California Business Litigation Blog

Academy Award winning director Woody Allen filed a lawsuit in U.S. District Court in Manhattan seeking $10 Million from American Apparel for use of his image without permission. The lawsuit states that the actor and director does not endorse commercial products or services in the United States.

Allen’s image (shown at right courtesy of Frillr.com), appeared on two billboards in New York and Los Angeles for one week in May 2007. Allen appears as a Hasidic Jew, a character from his movie “Annie Hall”. The lawsuit calls the billboards "especially egregious and damaging."

In a statement, American Apparel defended their use of Allen’s image as “Social Parody” protected by the First Amendment. They also stated “We had no intention of selling garments through the use of Mr. Allen’s image … We will make every effort to resolve this with Mr. Allen in an amicable way.”

In addition to its clothing line, American Apparel, based in Los Angeles is known for its colorful CEO Dov Charney and its political efforts in favor of immigration reform.

Was this “Social Parody”, infringement or just an effort to generate publicity? While we may never know for sure, I predict it will go away quietly with a monetary settlement.

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation , False Advertising , Intellectual Property

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MercExchange filed a lawsuit against online auction giant eBay in 2001 claiming eBay’s “Buy It Now” infringed on MercExchange patents and technology. In 2003 a jury awarded MercExchange $35 million in damages. The judge reduced the jury award to… $25 million. A federal judge certified the penalty and eBay threatened appeal.

During the above proceedings MercExchange tried to block eBay’s use of “Buy It Now”. In 2006 the Supreme Court made a landmark decision to allow eBay to continue use of “Buy It Now”. Before this ruling patent owners were virtually always granted court orders to block infringements. These actions to block use typically lead to faster more lucrative settlements for the patent owners.

Since the Supreme Court ruling in eBay’s favor, judges throughout the US have denied requests for court orders to block use where the infringer was not a competitor of the patent owner.

Financial terms of the settlement were not disclosed by either party. EBay said it would buy three patents from MercExchange related to “Buy It Now”/fixed priced sales as well as related technology. EBay General Counsel Mike Jacobson stated “The agreement gives us access to additional intellectual property that will help improve and further secure our marketplaces.''

This Supreme Court decision adds a new aspect to the trend written about previously on this blog whereby infringers are strategically using the court system to buy intellectual properties and/or licenses to use intellectual properties.

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation , Intellectual Property

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Could this be the licensing trend for the new millennium? In settlement of all patent infringing lawsuits between them, Apple and Burst announced a cash settlement of $10 Million to be paid to Burst upon signing of the “settlement”. Apple then gets non exclusive rights to all of Bursts patents except 4 (one issued and 3 pending) related to new DVR technology.

Burst had claimed that Apple infringed patents related to transmission of compressed files in iTunes, QuickTime and the iPod. Apple claimed it possessed the technology before Burst applied for patents.

Turning back the clock, in 2005 Burst announced a $60 Million settlement with Microsoft, providing an end to patent infringement lawsuits between them and giving Microsoft nonexclusive use of Burst’s patent portfolio.

In this 2005 press release, Richard Lang, Burst CEO stated his intention to use the Microsoft proceeds in 3 areas of the business. Number 2 was “To Reserve a sufficient amount of operating capital to launch a vigorous ongoing enforcement of its patent rights against all infringing parties, as well as pursuing software licensing and other avenues available to the Company to maximize the return to Burst shareholders.

He would appear to be a man of his word. The question remains, are patent infringement lawsuits the new licensing vehicle for high tech companies? Ultimately time will tell but in my perception, the trend is clear.

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation , Intellectual Property

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In a David v. Goliath story with a surprise ending, Transmeta and Intel have settled their mutually opposing patent infringement lawsuits. Intel will pay Transmeta a total of $250 Million; $150 Million now plus $20 Million a year for the next 5 years.

In addition to all pending lawsuits being settled, Intel will receive non exclusive rights to Transmeta’s entire patent portfolio (press release here). Transmeta gets an influx of cash and a guaranteed income for 5 years which will allow further research & development. Additionally, Transmeta can proceed without the threat of any additional patent lawsuits from Intel.

So who won? While it may be a little early to speculate, Transmeta is clearly better off than it was before the lawsuits were filed. Prior to this settlement, Transmeta’s market value was slightly over $40 Million. They have pretty much guaranteed their future for at least 5 years. In all likelihood, Intel will parlay their “investment” in Transmeta’s patent portfolio into profits which will exceed their cash outlay.

This is a textbook example of a settlement in a business lawsuit which not only stands to benefit both parties, but consumers as well.

One final note. Transmeta has 2 attorneys on it’s in house legal team while Intel’s in house legal team has over 200. I have long believed that in law, smaller is better because it allows much greater flexibility in litigation.

It’s nice to see that David won even if Goliath didn’t lose!

Continue reading "Intel and Transmeta End Patent Lawsuits With Intriguing Settlement" »

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation , Intellectual Property , Internet

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It’s an old Hollywood tale: Someone makes a film. Someone else finances and produces it and even before the editing is finished the question of who controls the film rights becomes a legal battle. The twist is that the filmmaker is only eleven (yes 11) years old! With 23 movie credits (see New Yorker Article), Kay had always planned to direct. In his directorial debut “Saving Angelo” creative differences arose between Kay and Malibu neighbor/producer Conroy Kanter, who contributed $11,000 to the making of the film.

In last month’s settlement, Kay got full ownership and creative control of the 15 minute film and Kanter got a producer’s credit. By the way, Kevin Bacon plays a fireman in “Saving Angelo”.

Now that the legal issues have been settled, Kay can return to more important things like finishing the editing in preparation for the film’s submission to festivals.

Returning to the law, this case like so many, illustrates the importance of having a contract that spells out each parties rights and responsibilities. Sadly, huge numbers of contracts are not written well enough to avoid litigation, and that my friends is one of the reasons our courts are clogged and more states are creating Business Courts (see March 10, 2007 post " Business Lawsuits Heard in Their Own Court...Will California be next?”)

The remaining question is: Will Dominic Scott Kay become the next Ron Howard?

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Contract Litigation , Intellectual Property

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Does 40 years of filing frivolous lawsuits constitute intellectual property? Steve Samwell learned about the lawsuit filed against NBC Universal by Clifton Mallery and his wife Amnau Karam Eele claiming their work has been wrongfully used on the television show “Heroes”. Mr. Samwell is asserting that Mallery & Eele have stolen his intellectual property and are profiting from that theft.

Samwell claims to have pioneered this type of lawsuit in 1967. Mr. Samwell filed suit against Mel Brooks, Buck Henry and other creators of the “Get Smart” TV show. He claimed that “Get Smart” was based on a short story he had sent to “Look” magazine in 1958. Although his story was never published, the case was settled for an undisclosed amount.

On March 26, Samwell announced that he will file a lawsuit against “everyone in the past 40 years who has filed a lawsuit claiming that their idea was stolen.”

Sadly, frivolous lawsuits cost everyone, including taxpayers whose dollars support courthouses, judges and their staff. I hope Mr. Samwell will reconsider this litigation…..Earth to Samwell…..are you listening?

Continue reading "Los Angeles: Is “Heroes” Lawsuit Against NBC Frivolous? Are Frivolous Lawsuits Intellectual Property? Are These Examples of Business Litigation Gone Insane?" »

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Intellectual Property

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Is California (specifically the Silicon Valley) to blame? Probably the most in demand area for lawyers is Intellectual Property (IP) litigation, more specifically, patent litigators. According to The American Lawyer, law firms are offering signing bonuses, partnerships and other expensive perks to attorneys with patent litigation experience.

Why? Simply stated, there is more work than experienced lawyers can handle in this field….and the billing rates are among the highest in the profession.

The median cost to move a patent case through trial is $5 million dollars. And that’s up from $2 million in 1996. Average profit per partner at one IP law firm in 2005 was $1.5 million.

Try not to get burned in this area of law!

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Intellectual Property

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