2014 was an interesting year in data breach litigation in California at both the federal and state level.  As always is the case in data breach cases, the requirement of a cognizable harm or “standing” took center stage.  At the state level, data breach defendants scored a huge victory in the case of Sutter Health v. Superior Court.  In contrast, at the federal level, data breach plaintiffs scored big in the case of In re Adobe.

Sutter Health involved the increasingly common situation of a stolen computer from a hospital.  The computer contained millions of patient health records.  Patients filed a class action alleging violations of the Confidentiality of Medical Information Act (“CMIA”).  The Act prohibits the disclosure of patient records and provides for statutory damages of $1,000 per breach.  Doing the math, Sutter’s liability added up to $4 billion of exposure.  The trial court denied Sutter’s demurrer resulting in an immediate appeal.

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As a follow up to my previous post, I now want to get into a liability analysis relating to the type of claims Sony could advance against media companies.  Though not addressed in the letter itself, liability is highly questionable because of robust First Amendment defenses that may be deployed by publishers in this case.  Sony and its executives could deploy a couple of conceivable legal claims in their fight against publishers.  First, there could be claims for violations of California’s Uniform Trade Secrets Act.  This Act ascribes liability to parties that disclose trade secrets information.  This requires that the disclosed Sony information actually constitute a trade secret.  In California, data can qualify as a trade secret if it derives economic value by virtue of being not generally known to the public.  Secondly, the owner of the trade secrets, in this case Sony, must have maintained reasonable efforts to keep the data secret.

Sony would likely have major difficulty qualifying much of the released data as trade secrets.  Thus far, the published data does not contain information that derives independent economic value by virtue of being a secret.  Much of the reported disclosed data is in the category of industry gossip and insults.  Similarly, data such as executive salaries lacks economic value.  Movie release date information and production expenses like actor salaries and profit participation likely would hold economic value by virtue of its secrecy.  However, Sony’s knowingly deficient data protection efforts may ensure that it fails to satisfy the element of reasonable efforts to maintain secrecy.  As a trade secrets litigator, I think Sony would be fighting an uphill battle on such claims.

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After serving as an industry punching bag for the last month, Sony recently decided to punch back regarding its recent data breach and attendant publicity surrounding the incident.  The method chosen by Sony was to hire one of the country’s best known and expensive lawyers to send an aggressive cease and desist letter to various media companies reporting on the incident.  David Boies became famous, by among other things, representing Al Gore in the 2000 election case.  Among his media company targets, many internet companies such as Twitter feature prominently.  Not surprising given the SOPA battles waged between Silicon Valley tech companies like Google and old guard Hollywood and its mouth piece, the MPAA.

This action by Sony raises three questions.  First, as a practical matter, is the letter a wise strategic decision?  Second, is the letter effectively drafted to accomplish Sony’s strategic goals.   Third, do digital media publishers face a legitimate risk of liability if they do not comply with the letter’s demands?  For the last question, First Amendment doctrine plays a prominent role.

As a digital media attorney, I think the letter was probably a wise strategic decision in concept.  An offensive response was long overdue given that Sony’s brand has been so badly damaged because of its handling of employee private data.  Sony had to take some action to protect employee data beyond the formality of providing a data breach notice.  California law, and forty-six other states, requires prompt notice to victims of a data breach regarding disclosure of personally identifiable information.  See  California Civil Code s. 1798.29(a) and California Civ. Code s. 1798.82(a).

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World Wrestling Entertainment (“WWE”) has serious problems at many of its events.  It seems that purveyors of WWE counterfeit merchandise set up shop at or near event locations. As such, the WWE loses a number of lucrative merchandise sales at events.  The problem facing the WWE has been how to stop such nameless, faceless counterfeiters who typically evade detection or enforcement consequences.  With scant resources, many local police departments are not willing or able to provide the type of “boots on the ground” enforcement required to stamp out sidewalk counterfeits.

So how does a brand owner succeed against shadowy, anonymous wrongdoers?  The WWE took the novel approach of seeking an ex parte temporary restraining order and seizure order against future, unnamed counterfeiters.  This is highly unusual in that most trademark enforcement actions are reactive and backward looking in that they seek to redress wrongs already committed.  Certainly, in the online trademark infringement context, relief is routinely granted against anonymous “John Doe” defendants. In such cases, however, there is existing admissible evidence of the infringements.  And typically such infringement is rectified easily via a seizure of the very domain names used to perpetrate the anonymous counterfeiting.

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Copyrights protect individuals from having their work used by others without permission. The copyrighted work must be fixed in a tangible medium and be original. California residents who have intellectual property protected by a copyright may wonder how long the copyright lasts. It lasts for the creator’s lifetime plus a period after their death.

The work is protected from copyright infringement from the time of creation, whether or not it was published or registered with the U.S. Copyright Office. If the work was created after 1978, the copyright lasts for a creator’s lifetime plus 70 years. Co-authored works last for the lifetime of both authors. If one author predeceases the other, the copyright lasts for the lifetime of the remaining author plus 70 years. The copyright for hired work will last for 95 years from the date that it was published or 120 years from the date that it was created. Works created before 1978 have copyright protection until at least Dec. 31, 2002. If the work was published before 2002, the copyright is extended until the end of 2047.

Copyrights are considered personal property, and they may be transferred to another person or to a company. The transfer, governed by applicable state laws, may be accomplished by contract or stipulated in a will, and recording the transfer may be beneficial. An author wishing to reacquire a copyright may be able to terminate the transfer in some cases.

Each case is different, and the information offered in this piece should only be used for education purposes. However, an attorney may be able to help a person learn about his or her rights to intellectual property. In order to protect one’s intellectual property, an attorney may assist in the registration of a copyright with the U.S. Copyright Office. If a copyright is infringed upon, the attorney may assist in helping an individual protect their rights.

Source: United States Copyright Office, “Copyright Basics“, September 19, 2014

On Sept. 8, a U.S. District Court judge for the Northern District of California denied Apple’s request for a retrial in its case against Samsung. A jury awarded Apple a verdict of more than $119 million, but the original complaint requested $2 billion. Following the May verdict, Apple argued that it was unfair for the judge to allow Samsung to make arguments to the jury based on allegedly false information. However, the judge ruled that the information provided to the jury was not untrue.

The judge also denied Apple’s request that she enter a judgment notwithstanding the verdict in the intellectual property case. However, the judge reportedly agreed to award supplemental damages to Apple to compensate the company for additional sales Samsung made after the jury reached a verdict. Apple is also entitled to prejudgment interest because the company was not able to use the $119 million it would have had if the patents had not been supposedly infringed.

This decision will not end Apple’s legal disputes against Samsung. In August, a judge denied an injunction prohibiting Samsung from selling its Galaxy S III smartphone despite the infringement of Apple’s patents because the company was unable to establish that customers purchased the smartphone because of the infringement. Apple intends to appeal that ruling. The company also filed a motion requesting damages to compensate the company for Samsung’s ongoing patent infringement by continuing to sell the Galaxy S III.

When a person or company uses someone else’s intellectual property without permission, the owner has a right to go to court to seek damages. An intellectual property attorney may be able to help send cease and desist letters to infringing parties or file a lawsuit. It may also be possible for an attorney to assist in settlement negotiations.

Source: ComputerWorld, “Apple denied retrial in California Samsung patent case“, Loek Essers , September 09, 2014

A lawsuit originally filed in May and amended in August by attorneys for two real estate photographers, one of whom is based in California, accuses CoreLogic, Inc., of large-scale intellectual property theft. The company is accused of a deliberate failure to credit the creators of numerous photographs of real property.

According to the complaint, CoreLogic allegedly scrubbed legitimate copyright metadata from millions of images uploaded to online multiple listing services and sold unauthorized, uncompensated access to the images through its own subscription database. The complaint alleges that CoreLogic engaged in this behavior with the understanding or expected understanding that it would facilitate infringement. It also alleges that CoreLogic placed its copyright image beside the images, creating a potentially deceptive impression of ownership.

The plaintiffs are seeking monetary relief for themselves and other professionals. Their intent is to expand the lawsuit into a class action representing many other photographers affected by CoreLogic’s alleged actions, and such action could later include some multiple listing services who worked with CoreLogic and may have received the photographs.

The upholding of copyright law is vital to a healthy economy. Entities who appropriate the legally protected creations of workers without accountability could be denying those creators of what might be a substantial source of income. A creative professional looking to safeguard his or her works against situations similar to this case could take various steps to prevent intellectual property infringement. Measures such as drafting an individualized license agreement, maintaining metadata records and using effective watermarks might all help a person to protect created media and keep a solid body of evidence should legal action become necessary.

Source: Inman News, “CoreLogic’s use of listing photos prompts copyright lawsuit“, Andrea V. Brambila, September 03, 2014

The Internet has made it easy to reach a global audience. While Los Angeles residents have a right to express how they feel, they can be held liable for false and reputation-harming statements about others. For instance, you can say or write that you had a negative shopping experience at a California store without enhancing the story with untrue invectives.

A law professor at the University of Michigan made an interesting point about Internet defamation. The authors of online opinions are publishers who must adhere to the same rules as journalists. Social media sites like Twitter, Facebook and Yelp give us a blank page and unlimited viewers that can encourage us to cross the line between negative truths and barbed untruths.

Word of mouth, or today’s Internet version of it, is the prime driver for new business for many small companies. Maintaining a good reputation is critical to staying in business.The opinions of unhappy customers can dissuade product or service buyers and, when enough people perceive the opinions as truth, turn profits into bankruptcy.

Stinging criticisms on review sites can protect consumers. Unfounded statements can unfairly impact a company’s reputation. Defamation and slander laws define the boundaries for both sides.

Defamation involves a spoken or written, published statement that causes harm. The personal or business damage must be evident. The statement also must be false.

A consumer who writes about the slow service at a restaurant on Angie’s List cannot be accused of Internet defamation if, in fact, the service is slow. There might be an argument between the restaurant owner and the customer about what is and isn’t slow. However, if there’s a nugget of truth in the statement, the opinion cannot be declared defamatory.

Nevertheless, it’s advisable to monitor the words you use in online criticism. An intellectual property attorney will be the first to tell you that there are regulations on public expression.

Source: Detroit Free Press, “Negative online reviews may end in defamation lawsuits” Zlati Meyer, Sep. 02, 2014

The intangible symbols and words of trademarks used by California companies are identifiers. To customers and clients, a trademark represents who you are and what you do. To understand the value of a trademark, see our blog post about a recent trademark dispute over the use of the words “comic con.”

The practice of riding on the shirttails of someone else’s success is as old as business itself. The Internet has just provided a new way to do it. There are people and competitors who plot to profit from business identities through cybersquatting.

That uncomfortable sounding term describes a party who obtains a domain name that looks like or sounds like a trademark belonging to another party. A cybersquatter capitalizes on a trademark by association. In some cases, these rip-off artists simply “squat” on the domain name, until the trademark owner coughs up a considerable sum to buy it.

This backdoor theft often works because companies would rather pay off a cybersquatter than invest in a complex, costly domain name dispute. The problem is, when you give a thief a pass or pay them to recover trademark control, you encourage more stealing. Let’s examine an option that doesn’t involve buying property that rightfully should belong to you or litigation – arbitration.

The Anti-Cybersquatting Consumer Protection Act grants permission to settle domain name disputes through the Internet Corporation of Assigned Names and Numbers. ICANN coordinates the global Internet addresses we call domain names. Online address complaints can be resolved under the Uniform Domain Name Dispute Resolution Policy.

To obtain a favorable arbitration outcome, trademark owners must show a cybersquatter’s domain name is close enough to the trademark to cause confusion. Additionally, it must be established the domain name owner had no real claim to the identifier and acted in bad faith. The advantage of intellectual property litigation is the possibility of recovering compensation for cybersquatting damages.

Source: FindLaw, “Internet Cybersquatting: Definition and Remedies” Aug. 26, 2014

The name of a business helps California consumers identify the source of products or services they like. Some people or companies want to cash in on a business’s success by muscling in on that name or trademark. Trademark infringement litigation often occurs when individuals or businesses offering like products also have the same or similar names.

What may have started out as a quirky gathering of comic book fans has evolved into a well-known West Coast event. Comic-Con in San Diego has attracted comic book lovers nationwide and the celebrities who bring those characters to life on TV and in films. Devoted fans circulate the convention often dressed like their favorite comic-book characters.

Comic-Con’s success hasn’t gone unnoticed. The organizers of San Diego’s Comic-Con convention are not pleased an event in Utah is called Salt Lake Comic Con. A recently-filed trademark infringement lawsuit accuses the Salt Lake event’s founders of profiting off the California convention’s name.

The lawsuit seeks an injunction to stop the use of “comic con” in the name of the Salt Lake convention. The plaintiffs stated use of the name was confusing to consumers, who may believe the events or related products are somehow connected. The defendants feel their event’s instant success caused the plaintiff to react.

A co-founder of Salt Lake Comic Con said the legal action had no merit. He believes the lawsuit was filed because the Salt Lake convention drew record crowds from its 2013 start — a second related convention attracted even more fans. Salt Lake’s founders also dispute the claim, since so many other events around the country apparently are also called “Comic Con.”

Courts in trademark infringement disputes have to determine whether a defendant’s name misleads the public about products or product sources. Registration with the U.S. Patent and Trademark Office isn’t necessary to protect a trademark, but an intellectual property attorney is likely to recommend it.

Source: NBC San DIego, “San Diego Comic-Con Sues Utah Convention Over Name” Aug. 10, 2014