If that fart doll that you wanted to buy happens to be more expensive this year, you can thank the 7th Circuit Court of Appeals based on its decision today in JCW Investments Inc. v. Novelty Inc. (Note how the court is careful enough to include the ® trademark sign in its decision when it refers to "Pull My Finger Fred". Do they do the same if they mention the Academy Award Oscars® in a decision?):

Meet Pull My Finger® Fred. He is a white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white tank top and blue pants. Fred is a plush doll and when one squeezes Fred's extended finger on his right hand, he farts. He also makes somewhat crude, somewhat funny statements about the bodily noises he emits, such as “Did somebody step on a duck?” or “Silent but deadly.”

Fartman could be Fred's twin. Fartman, also a plush doll, is a white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white tank top and blue pants. Fartman (as his name suggests) also farts when one squeezes his extended finger; he too cracks jokes about the bodily function. Two of Fartman's seven jokes are the same as two of the 10 spoken by Fred. Needless to say, Tekky Toys, which manufactures Fred, was not happy when Novelty, Inc., began producing Fartman, nor about Novelty's production of a farting Santa doll sold under the name Pull-My- Finger Santa.

Tekky sued for copyright infringement, trademark infringement, and unfair competition and eventually won on all claims. The district court awarded $116,000 based on lost profits resulting from the copyright infringement, $125,000 in lost profits attributable to trademark infringement, and $50,000 in punitive damages based on state unfair competition law. The district court then awarded Tekky $575,099.82 in attorneys' fees. On appeal, Novelty offers a number of arguments for why it should not be held liable for copyright infringement, argues that Illinois's punitive damages remedy for unfair competition is preempted by federal law, and contends that the attorneys' fees awarded by the district court should have been capped according to Tekky's contingent-fee arrangement with its attorneys. For the reasons set forth below, we affirm.

Somewhat to our surprise, it turns out that there is a niche market for farting dolls, and it is quite lucrative…

[Hat-tip: Decision of the Day Blog]

Via Gerry Everding: What were they thinking?

In creating a double standard for copyright and trademark law, the courts appear to have been influenced by the "romantic nature" of copyright law, Bartholomew says. "It's romantic to think about someone writing the great American novel or producing a hit song," he explains, "and the people who appeal for protection of these rights authors, movie stars, musicians are themselves very appealing."

When these romantic notions are combined with fears of widespread digital theft, you get "copyright panic," Bartholomew contends.

Complete article here

Thanks to David K. Levine (no relation to me) and the rest of the gang here at Againstmonopoly.org for inviting me on as a guest blogger.

Brief background about myself: I produce a radio show in Los Angeles. I am also a licensed attorney who still occasionally dabbles in law on the side (mainly in defamation defense - but also with some experience in copyright infringement defense). Before that, I worked in film and television post-production which helped to form my views that current IP schemes overburden artists and stifle creativity.

I have previously guest blogged for other sites, including: Patterico.com, The Southern California Law Blog, and Calblog.com. I still occasionally guest blog for the first two sites listed, but I thought it best to bring over my posts about IP to this site for the sake of thematic consistency within blogs. If you still have an interest in other areas of law and/or media bias - feel free to check out those sites as well.

I have previously written a series of posts concerning IP entitled The Tyranny of Copyright Law, The Tyranny of Trademark Law, The Tyranny of Patent Law, and the (somewhat related) Coming Legal Superstorm Against Bloggers. [Each post is a multi-part series that is often spread out over multiple blog sites. Click on the links and they will provide further links to other parts of the respective series.]

I welcome all feedback and debate regarding my posts and the ideas that are generally put forth by this site. I know that many readers of the other blogs I have written for have a difficult time accepting the difference between real (tangible) property and so-called intellectual property. They would often roast me over the coals in their comments with delightfully amusing abuse. I hope that they will follow me over to this site on occasion to continue it (and in that process, hopefully become exposed to some new ideas that will change their thinking over time).

:-)

Some investment advice: when a companies main business is filing lawsuits - sell short. Apparently the stitching on the pocket of your jeans is a trademark. Who knew.

The University of Alabama has sued a local artist for making a nice business from painting pictures of the university football team from photographs and selling them as paintings, photos thereof, and as logos on coffee mugs and other things. The university claims he violated the university's trademark rights, particularly its “famous crimson and white color scheme.” (link to article here)

The Times article (front page, yet!) makes clear how cloudy the law is here. Some courts have “tried to balance the rights of the owners of intellectual property against that of free expression. The cases, which involve a variety of legal theories, generally turn on whether consumers are apt to be confused about who produced the works in question and on whether artists managed to add something meaningful to the bare facts.”

Read the rest. Here we go again.

Charles Lane writes in the Washington Post on who makes patent law (Washington Post link here). He gives pride of place to the Solicitor General, representing the Patent and Trademark Office, who is invited by the Supreme Court, feeling its own lack of expertise. The competition is the specialty court for patent and trademark law established by Congress in 1982, the U.S. Court of Appeals for the Federal Circuit. In the 10 Supreme Court patent cases in which the solicitor general has participated since 1995, he always won.

Lane provides a current example, KSR International v. Teleflex, where the issue is the proper meaning of "obvious" in patent law, e.g., an extension on a vehicle's accerator to accomodate short people. Read the article for the details. Lane opines that the Solicitor General leans toward limiting the meaning of new and non-obvious.

Not exactly earth shaking.

The New York Times has an editorial today severely criticizing the American patent system (link to NY Time article). It is short, so here is the whole thing.

Pay to Obey

The broken American patent system has a knack for sanctioning the ridiculous. In the latest example, businesses are receiving patents for devising ways to obey the law the tax code, to be more specific. What's next, a patented murder defense?

As Floyd Norris reported recently in The Times, the broad category known as business-method patents (like patenting the idea of pizza delivery rather than the pizza itself) has expanded once again. Now it includes the legal ways that accountants and lawyers help their clients pay less tax.

Once the Patent and Trademark Office has granted one of these patents, everyone who uses the same legal shelter even if they draw the conclusion based on their own interpretation of the tax code will be subject to lawsuits and even injunctions against using the method at all.

Defenders of these tax-strategy patents argue that they won't affect the average person's struggle with the 1040 form each April. The easy stuff should be rejected under the usual standard that requires patents to be novel and not obvious. Tax-strategy patents, they argue, are more geared toward the complicated tax returns of rich people.

While we don't normally rush to make it easier for the rich to pay less tax, the precedent is a bad one. People should be treated the same under the law, and shouldn't have to pay a licensing fee for the privilege. Congress needs to make spurious patents easier to challenge across the board, and should consider clarifying what may be patented. Recent technological advances raise questions about how patents apply to genes and life forms, or what standard should cover old business models on the Internet.

Patents are supposed to encourage innovation, rewarding the individual for the greater good of society. But excessive or overly broad patents can slow business activity to the pace of cold molasses. And we sure don't need something else to worry about on tax day."

The Washington Post reports that Oprah Winfrey's lawyers are threatening to sue retired school teacher Patrick Crowe for copyright and trademark infringements because he uses her picture in his website running her for president (link here).

At one level, this is silly. But it does raise a serious question. Does she own the copyright on her image? I don't believe I own mine or you, yours. She is a public figure. Paparazzi take and sell photos of celebrities all the time. The lawyers may rather believe they can scare Crowe into taking down the picture, using the threat of big legal costs.

Joe Nocera wrote a fascinating story about a nasty patent suit between a patent-trolling company, whose board is chaired by none other than Paul Allen, and audible.com. The story begins:

Nocera, Joe. 2006. "Tired of Trolls, a Feisty Chief Fights Back." New York Times (16 September). "Patent disputes have become part of the dark underbelly of American business. So-called patent trolls acquire patents, often from bankrupt companies -- and often overly broad patents that should never have been issued by the United States Patent and Trademark Office in the first place. Instead of using them to build a commercial product, they extract licensing fees from companies that are making and selling real products. As The New Jersey Law Journal put it not long ago, "They exist solely to exact a tax"." "The deck is stacked against target companies, even when their product is not infringing. Patent litigation is expensive, and the judicial system tends to be sympathetic to the patent holder. So companies usually come to the obvious conclusion: it makes more sense to pay than to fight. For its part, the patent troll often prices the licensing fee below the cost of litigation, to encourage such behavior." Abuible refuses to settle, spends a million dollars rather than pay the demanded $300,000, only to find out the troll company does not even have legitimate ownership of the patent. "After a year of legal wrangling, Digeo dropped its price. A clearly frustrated Mr. Blaisdell wrote an astonishing e-mail message in May 2006 to Audible's internal lawyers, saying he was "perplexed as to why Audible has not taken Digeo up on its offer to settle for $300K." After all, he pointed out, that was far less than the "high legal fees" Audible was paying. He added, "Surely you understand that the prospect of convincing a Jury that Audible doesn't infringe or that the Patent is invalid is an expensive one." Digeo may or may not be a patent troll, but rarely has the economics of patent trolling been so baldly stated." "As it turns out, Digeo did not have the complete ownership of the patent that it thought it had. Documents that had been turned over to Digeo when it bought the patent showed that Edward Chang, one of the four co-inventors, had died, and that another -- his brother -- had assigned the rights to the patent to the company that later sold the `823 to Digeo." "Edward Chang, however, was very much alive, and his brother had never assigned the rights to anyone. The documents had been forged -- though it's not yet known by whom. The forgery was discovered by Mr. Kelber, the Audible lawyer. Audible then went to Mr. Chang and got him to sell it a license for $70,000. Last month, when this new evidence was presented, a judge ruled that Digeo was entitled to no monetary damages from Audible."

Creswell, Julie. 2006. "A Wall Street Rush to Patent Profit-Making Methods." New York Times (11 August).

An intellectual property arms race is escalating on Wall Street, where financial services firms like Goldman Sachs and Citigroup are building up stockpiles of patents on processes like software-based pricing, trading and risk analysis systems and products like credit cards, exchange-traded funds and exotic derivatives.

While there have been no big clashes yet, the question is, Which firm will be the first to try to enforce its growing portfolio of patents?

Patent activity among financial services firms began to soar in the late 1990's, prompted by the boom in new technology and by the fact that banks were spending enormous sums to upgrade their in-house systems. A federal court decision in 1998 that software and business methods could be patented also fed the rush to seek patents.

The result was a virtual stampede among top financial services firms to the United States Patent and Trademark Office. In 1997, there were 927 patent applications for various methods of processing financial and management data. Last year, there were 6,226.

Perennially understaffed and now overwhelmed by the sheer volume and complexity of these "dreamed up by a rocket engineer" financial products and systems, the patent office has struggled to keep up with the flood of applications. These days, banks and other financial giants are being granted patents they applied for four or even five years ago. Last year, more than 1,000 patents for processing financial and management data were approved, up from 200 in 1997.

Goldman, viewed by many as a patent leader on Wall Street, has hundreds of patent applications in the pipeline and has received patent rights on a couple of dozen products and systems, according to its chief patent officer, John Squires. He joined Goldman in the new position in 2000 after being a patent lawyer with Allied Signal.

"I think there will be increased filings as the convergence of banking and technology is irreversible," he said. "As people spend more and more building systems and deploying technology, they're going to want to make sure they have the rights available to them."

For now, all the big firms seem to be playing nicely with one another. Many lawyers involved in patenting systems and products on Wall Street label the patents as defensive in nature. They say Wall Street banks are trying to patent products or software systems in an effort to protect themselves from claims or litigation brought by individuals or small companies whose primary business is holding patents -- those known to their detractors as patent trolls.

But some warn it is merely a matter of time before the patent activity turns from defensive to offensive. Wall Street firms will eventually look for ways to license the technologies or products they have patented, hoping to earn a high-margin revenue stream, or they will begin to litigate against each other, lawyers say. "Right now, people are figuring out they need some playing cards so that if someone comes to us and says 'You're infringing,' well, we have some patents and we can do a cross-licensing deal and everyone goes away," says Raymond Millien, a former patent lawyer for American Express who is now the general counsel with Ocean Tomo, a merchant bank specializing in intellectual property. "But there are going to be some companies on the Street who are going to start licensing their products and enforcing the patents to get a revenue stream from them."

No one is ruling out the possibility of a patent war between the financial titans some time down the road. It has happened before. In 1982, Merrill Lynch sued the rival brokerage firm Paine Webber, accusing it of infringing on a patent Merrill received on its cash management accounts. Eventually, the two reached a settlement. "Right now, because all of the Wall Street banks are showing record profits, there's not much incentive to sue within the club," Mr. Millien said. "But three years or so down the road, it's hard to say."