PB would win in my book every day of the week).  In this crowd I feel like Zelig!

Here's David's generous mention of the Settle It Now Negotiation Blog and my recent post on convincing your clients to give up more than you (their attorney) predicted while still maintaining your credibility.

On the subject of trust-based leadership, Victoria Pynchon at the Settle It Now, Negotiation Blog has an excellent guide for maintaining your client's trust during a difficult negotiation: How Can I Convince My Client to Lose More than Predicted and Still Maintain My Own Credibility? The answer is complex and multi-faceted, but it boils down to the fact that you have to get the stakeholders and decision makers face-to-face, get their buy in on resolution as a goal (in addition to winning), explore all avenues of resolution, and you have to let them explore all aspects of the dispute, even those that do not matter. The last point is a difficult one for lawyers. As a lawyer you generally want to remain focused on the settlement inputs -- money, confidentiality provisions, sale of existing product if something about the product is being changed, etc. -- but from a trust perspective it is important that the stakeholders resolve not just those issues that go into a final agreement, but any problems or concerns they have related to the dispute or the parties to the dispute.

And let me just add here -- though I'll sound like a broken record to my regular readers -- that business people seek out lawyers because they believe themselves to be victims of injustice. (see my short-short video on this topic here)

Though I, as a mediator, am always seeking business solutions to legal problems, the client's injustice problem must be addressed to maintain your credibility (and retain your client's trust.).  Every great mediator I know will address this issue with your client unbidden.  If you're using less than great mediators --  raise the issue yourself -- all competent mediators should be prepared to address the issues foremost on your client's mind right including -- Will I lose?  How much more is this going to cost me? and Am I Being Extorted or Low-Balled?

Thanks for the mention, David!  We're happy to see Settle It Now mentioned by an IP Blog as influential as yours.  Every IP dispute involves the same issues as every other commercial dispute, requiring the parties to go beyond their legal positions; explore all of both parties' commercial interests; create value from potential business synergies; claim as much of that value as possible; craft business solutions to legal problems; and, frankly address the injustice issues that led your client to seek you out in the first place. 

They'll be yours for life.

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Too busy to comment, but couldn't resist posting this one.  Comments from the IP crowd?  Ideas for interest-based solutions from the ADR posse?  Mike Young?

ATHENS, Greece - A Greek court has been asked to draw the line between the natives of the Aegean Sea island of Lesbos and the world's gay women.

Three islanders from Lesbos — home of the ancient poet Sappho, who praised love between women — have taken a gay rights group to court for using the word lesbian in its name.

One of the plaintiffs said Wednesday that the name of the association, Homosexual and Lesbian Community of Greece, "insults the identity" of the people of Lesbos, who are also known as Lesbians.

"My sister can't say she is a Lesbian," said Dimitris Lambrou. "Our geographical designation has been usurped by certain ladies who have no connection whatsoever with Lesbos," he said.

The three plaintiffs are seeking to have the group barred from using "lesbian" in its name and filed a lawsuit on April 10. The other two plaintiffs are women.

And below -- a T.V. lesbian "mediator" gives warring parents a hologram of custody battles.   Funny.

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Check out Cumulative and Overlapping Innovation by Adam B. Jaffe and Josh Lerner over at  Harvard Business School Working Knowledge here as well as Jaffe and Lerner's book Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, one of the Economist's Best Books of 2004, Economics and Business Category.  Excerpt from HBSWK below: 

A classic example of the tradeoff between rewarding pioneering inventions and allowing improvements is the Edison electric light bulb. Edison was granted the basic patent on incandescent lighting in 1880. For the next dozen years or so, there was much dispute about the validity and breadth of this patent. Many companies offered competing products. A number of these contained important improvements in the design of the filament and the bulb itself, and the cost of the bulb trended steadily downward.

Then, in 1891, Edison General Electric Company won an infringement suit against its competitor, United States Electric Lighting,and subsequently won injunctions against a number of competitors. The flow of improvements then slowed, until the expiration of the patent allowed competitors to re-enter and resume their efforts to improve Edison's design.

Now, surely Edison's invention was about as novel as they get. And Edison and his assistants put a lot of time and money into testing different materials until they succeeded with the carbon filament, justifying a patent to allow significant profits to be earned on the invention. But acknowledging the legitimacy of Edison's patent and his efforts to enforce it is not inconsistent with recognizing that the monopoly thereby created temporarily inhibited the subsequent improvement of the invention and the development of the industry more broadly.

In principle, subsequent inventors with good ideas about improving an important invention ought to be able to negotiate an agreement with the owner of the original patent that allows the improvement to be implemented.

This could be done by granting the improver a license to use the original patent, or by selling or licensing the improvement back to the holder of the original invention.

After all, if the improvement is really a good one, both the original inventor and the improver have an incentive to see it implemented. In practice, however, such agreements often are difficult to work out. After the Wright brothers patented their basic design for an aircraft stabilization and steering system, there were many others who wanted to work on a wide variety of different ideas for aircraft. But the Wright brothers refused to license anyone, and engaged in protracted litigation with a number of designers.

With the entry of the United States into World War I, the U.S. government in fact pushed the major aircraft manufacturers, including the Wrights' firm, to license their patents as a package, in order to ensure the rapid manufacture of planes and the development of new designs. The rapid development of numerous different aircraft concepts in the years after the establishment of this "patent pool" suggests that the pioneering patent—combined with the unwillingness or inability of the inventors to cooperate with their technological followers—temporarily retarded the development of technology.

Continue reading here

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The significant problems we face cannot be solvedby the same level of thinking that created them.--Albert Einstein

Lawyers, philosophers and scientists are all trained to question first principles.  The right of one individual to the absolute and exclusive right of dominion over property by virtue of creation or payment (by money or barter) is one of the first principles of capitalism and is rarely questioned. /**

The ownership of ideas, however, and one's entitlement to preclude others from interfering with another's dominion over them, is more slippery today than ever.  In this month's Harvard Business School Working Knowledge journal, for instance, Professor James Heskett kicks off a reader's forum -- Who Owns Intellectual Property -- (open until April 24) with the following:

I [recently] visited the website of the branding consultancy Wolff Olins, responsible for creating the branding for (RED), which raises money for The Global Fund being promoted by Bono and Bobby Shriver. (RED) is a brand, a piece of intellectual property that was designed purposely to be co-opted by others wishing to incorporate it into their advertising. Organizations such as Apple, Gap, and American Express have promoted their products and services using (RED) while raising money for The Global Fund.

Wolff Olins' homepage presents a provocative redefinition of brands as practical platforms that enable people to do things. In its words, "As brands become less the property of an organisation and more the banner of a movement, ownership will become even looser. Logos will be things other organisations, and individuals, can borrow and adapt." That belief, they maintain, will require that some companies, in their own best interests, relinquish control over brands and "be more generous" with consumers. In other words, they take the risk of transferring ownership and quality control of what used to be called their brand to others. In this case, who owns the intellectual property?

More generally, are views of ownership of intellectual property changing? If so, how will it affect the way intellectual property is valued for financial purposes? Are laws worldwide regarding intellectual property out of date? What do you think?

To add your own thoughts, click here.

____________________

/**  Though possibly apocryphal, in responding to the question "what proof need I present to demonstrate my ownership of this slave," a trial judge sitting in a non-slave state in 1840's America is said to have answered, “a bill of sale from God Almighty.” 

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See The Unlucky Troll at Forbes.com, excerpt below:.

[Chicago lawyer Anthony] Brown first noticed the JPEG patent after quitting his corporate law practice in 1996 and raising just under $1 million from friends and family to fund his new patent-licensing firm. After several months of trolling the national patent database, he found what he'd been looking for. The brainchild of two Philadelphia-area engineers, the JPEG patent lay dormant after being issued. Brown cold-called one patent holder, then 70, and the widow of the other, and persuaded them to assign him control in exchange for a chunk of any licensing fees recovered.

Then came Brown's first roadblock: A petition filed in 2000 by parties unknown asked the U.S. Patent & Trademark Office to reexamine whether the processes the patent described were novel enough to deserve a patent. The feds agreed to the review, a common practice if the questions raised seem substantial. The catch is that during the review the holder of the patent can't demand licensing fees, and the patent's life doesn't get extended accordingly. The reexam of the JPEG patent lasted seven years (the average takes less than two). In the end some fancy wordsmithery allowed Brown to retain control of the patent's pertinent provision.

Brown then launched a wave of lawsuits last summer, demanding anywhere from $25,000 to $15 million, depending on a company's revenues and reliance on the Web. One licensee, court records show, was Kraft Foods (nyse: KFT - news - people ), which was subject to a $5 million fee under Brown's "royalty schedule." Kraft agreed to an undisclosed fee.

But last year saw yet another anonymous challenge. This one was filed by Chicago patent attorney Vernon Francissen, who declines to identify his client. Francissen suggested the JPEG patent's current version had slipped through an overburdened system and was being applied too broadly. In March the Patent Office agreed to a second reexam, again putting up a roadblock to Brown's licensing campaign. . . . .

In late 2010 the patent expires--and there's no limit on the number of times "anonymous" parties can ask for a reexam.

See also TechDirt's February '08 article JPG Patent Holder Goes for the Sympathy Vote here; for more on patent trolling in general, see law.com's "Meet the Original Patent Troll" here.

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There are dozens of reasons why a negotiated settlement of a patent infringement case is superior to continued litigation, but only one reason why it's even better than winning.  As law.com recently reported, "over the last decade, 38 percent of the cases had at least one term found on appeal to have been wrongly construed [and] . . . 30 percent of the cases had to be reversed or vacated because of an erroneous claim construction." 

As usual, we have Dennis Crouch at Patently-O to thank for the statistics, which were gathered by David Schwartz, an assistant professor at The John Marshall Law School.  

"For some lawyers, the high reversal rate is worrisome," according to law.com's article Federal Circuit Tosses Out $104 Million Patent Verdict in DirecTV Case here. 

"It's higher than everyone would like," said Michael Barclay, an IP lawyer at Wilson Sonsini Goodrich & Rosati. "You can't advise your clients on what's going to happen."

One fix for the issue was proposed in the patent reform bill that is currently stalled in the Senate. It would change the rules to permit an interlocutory appeal to the Federal Circuit after the hearing on claims construction instead of waiting until the trial is finished.

Proponents said the change would cut out all the time wasted on trials that ultimately get overturned by the appeals court. But opponents, including Federal Circuit Chief Judge Paul Michel, said that the change would clog up the appeals court and cause even more delays in patent cases.

In the Finisar case, a Texas jury originally awarded the tech company $78.9 million in damages after it found that DirecTV willfully infringed on a patent involving methods for transmitting and broadcasting digital information. U.S. District Judge Ron Clark denied Finisar's request for an injunction but awarded $25 million in enhanced damages. DirecTV was also on the hook for prejudgment interest, post-judgment interest and a compulsory license.

The appellate panel vacated the verdict, ruled that the alleged infringement wasn't willful, and invalidated one of the seven patent claims in question.

DirecTV's appeal had challenged the construction of two terms in the district court's claim construction as too broad. The appeals court agreed, though it ruled that only one of the misinterpretations was harmful.

For the full article, click here.

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Harry Potter and Copyright Fair Use junkies know this already -- there is a firestorm brewing between the not insignificant powers (and financial resources) of JK Rowling and her Harry Potter franchise (which includes Warner Brothers) on the one hand and RDR, the wanna-be publisher of a fan's "Lexicon" or reference guide, on the other.

And the battleground is copyright's amorphous fair use doctrine.

Potter fan and Michigan middle-school librarian Steven Vander Ark has a very popular and comprehensive website that is considered to be the most authoritative reference to the Harry Potter series. 

Among other things, the Lexicon collects in alphabetical order information on the series' characters, places, spells, potions, and more, quoting liberally from the original language in the Potter books. The Lexicon was so popular, and so comprehensive, that JK Rowling herself frequented it as a reference guide and awarded it a "fan site award" in 2004.

Rowling's views changed, however, when she learned that Vander Ark had cut a deal with book publisher RDR to create the Lexicon in hard copy and sell the book in stores.  Before it could be published, Rowling brought suit in New York, claiming copyright infringement.

Her legal position is that the Lexicon merely reorganized, but otherwise copied, her words and ideas -- a blatant infringement of her most basic copyright in her creations.

As Rowling notes, she has the exclusive right to create derivative works which is what the Lexicon is.  Rowling further asserts that she intends to write her own Harry Potter encyclopedia of sorts in the next decade, with proceeds to be donated to charity.

RDR is screaming fair use, arguing that the Lexicon is transformative of the original work -- that is,  taking the original and creating a wholly new and different work of authorship. RDR points to reference guides that have been published for innumerable other works of fiction, including ones for The Lord of the Rings and The Chronicles of Narnia.

So which is it, an infringing derivative work, or a transformative fair use? My fellow panelist on last month's USC IP Institute Fair Use Panel, Tony Falzone has an opinion -- Fair Use.

Indeed, Tony and the Fair Use Project are representing RDR books in the trial currently pending before New York Federal Court Judge Robert Patterson Jr. while Dale Cendali of O'Melveny and Myers' New York office leads the charge for Rowling's camp, and not surprisingly sees nothing transformative at all about the Lexicon. 

For details on the trial, take a look at the WSJ blog here the gothamist blog here.   Both are providing terrific day to day coverage of the trial.

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In the epic Harry Potter copyright fair use battle now under way in a District Court in New York, the mortal judge is wondering out loud -- from the bench -- why these parties can't just settle their dispute.

For background on this fascinating Copyright dispute, click here.

U.S. District Court Judge Robert Patterson Jr., after referencing Bleak House -- Charles' Dickens tale of endless litigation -- noted that it was “a very sad story. Litigation isn’t always the best way to solve things."

He went on to ask the parties: "Can it be resolved another way? I feel that this case could be settled and should be settled."  "I think this case, with imagination, could be settled."

Despite the invitation, even Rowling's apparently boundless imagination could not be tapped to think creatively about a global settlement.  As reported by the WSJ Law Blog here, the parties have reached a settlement of the relatively inconsequential false advertising and deceptive trade practices claims, but the copyright/fair use dispute -- the meat of the case -- continues.

Is the judge wrong to think that a high profile copyright case that makes a star of the fair use doctrine could be settled?  Or as one of the participant's asked, how do you settle with a billionaire?

Answer:  To settle with a billionaire, you need to offer something that the billionaire wants more than money.

The first task, then, is to figure out what that is. Why is Rowling fighting in the first place? What is her motivation?

We get some indication of what propels her from her own testimony at trial: protection of her characters, her "17 years of . . . hard work," her desire to write a Potter encyclopedia of her own one of these days, proceeds of which she says she will donate to charity.   Indeed, in the preliminary injunction papers filed by Rowling, she made a point of saying that she has already donated $30 million to charities.

This gives any good mediator plenty of things to work with in trying to explore settlement possibilities.  Rowling may want good press; she may want to build an image as a philanthropist; she may want to be seen as a protector of authors' rights. 

What about exploring a settlement where the Lexicon is published but some of the proceeds are donated in  Rowling's name to a charity of her choice.  If she is interested in giving young writers a leg up, the publisher could offer to open doors for young writers, one of whom could co-write or co-edit the Lexicon.

To protect Rowling's characters, RDR could agree to a licensing arrangement, thereby ensuring that no precedent is set.

A little imagination, as Judge Patterson so aptly noted, can go a long way towards finding ways to satisfy the underlying interests and motivations of all parties.

The conflict resolution side of me would love to explore ways to end the Rowling/RDR dispute in a way that satisfies all interested parties.  I am convinced there is a settlement out there to be had, if only the parties would explore it with an open mind.

On the other hand, the fair use junkie in me is avidly interested in how this monumental battle will shake out.  Fair use is an amorphous concept at best, as was made clear at the USC IP Institute Fair Use Panel last month.

Further judicial guidance -- and this one is definitely headed to the appellate courts -- would be a welcome contribution so long as it helps to clarify, and not further muggle, er, muddle, what constitutes fair use.

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Former Executive Vice-President and General Counsel to The Walt Disney Company, entertainment law heavy-weight Lou Meisinger knows more about driving a hard bargain than anyone I know. 

Yet it is Lou who taught me that the deal you drive too hard is the one that will come back to bite you.

Why?

Because you have to leave enough profit in it for your negotiating partner to survive.

Once, Lou says, his company drove so hard a bargain, leaving so little profit to its bargaining partner, that the contract had to be renegotiated, on terms less favorable than originally offered. Had the stronger party been content with the deal that could have kept its negotiation partner healthy, it would not have had to take a worse deal months later based upon the other's inability to comply with the harsher terms originally imposed.   

You not only have to leave them "face," you also have to leave them with enough money to survive.

You protest that Lou's wisdom doesn't apply to a one-time deal. Maybe. But I'm getting older and it's a small world.  

A fair agreement is a durable agreement.

Hard bargainers love to quote Machiavelli's The Prince on fear and love, though they forget that Machiavelli cautioned only that it is much safer to be feared than loved, when, of the two, either must be dispensed with.

Most people also forget -- or never read -- his final words on the subject:

Nevertheless a prince ought to inspire fear in such a way that, if he does not win love, he avoids hatred; because he can endure very well being feared whilst he is not hated, which will always be as long as he abstains from the property of his citizens and subjects and from their women.

Drive too hard a bargain and you take what belongs to another, engendering ill will in your industry's community that you may never reverse.

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From Concurring opinions here

As the folks at Recording Industry v. The People note, the 109-page complaint begins by invoking the RIAA's statement that it sometimes catches dolphins when fishing.

It is a bold way to show the possible callousness of the RIAA and MediaSentry . . . but seems a bit reliant on the "see they are evil" idea rather than solid causes of action.

I have only scanned the complaint but the other claims could pose problems for the RIAA.

The RICO claims and the trespass to chattels claim offer chatter fodder. If nothing else the chattels doctrine which has been questioned if not mocked may end up protecting individuals in these cases.

Furthermore, the privacy claims seem to go to property ideas in that once the plaintiff thought something was on her computer (based on alleged acts by the defendants) she spent money to protect her property. With 109 pages there is more to think on but those alone catch attention.

For remainder of post click here.

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Mike Young writes to tell us that the USC IP Institute is coming up on March 17 and 18. See brochure below. 

Mike is moderating a panel on fair use with a a group of experts, including Tony Falzone. Tony is with Stanford's Fair Use Project, and is currently in hot litigation with J.K Rowling over a publisher's right to publish a "reference guide." The case is set for trial on March 25th in New York. 

At the special interactive in-house counsel forum on March 17, the panelists will ask -- while in-house counsel have led the charge for ADR and mediation in other fields, why are they reluctant to take their IP disputes to an ADR forum, mediation in particular?

The Rowling litigation may also be worth a mention at this forum.

Mike asks why not mediation?

Don't know what to offer a world famous billionaire author? How about an enhanced reputation or donating some of the boooks' proceeds to charity? How about establishing a Rowling Fellowship for an aspiring author with a disadvantaged childhood, similar to Rowling's.  Just because someone is not motivated by money doesn't mean she is not motivated. Mediation allows the parties to explore just what that motivation might be.

The Rowling docket sheet is here.  

The Rowling motion for injunction is here. 

The RDR Books opposition is here.   

The Court decided to turn the injunction hearing into a trial on the merits.

IP Forum - Get more free documents

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From ALTERNATIVES TO THE HIGH COST OF LITIGATION, INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION VOL. 26 NO. 3 MARCH 2008

UPDATE: DESPITE MEDIATION RELATED INCARCERATION, GIRLS GONE WILD FOUNDER IS HEADED FOR MORE ADR

A federal judge has rejected a recusal motion from the maker of the Girls Gone Wild videos, who challenged the judge’s impartiality for first ordering mediation, and then sending the producer to jail for contempt based on his ADR conduct. That means the civil case against still incarcerated Joseph Francis will proceed. And, surprisingly, the case will go back to mediation.

In an order accompanying the . . . . opinion . . . U.S. District Court Judge Richard Smoak . . . told the parties to try mediation again. Smoak ordered . . . . mediation by June 27, with a “mediation report” deadline six days later.

In his 22-page opinion, Smoak strongly defends his record as a mediation supporter, and rejects claims that he tried to force Francis to settle before sending Francis to jail for contempt.  The defense charges stem from a suit brought by Francis’ video subjects.  . . . .  

The support for the defense motion included Los Angeles attorney Michael Young’s 2007 Alternatives article, “Mediation Gone Wild: How Three Minutes Put an ADR Party Behind Bars,” 25 Alternatives 97 (June 2007) (available at WileyInterscience. com). Young wrote that Smoak’s moves intruded into the mediation process and hurt ADR.

Court's opinion below:

 

Court Opinion re Girls Gone Wild Producer Joe Francis - Get more free documents

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We mediators long for the day when we can no longer use the expense, delay and uncertainty of trial as a good reason to settle your patent litigation.  Why?  Because mediation, as Diane Levin recently wrote, is simply an alternative -- not necessarily the "appropriate" -- means of resolving your clients' dispute.  (See the Mediation Channel's post Debating the Meaning of "A" in ADR here)

It gives mediators no pleasure, and does our profession no good, for litigants to walk away from meritorious lawsuits because the chance to obtain justice through the justice system is not a genuine option anymore.    

So we're pleased to bring you the good news that the Northern District of California is making a serious effort to get your patent case to trial with fewer delays (and less cost) than has been the rule of late.

  Excerpt of a recent Duane Morris Client Update on the new Northern District Rules with a link to the full article below.

New Rules in the N.D. of California Seek to Accomplish More Efficient Patent Trials, with the Help of KSR

Patent litigants, patent rocket dockets, and entities seeking a more streamlined patent litigation should take notice of the U.S. District Court for the Northern District of California’s recent modification of its patent trial rules. Much is at stake in choosing where to file a multimillion-dollar patent litigation. Salient factors in selecting a forum include the court's docket backlog and its perception of patents. Now, the local rules are playing a much more prominent role and should be analyzed lest a patent party be beset with frustration and major setbacks. Here, the Northern District of California's recent actions in revising its local rules demand scrutiny by in-house and outside counsel in formulating a patent litigation strategy.

To read the full text of this Alert, please click here.

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This is the sort of statement I simply cannot resist.  Thanks to TechDirt!

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. . . . He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

-- Thomas Jefferson, courtesy of TechDirt's post On the Constitutional Reasons Behind Copyright and Patents -- click here for the full post.

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See No do-overs, no take-backs over at Likelihood of Confusion, excerpt below:

Hypothetical: We are negotiating a trademark dispute. During those negotiations — which we both agree are being undertaken for purposes of settling our dispute — I, trademark user, promise not to object to (i.e., not to sue for) a certain use by you, other user, but we never actually incorporate that into any kind of agreement.

Five years later I sue you for making just that use. You try to introduce proof of that promise as evidence that I acquiesced to your use, and should be estopped (barred) from suing because of that acquiescence.

And I get down from my pony and scream: “You can’t use that! Those are settlement communications protected under Federal Rule of Evidence 408 — not admissible!”

Click here for the solution to the not-so-hypothetical problem in PRL U.S.A. Holdings vs. U.S. Polo Association.

Until the California Supreme Court decides Simmons v. Ghaderi, the result in PRL would not be the same here if the parties were mediating under the California Rules of Evidence.  See here, here and here.

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(image from the U.K. Trademark Application Blog)

What's the difference between an IP arbitrator or mediator and a general commercial arbitrator and mediator?  Some of us -- like Les Weinstein and Michael Young -- have devoted substantial parts of their careers to patent (Les) and trademark (Michael) litigation.

The rest of us -- the Hon. John Leo Wagner (Fed. Magistrate, Ret.), Eric van Ginkel, the soon-to-be-added Jay McCauley and I -- have litigated patent, trademark, copyright and other IP cases in the course of our more general commercial litigation careers.

What unites us is an avidity for the topic and an interest in keeping up with the law.  So in addition to being the quick studies that all general commercial litigators are, we're already all the way (Les, Mike) or half way there when you lay your fabulously instructive briefs on us.   

To help our clients and ourselves, we print tutorials from time to time by law firms who our statistics page tells us are reading our blog.  Today we excerpt and link to Lindquist and Vennum's terrific Trademark tutorial -- The Trademark Dilution Act of 2006 -- A Summary of Changes Affecting Trademark Owners

When is a mark famous?

A mark is famous if the general consuming public of the United States widely recognizes it as a designation of a source of goods or services.

In determining whether a mark is famous enough to merit protection under the Trademark Dilution Revision Act, a court may consider all relevant factors, including:

1. The duration, extent, and geographic reach of advertising and publicity of the mark, including whether the mark is advertised or publicized by the owner or third parties
2. The amount, volume, and geographic extent of sales of goods or services offered under
   the mark 
3. The extent of actual recognition of the mark 
4. Whether the mark was registered

Because no registry of famous marks exists, determining whether a particular mark is famous requires the court to evaluate these factors on a case-by-case basis.

What constitutes tarnishment and blurring?

Dilution by tarnishment is an association arising from the similarity between the famous mark and the diluting mark that harms the reputation of the famous mark—that is, when the diluting mark is used in connection with undesirable or inferior goods or services that could create a negative association with the use of the famous mark.

Dilution by blurring is an association arising from the similarity between the famous mark and the diluting mark or trade name that impairs the distinctiveness of the famous mark. Dilution by blurring reduces the connection in the minds of consumers between the famous mark and the goods and services for which it is used.

In determining whether a mark is likely to cause dilution by blurring of a famous mark, a court may consider all relevant factors, including:

1. The degree of similarity between the mark or trade name and the famous mark 
2. The degree of inherent or acquired distinctiveness of the famous mark 
3. The extent to which the owner of the famous mark is engaging in substantially
   exclusive use of the mark 
4. The degree of recognition of the famous mark 
5. Whether the user of the mark or trade name intended to create an association with the
   famous mark 
6. Any actual association between the mark or trade name and the famous mark

For the remainder of this excellent article, click here.

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Someone once asked me whether IP ADR was too narrow a topic to justify an entire blog(!!!!)

Any regular reader will chuckle in response.  Check out, for instance, the IP Blogs listed on the ABA Blawg site.  This week's featured blog, Patently O, is one of the best IP blogs in the world.  And it doesn't hurt Dennis Crouch's readership one bit that he hosts Patent Law Job listings here.  

The ABA lists 151, count 'em, 151 separate IP Law Blogs!  Those bloggers read and link to their IP Sister Blogs and are not simply repeating what each has to say but adding the unique perspectives that arise from a decade or more of active IP practice (younger specialty bloggeres are rare).  .

You can pick up our RSS feed at the ABA Blawg site as well.  While there are 150 IP Blogs, there's only one IP ADR Blog and, with all due modesty, it's a valuable one to add to your daily, weekly or monthly reading list.

Why?  Because we search the IP Blawgosphere for you to come up with information useful to the settlement of IP cases.  Below, for instance, is a chart from Patently O (thanks to David Schwartz!) showing the reversal rate of claim construction decisions.  Why is this important to settlement?  You know the answer -- the cost benefit analysis or decision tree process you're preparing to help you and your client find just the right price for the "sale" of your lawsuit to your opponent.

 

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EBay Agrees to Buy Patents From MercExchange, Settling Long-Running Dispute 

EBay Inc. has settled a seven-year patent dispute with MercExchange LLC that prompted an important intellectual property ruling from the U.S. Supreme Court.

The online auction company said in a statement Thursday that it bought the three MercExchange patents it had been accused of violating. The price was not disclosed; eBay said the figure would not materially affect its financial results.

For remainder of story click here.

Hmmmmmmmm, wonder if this could have been accomplished sooner?

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(above, floodgates along the Bitan Dam by Poagao)

The U.S. Supreme Court just denied review of Convolve Inc. v. Seagate Technology.

Why do we care?

Because in Seagate, the Federal Circuit reversed a long established precedent and announced a new and higher standard for obtaining treble damages in patent cases, which could have the impact of making some patent cases more receptive to mediation or other ADR processes.

Prior to Seagate, a patent holder seeking to prove that a defendant willfully infringed (which opens the door for treble damages) had a pretty low burden to satisfy; the court even suggested that it was as low as a negligence standard. Infringers who had actual knowledge of the patent at issue had an affirmative duty to "exercise due care," which most sought to satisfy by way of an opinion of patent counsel.  See Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983). In fact, because of Underwater Devices, a whole new market opened for patent lawyers, the drafting of patent opinions. (This also raised numerous knotty privilege issues during discovery of these opinions, as one might imagine.)

The landscape changed last year with Seagate. There, the Federal Circuit overturned Underwater Devices, and abandoned the defendant's affirmative duty to demonstrate it had exercised "due care." Instead, the Court imposed a more stringent burden on patent holders to demonstrate that the defendant had willfully infringed. Under Seagate, a plaintiff now must show "by clear and convincing evidence" that the infringer acted "despite an objectively high likelihood that its actions constituted infringement of a valid patent," and that this objectively-defined risk was known (or should have been known) to the infringer.

So with the sweep of the pen (a click of the keys?) twenty-four years of precedent was wiped out, along with the need for patent counsel opinion letters (and some of the thorny privilege issues).

Needless to say, patent holders were less than thrilled, and the matter was taken to the U.S. Supreme Court.

To no avail. On Monday, the Supremes allowed the Federal Circuit opinion to stand as-is, without further review by the Court.

So what does this have to do with ADR?

Plenty. Assuming courts apply the new standard properly, the ability to trigger treble damages has just been significantly curtailed in patent cases. There is less of an upside to taking a flyer at trial. Which should meant that there is more of an upside in trying to work out a resolution that is based on the actual value of the dispute in question.

The dispute can be settled by the application of objective standards of value or other measures without having the settlement process derailed by the wish to achieve (or avoid) the home run treble damage award.

This cries out for a more cost effective resolution process, be that mediation or arbitration. Or some hybrid of the two.

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Recently I re-posted Five Ways to Minimize Risk of Copyright Liability from Citizen Media here. 

Today, IP attorney extraordinaire Tamera Bennett (left) dropped by to remind us of our own ADR "core values," i.e., self-determination and respect for the rights of others.  

Instead of simply approving Tamera's comment, I decided to bring it up here for everyone to see. 

The easiest way to get along with our fellow artists?  

Get a license! 

If you have genuine affection for the work of another, drop them a line, pick up a phone, send a carrier pigeon.  

"I really love your work." 

Then ask for permission to use it. 

Just do what your mother taught you.  Ask nicely.  Say please.  Then thank the nice copyright owner for being so generous with his/her work.  You'd be amazed at people's generosity, especially when you couple it with a (true) statement such as "I'm a young artist and don't have a lot of money but would really like to . . . . . " 

If you can't say that, i.e., if you have the money to pay the license fee, for heaven's sake support your fellow artists.

Tamera's comment below.  See her blog, Current Trends in Copyright, Trademark and Entertainment Law here. 

I have several concerns with the listing of ways to avoid copyright infringement.

1. "Use only as much of the copyrighted work as is necessary to accomplish your purpose or convey your message" ---- Clients come to me and want to know how much of the song can I use or can I reprint a portion of this chapter of the book, or can I use this poster in something else. I advise the client to get a license. Fair Use is a defense which is very difficult to win. There is no cut-and-dry rule that you can use three bars from the song before liability attaches.

2. Add something new or beneficial (don't just copy it -- improve it!) --- This trips folks up all the time. Adding something new does not protect you from copyright infringement. You need a license to create a derivative work. Adding something new to someone else's copyright is a violation of the copyright owner's exclusive right to allow for the creation of derivative works.

Remember, if you did not create it, you probably need a license to use it.

In line with Tamera's advice, see No copyright for derivative works without permission over at the Chicago IP Litigation Blog.  Excerpt below. 

Photo my own -- a surprising street scene outside my front door. 

Plaintiff took a series of photographs of defendants’ Thomas & Friend toy trains, each pursuant to a provision that defendants could only use the photographs for two years. Plaintiff argued that defendants infringed plaintiff’s copyrights by using the photographs after the two years were up.

But the Court held that plaintiff had no copyright. The photographs were derivative works based upon defendant’s copyrighted Thomas & Friends train engines and cars. The party making a derivative work must have the copyright holder’s permission to copyright the derivative work. While plaintiff had the right to make the derivative works, plaintiff was not granted the right to copyright them. Plaintiff, therefore, had no copyright.

 

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Patent infringement settlements sometimes include the drastic remedy of selling your company.  It is the exception, but by no means any longer surprising, when the parties to a patent infringment mediation inform me that the co-defendants have been exploring the option of a buy-out while I was in separate caucus with the plaintiff.

That being the case, it is wise to come to a mediation prepared to explore valuation issues.  In that regard, I direct your attention to an article by Dennis L. Monroe of Krass Monroe entitled All Company Valuations are Not Created Equal.  Below is an excerpt.  For the full article, click here. 

“What is the value of my company?” is a question I am frequently asked. In the franchisor world (whether it be franchisors or franchisees), we usually focus on a multiple of earnings. In recent times the multiple of earnings have been going up; and there has been a feeding frenzy as it relates to the purchase of franchise companies.

What determines the value of a company? We normally look at the valuation in terms of a third-party sale. However, there are other times when we look at valuations for purpose of financing, estate planning, management compensation and other events that may necessitate a valuation.

There are a number of valuation firms in the country. I wanted to go to someone who is known for valuing businesses of all kinds and for various purposes, not just someone who values franchise businesses, because they can be formulaic in their approach. I had the honor of recently speaking with Mike Bochert, a [former?] Managing Director of Cherry Tree Companies, a 25 year old investment banking and investment management firm. Mike is a long-time investment banker and valuation expert of private companies, whether very small or very large.

Dennis Monroe question: How are company valuations not alike?

Mike Bochert response: To understand why all company valuations are not alike, think “P-C-A.” In other words, valuations vary in Purpose, occur under differing company Circumstances and each is directed to a specific Audience. Each of those variables has an effect on the judgments and considerations which are appropriate for any valuation.

Without trying to be exhaustive, the Purpose of the valuation could be:

• Determining value pursuant to a buy-sell agreement
• An estate valuation
• Obtaining growth financing
• Acquiring another multi-unit business
• Considering being acquired
• Strategic decision making
  

The company’s Circumstances might be:

• Profitable company with substantial growth opportunities
• Franchisee with multiple concepts, one performing well and one performing poorly
• An economically strong operation which is considering the acquisition of another operator
• Troubled operation considering an acquisition by another operator

The Audience for the valuation could be:

• Private equity firm
• Mezzanine financing firm
• Internal Revenue Service
• Litigation attorneys
• Management or Board of Directors

To continue reading, click here.

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We've said this before:  prevention beats every dispute resolution mechanism available so long as you do not limit your own freedom out of fear of liability.  

That said, here are the top five tips for using copyrighted material fearlessly from the extraordinarily concise and helpful "Primer on Copyright Liability and Fair Use" from  the Citizen Media Law Project Blog.

While there is no definitive test for determining whether your use of another's copyrighted work is a fair use, there are several things you can do to minimize your risk of copyright liability:

• Use only as much of the copyrighted work as is necessary to accomplish your purpose or convey your message;
• Use the work in such a way that it is clear that your purpose is commentary, news reporting, or criticism;
• Add something new or beneficial (don't just copy it -- improve it!);
• If your source is nonfiction, limit your copying to the facts and data; and