News/Events - Newsletter
NEWS FROM OSTROLENK, FABER, GERB & SOFFEN, LLP
December, 2006
Partner Douglas A. Miro successfully dismissed an individual corporate officer as a party in a patent infringement case brought by US Philips Corporation in the United States District Court for the Central District of California. The court ruled that the corporate officer did not have sufficient minimum contacts with the state of California in his personal capacity, nor did Philips sufficiently allege that the officer personally participated in the alleged patent infringement. Mr. Miro was assisted in this matter by associates Art C. Cody, Douglas Q. Hahn and David J. Torrente.
Partner Peter S. Sloane, working with The Pro Bono Partnership, a tax-exempt public charity that provides free business legal services to nonprofit community-based organizations serving the poor and disadvantaged in the New York metropolitan area, helped Foster and Adoptive Family Services register its mark NJFC SCHOLARS New Jersey Foster Care Scholars with the design of the State of New Jersey for services in providing educational scholarships with the U.S. Patent and Trademark Office.
Aimee Allen has joined our firm as an associate. Aimee is an intellectual property litigator also active in trademark prosecution, copyright, and Internet media matters. Aimee received her undergraduate degree from Yale University in 1997 and earned a Juris Doctor degree from Columbia University and a Maîtrise en droit from the Université de Paris III – La Sorbonne in 2002. Prior to joining Ostrolenk, Faber, Gerb and Soffen, Aimee worked as an intellectual property litigator with Fross, Zelnick, Lehrman & Zissu and as litigation associate at both Dorsey & Whitney and Debevoise & Plimpton. She is admitted to practice in New York.
Legal Developments
New Rules Regarding Discovery of Electronic Documents
With the proliferation of documents stored solely electronically in the form of e-mails, website information and the like, parties in litigation have been forced to pay greater attention to such potentially relevant electronic information. The extent to which such electronic information is “subject to discovery” during litigation by other parties in the litigation has been subject to dispute. After several years of discussion and input by bar associations and the public, the Federal Judicial Committee has promulgated new rules that pertain to the discovery of electronically stored information (“ESI”) during the litigation process. Rules 16, 26, 33, 34, 37 and 45 of the Federal Rules of Civil Procedure (FRCP) are amended effective December 1, 2006. Some highlights of the new rules follow.
Traditionally, parties to a dispute after commencing legal action take part in a “scheduling conference,” which must typically take place 120 days after the litigation is filed. During the scheduling conference, the parties in litigation discuss the documents and witnesses and other potentially relevant information to which they are likely to need access as part of the discovery process. FRCP Rule 26(f), effective December 1, 2006, requires that parties discuss discovery issues involving ESI during an initial “meet and confer” session. Such a meet and confer session must take place at least 21 days prior to the scheduling conference. The party requesting the ESI will typically specify the format in which it would like to receive the ESI. Under the new rules, attorneys representing parties to a dispute will have an obligation to exercise due diligence regarding ESI. An initial disclosure mandated by Rule 26 must reference any sources of ESI that may store client data that is potentially relevant with respect to either claims or defenses. Thus, for example, a party that relies on internal e-mail messages to demonstrate a certain claim or a certain defense must disclose any e-mail archiving systems or associated data repositories as part of the initial disclosure under Rule 26. Under such a scenario, parties who fail to comply with the rules may face sanctions, potentially severe, if bad faith is present. Thus, as a practical matter, most corporate data repositories may have to be disclosed as part of the initial disclosure because they contain potentially relevant ESI. Further, the initial disclosure under Rule 26 must also disclose witnesses, such as IT directors and record managers, who manage the servers or databases housing the client company’s ESI.
In view of the potentially onerous nature of such disclosures, under Rule 26(b)(2)(B), a party may resist a request for ESI on the basis that the ESI is “not reasonably accessible.” For example, ESI that is stored offline, such as obsolete media or backup tapes, may be deemed by courts to be “not reasonably accessible.” Even if the party succeeds in demonstrating that any such ESI is “not reasonably accessible,” the party would still be under an obligation to preserve such material absent a court order or an explicit release from preserving it from the opponent in the litigation.
Trial courts retain their traditional wide latitude in ruling on specific applications of the FRCP. The specific contours of a broad rule, such as the “not reasonably accessible” defense against the requirement to disclose ESI, is subject to interpretation as courts grapple with, and create precedent regarding, the exact scope of the rules. Further, trial courts would still have great discretion in applying the rules to any particular case, even after controlling precedent is created to flesh out broad rules, such as the “not reasonably accessible” defense. Moreover, the traditional legal standards for resisting production of documents remain, for example, if the matter requested is “unduly burdensome to produce.”
The foregoing discussion of some of the important new ways in which courts are likely to view ESI is intended only as a small sampling. What companies should be quite cognizant of is that competent litigation counsel should be consulted early on in the litigation process, and preferably before the commencement of litigation, to work out how electronic documents, and other potential evidence, is likely to be viewed by courts and opposing counsel as part of the litigation process. Particularly in view of the broad understanding of ESI evinced by the new rules, and the requirement for identifying sources of ESI, it is imperative for parties to consult litigation counsel early to think creatively about the potentially offensive and defensive application of the new rules.
Trademarks
The U.S. Congress has enacted The Trademark Dilution Revision Act of 2006 in response to the 2003 Supreme Court decision in Moseley v. V. Secret Catalogue, Inc. Resolving an earlier circuit split, the Supreme Court had held in Moseley that proof of actual dilution, as opposed to a mere likelihood of dilution, was necessary for a successful cause of action. The less stringent likelihood of dilution standard now codified in the Act should allow trademark owners to proactively protect their famous marks by not requiring that they wait for harm to occur before taking action against an alleged diluter. However, the change comes at the expense of small business owners and niche market operators who may no longer be able to demonstrate that they own a "famous" mark entitled to protection under the Act. To receive such protectionunder the 2006 Act, amark must now be widely recognized by the "general consuming public" of the United States. However, those parties unable to avail themselves of federal protection may still seek recourse under state dilution laws, where available, depending upon the jurisdiction. The Act also now expressly defines dilution by tarnishment as a violation, in addition to dilution by blurring, and it expressly names legitimate parody, comments, and criticism as fair use exceptions (in addition to the pre-existing exemptions for comparative advertising, news, and non-commercial speech) so long as they do not designate a source of goods or services.
Domain Names
The Sixth Circuit’s recent decision in Audi AG et al. v. D’Amato affirmed a grant of summary judgment, injunctive relief, and attorneys’ fees against a defendant who had registered and used the domain name www.audisport.com. In addition to featuring Audi trademarks throughout the website in watermarks and wallpaper, the domain name was used to sell merchandise bearing Audi’s trademarks and to sell advertising space to sponsors. The defendant alleged he had received authorization to use the marks from employees of a Florida Audi dealership and an independent press agent working for Audi. However, the court noted that the dealership agreement did not grant the dealer the right to dispose of trademark licenses, and the press agent was not an employee of Audi. The Court upheld a finding of trademark infringement and dilution as well as a violation of the Anti-Cybersquatting Protection Act, and bad faith warranting an award of attorney’s fees. While defendant attempted to mount a reasonable belief defense based on his claim that he believed the use of the Audi marks was authorized by the dealership, the court rejected this argument as “objectively unreasonable.”
