Case Comments
| Jurisdiction | California,United States,Federal |
| Author | Lowell Anderson |
| Publication year | 2019 |
| Citation | Vol. 44 No. 3 |
Lowell Anderson
Stetina Brunda Garred & Brucker
The Defendant provides confidential advice to clients on the value of advertising on various websites, including rating websites on "adult content" and "copyright infringement." Unhappy with its ratings, Plaintiff website owner sued for trade libel, interference and unfair competition. The trial and appeal courts struck the claims under the catchall provision of California's anti-SLAPP statute because of the public interest in adult content and illegal distribution of copyrighted materials. California's catchall provision protects "any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." Cal. Code Civ. P. § 425.16(e)(4). Commercial speech is not automatically excluded from protection, but "depends not only on the content of that speech but also the identity of the speaker, the intended audience, and the purpose of the statement." "What we hold is that the context of a defendant's statement is relevant, though not dispositive, in analyzing whether the statement was made 'in furtherance of' free speech 'in connection with' a public issue. (§ 425.16, subd. (e)(4).) In an age of easy public access to previously private information through social media and other means, context allows us to assess the functional relationship between a statement and the issue of public interest on which it touches—deciding, in the process, whether it merits protection under a statute designed to 'encourage continued participation in matters of public significance.' (§ 425.16, subd. (a).)" "[T]he catchall provision demands 'some degree of closeness' between the challenged statements and the asserted public interest." "We are not concerned with the social utility of the speech at issue, or the degree to which it propelled the conversation in any particular direction; rather, we examine whether a defendant—through public or private speech or conduct—participated in, or furthered, the discourse that makes an issue one of public interest." "But the inquiry of whether a statement contributes to the public debate is one a court can hardly undertake without incorporating considerations of context —including audience, speaker, and purpose." Here, the confidential information never entered the public sphere of discussion, and Defendant "did not issue its report in furtherance of free speech 'in connection with' an issue of public interest." The anti-SLAPP dismissal was reversed. Filmon.com, Inc. v. Doubleverify, Inc., 7 Cal. 5th 133, 439 P.3d 1156, 246 Cal.Rptr.3d 591 (2019).
Apple sells third-party apps for its iPhones and requires a 30% commission on every app sale. Four iPhone owners sued Apple, claiming unlawful monopoly of the aftermarket for iPhone apps and that the 30% commission causes them to pay more than they would in a competitive market. "In Illinois Brick, this court held that direct purchasers may sue antitrust violators, but also ruled that indirect purchasers may not sue." Section 4 of the Clayton Act (15 U.S.C. § 2) says "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue...." (emphasis added). Apple sold the apps directly to the consumers, not the app developers. As Apple sold the apps directly to the consumers and as Apple is accused of antitrust violations for using its market power over the retail apps market to charge higher-than-competitive prices, the direct purchasers can sue for antitrust violations under Illinois Brick. Apple, Inc. v. Pepper, 139 S.Ct. 1514 (2019).
Lamps Plus succeeded in dismissing a lawsuit in favor of arbitration, but the arbitration order was not limited to the single individual as requested and instead arbitrated an entire class action. The dismissal of the lawsuit and order compelling arbitration was a final decision, subject to appeal so the appellate court had subject matter jurisdiction. While Lamps Plus was a prevailing party because the lawsuit was dismissed, it had standing to appeal because the order compelled arbitration of the class action claims not an individual claim as requested by Lamps Plus. Justice Breyer dissented on jurisdiction, viewing the arbitration order as one under 9 U.S.C. § 4 (Section 16), with § 16(b) (2) saying that "an appeal may not be taken from an interlocutory order.. .directing arbitration to proceed under section 4 of this title." Lamps Plus, Inc. v. Varela, 139 S.Ct. 1407 (2019).
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Because arbitration is a matter of consent, arbitration of a class action claim requires an affirmative contractual basis for concluding the parties agreed to arbitrate class action claims; silence is not enough. An arbitration agreement was ambiguous on whether it allowed arbitration of class claims. The Ninth Circuit affirmance of arbitration of class action claims was based on construing the agreement against the drafter, which is inconsistent with the foundational principle that arbitration is a matter of consent. An order dismissing a lawsuit and ordering arbitration of class action claims for disclosure of employee information, was reversed and remanded, in a 5-4 decision. The dissent viewed the Federal Arbitration Act as not designed to govern contracts in which one of the parties characteristically has little bargaining power. Lamps Plus, Inc. v. Varela, 139 S.Ct. 1407 (2019).
Contributory copyright infringement requires knowledge of another's infringement and either materially contributing to it or inducing it. The jury was instructed that actual knowledge or "reason to know" was sufficient to meet the knowledge requirement. But the Defendant did not object to the instruction and Ninth Circuit precedent was inconsistent on the knowledge requirement. One case said only actual knowledge or willful blindness of specific facts could meet the knowledge requirement, while others approved "know or have reason to know." Both cases were cited after MGM v. Grokster, 545 U.S. 913 (2005) which was urged as requiring actual knowledge. The split in opinions prevented reversing for plain error, so the issue was not decided and a jury verdict of contributory infringement was affirmed. Erickson Productions, Inc. v. Kast, 921 F.3d 822, 2019 U.S.P.Q.2D 134449 (9th Cir. 2019).
"[W]e read Howard, to hold that claim preclusion does not apply to claims that were not in existence and could not have been sued upon—i.e., were not legally cognizable—when the allegedly preclusive action was initiated." Copyright claims accrue "when a party discovers, or reasonably should have discovered the alleged infringement." Microsoft breached NDA restrictions to develop software, giving rise to copyright and patent claims. The common nucleus of operative facts were the same for all claims. "We reject MRT's categorical contention that patent and copyright suits cannot 'involve infringement of the same right..Plaintiff could have discovered Microsoft's infringement before commencing a 2013 patent suit as Microsoft's software included Plaintiff's watermark and Plaintiff believed Microsoft improperly derived its software from Plaintiff's software. As the patent suit was dismissed with prejudice, all copyright claims accruing before suit was filed were barred by claim preclusion. But under the separate-accrual rule "[e]ach time an infringing work is reproduced or distributed, the infringer commits a new wrong." That plaintiff sought prospective relief did not bar the separate accrual rule and because copyright was not involved in the prior lawsuit, no issue preclusion applied to the copyright claims. Copyright claims on products sold after the prior lawsuit was filed were thus not precluded and the dismissal of such claims was reversed and remanded. The separate accrual rule did not apply to DMCA claims for bypassing access restrictions or breach of contract claims for reverse engineering plaintiff's software, so the dismissal of those claims was affirmed. Media Rights Techs., Inc. v. Microsoft Corp., 922 F.3d 1014, 2019 U.S.P.Q2d 158223 (9th Cir. 2019).
The defendant distributed a sixty-second track of a copyrighted work before it was registered, and redistributed the same track on Instagram Video after registration. Plaintiff said the second distribution was an audiovisual work which is a completely separate category of works apart from audio recordings and Phonorecords, so it was entitled to statutory damages. "Although the post-infringement Instagram video was published on a different medium, and is separately defined under the Copyright Act, it is a result of the original act of infringement." The claims for statutory damages and attorneys' fees were dismissed with prejudice as the work was not registered before infringement commenced. Marshall v. Babbs, 2019 U.S.P.Q.2d 128382 (C.D. Cal. 2019) (Judge Pregerson).
An interrogatory requested Plaintiff to identify the original portions of code, any material constituting pre-existing material and portions that are substantially similar to the accused code. Identifying all the code as original was insufficient because the code admittedly included open source code. Identifying open source projects used in copyrighted software was insufficient to identify the preexisting material because it failed to identify what parts of the code may have come from preexisting material not on the open source list. A list of literal matches was insufficient to identify substantially similar portions because it included preexisting material not original with Plaintiff. Supplemental responses to the interrogatory were ordered. Vendavo, Inc. v. Pricef(x) AG, 2019 U.S.P.Q2d 162954 (N.D. Cal. 2019) (Magistrate Judge Westmore).
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