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Over My Dead Body: Defendant Can’t “Wait Until He Dies” to Pay Arbitration Award

by Tessa Kroll | May 5, 2022 | Uncategorized

The US Court of Appeals for the Seventh Circuit reversed the district court’s interpretation of an arbitration award, finding that the defendant could not “wait until he dies” to pay a portion of the damages award. Nano Gas Techs., Inc. v. Roe, Case Nos. 21-1809; -1822 (7th Cir. Apr. 25, 2022) (Rovner, St. Eve, Jackson-Akiwumi, JJ.)

Clifton Roe invented a nozzle that disperses gases into liquids. Roe assigned the invention to Nano Gas as part of a collaboration agreement under which Roe received 20% equity and a board seat. The agreement also provided for a salary that was subject to Nano Gas’s ability to raise capital and Roe’s success in developing the invention at Nano Gas’s facility. The parties’ relationship deteriorated after the collaboration failed to produce the desired results. Roe ultimately took the machine and related intellectual property created by another Nano Gas employee and continued developing the product on his own. Arbitration ensued.

The arbitrator concluded that Roe did not have the right to remove the machine and related intellectual property from Nano Gas’s facility. The arbitrator determined that Roe should pay Nano Gas for the financial harm it suffered but also found that Roe deserved compensation for his work on the technology. In his award, the arbitrator indicated that he had initially considered giving Roe a royalty on future profits but declined to do so because Roe was a shareholder in Nano Gas and could benefit financially from the invention’s future success. The arbitrator offset Nano Gas’s $1.5 million damages award with an award to Roe of $1 million and ordered Roe to pay the $500,000 offset “in such manner as Roe chooses.” Roe was also required to return the related intellectual property or pay Nano Gas $150,000.

Nano Gas sued to enforce the award, and the district court entered judgment for $650,000 ($500,000 for the offset and $150,000 for the intellectual property). Nano Gas then filed a turnover motion for Roe’s Nano Gas stock, valued at $117,000. Roe argued that the arbitration award protected his status as a shareholder and allowed him to pay the damages “in such manner as [he] chooses.” Roe planned to pay the award with dividends from his stock and maintained that he could “wait until he die[s]” to satisfy the debt. The district court denied Nano Gas’s turnover motion, finding that Roe was entitled to remain a shareholder and could pay both awards “in such a manner as Roe chooses.” Nano Gas filed a motion to reconsider, and the court amended its order to require Roe to either turn over the stock or identify other assets to satisfy the $150,000 award. As to the remaining $500,000, the district court found that Roe could still choose how and when to pay that portion of the award. Both parties appealed.

The Seventh Circuit first addressed Roe’s argument that the arbitration award entitled him to remain a shareholder. The Court observed that the award did not stipulate that Roe would remain a shareholder indefinitely [...]

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Lawyers Scolded but Not Sanctioned for Violating Federal Circuit’s COVID-19 Rules

by Paul Devinsky | Mar 10, 2022 | Uncategorized

The US Court of Appeals for the Federal Circuit decided not to impose sanctions for violation of its COVID-19 restrictions on the number of counsel permitted to attend oral argument, citing the involved lawyers’ “earnest remorse.” In re Violation of the Revised Protocols for In-Person Arguments and Related Order, Case No. 22-9000 (Fed. Cir. Feb. 25, 2022) (per curiam).

When the Federal Circuit reopened for in-person oral arguments in September 2021, it continued to restrict public access to the National Courts Building and set out strict protocols governing appearances at oral argument. Under those protocols, only arguing counsel and up to one additional attendee whose presence was necessary to assist or supervise the arguing counsel could attend. All persons entering the building had to sign a form certifying that they were either arguing counsel or assisting or supervising arguing counsel. Arguing counsel had to sign an additional form taking personal responsibility for ensuring that all individuals attending argument with the arguing counsel had read and would comply with the COVID-19 protocols.

Several senior lawyers from one law firm wanted to attend a junior colleague’s oral argument. The junior lawyer moved for permission for two lawyers and two other individuals to attend the oral argument in addition to arguing counsel and the one permitted assistant/supervisor. The Federal Circuit denied the motion. Nonetheless, on the day of argument, four lawyers (each carrying the required form) went to the courthouse and entered the assigned courtroom. The two non-arguing, non-assisting/supervising lawyers sat in the back corner of the courtroom until they were summoned to the front by a deputy clerk and told to leave the courtroom. The lawyers returned to the lobby area and were subsequently escorted out of the building.

The matter was referred to the Federal Circuit’s standing panel on attorney discipline, which ordered all four lawyers to show cause why they should not be sanctioned. The lawyers stated that they had gone to the courthouse notwithstanding the denial of their motion for leave to attend the hearing merely to seek clarification on any potential changed circumstances that might permit their attendance. They also argued that the Court’s COVID-19 restrictions were ambiguous. Finally, they expressed remorse for having violated the rules.

The Federal Circuit criticized the lawyers for trying to attend the oral argument even though their motion for leave to attend was denied. The Court noted that the lawyers might have sought clarification or reconsideration of the denial in writing but stated that it was inappropriate for the lawyers to have sought such clarification or reconsideration in person at the time of the hearing. The Court also called the lawyers’ argument that the protocols were ambiguous “wholly without merit.” Nonetheless, on a finding that the lawyers’ remorse was earnest, the Court decided not to impose sanctions.

Practice Note: Anyone might make an occasional error in judgment. While remorse does not undo such an error, it can at least help prevent sanctions from being imposed. Then again, the Federal Circuit has now [...]

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Don’t Be So Dramatic: True Crime Docudrama Doesn’t Violate Right of Privacy

by Eleanor B. Atkins | Jul 29, 2021 | Uncategorized

Addressing the tension between the First Amendment and the right to privacy under New York law, the New York Supreme Court Appellate Division, Third Department, unanimously held that despite being partially fictionalized, a movie based on true events did not violate the privacy rights of the film’s subjects. Porco v. Lifetime Entertainment Services, LLC, Case No. 531681 NY Supr. Ct, Appellate Div. Third Judicial Dept, June 24, 2021) (Fitzgerald, J.)

Christopher Porco was tried and convicted for the murder of his father and attempted murder of his mother in 2011. Lifetime Entertainment created a movie inspired by the events titled, Romeo Killer: The Chris Porco Story. Porco and his mother sued to stop the broadcast, alleging that the film (and related promotional materials) violated their rights of privacy under New York law.

Both parties moved for summary judgment on liability, with Lifetime arguing that the movie did not violate the plaintiffs’ right to privacy “because it depicted newsworthy events to which the use of their names was reasonably related.” The New York Supreme Court denied both motions, finding that questions of fact remained as to whether the depiction of events was “so materially and substantially fictitious as to give rise to liability.” The parties cross-appealed.

New York’s statutory right of privacy (Civil Rights Law §§ 50 and 51) prohibits the unauthorized use of “a living person’s name, portrait or picture . . . for advertising or trade purposes.” On appeal, the Court recognized the tension with the First Amendment, as the right of privacy does not prohibit reporting on “newsworthy events or matters of public interest, even if the reports were produced with profit in mind.” This “newsworthiness exception” is inapplicable, however, in situations where the “newsworthy or public interest aspect . . . is merely incidental to its commercial purpose” or “where the purported aim of the work is to provide biographical information of obvious public interest, but the content is substantially fictionalized.”

Porco argued that the film, a docudrama, fell within the latter category. The New York Supreme Court noted that the events depicted were “indisputably” newsworthy, but Porco contended that the movie was an “invented biography” that had “no purpose at all beyond the actionable one of exploiting their names and likenesses for profits.” The Court held that the film did not violate Porco’s rights of privacy, despite containing some fictionalizations, for two reasons. First, based on a review of materials such as the real police and media interviews with Porco and excerpts from his criminal trial, the Court concluded that the film was “broadly accurate.” Second, the film did not mislead viewers or present itself as wholly truthful, because it included the statement “based on a true story” at the beginning of the film and stated at the end that it was a “dramatization in which some names have been changed, some characters are composites and certain other characters and events have been fictionalized.” Accordingly, the Court reversed the lower court’s denial of Lifetime’s motion for [...]

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Virtual Event | USIPA’s Increasing Diversity in Innovation – Capturing America’s Lost Inventors

by Ahsan Shaikh | Jul 13, 2021 | Uncategorized

McDermott is sponsoring the United States Intellectual Property Alliance’s (USIPA) Increasing Diversity in Innovation conference, which is taking place July 26-29, 2021. This virtual event will offer attendees four half-days of programming from leading experts on how to affect meaningful change in your organization. Partner Ahsan A. Shaikh will be presenting his research and moderating a panel at the conference, on the topic of “Reaching Diverse Inventors Using Brainstorm Techniques.”

Click here for more information and to register.

Thank You to Our Readers

by McDermott Will & Emery | Mar 31, 2021 | Trademarks, Uncategorized

We greatly appreciate our readers over the past year and are pleased to share that we were recently recognized for our intellectual property thought leadership in the 2021 JD Supra Readers’ Choice Awards, which acknowledge top authors and firms for their thought leadership in key topics during all of last year.

Sarah Bro, a regular contributor to IP Update, was recognized as “Top Author” for trademarks. She focuses her practice on trademark prosecution, enforcement and brand portfolio management, as well as licensing, due diligence, copyright, right of publicity and domain name matters. Through our various blogs and thought leadership pieces, we are dedicated to maintaining our position as a leading firm for intellectual property work and keeping clients abreast of significant and relevant topics in the industry.

To Die For – New York Recognizes Publicity Rights of Deceased Performers.

by Jodi Benassi | Dec 17, 2020 | Uncategorized

On November 20, 2020, New York Governor Andrew Cuomo signed into law Senate Bill S5959D, a law that is highly important for New York based recording artists, actors, and other celebrities. The new law recognizes post-mortem rights of publicity to protect deceased performers from exploitation of their likeness for 40 years after death.

Specifically, the new law establishes the right of privacy and the right of publicity for both living and deceased individuals. It provides that an individual’s persona is the personal property of the individual and is freely transferable and descendible, meaning the rights can be exercised by the artist’s descendants. The new law provides for the registration with the department of state of such rights of a deceased individual, and that the use of a digital replica for purposes of trade within an expressive work is a violation of law. The legislation also creates a private right of action and new penalties for the publishing of sexually explicit images of individuals and “deep fakes” that are used to falsely depict individuals as engaging in sexual activity, protecting people from revenge porn.

The new law goes into effect on May 31, 2021 and will align New York with 23 other states that have statutory post-mortem rights of publicity.

PTAB Issues Updated Trial Practice Guide: Yearly Updates Expected

by Paul Devinsky | Jan 3, 2020 | Uncategorized

On November 20, 2019, the Patent Trial and Appeal Board (PTAB) issued updated guidance for trial procedures in inter partes review (IPR) and post grant review (PGR) proceedings at the US Patent and Trademark Office in the new edition of the Trial Practice Guide.

For easier reading and greater consistency, the new edition incorporates the prior updates released in August 2018 (IP Update, Vol. 21, No. 9) and July 2019 (IP Update, Vol. 22, No.8) into the original August 2012 Practice Guide.

The new edition provides updated guidance on the impact of SAS Institute Inc. v. Iancu on the institution of trial. The new guide also replaces the prior “observations” practice with procedures for a more fulsome sur-reply. In addition, the PTAB has provided more opportunities to contact the PTAB to request an initial conference call, and it has updated the way word counts apply to specific filings. The PTAB has also updated the expected scheduling order for derivation proceedings and the default protective order.