Tech Companies To Litigate Unpaid Royalties

Two kings of the tech world will reportedly duke it out over allegedly unpaid royalties.  In the suit, filed in federal court in New York, Microsoft alleges that it entered into a patent-sharing agreement in 2011 by which Samsung was to pay Microsoft a royalty for every Android phone it sells.  This was purportedly part of an effort to “work together to develop and market Windows Phone, Microsoft’s mobile software.” Microsoft alleges that Samsung failed to make a royalty payment on time and refused to pay interest on the late payment.  The original “heavily redacted complaint” alleges that Samsung has attempted to use Microsoft’s acquisition of Nokia’s phone business as an excuse for not complying with the patent-sharing agreement. Microsoft has since filed an amended complaint, and Samsung has responded with a motion to compel arbitration. The case is Microsoft Corp. v. Samsung Electronics Co., 14-cv-06039, (D.N.Y. 2014).

No Wings for Red Bull? Company Settles False Advertising Suit In New York

According to a report from BevNet, energy drink manufacturer Red Bull has settled a proposed class action lawsuit filed against it for $13 million.  The suit, filed last year by Benjamin Careathers in the U.S. District Court for the Southern District of New York, alleged that Red Bull’s signature “It gives you wings” slogan is false and misleads customers about the drink’s superiority.  While the company’s advertisements may in fact show Red Bull drinkers growing wings, the plaintiff alleges that Red Bull offers no increased performance, concentration, or reaction speed.  As you might expect, Red Bull has denied any liability.

We assume – and hope – that the plaintiff didn’t actually believe Red Bull would give him actual wings.  (We doubt New York recognizes the “negligent failure to bestow wings” cause of action.). In fact, we seriously doubt that Red Bull would have paid out millions on such claims even if it was concerned about litigation costs. As such, we will refrain, mostly, from commenting on the absurdity of such a lawsuit and focus on the more plausible allegations.

This lawsuit was never about wings, but rather, it centered upon whether Red Bull actually delivers that energy fix we all crave.  After all, that energy boost is why people spend $3 on an 8-ounce drink in the first place, right?  Or, $2 for a cup of Starbucks coffee, for that matter.  The suit, however, alleges that Red Bull’s primary active ingredient (caffeine) is the same as that of coffee and, thus, it is not worthy of the premium price.  Maybe so, but the suit fails to take into account the cognitive effects that come along with drinking an “energy drink.”  Even if it offers a mere placebo effect, the energy drink didn’t become a multi-billion dollar industry without repeat customers.

The truth is that the energy drink is not some new phenomenon.  For centuries, people have been looking for ways to give themselves an extra burst of energy.  Coffee has been, and continues to be, the drink of choice for many across the globe.  However, in the 1960′s, Japanese manufacturer Taisho upped the ante when it released Lipovitan D – an energizing tonic sold in mini-bottles.  Thereafter, other beverage companies joined in the game.  Pop culture legend Jolt Cola was once marketed to the masses as having “all the sugar and twice the caffeine.”  Those were the days. Even the soft drink giants, Coca-Cola and Pepsi, have tried their hand at distributing coffee replacements over the years.  Today, the game has evolved into the billion dollar “energy drink” industry featuring companies like Red Bull and Monster.

Our guess is that this lawsuit will have little, if any, impact on the energy drink industry.  For those angry about Red Bull’s alleged false advertising, Red Bull has placed $6.5 million of the $13 million settlement into a fund for consumers.  If you have purchased a Red Bull in the last 10 years, you can go here for a $10 refund or two free Red Bull products.   No word on whether the free products give you wings.

The Beastie Boys Smack Down Monster Beverage

The Beastie Boys are back in the news, but it’s not for the band’s music.  Rather, they recently obtained a $1.7 million verdict in a New York copyright infringement and false endorsement lawsuit against Monster Beverage (the makers of Monster Energy drinks) over the company’s use of the musical trio’s music and image in a promotional video. The lawsuit stemmed from the energy drink maker’s use of the Beastie Boys’ likenesses and five songs as part of a “megamix” in a snowboarding video titled “Ruckus in the Rockies.”  The video was posted on a promotional website back in 2012.  According to Monster, the whole thing was just a big misunderstanding. Apparently, an employee “inadvertently” believed Monster had been given rights to use the music.  Monster only contested damages at trial. Nevertheless, the jury came back with a “monster” judgment.

As you might suspect, Monster was not too happy with amount of the award.  The company had contended that the damages only amounted to $125,000.  Admittedly, the award does seem a little large, but it is not outrageous. “Syncing,” which is the industry term for reusing a song for commercial purposes, generates approximately $322 million per year for the music industry.

This isn’t the only time the Beastie Boys have had to “fight for their rights” this year.  In March, the group settled with a small toy company over its use of the song “Girls” in a video that went ultimately viral.

Rabid Dogs and Expensive Coffee Allegedly Have 2,000 Decillion Things In Common

A Manhattan man, Anton Prisima, has reportedly filed suit against New York City, Hoboken University, LaGuardia Airport, the MTA, and “thousands more people,” including “Latina Dog Owner” and “Kmart Store 7749.”  Apparently, the nature of the lawsuit is just the standard dog bite/coffee overcharge case, or as categorized by Justia, “other civil rights.”  Mr. Prisima seeks $2,000 decillion in monetary damages.

Mr. Purisima “claims that his middle finger was bitten off by a ‘rabies-infected’ dog on a city bus, then a ‘Chinese couple’ took photos of him as he was being treated.”  Separate and apart from those allegations, Mr. Prisima has joined several defendants in the suit based on the fact that “he’s routinely overcharged for coffee at LaGuardia Airport.”  We assume that this is a permissive joinder situation.  If not, Mr. Purisima may have a Palsgraf issue.  In any event, as a result of these wrongs,  Mr. Purisima seeks the modest amount of money mentioned above, in additional to “additional damages that ‘cannot be repaired by money” and are ‘therefore priceless.’”

Good thing Mr. Purisima cast a wide net to bring in as many deep pockets as possible, considering the fact that it is not possible to raise the amount of money he seeks even if the defendants are somehow able to sell the Earth and everything on it for scrap.

(Hat tip: Lowering the Bar).

Baidu Scores Dismissal of Free Speech Lawsuit

According to The New York Times, Baidua, a popular Chinese search engine, recently scored a simultaneous victory for both censorship of speech and freedom of speech.  A federal district court in New York recently dismissed a lawsuit that sought to punish Baidu for censorship that limits certain pro-democracy search results.  In dismissing the lawsuit, the judge ruled that Baidu itself maintains a First Amendment right to censor pro-democracy webpages from from its own search results. Baidu is the biggest search engine in China with more than 50 percent of the  market share.  However, the Chinese company is required to comply with the nation’s strict regulations over Internet content. As you may recall, in 2010,  Google decided to shutdown its search engine operations in China following ongoing disputes with the nation’s censorship rules. This lawsuit was filed in 2011 and claimed that Baidu was violating United States laws on free speech because its search results had been censoring pro-democracy works for those accessing the site from New York.  The lawsuit sought a mere $16 million in damages for the purported free speech violations.  However, the district court ultimately ruled against the plaintiff and held that requiring Baidu to include pro-democracy webpages in its search results would actually be a violation of the First Amendment Funny how that works, eh? The court compared Baidu’s filtering of search results to a newspaper’s right to exercise “editorial control” over the contents that it publishes. Baidu has simply created a search engine producing results that favor certain types of political speech. The court’s order states that “[t]he First Amendment protects Baidu’s right to advocate for systems of government other than democracy . . . just as surely as it protects Plaintiffs’ rights to advocate for democracy.” 

9/11 Scandal Surfaces, Mocks Legitimate Claims

In the age of social media, personal injury plaintiffs must be careful what they publish on the Internet. Settlement demands will take a hit once photos of a backyard tackle football game surface on an allegedly disabled plaintiff’s Facebook or Instagram account. We live in an age of transparency and the truth has a tendency to show its head. As such, we here at Abnormal Use weren’t surprised when we heard about the alleged 9/11 injury scam.

According to the New York Post, 80 NYPD and FDNY retirees have been arrested for an alleged Social Security scam whereby they lied about being at Ground Zero and suffering emotional trauma. The report notes:

Many of them claimed they couldn’t sleep, do simple arithmetic or even leave their own home — but investigators found that they’d been piloting helicopters, riding Jet Skis, teaching karate, deep-sea fishing and even running half-marathons.

Many of the individuals claimed to be so emotionally traumatized that they couldn’t use a computer, drive a car, or fly in a plane. Facebook, Twitter, and YouTube – along with car rental and airline receipts – said otherwise.

Obviously, at this stage the contents of the Post report are mere allegations. If true, however, the actions are disturbing, but not surprising. We were not at Ground Zero on that fateful day, but we can only imagine the emotional turmoil faced by those who were. We have no doubt that many of those brave individuals who responded to the scene face legitimate emotional trauma. If the allegations of this report are accurate, then these 80 persons should feel ashamed.

The fact that these individuals may have blatantly published the fabrication on social media significantly worsens the situation. We would like to think that if we lied about a significant injury for financial gain, we would be too scared to show our faces in public for fear of blowing our cover. But, we suppose once you initially get away with a scam of this magnitude, a feeling of invincibility must seek in. As is the case with personal injury actions, when someone is legitimately harmed due to the acts of others, then they deserve to be made whole. Unfortunately, a small percentage of people attempt to abuse the system, casting a shadow on legitimate claims.

A Book Fair – Google Books Ruled Fair Use

It seems these days there is a very fine line between an innovator and a thief.   Google recently was found to be on the innovator side of the line in a lawsuit over its product Google Books.  As you may have heard, the U.S. District Court for the Southern District of New York recently held in its summary judgment opinion that Google’s scanning of more than 20 million books and posting them online was “fair use” under U.S. copyright law. See The Authors Guild, Inc., et al v. Google, Inc., No. 05-CIV-8136 (S.D.N.Y. Nov. 14, 2013). This case began nearly a decade ago when Google when began scanning and uploading “snippets” of books online without the permission of the authors and publishers.  In 2005, the Authors Guild brought suit against Google seeking $750 per book scanned.  As you might imagine, twenty million books at $750 per book adds up pretty quickly ($15 billion to be precise).  The two sides sought to settle the matter in 2011 for around $125 million.  However, the U.S. District Court judge refused to approve the settlement, holding that it would give Google a ”de facto monopoly” to copy books en masse.

The ruling in this case centered around whether Google’s use of the copyrighted books constituted “fair use.”   The doctrine of fair use permits the use of copyrighted works “to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts.’”  One key consideration in determining whether use falls under “fair use” is the extent to which it is transformative.  The use of work is transformative where it adds something new or alters the original creation.

The Court’s opinion focused largely on  the fact that Google Books was indeed transformative in that it “transformed book text into data for purposes of substantive research, including data mining and text mining in new areas, thereby opening up new fields of research.”   The Court ultimately held that this transformation, which adds value to the original books, along with other factors outweighed any commercial aspect of the use.  As such, it granted summary judgement to Google.

This ruling has been hailed by some as a win for the fair use doctrine, tech companies, and society at large.  We tend to agree.  However, there will undoubtedly be many who view this case as just another instance of the big companies and the court system stepping on the little guy.

Fox News Finds Itself in Intellectual Property Battle

For the past few years, it has seemed liked Fox News spends more time in the news than reporting (and opining) on the news.  Once again, the network is back in the headlines, but this time, it stems from an intellectual property lawsuit against a company called TVEyes.  In a nutshell, TVEyes transcribes thousands of TV and radio broadcasts to make them text searchable and then sells access to the transcripts.  Fox News claims that the transcription of its broadcasts infringes on its intellectual property rights. The case, Fox News Network LLC v. TVEyes Inc. (No. 13-CV-5315), was filed in the U.S. District Court for the Southern District of New York.  According to the complaint,  TVEyes is willfully and deliberately infringing on Fox News’ copyrights and is misappropriating its “hot news” content.  It then allegedly distributes that content to subscribers over the Internet for a fee.  Fox News further alleges that TVEyes is “well aware” it needs a license or authorization from Fox News in order to reproduce its content in this manner. Apparently, TVEyes allegedly contacted Fox News seeking a license for its use of Fox News content, which Fox News declined to provide.

According to its website, the mission of TVEyes is “to organize the world’s television and radio broadcasts and make them universally searchable by the spoken words.”   Fox News’ complaint alleges that TVEyes charges users a subscription fee of $500 per user per month.  This is not some fly-by-night company, either.  Its customers include the United States Department of Defense.

Fox News pulls no punches in describing TVEyes’ business model.  The complaint argues that “TV Eyes engaged  in the parasitic business of offering and providing the public for a fee copies of the television programing and content created by others.”  Fox News wants an injunction, as well as unspecified statutory and punitive damages.  It is notable that Fox News does indeed have its own service that sell transcripts of its programing. TVEyes has already filed its motion to dismiss.  In the motion, TVEyes asserts that the Fox News’ claims are barred by the Copyright Act and the complaint fails to state a claims for “hot news” misappropriation.  A plaintiff alleging “hot news” must show “time-sensitive factual information, free-riding by the defendant, and threat to the very existence of Plaintiff’s product.” We’ll keep our eyes on this lawsuit.

Exotic Dancers Suing for Minimum Wage in New York

In a recent Fair Labor Standards Act (FLSA) case in the U.S. District Court for the Southern District of New York, a federal judge ruled in favor of class of strippers exotic dancers and determined that they were actually employees rather than independent contractors.  According to Law360, the facts were these: Former exotic dancers at Manhattan strip club gentlemen’s club Rick’s Cabaret brought a minimum wage class action against club operator Peregrine Enterprises Inc.  Seriously? Exotic dancers at a very popular club in Manhattan are suing over minimum wage?  I suppose no professions are immune from economic downturns. Because of their independent contractor status, the plaintiffs weren’t paid wages while working at Rick’s, but instead, received “performance fees” for “dances” with customers.  However, the named plaintiffs argued that they truly were employees of Rick’s and were therefore entitled to a minimum wage.  U.S. District Judge Paul Engelmayer agreed with the plaintiffs and ruled that they were, in fact, employees of the midtown Manhattan club and that Peregrine was their employer.

In reaching his decision, the Judge applied the five factor “economic realities” test.  Of course, that is a standard test to determine whether agents of a business are employees or contractors.  The test has nothing to do with the economic realities of whether an exotic dancer should be entitled to the minimum wage. While the outcome of the case appears favorable the dancers, the judge wasn’t quite ready to make it rain just yet.  Although he ruled that the dancers were employees, he refused to grant summary judgment because a question remained as to whether they are solely employees of Peregrine or whether they were also employees of Rick’s Cabaret International Inc. and RCI Entertainment (New York) Inc. We’ll have to keep a close eye on the future of this litigation, won’t we?

The case in question is Hart v. Rick’s Cabaret Intern., Inc., — F. Supp. 2d —-, No. 09 Civ. 3043-PAE (S.D.N.Y September 10, ,2013).

Volunteer Dissatisfied with “Pay,” Files Suit Against MLB

A “volunteer” can be defined as one who offers to provide a service willingly and without pay.  Apparently, one New York resident wants to rewrite the definition of volunteer.  John Chen was one of many persons that volunteered to work for free at Major League Baseball’s 2013 All-Star Fan Fest.  Now, after the fact, Mr. Chen is looking to get paid and has filed suit claiming that MLB violated wage laws. I always thought the minimum wage for volunteers was $0.  Surely, there must be more to this story, right? Allegations of fraud and deception? Broken promises? Nope, there’s nothing of the sort.

Chen volunteered with MLB for five days assisting with tasks that included hospitality, logistics, and transportation. By all accounts, Mr. Chen undertook the endeavor knowing full well that he would not be compensated for his time.  There’s no allegation that he was tricked into volunteering or that MLB made any sorts of promises that weren’t kept.  Nevertheless, the lawsuit filed in federal court alleges that MLB violated federal and state minimum wage laws by failing to pay him and more than 2,000 other volunteers.  Mr. Chen and his attorney have sought class action status and have asked for lost wages.

So what gives?  One frivolous lawsuit begets an onslaught of similar lawsuits.  It just so happens that Mr. Chen’s attorneys, Outten and Golden LLP, recently won a lawsuit against Fox Searchlight seeking pay for interns who had accepted previously unpaid internships. Of course, that case turned on the fact that the interns were regular employees, which is not the case in this lawsuit.
I know I’ll be watching this one closely.  If this suit is successful, I may have some money coming my way from the MS Society, the United Way, and Habitat for Humanity.