© 2003 Mark H. Barinholtz

The following case summaries appeared as a contribution to the 2003 Report of the International Copyright Law Committee of the Intellectual Property Law Section of the American Bar Association:

Sturdza vs. United Arab Emirates, et al., 281 F.3d 1287 (D.C. Cir. 2002). Plaintiff Sturdza is an architect who submitted a design to a competition for a new embassy for the United Arab Emirates (UAE) in Washington, D.C. Although the UAE told plaintiff that her design had won and she would be awarded the contract, the UAE entered into a contract with a different architect (Demetriou) whose design was similar to plaintiff's. Using Demetriou's design, the UAE began building its new embassy. Plaintiff sued the UAE and Demetriou in the United States District Court for the District of Columbia, alleging, inter alia, claims for copyright infringement, breach of contract, tortious interference, infliction of emotional distress, conspiracy to commit fraud and conspiracy to commit sex discrimination in violation of 42 U.S.C. Sec. 1985. Plaintiff's copyright infringement, breach of contract and quantum meruit claims were dismissed on summary judgment. Plaintiff's tort claims, including her Sec. 1985 claim, were dismissed under Fed.R.Civ.P. 12(b)(6). On appeal, the D.C. Circuit reversed the dismissal of plaintiff's copyright claim because the Court of Appeals found, after a detailed de novo side-by-side review of the two architects' designs, that a reasonable jury could find substantial similarity sufficient to uphold liability for infringement. With regard to plaintiff's contract claims the court deferred ruling subject to certification to the District of Columbia Court of Appeals (the local court) with regard to the question of whether the fact that plaintiff was not licensed as an architect in the District of Columbia acted as a bar to her prosecution of her contract claims. In discussing the contract related claims and plaintiff's lack of a license, the court stressed the local importance of the issue, since architects throughout the country and "even around the world" unlicensed to practice in the District routinely presented bids for proposed architectural services with respect to "this city of embassies, monuments, and public buildings." Thus, the court felt that precisely how D.C. law would apply to such unique characteristic of Washington, D.C., and its economy was an important question to be resolved by the D.C. courts. Moving on to plaintiff's tort claims, the court applied the "extra element test" finding that plaintiff's claims for interference with contract, intentional infliction of emotional distress and conspiracy to commit fraud were sufficiently different in their elements and factual allegations to survive dismissal through preemption. Finally, the court upheld the dismissal of plaintiff's Sec. 1985 sex discrimination claim based upon the definitional provisions of Sec. 1985 and the Dictionary Act, found at 1 U.S.C. Sec. 1. Finding that neither Sec. 1985 nor the Dictionary Act defined "person" to include or expressly mention "foreign sovereigns," the court concluded that a foreign government is not a "person" for purposes of plaintiff's conspiracy claim. Because Sturdza had only sued the UAE and Demetriou, the court affirmed the District Court's dismissal of the sex discrimination claim, since Sec. 1985 requires at least two or more "persons" in order to have a conspiracy.

United States vs. Elcom, Ltd., etc., et al., 203 F.Supp. 2d 1111 (N.D. Cal. 2002) Defendants, a Russian software company and its employee, were indicted in the San Jose Division of the Northern District of California, charged with violations of Digital Millennium Copyright Act (DMCA) anticircumvention provisions and for allegedly trafficking in and marketing a computer program which allowed the user to remove use restrictions from Adobe Acrobat PDF files and files formatted for the Adobe eBook Reader programs. Those programs were designed by Adobe Systems to allow publishers or distributors of electronic books to control the distribution of such "e-books." Defendant Elcom filed motions to dismiss the indictment for violations of due process and on First Amendment grounds. Before denying defendant's motions, the District Court recounted how Article 11 of the WIPO Copyright Treaty adopted at or about 1996 provided that the contracting parties "shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law." The court went on to say that adoption of the WIPO Copyright Treaty spurred U.S. Congressional focus toward revision of the copyright law to the digital age, leading to the enactment of the DMCA in 1998 as the culmination of the legislative process. The new law (DMCA) was designed to foster electronic commerce and the rights of copyright holders in the face of a "plague of digital piracy" in the "global digital on-line marketplace for copyrighted works" on the Internet. Defendant's due process challenge invoked the due process clause of the Fifth Amendment which prohibits statutory vagueness which could lead to inadequate notice of the kind of conduct sought to be prohibited, and could encourage arbitrary or discriminatory enforcement. The court rejected the due process argument finding that the DMCA was not unconstitutionally vague. Defendant also moved to dismiss alleging various First Amendment challenges. Defendant contended that the DMCA violated the First Amendment as applied to the sale of defendant's software, that the DMCA violated the First Amendment by infringing the First Amendment rights of third parties, and that the DMCA violated the First Amendment because it is impermissibly vague. After applying an intermediate scrutiny analysis, rather than strict scrutiny, the court rejected all three of defendant's First Amendment challenges. The court found that the DMCA furthered an important governmental interest and that any incidental restrictions on First Amendment freedoms are no greater than essential to the furtherance of that interest. Finally, defendant challenged the DMCA on the basis that Congress, in enacting the DMCA, had exceeded its Constitutional authority under the Intellectual Property Clause and the Commerce Clause. The court rejected these Constitutional challenges, stating that the DMCA does not run afoul of restraints on Congressional power as a result of the Intellectual Property Clause or the Commerce Clause because the anticircumvention provisions of the DMCA are not irreconcilably inconsistent with Congress' Constitutional authority in enacting such law.

Dam Things From Denmark v. Russ Berrie, 290 F.3d 548 (3d Cir. 2002) In the 1950s, Danish woodcarver Thomas Dam created a so-called "troll" doll for his daughter. Claiming that the doll brought good luck to whomever possessed it, Dam dubbed the rubber figure the "Good Luck Troll." Dam's creation caught on in Denmark, selling approximately 10,000 units per month by 1959 in Denmark alone. After certain innovations which increased the durability of the product, the trolls' success reached to other countries and were first sold in the United States in 1961. Defendant Russ Berrie & Company became a representative for Dam Things' U.S. licensee in 1963 and began to sell trolls manufactured by Dam. In 1965 the District Court for the District of Columbia ruled that Dam's U.S. copyright registrations on troll dolls were invalidated due to failure to comply with various notice and marking formalities, and thus were in the public domain. See, Scandia House Enters., Inc. v. Dam Things Establishment, 243 F.Supp. 450, 453-54 (D.D.C. 1965). Years later, in 1994, Congress enacted the Uruguay Round Agreements Act which provided for broad restoration of certain foreign works which had previously fallen into the public domain in the United States. Subject to certain specific requirements, set forth in 17 U.S.C. Sec. 104A, the legislation was intended to reciprocally ensure greater protection for American copyright holders abroad. Dam Things (a Danish company) brought this action against Russ Berrie in August 2001, alleging that its copyright in its original troll design, the "Basic Good Luck Troll," had been restored under Sec. 104A. Dam Things alleged Russ Berrie had infringed the restored copyright and sought an injunction, among other forms of relief. In August 2001, the District Court for the District of New Jersey entered an injunction against Russ Berrie finding a reasonable likelihood of success on Dam Things' claims that its copyright was revived and that its troll doll had been infringed. The injunction ordered Russ Berrie to cease manufacture of new troll dolls, but allowed existing inventory to be sold into early 2002. The Third Circuit Court of Appeals, on an expedited interlocutory appeal, reversed the District Court and remanded the case for further proceedings. The Court of Appeals disagreed with the District Court's finding that Dam Things had a reasonable probability of success on the merits. Although the court found that the District Court had properly determined that Dam Things was likely to establish that one early copyright was likely to qualify for restoration, and that such copyright was not abandoned by Dam Things by virtue of its acceptance of the earlier Scandia House ruling, nevertheless, the District Court had failed to apply the proper standard for analysis as to whether Russ Berrie's trolls were derivative works and thus subject to Sec. 104A's safe harbor provisions. Finally, the court found that the District Court, in confusing the standard for originality with that for substantial similarity, also failed to conduct the proper factual comparison between the exact works at issue. On remand, the District Court was instructed to apply the appropriate standard and to compare the specific trolls -- including a review of the actual troll dolls at issue, not merely photographs -- in order to conduct the proper analysis.

Cordon Holding B.V., et al. v. Northwest Publishing, et al., 63 U.S.P.Q.2d 1013 (S.D.N.Y. 2002). Plaintiffs Cordon Holding and Cordon Art are Dutch corporations organized and existing under the laws of the Netherlands. Plaintiffs claim ownership in all subsisting copyrights in the works of renowned Dutch graphic artist M.C. Escher. Escher, who died in 1972, created a series of prints (art reproductions) derived through a multi-step process. He began with a sketch which was reproduced as a master engraving which in turn was utilized to reproduce the prints. After the prints were made, Escher would destroy the master. Defendants, Northwest Publishing and Paul Anish, are a Florida corporation and its president. Beginning in 1995, and without any permission from plaintiffs, defendants offered reproductions of several of Escher's works in poster form marketed by means of a catalogue. After several years of negotiations between plaintiffs and defendants, seeking to settle plaintiffs' claims of infringement, plaintiffs filed suit alleging copyright infringement and breach of contract. Defendants filed a counterclaim for declaratory judgment that the Escher works in question are in the public domain and that neither defendant had infringed plaintiffs' rights. In granting plaintiffs' motion for partial summary judgment on the issue of liability for copyright infringement, the court analyzed at length plaintiffs' claim to ownership and restoration of copyright under the Uruguay Round Agreements Act (URAA). The court concluded that the art reproductions as well as the underlying sketches and master engravings had, in fact, fallen into the public domain due to omission of various required copyright notice formalities. However, the court next concluded that the Escher works at issue which had fallen into the public domain also qualified as "restored works" under 17 U.S.C. Sec. 104A. The court reviewed the conditions for qualification, namely that the work must not be in the public domain in the source country through expiration of its term of protection, that the work must be in the public domain in the United States due to non-compliance with formalities imposed by U.S. copyright law, that the work have at least one author who was, at the time the work was created, a national or domiciliary of an eligible country, and, if the work was published, it was first published in an eligible country and not published in the United States during the 30-day period following publication in the eligible country. The court reviewed each of the Sec. 104A requirements and found that Escher's works constituted restored works under Sec. 17 U.S.C. Sec. 104A. Finally, with respect to damages, defendants argued they should be deemed "reliance parties" under the safe harbor provisions of Sec. 104A. The court found that defendants were not reliance parties due to a Sec. 104A timing issue, namely, that the allegedly infringing acts must have begun prior to enactment of the URAA in December 1994. Since defendants began manufacturing the infringing posters nearly six months after URAA enactment, they could not be considered reliance parties.

Cambridge Literary Properties v. W. Goebel, 295 F.3d 59 (1st Cir. 2002). Plaintiff Cambridge is a co-owner of copyrights in a literary work known as the Hummel Book. The Hummel Book, first published in Germany in 1934, contained images of children drawn by a German nun, Sister Hummel, accompanied by verses by an Austrian poet Margarete Seemann. Certain additional illustrations were provided by Emil Fink Verlag, a German publisher who first published the book under contract with Hummel and Seemann. In 1936, Fink registered the book as a foreign publication under United States copyright law, and then introduced an English language version of the book into the United States. Plaintiff Cambridge claims its ownership interest in the renewal copyright as a result of a purchase from the heirs of Seemann who died in Austria in 1949. Defendants Goebel and Goebel Art, a German limited partnership and German corporation, owned various interests in the renewal copyright purchased from Fink. At stake were millions of U.S. dollars annually generated by sales of Hummel figurines derived from the illustrations in the Hummel Book. The gist of the lawsuit was to seek an accounting and imposition of a constructive trust to allow plaintiff to recover its alleged share of the overall profits as a co-owner. In the trial court, defendants succeeded in having the case dismissed for lack of personal jurisdiction over all defendants. On appeal, the First Circuit reviewed the dismissals by analyzing the Massachusetts Long-Arm Statute which allowed for jurisdiction over such foreign defendants if their acts gave rise to a cause of action related to the transaction of any business within the Commonwealth of Massachusetts. The Court of Appeals reviewed the Constitutional requirements for exercising personal jurisdiction and found that substantial shipments of Hummel figurines into the state satisfied the minimum contacts prong of the due process inquiry. The court also found that the defendants' Massachusetts contacts not only existed but were sufficiently related to the events which make up the cause of action. Consequently, since the copyright law did not contain any provisions regarding which law would govern remedies in disputes between co-owners, the Massachusetts law analysis would govern in the context of diversity jurisdiction. It also appeared pertinent, and as the court noted several times in the decision, that the German company defendants maintained a North American subsidiary based in New Jersey. Finally, as to several individual German citizens who were current or former general partners in the Goebel partnership, those individual defendants were dismissed out as having insufficient independent contacts with Massachusetts. The court rejected plaintiffs' bald argument that personal jurisdiction over a partnership automatically confers personal jurisdiction over the partners. The court declined to entertain what it characterized as plaintiffs' underdeveloped argument on this issue.

Torah Soft Ltd. v. Michael Drosnin, 224 F.Supp.2d 704 (S.D.N.Y. 2002) This case revolves around a theory known as "Bible code" which holds that the Hebrew Bible contains predictions of the future encrypted in its text. The key to breaking the code involves various steps including identifying certain letters and calculating equidistant separations between the letters to form a matrix. The matrix can then be analyzed in order to discern the recognizable prophetic phrases. Plaintiff in this action, Torah Soft, Ltd., and its owner Dr. Yochanon Spielberg, were domiciles of Israel who, in 1988, had developed a computer program for conducting Bible code searches. Defendant, Michael Drosnin, is the New York author of the best selling book The Bible Code. Drosnin contacted Spielberg in 1992 in connection with the software created by Spielberg, since Drosnin was interested to use it in connection with his intended book. An agreement was made as to various matters, including to modify the software for Drosnin's purposes, and that Torah Soft would receive publicity and credit for its contribution when the book was published. Drosnin's book The Bible Code was published in 1997, but included no reference to Torah Soft or Dr. Spielberg. Instead, the book credited a different Israeli mathematician with discovery of "the Bible code." This lawsuit was first filed by Torah Soft against Drosnin and his publisher, Simon and Schuster in 1998 in New York State Court, alleging breach of contract and other state law claims. Defendant Drosnin filed counterclaims against Torah Soft and third party claims against Dr. Spielberg, also alleging breach of contract with respect to a purported exclusive marketing agreement and for unfair competition by means of allegedly false representations by Spielberg with respect to the extent of Drosnin's use of the software program in writing The Bible Code. In the state court the dispute was found to be governed by Israeli law. Various motions to dismiss were denied, and affirmed by the Appellate Division. Thereafter, Drosnin removed the case to federal court, claiming that plaintiff's claim was essentially one of copyright infringement. Although Spielberg in fact subsequently filed a copyright action against defendants, that claim was dismissed in the District Court. Torah Soft Ltd. v. Drosnin, 136 F.Supp.2d 276 (S.D.N.Y. 2001). Nevertheless, the court retained jurisdiction over the action on the basis of diversity. The District Court was presented with cross-motions for summary judgment. With the exception of defendant's motion to dismiss a portion of Torah Soft's claim for breach of contract with respect to a purported joint marketing agreement, the District Court denied all motions and cross-motions for summary judgment. The court engaged in a copyright preemption analysis with respect to plaintiff's summary judgment motion which was directed to Drosnin's claim that plaintiff breached an exclusivity agreement with respect to sales of the modified software. The court found that the copyright laws of the United States do not apply extraterritorially to the deal entered into in Israel, and that even if United States copyright law did apply it would not preempt the contract-based counterclaim under the "extra element" test. As to the remaining state law claims the court conducted a lengthy discussion and analysis of the applicability of Israeli law. Finding the earlier state court decision on applicable law to be the "law of the case," the District Court reviewed submissions by the parties' competing experts on Israeli law, treatises on Israeli law and Israeli case law decisions in reaching most of its rulings denying the summary judgment cross-motions.

Well-Made Toy Mfg. Corp. v. Lotus Onda Industrial Co., Ltd., 2003 WL 42001 (S.D.N.Y. Jan. 6, 2003). This case is essentially round-two in a follow-up to last year's similar litigation between the same parties involving some similar issues. See, Well-Made Toy Mfg. Corp. v. Lotus Onda Indus. Co., Ltd., 2002 U.S. Dist. LEXIS 789 (S.D.N.Y. Jan. 16, 2002). Plaintiff Well-Made is a New York corporation with its principal place of business in Queens. Defendant Lotus is a Hong Kong corporation with its principal place of business in Hong Kong, although Lotus maintains a showroom in New York in which it displays and solicits sales of the various allegedly infringing products. In this action, Well-Made filed suit against Lotus alleging copyright infringement under United States copyright law and supplemental claims arising under Hong Kong copyright law. Defendant moved to dismiss for lack of jurisdiction under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6). The copyrights at issue were a fabric design and a soft sculpture design. The District Court found that additional discovery was warranted with respect to the issue of jurisdiction over defendant, and rather than rush to apply an extraterritoriality analysis, the circumstances warranted delving into whether defendant committed any predicate infringing acts within the United States. With regard to the fabric design claim, the court found that the earlier litigation between the parties (Well-Made I) precluded assertion of such claim under the doctrine of res judicata. Not only did the court allow plaintiff's doll design infringement claims to survive, but the court allowed the Hong Kong infringement claims to survive. The court found that copyright infringement constitutes a "transitory" cause of action and, thus, may be adjudicated in a court of a sovereign other than the one in which the cause arose. In this situation, the court preliminarily held it could have subject matter jurisdiction over claims arising under Hong Kong copyright law. However, the court also intimated it might entertain a forum non conviens motion to transfer.

Brown v. Bandai America, Inc., et al., 2002 WL 1285265 (N.D. Tex. June 4, 2002) This case involves an interpretation under provisions of Article 10(a) of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commerce Matters (the "Hague Convention") on how to obtain service of process on a foreign corporation that conducts business in a state (Texas) but maintains no regular place of business in the state, . Plaintiff Brown holds copyright ownership for cartoon drawings known as "Bone Masters." Brown's drawings depict unique humanoid figures that incorporate dinosaur bones outside of their bodies and can transform into dinosaurs. Defendants Sunrise and Bandai are a Japanese corporation and its American affiliate, who manufacture and market toy action figures known as "Dinozaurs." The Dinozaur characters incorporate features similar to the Bone Masters characters, including dinosaur-like bones on their head, legs, arms and torsos. During July 2000 through November 2000, defendants' Dinozaurs characters appeared in a cartoon television show broadcast in the United States on the Fox Children's Network. In March 2001, Brown filed a suit for copyright infringement in federal court in Dallas, Texas, against Bandai and later added Sunrise and Fox as defendants. Bandai had attempted to get the jump on Brown by earlier filing a declaratory judgment action against Brown in a California federal court, however that case was dismissed for lack of personal jurisdiction over Brown. In the Texas lawsuit Brown sought to obtain jurisdiction over Sunrise, the Japanese corporation, by means of service on the Texas Secretary of State, with a copy of the summons and complaint forwarded to Sunrise in Japan by registered mail, pursuant to Texas civil practice rules. Counsel for Sunrise communicated with Brown's attorney by mail and telephone complaining that various defects in the preparation and method of service were not consistent with applicable Federal Rules of Civil Procedure or otherwise in compliance with the applicable Hague Convention provisions. Counsel for Brown immediately proceeded to have a default entered against Sunrise in the Dallas federal court. Sunrise moved to set aside the default on various grounds, including, no reasonable opportunity to respond, failure to comply with Federal Rules or Hague Convention formalities, and on discretionary equitable grounds. The court carefully analyzed the requirements of the Federal Rules of Civil Procedure, the Hague Convention, and the Texas Civil Practice Code, and decided that there had been no due process violation since Sunrise was aware of the pendency of the lawsuit but chose not to appear. The court further found that service on Sunrise was accomplished consistent with Federal Rules of Civil Procedure and the Hague Convention through service in the manner prescribed by the Texas Civil Practice Act. However, the court also found on equitable grounds that Sunrise's neglect to appear was justifiable in view of the circumstances and manner in which the attorneys for the respective parties acted toward one another. Moreover, Sunrise was able to show a possible meritorious defense. Sunrise's motion to set aside the default was granted.

Elisan Entertainment, Inc., et al. v. Suazo, et al., 206 F.R.D. 335 (D. Puerto Rico 2002) Plaintiff Elisan, and other plaintiffs in the music business, filed a copyright infringement suit in the federal court for the District of Puerto Rico. Defendants, the alleged infringers, are individual residents of the Dominican Republic. Within weeks after filing suit, plaintiffs filed a motion requesting leave to serve summons upon defendants by means of publication under Rule 4(e)(1) of the Federal Rules of Civil Procedure and the local practice Rules of Puerto Rico. The District Judge Dominguez denied plaintiffs' motion, finding that Federal Rule 4(e)(1) only applies to service upon individuals located within a "judicial district of the United States." Thus, since defendants are residents of a foreign country (the Dominican Republic) plaintiffs could not rely on Rule 4(e)(1) and the local Puerto Rico rule to accomplish service through publication. Instead, the court engaged in a lengthy discussion of appropriate methods of service through Fed.R.Civ.P 4(f). Within the context of Rule 4(f)(1) and the Hague Convention the court found that the Dominican Republic is not a member state, and has never ratified or signed the Hague Convention, nor was it a party to any other international convention that might be applicable between the United States and the Dominican Republic. Therefore, the court concluded that plaintiffs should serve process using one of the several methods provided by Fed.R.Civ.P. 4(f)(2). These methods include service in the Dominican Republic under Dominican Republic rules, service by a letter rogatory as may be directed by Dominican Republic governmental authority, and, provided that the foreign sovereign does not specifically prohibit such methods of service, by service through personal delivery upon the defendants individually within the Dominican Republic, or service by the Clerk of the District Court by means of mail requiring a signed receipt. The court noted that in any event, service under Rule 4(f) must conform to fundamental due process requirements of reasonable notice and opportunity to be heard in any proceeding which is intended to be accorded finality. Defendants must always be apprised of the pendency of the action and afforded an opportunity to present their objections. In making his rulings, Judge Dominguez provided interesting references to helpful Internet Web sites, including ones containing the Hague Convention and an update of member states (

© 2003 Mark H. Barinholtz

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