IP UPDATE

DMCA safe harbor: Prelude to a Supreme Court encore?

by Jodi Benassi | Sep 18, 2025 | Copyrights

The US Court of Appeals for the Second Circuit granted in part and denied in part Capitol Records’ petition for reconsideration of the Court’s January 13, 2025, decision in Capitol Records v. Vimeo. In that ruling, the Court determined that Capitol Records had waived the argument that Vimeo’s encouragement of users to make infringing lip-dub videos may constitute a form of right and ability to control infringement – an apparent forfeiture of the safe harbor provided by the Digital Millennium Copyright Act (DMCA). In its reconsideration decision, the Court removed a footnote regarding whether the “right and ability to control” argument was preserved for Supreme Court review. Capitol Records, LLC, et al. v. Vimeo, Inc., et al., Case Nos. 21-2949; -2974 (2d Cir. Sept. 9, 2025) (Leval, Parker, Merriam JJ.)

Capitol Records filed a petition for reconsideration of the Second Circuit’s decision, which found that Capitol had waived its argument under Metro-Goldwyn-Mayer Studios v. Grokster. A central issue was application of the Grokster precedent, which addressed inducement of copyright infringement. Capitol Records argued that Vimeo’s encouragement of users to create infringing lip-dub videos constituted a “right and ability to control” infringement, potentially forfeiting the DMCA safe harbor protection.

In its earlier ruling, the Second Circuit found that Capitol Records had waived this argument by not adequately presenting it in the appellate brief, despite having discussed it in the fact section. The Court emphasized that the argument was not developed in the argument section of the brief and, in a footnote, noted that Capitol Records had acknowledged that the argument was foreclosed by a prior ruling. Capitol Records argued that its waiver was not of the Grokster-based theory of forfeiture of the safe harbor, but rather of a claim under Grokster for induced infringement. The Court was not persuaded, noting that Capitol Records’ opening brief made no distinction between a Grokster-based inducement claim and a Grokster-based theory for forfeiting DMCA safe harbor protection. As a result, the Court rejected Capitol Records’ argument that the Grokster-based theory had not been waived.

In its most recent ruling, the Second Circuit granted Capitol’s petition to remove language from a footnote in the Court’s prior ruling that suggested Capitol’s Grokster inducement theory, based on the “right and ability to control,” was barred from Supreme Court review.

Practice note: The Second Circuit’s decision to partially grant and deny the petition for reconsideration clarifies the procedural requirements for preserving arguments on appeal and reinforces the complexities of applying traditional copyright principles to digital platforms. As the case progresses, stakeholders in the music and technology industries should monitor developments and implications for the DMCA and copyright enforcement.

Oh brother: Draft settlement agreements carefully

by Ashley K. Justice | Sep 18, 2025 | Copyrights, Trademarks

The US Court of Appeals for the Eighth Circuit affirmed a district court judgment, finding that the plaintiff failed to sufficiently prove damages for its copyright claim, the jury instructions accurately applied the sophisticated consumer exception to initial-interest confusion, and the district court properly submitted ambiguous contract language to the jury for interpretation. Hoffmann Brothers Heating and Air Conditioning, Inc. v. Hoffmann Air Conditioning & Heating LLC, Case No. 24-1289 (8th Cir. Sept. 8, 2025) (Graza, Stras, Kobes, JJ.)

Brothers Tom and Robert Hoffmann were partners in Hoffmann Brothers. After Robert bought out Tom, they entered into a settlement agreement that included a four-year restriction barring Tom from using the name “Hoffmann” in connection with an HVAC business. After four years, Tom began using “Hoffmann Air Conditioning & Heating, LLC” (Hoffmann AC). Hoffmann AC’s advertising agency later mistakenly used pictures of Hoffmann Brothers. Hoffmann Brothers sued for trademark and copyright infringement. Hoffmann AC prevailed on some issues at summary judgment, and the jury reached a mixed verdict on the remaining claims. Both parties were denied attorneys’ fees, and Hoffmann Brothers appealed.

On appeal, the Eighth Circuit affirmed that Hoffmann Brothers did not sufficiently prove damages for its copyright claim based on Hoffmann AC’s use of its photographs. Because the photographs were unregistered works, Hoffmann Brothers was required to prove actual damages and/or additional profits of the infringer attributable to the infringement. Hoffmann Brothers’ only evidence of actual damages was Hoffmann AC’s monthly fee paid to its marketing agency. The Court found that using the monthly fee was too speculative because it did not reflect the benefit to Hoffmann AC or the harm to Hoffmann Brothers. For evidence of additional profits, Hoffmann Brothers’ expert report failed to link the use of the photographs to Hoffmann AC’s gross revenue. The Court explained that the Hoffmann Brothers could have linked additional profits attributable to the use of the photographs by, for example, demonstrating that:

Hoffmann AC gained customers because of the ads.
The photographs actually influenced purchasing decisions.
There was spike in monthly revenue that coincided with use of the photographs.

Regarding Hoffmann Brothers’ trademark claim, the jury found that the names were not so similar as to cause confusion. Hoffmann Brothers appealed, arguing that the district court erred in its jury instructions. The Eighth Circuit rejected the argument, finding the instructions fair and legally adequate. The instruction was directed to the issue of initial-interest confusion (a concept not adopted by Missouri courts), which occurs when consumer confusion arises at the outset, even if no sale ultimately results. The Court explained that under Eighth Circuit precedent, a sophisticated consumer exception applies to this theory, meaning that consumers who exercise a high degree of care are less likely to be initially confused. Here, the district court instructed the jury to consider initial-interest confusion only if it found that Hoffmann Brothers’ customers were not sophisticated. While the Eighth Circuit acknowledged some hesitation about the assumption that sophisticated consumers are never susceptible to initial-interest [...]

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Penny for your characters? Victorian tropes not so striking or protectable

by Anisa Noorassa | Sep 18, 2025 | Copyrights

The US Court of Appeals for the Ninth Circuit affirmed a district court’s dismissal of a copyright infringement claim finding that the plaintiff had not plausibly alleged copying of protected characters. Anna Biani v. Showtime Networks, Inc. et al., Case No. 24-3949 (9th Cir. Sept. 8, 2025) (Nguyen, Mendoza, Kernodle, JJ.)

Biani sued Showtime alleging that the series “Penny Dreadful” infringed on three original characters she created for an online role-playing forum. Biani claimed that Showtime incorporated various aspects of her characters into two of the show’s characters and alleged that the defendants had access to her work because of the similarities between the characters. The district court dismissed the complaint, finding that Biani failed to plausibly allege that Showtime had a reasonable opportunity to copy her work. The district court applied the extrinsic test for protectable material under copyright, filtering out characteristics considered to be stock aspects of the Victorian-era England genre, and found that any remaining similarities were not striking enough to preclude the possibility of independent creation. Biani was granted leave to amend but chose not to, leading to the dismissal of the case with prejudice. Biani appealed.

The Ninth Circuit affirmed the dismissal of Biani’s complaint for failure to state a claim. The Court explained that to state a claim for copyright infringement, a plaintiff must plausibly allege both ownership of a valid copyright and that the defendant copied protected aspects of the work, which includes factual copying and unlawful appropriation. Biani did not challenge the district court’s determination that she failed to plausibly allege evidence of access. Instead she argued that the similarities between the works were so striking as to preclude independent creation. While the panel concluded that the district court improperly filtered out unprotectable elements of the works, it found this error was harmless because Biani’s allegations were insufficient to plausibly infer copying. The Court found that any resemblance between the characters was not extensive enough to preclude the possibility of coincidence, independent creation, or prior common source.

The Ninth Circuit also held that Biani’s claim failed under the “unlawful appropriation” analysis, agreeing with the district court that Biani failed to allege substantial similarity in protectable expression. The Court applied the extrinsic test to assesses the objective similarities of the two works, focusing only on the protectable elements of the plaintiff’s expression. The Court found that many of the characteristics that Biani alleged were unique to her characters (such as their age, strength, beauty, and engagement in witchcraft) were actually unprotectable elements, common in the public domain, and a standard aspect of Victorian-era-based fiction. The Court thus concluded that Biani failed to allege substantial similarity in protectable expression and thus affirmed the district court’s dismissal.

Surprise? Last-minute new theory leads to new trial

by Dexter Hamilton | Sep 18, 2025 | Patents

The US Court of Appeals for the Federal Circuit reversed a district court’s denial of a new trial after the defendant introduced a new noninfringement theory on the eve of trial based on test results it previously refused to produce, saying they were not necessary. Magēmā Technology LLC v. Phillips 66, Phillips 66 Co., and WRB Refining LP, Case No. 2024-1342 (Fed. Cir. Sept. 8, 2025) (Moore, Stoll, Bumb, JJ.)

Magēmā owns a patent directed to a solution to desulfurize fuel used to power cargo ships. Magēmā entered into licensing discussions with Phillips, but after the parties failed to reach an agreement, Phillips modified its hydrotreater reactors to implement what Magēmā believed was an infringing desulfurization process. Magēmā sued.

The governing fuel standard required a flashpoint of at least 140 degrees, meaning fuel with a pre-hydroprocessing flashpoint below that threshold would not infringe. The parties disagreed on where at the refinery the flashpoint should be tested. Phillips provided data from one sampling point while Magēmā requested data from a location closer to the hydrotreater reactor. Phillips refused, citing safety concerns, and argued that Magēmā could estimate the flashpoint using an accepted formula. The district court denied Magēmā’s motion to compel, agreeing that the formula sufficed. However, after discovery closed, Phillips moved to supplement the summary judgment record with new flashpoint test results from a different sampling station. The district court denied the motion, finding Phillips had no reasonable explanation for failing to sample earlier, and that introducing the evidence late would be unduly prejudicial, especially since Phillips had previously said Magēmā could rely on the formula. Yet shortly before jury selection, Magēmā learned that Phillips intended to argue that the formula was inadequate and that only actual testing could prove infringement (evidence Magēmā lacked), effectively shifting the burden. Magēmā objected, but the district court overruled the objection.

At trial, Philips told the jury that the standard required actual flashpoint testing and that Magēmā could not prove infringement without test samples. Magēmā requested a curative instruction, which the district court denied. The district court also barred Magēmā from explaining why it had relied on a formula rather than actual testing data. The jury returned a general verdict of noninfringement. Although the district court acknowledged that Phillips’ arguments were “improper and prejudicial,” it denied Magēmā’s motion for a new trial, finding that the misconduct did not affect the outcome. Magēmā appealed.

Phillips argued that Magēmā had failed to timely object, but the Federal Circuit disagreed, citing to Magēmā’s pre-jury selection objection, request for a curative instruction, and motion for a new trial. Finding that the district court abused its discretion in denying a new trial, the Federal Circuit agreed that Phillips’ argument was “improper and prejudicial,” characterizing it as a “bait-and-switch.”

Because the jury returned a general verdict form, the Federal Circuit could not determine the basis for the noninfringement finding and, given the repeated emphasis Phillips placed on its improper argument, the Court concluded it would be unjust to let the [...]

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Solidarity: Union’s commercial use may be Lanham Act violation

by Cecilia Choy, Ph.D. | Sep 18, 2025 | Trademarks

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court’s dismissal of a Lanham Act action, finding that this case was not the rare instance where there was no plausible likelihood that a reasonably prudent consumer would be confused about the origin of the goods that allegedly bore the distinctive marks at issue. Trader Joe’s Co. v. Trader Joe’s United, Case Nos. 24-720; -2826 (9th Cir. Sept. 8, 2025) (Sanchez, Thomas, Donato, JJ.)

Trader Joe’s, a US grocery store chain, owns the red typeface logo and sells reusable tote bags and other branded goods bearing its marks. Trader Joe’s United (TJU), a labor union representing certain Trader Joe’s employees, markets (for profit) various products via its website, including reusable tote bags. Its website header features a logo that uses the distinctive red typeface and the concentric circle design in Trader Joe’s logo. The image below shows totes from Trader Joe’s (left) and TJU (right).

TJU allegedly began using Trader Joe’s marks in commerce, and Trader Joe’s sent TJU a cease-and-desist letter. Trader Joe’s noted that its demand was directed solely at TJU’s commercial use of the marks on merchandise sold to consumers on the TJU website, not the reference to Trader Joe’s to identify the union or discuss the union’s cause.

Trader Joe’s sued TJU, asserting several claims, including trademark infringement, and sought to permanently enjoin TJU from using Trader Joe’s trademarks in connection with the sale of commercial merchandise on the TJU website. Trader Joe’s also sought the destruction of all infringing merchandise and recovery of damages. TJU moved to dismiss, arguing that Trader Joe’s filed its trademark infringement complaint in retaliation over an ongoing labor dispute and asserting that there was no plausible likelihood that a consumer would believe that products sold on TJU’s website were sponsored, endorsed, or approved by Trader Joe’s.

Applying the Sleekcraft likelihood-of-confusion factors, the district court agreed with TJU and noted several differences between the marks. The district court also explained that Trader Joe’s does not sell many of the products sold on TJU’s website, including buttons, t-shirts, and mugs. The district court concluded that confusion about the origin of these products was unlikely for a reasonable consumer because TJU’s website clearly identified itself as a website of a labor union and was openly critical of Trader Joe’s labor practices. Trader Joe’s appealed.

The Ninth Circuit concluded that when the allegations were viewed in the light most favorable to Trader Joe’s, the district court erred when applying the fact-specific likelihood-of-confusion test. To prevail on a trademark infringement claim, Trader Joe’s would need to establish that it had a protectible ownership interest in the mark and that TJU’s use of the mark was likely to cause consumer confusion. To determine whether a reasonably [...]

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