Tag Archives: Ninth Circuit

Non-Separable Design Features in Useful Articles Not Entitled to Copyright Protection

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

Starbuzz HookahIn an opinion issued yesterday, the Ninth Circuit confirmed, in Inhale, Inc. v. Starbuzz Tobacco, Inc. (Case No. 12-56331), that when a useful article has distinctive, artist features, those features are not copyrightable if they are not separable from the utilitarian aspects of the article.

Background

Inhale registered with the Copyright Office its design for a uniquely shaped hookah (a device used for smoking tobacco). Starbuzz sold identically shaped hookahs (shown in the picture to the right and as alleged in the complaint). Inhale then sued Starbuzz for copyright infringement. The District Court granted summary judgment in favor of Starbuzz, holding that the shape of a hookah is not copyrightable.

The Ninth Circuit Affirms

Designs of a useful article are copyrightable “only if, and only to the extent that, [it] incorporates . . . sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the” article. 17 U.S.C. § 101. The parties agreed that the hookahs were useful articles, so the question was whether the design was physically or conceptually separable from its utilitarian aspect. Inhale argued conceptual separability.

The Ninth Circuit first considered whether separability was a question of law or fact. It concluded under its precedent that it was a mixed question, and, therefore, it could decide the issue de novo.

Inhale argued that the distinctiveness of the shape of the hookah made its conceptually separable from its utilitarian aspects. The Ninth Circuit acknowledged that the law is muddled with respect to how courts should determine the separability of the artistic and utilitarian aspects of a useful article, so it deferred to the Copyright Office’s interpretations of the relevant standards.

The Copyright Office has determined that the distinctiveness of an article’s shape does not affect its separability. The Ninth Circuit found its reasoning persuasive and adopted it—“[t]he shape of a container is not independent of the container’s utilitarian function—to hold the contents within its shape—because the shape accomplishes the function.”

Therefore, the Ninth Circuit affirmed the District Court’s grant of summary judgment because it correctly concluded that the shape was not copyrightable.

 

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Ninth Circuit Holds Royalty Agreement Unenforceable

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

Web BlasterA recent decision from the Ninth Circuit in Kimble v. Marvel Enterprises Inc., No. 11-15605, highlights the problems parties can have when they enter into license agreements involving patents where the royalty payments extend beyond the life of the patents. In general, hybrid licensing agreements (those having inseparable patent and non-patent fights) are unenforceable beyond the expiration date of the patent unless either (a) there is a discounted royalty rate after the expiration date or (b) there is some clear indication that the royalty rate was not driven by leverage created by the patent rights. See Brulotte v. Thys Co., 379 U.S. 29 (1964). The rationale is that to hold otherwise would improperly extend the lifetime of the patent.

In Kimble, the inventor met with Marvel about his patented idea for a toy that children could use to mimic Spider-Man’s ability to shoot webs from his hands by shooting foam string from a glove. Kimble claimed the parties reached an oral agreement that Marvel would compensate Kimble if it used his ideas. Marvel then created a toy called the “Web Blaster” that was similar to what Kimble suggested. Marvel did not compensate Kimble, however.

Kimble sued for both patent infringement and breach of contract. The parties ultimately settled the case, with Marvel paying a lump sum to Kimble along with a perpetual 3% royalty on Marvel’s sales of these products. Eventually, the parties had a falling out regarding what products were covered by the agreement and the amounts due to Kimble.

The Court found that the agreement was a hybrid licensing agreement encompassing both patent and non-patent rights. Because there was no discount in the royalty rate post-expiration and there was no clear indication that the royalty rate was not subject to the leverage created by the patent, the post-expiration royalties were per se unenforceable.

The Ninth Circuit was not pleased to reach this result, however. It believed that the Supreme Court’s rule in Brulotte is “counterintuitive and its rationale is arguably unconvincing.” Nonetheless, it recognized that it was bound by this decision and that national uniformity on these issues is important.

The Kimble and Brulotte decisions highlight the importance of carefully considering the terms and duration of any licensing agreement that encompasses patent rights. Care must be taken to determine when any patent rights expire, what a royalty rate is based on, and how the two interact. With proper care ahead of time, problems like these can be avoided.