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For more information about this Update, please contact William Oxley or Christopher Ruhland. © Orrick, Herrington & Sutcliffe LLP 2004 777 S Figueroa St Los Angeles, CA	August 2, 2004 This month's Copyright and Trademark Update discusses cases from July 2004 that decide important issues involving copyrightability, the application of Dastar, contributory copyright infringement, and the legal definition of actual confusion. Featured Case MyWebGrocer, LLC v. HomeTown Info, Inc., No. 03-7909 (2nd Cir. July 13, 2004) There are many words that can be used to describe Gerber’s banana baby food. But if you describe it as “Gerber 1st Foods – Bananas,” look out for a copyright infringement lawsuit from MyWebGrocer. According to the Second Circuit, brief product descriptions such as this may be sufficiently creative to receive copyright protection, at least against verbatim copying. MyWebGrocer and HomeTown are competitors in the business of developing and maintaining online grocery stores for supermarkets. As part of this business, they write descriptions of grocery products and post these descriptions on their clients’ websites. The information contained in these product descriptions is derived from various sources, including product packaging. MyWebGrocer sued HomeTown for copyright infringement after HomeTown used thousands of product descriptions created by MyWebGrocer (such as the one above) on a website HomeTown activated for one of its clients. MyWebGrocer moved for a preliminary injunction, but the district court held that MyWebGrocer was unlikely to prevail at trial because the product descriptions were not sufficiently creative to be copyrightable. The court found that “MyWeb exercises virtually no discretion in choosing what facts to include in a product description, and the arrangement of those facts is largely dictated by the use to which the facts are put.” The Second Circuit agreed that MyWebGrocer was not entitled to a preliminary injunction, but it disagreed with the district court’s blanket rejection of MyWebGrocer’s copyright claim. The court held that “some aspects of the MyWeb descriptions may involve original selection, and if so, they are protected at least from wholesale verbatim copying.” At trial “a trier of fact might conclude that [MyWebGrocer and its competitors] have different concepts of the most attractive and useful product description – brevity versus completeness, bare physical essentials versus essentials plus puffery, full product names versus abbreviations, for example. A trier might conclude that MyWeb made creative choices about what to include or exclude in its product descriptions – e.g., advertising slogans, sub-brands, product colors, and phrases from product packaging – for the purpose of facilitating and encouraging online shopping.” This reasoning, which gives MyWebGrocer significant leeway to prove that its short product descriptions are copyrightable, will probably be a source of encouragement for others who claim copyrights in compilations of facts. Click Here for the Full Opinion General Universal Systems, Inc. v. Lee, No. 01-21114 (5th Cir. July 20, 2004) Applying the holding of last year’s Supreme Court decision in Dastar, the Fifth Circuit held that the owner of a software program cannot sue a competitor under the Lanham Act based solely on the theory that the competitor sold a “copy” of the plaintiff’s program. The court noted that the essence of the plaintiff’s claim was that the defendant’s freight tracking software program was substantially similar to the plaintiff’s program. Under Dastar, this allegation – that the defendant committed copyright infringement – could not form the basis of a “reverse palming off” claim under the Lanham Act. To allow the plaintiff to assert this claim, the court held, could result in granting the plaintiff what would amount to a perpetual copyright in its software program. Click Here for the Full Opinion UMG Recordings, Inc. v. Bertelsmann AG, Case No. 04-2121 (N.D. Cal. July 14, 2004) In the most recent chapter in the Napster saga, the district court allowed UMG to pursue its claim that Bertelsmann and a venture capital firm, Hummer Winblad, committed contributory copyright infringement in connection with their financing of Napster. Bertelsmann and Hummer moved to dismiss, arguing that the lawsuit amounted to a claim that they contributed to copyright infringement by providing the funds that permitted Napster to operate. The district court chided defendants for not “properly characteriz[ing] plaintiffs’ complaint.” Plaintiffs alleged that defendants exercised complete control over Napster and ordered Napster to engage in infringing conduct. This was enough to make it past the pleading stage and send the case toward trial. Click Here for the Full Opinion Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, Case No. 03-2671 (1st Cir. July 12, 2004) In Beacon, the First Circuit adopted what appears to be an expansive view of the actual confusion factor in a trademark action. Other courts have held that evidence of actual confusion is only relevant if it effects a consumer’s purchasing decision. In Beacon, the court rejected that limitation, holding that the inquiry “includes others whose confusion threatens the trademark owner’s commercial interest in its mark.” Thus, in this case between two insurance companies, evidence of misdirected premium checks, claim forms, medical records, and legal correspondence was relevant because that evidence of actual confusion may show damage to the plaintiff’s goodwill and reputation. Click Here for the Full Opinion Swirsky v. Carey, Case No. 03-55033 (9th Cir. July 13, 2004) There is more to a song than its chorus, at least according to the Ninth Circuit. Swirsky involves a claim that Mariah Carey’s song “Thank God I Found You” infringed the copyright in plaintiff’s song “One of Those Love Songs.” The Ninth Circuit reversed a summary judgment in favor of Carey, holding that the district court ruling was based on a mechanical application of the extrinsic test for similarity. Although there are various dissimilarities between the two songs, including differences in lyrics and verse melodies, the extrinsic test may nevertheless be met if other compositional elements, such as harmony, rhythm, pitch, tempo, structure, chord progressions, spatial organization, and interplay of instruments, are similar. The matter was returned to the district court for another listen. Click Here for the Full Opinion