by Lee Gesmer | Dec 6, 2019 | Copyright
Oracle’s copyright case against Google has dragged on for nine years. The case has generated multiple federal district court trials and appellate decisions. Hundreds of thousands of words have been written on the case. Academic careers have been built on it (OK, I’m exaggerating, but not by much).
Now that the case is before the Supreme Court a new, even larger audience wants to understand it. However, few people want to struggle through the lengthy court decisions or law review articles.
Here is my summary of the issues in the case in a nutshell. Almost all jargon and many details omitted.
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First Issue – copyrightability. Oracle owns the Java 
programming language. Part of Java is an application programming interface (“the Java API”). These are pre-written programs that allow programmers to perform common programming tasks. When Google built its Android smartphone operating system it copied verbatim a significant portion (over 11,000 lines) of the Java API.
The Java API uses commands and syntax that look a lot like computer code. Here’s an example:
The Copyright Act protects computer programs. It defines a computer program as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” Oracle argues that both the text and the structure, sequence and organization of the API fall squarely within this definition.
However, the Copyright Act excludes from copyright protection “methods of operation,” a term that is undefined. Google argues that the Java API is a method of operation, and therefore not copyright-protected.
The Federal Circuit held that the text and the structure, sequence and organization of the Java API are protected by copyright. Google is asking the Supreme Court to reverse that holding.
Second issue – fair use. Even if the Java API is copyright-protected Google has a second defense – that it’s use of the Java API is fair use. A jury decided this issue in Google’s favor. Oracle appealed, and the Federal Circuit reversed, holding that Google’s use of the Java API is not protected by fair use. Google is asking the Supreme Court to reverse that holding.
What happens next. If the Supreme Court holds that the Java API is not copyright-protected, Google wins and the case ends. If it holds that Google’s use of the Java API is fair use Google wins and the case ends.
If the Court rules in favor of Oracle on both issues (upholding the two Federal Circuit decisions) the case will be remanded for a trial in the district court to determine Oracle’s damages. Oracle is expected to ask a jury to award it $9 billion.
That’s it, in a nutshell.
If you want to explore the case in more detail go to my Oracle v. Google Resources Page.
by Lee Gesmer | Dec 4, 2019 | Trademark
Have you ever used the website booking.com to make a hotel reservation? If you are familiar with this site and I asked whether you thought BOOKING.COM is a brand name or a generic term, what would you say? Odds are you’d say it is a brand name – 75% of people surveyed thought so.
The United States Patent and Trademark Office (the USPTO) doesn’t challenge those survey results. However, it doesn’t think BOOKING.COM is entitled to trademark registration. It concluded that BOOKING is generic for an online hotel reservation service, and adding a top-level domain name (“.com” in this case) doesn’t change that, irrespective of survey results showing that consumers view it as a brand.
The owner of the trademark, Booking.com B.V. (“Booking”), appealed, and after grinding its way through the USPTO and the courts for eight years this dispute has arrived at the U.S. Supreme Court.
The issue presented to the Court is this: you can’t register (or enforce) a generic trademark. But what if you add a top-level domain name like “.com” to the generic term? Does that take the mark out of the generic category (making it “descriptive”) and open the door to registration, assuming the owner can prove secondary meaning?
The courts — and the USPTO — have made something of a muddle of this issue. The USPTO asserts that there’s a circuit split on trademark 
protection for “generic.com” trademarks. There may be, but this is not as clear as it could be. To make matters worse, the USPTO has been inconsistent on the issue. It disallowed registration for BOOKING.COM in the current case, but it has allowed registration for other apparently generic marks, such as CHEAPTICKETS.COM, CHEAPROOMS.COM, UNIVERSITYJOBS.COM, DIAPERS.COM and BUYLIGHTFIXTURES.COM.
The Supreme Court now has an opportunity to straighten things out.
Booking, the plaintiff in the case now before the Supreme Court, owns the booking.com domain name, and claims BOOKING.COM as a trademark.
“BOOKING” is a generic term for hotel reservation services, or so the USPTO and the federal courts concluded. (link) There’s no question that if you started a brick-and-mortar hotel reservation business and called it BOOKING or BOOKING, INC., you’d be unable to register those terms or claim an enforceable trademark in them.
However, Booking argues that under the Lanham Act’s “primary significance” test for generic marks the key issue is what the public understands the composite mark BOOKING.COM (“booking” + “.com”) to refer to. It relies on its survey evidence, which established that 75% of consumers view BOOKING.COM as a brand, and it argues that it’s logically and grammatically impossible to use the term BOOKING.COM as a generic term for anything.
Booking’s arguments persuaded a federal district court and the Fourth Circuit, that BOOKING.COM is descriptive.
The USPTO’s counter-argument is that adding “.com” to a generic term is analogous to adding “Inc.” to a generic term and, under long-established law, adding an identity-designation such as “Inc.” to a generic term does not convert it to a protectible mark. Just as no company could register a trademark in “BOOKING, INC.,” Booking should not be permitted to register a trademark in “BOOKING.COM.” The PTO asserts that the “.com” does nothing more than tell the public that the user operates an online business, much as “Inc.” tells the public that the user is a corporation. It does not create a “descriptive” (and therefore potentially protectable) trademark.
The outcome of this case is a close call. However, in my view Booking has the better side of the case. The USPTO’s central argument – that a top-level domain such as “.com” creates a commercial impression analogous to “Inc.” or “Corp.” – seems questionable. However, even if the Court does rule for Booking, the question remains whether the Court will place “GENERIC.COM” trademarks into the established category of “descriptive” trademarks (as Booking argues) or carve out a separate legal standard for generic.com marks (or a generic word paired with any other top level domain name). For example, the Court could require that generic.com marks meet a more rigorous, sui generis standard of secondary meaning to be eligible for registration.
If the Court does decide that GENERIC.COM trademarks are protectable, I expect that we will see many more of them – perhaps even a mini-gold rush to secure domain names with generic second-level domain names. And, companies that can establish secondary meaning, like Booking, will have stronger grounds on which to freeze out potential competitors who use close variants of generic.com marks. Imagine how Booking might respond to a competitive domain name such as HOTELBOOKING.COM or EBOOKING.COM. Very likely the owners of these domains would receive a cease and desist letter, followed by an infringement lawsuit if they didn’t comply with Booking’s demands.
The Fourth Circuit decision in this case and the cert. petitions are available on the case’s SCOTUS blog page. Eventually, merits briefs, amicus briefs and the Court’s opinion will be available there as well. (link)
FOOTNOTES:
by Lee Gesmer | Nov 17, 2019 | General
Click here to access my Resources Page on Oracle v. Google, currently pending before the Supreme Court.
by Lee Gesmer | Oct 12, 2019 | Litigation
“When they go low, we go high” Michelle Obama
“You can’t waller with the pigs and not get dirty” Anon
As I’ve watched the political events of the last few years I’ve heard each side argue that their side needs to “fight dirty” to match the tactics of the opposing party.
I’m not going to voice an opinion on the political issues raised by these arguments, but I’ve learned one thing from personal experience: if you are an ethical litigator you are likely to be faced with a similar personal challenge at some point during your career. Sooner or later, and probably more than once, you’ll have a case where opposing counsel behaves borderline unethically, or even over the line. The list of ways in which a lawyer can skirt the rules to do this are countless. If you’re on the receiving end it can be upsetting and infuriating.
You, as the ethical lawyer, can’t change your opponent’s conduct. You can complain to the judge overseeing your case, but this is often a futile effort – judges have better things to do than oversee the conduct of lawyers, and they often are dismissive when they are asked to do so. The legal profession is expected to regulate itself, so unless the conduct is extreme and obvious, judges will usually remind the lawyers that they are professionals, admonish them to act like it, and send them on their way. Litigation can be like a football game where the players know the rules but are told to apply them themselves, without referees.
So, you face a choice: do you respond in kind, or do you “go high”?
There are two parts to this decision. The first is the conversation you hold with yourself and your colleagues. You’re an ethical lawyer, and you may say to yourself, “opposing counsel is behaving in a way that I think is unethical, but I will maintain my values. I will ‘go high.’ I won’t let myself be dragged into the mud. I’ll create a record and I’ll let the judge know when I think it will be effective, but I won’t let this lawyer drag me down to his or her level.”
Good thinking, but you still have a problem.
The problem is that your client may not agree with you, and this adds to the discomfort of your situation. In the eyes of the client, if the opposing party crosses the line, so should you. By not doing so, they may think you’re putting their case at a disadvantage. And, they may be right!
So, what do you do?
I don’t have any easy answers for a lawyer facing this situation, just as I don’t have an answer for people who may be struggling with this dilemma in the political world. However, I know that, between the natural instinct to fight fire with fire and client pressure, it can be difficult not to be dragged down by an unethical lawyer.
Fortunately, after 40 years of experience I’ve encountered this situation only a few times. In at least one case I can think of the client hired a new lawyer – one whose values were more in tune with those of the client. The client didn’t make it explicit, but it was clear what was going on – the client wanted a junkyard dog lawyer that would counter the opposing junkyard lawyer, and I didn’t fit the bill. Sorry.
In a couple of other cases I told the clients that I would not let the opposing lawyer force me to act unethically, and the clients accepted that.
If (or when) this happens to you, my advice is to continue to “go high.” It may be hard to take, but when you look back on your career from the perspective of many years or decades, you’ll like yourself a lot better, which is all that really matters in the end.
by Lee Gesmer | Sep 30, 2019 | Antitrust
This is a brief follow-up to my earlier post, Copyright Infringement? Peloton Punches Back With Antitrust.
Under Section 1 of the Sherman Act a “contact, combination or conspiracy” in restraint of trade is illegal. However, the Sherman Act says nothing about how much evidence is necessary to file a lawsuit alleging an illegal antitrust conspiracy. In other words, what factual allegations do you need in the complaint to avoid having it dismissed? In lawyer-speak: “what do we need to get into court?”
This question arises frequently in antitrust litigation, and it’s often a close call. Evidence of an antitrust conspiracy may exist, and it may be accessible via discovery, but the plaintiff needs to make enough factual allegations to avoid dismissal to get access to discovery and prove the conspiracy. If it can’t allege the illegal conduct in a complaint, it’s likely to face a motion to dismiss that will kill the case at its inception.
The Supreme Court has made this challenging for plaintiffs. In Bell Atlantic v. Twombly (2007), the Court held that a complaint alleging an antitrust conspiracy must plead “enough facts to state a claim to relief that is plausible on its face.” “[T]he complaint’s factual allegations must be enough to raise the right to relief above the speculative level, i.e., enough to make the claim plausible.” If the complaint doesn’t meet this “plausibility” standard, it will be dismissed on a motion filed by the defendant.
The problem is that “plausibility” is highly case-specific.
In my first post on Downtown Music Publishing v. Peloton I predicted that the music publishers would use this defense to try to dismiss Peloton’s counterclaim alleging that they had engaged in an illegal antitrust conspiracy. As expected, this is exactly what the publishers have done.
To recap, in early 2019 nine independent music publishers filed suit against Peloton, claiming copyright infringement of more than a thousand musical works and seeking total damages as high as $150 million. Recently, the publishers filed an amended complaint that doubles the number of works infringed, as well as the damages.
Peloton responded by denying it had engaged in copyright infringement and filing a counterclaim against the nine publishers and the National Music Publishers Association, Inc. (NMPA). The counterclaim alleged that, with the coordination of NMPA, the nine publishers engaged in a conspiracy to fix prices and boycott Peloton.
The law that has evolved under Twombly allows an antitrust plaintiff to allege a conspiracy based on direct evidence or circumstantial facts that support an inference that a conspiracy exists. Here is the essence of the publishers’ argument addressing the allegation of a direct conspiracy –
Peloton does not even attempt to allege a direct case of conspiracy … Its complaint fails to plead the required “evidentiary facts: who, did what, to whom (or with whom), where, and when.” . . . Rather, Peloton relies on vague allegations that the Publishers . . . have engaged in collective negotiations of license terms and have exchanged information with each other about ongoing license negotiations at unidentified times and places. . . . Such allegations fall far short of pleading an agreement that can withstand dismissal. See Twombly … (holding that “a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality” where the allegations “mention[] no specific time, place, or person involved in the alleged conspiracies.”).
This argument is persuasive, and I expect the publishers to win on this point. The complaint is missing the allegations of “who, what, where and when” that are usually the basis for a direct conspiracy.
However, Peloton also can meet the “plausibility” standard based on circumstantial evidence that supports an inference of a conspiracy. And here things get murky.
The music publishers undertake a lengthy, and frankly somewhat convoluted, explanation for why the publishers might have cut off negotiations with Peloton without engaging in an agreement or conspiracy – that is, that each of the publishers acted independently in its own economic self-interest. (Music publishers brief here).
Peloton responds –
. . . absent their agreement in restraint of trade, each of the coordinating publishers’ own economic-self interest should have led them to enter into direct license agreements with Peloton. The facts at trial will reveal that Peloton had entered into multiple licensing agreements with dozens of publishers (including all the “majors”) on terms viewed as favorable by those many licensing publishers, and that Peloton similarly offered to license the counterclaim defendant publishers on favorable terms that, had they been acting individually, would have been in their economic interests to accept. The only plausible inference in such circumstances is that the counterclaim defendants believed that, by seeking to license collectively and otherwise refusing to deal with Peloton, they could extract supracompetitive fees.
This issue is a close call, but I’m going to predict that Peloton will win this motion – that the music publishers’ motion to dismiss Peloton’s antitrust case will be denied. The publishers’ argument is somewhat plausible, but so is Peleton’s. Where the parties’ positions are so evenly balanced I am doubtful that the court will dismiss Peloton’s antitrust claims.
Either way, the stakes are high for both sides. If the publishers succeed in getting the antitrust case against them dismissed, Peloton will have the right to an immediate appeal to the Second Circuit. But that takes time, and in the meantime Peloton (which just went public and raised $1.3 billion) will have lost the leverage its antitrust counterclaim gives it to negotiate a reasonable settlement of the publishers’ copyright case. Shareholders are unlikely to be enthusiastic about spending Peloton’s newly obtained capital to defend the publishers’ copyright case, and risk almost one-third of it if the publishers win.
On the other hand, if the publishers’ motion to dismiss is denied the publishers will be looking at expensive discovery before a summary judgment motion gives them their next opportunity to dismiss Peloton’s case. And, of course, discovery may reveal conduct that supports Peloton’s case.
Bottom line: this is a copyright and antitrust case worth watching.
FOOTNOTES:
