Preemption Archives

Preemption

Google It: Federal Copyright Law Preempts California Causes of Action

by Katherine Pappas | Feb 1, 2024 | Copyrights

Addressing a state law-based challenge to the way search results are displayed on copies of websites, the US Court of Appeals for the Ninth Circuit held that copyright preemption precluded a website owner from invoking state law to control how the websites are displayed. Best Carpet Values, Inc. v. Google LLC, Case No. 22-15899 (9th Cir. Jan. 11, 2024) (Wallace, Thomas, Forrest, JJ.)

Best Carpet Values filed a class action against Google asserting California state law claims for trespass to chattels, implied-in-law contract and unjust enrichment based on the way Google’s search app displayed their websites on Android phones. If an Android user used the search app to navigate to a website, the app delivered a copy of the website, which was displayed with a frame at the bottom of the page saying, for example, “VIEW 15 RELATED PAGES” and which allowed the user to click a button to expand the frame to display half-page banners advertising related websites. For Best Carpet (the class representative), these displayed results included websites for its direct competitors and even news stories about Best Carpet’s owner. Best Carpet argued that Google thereby occupied valuable space on Best Carpet’s websites, obtaining all the benefits of advertising from its use of that space without paying for such advertising.

Google moved to dismiss the complaint for failure to state a claim upon which relief could be granted. After the district court denied the motion to dismiss, Google moved to certify the order for interlocutory appeal. The district court granted Google’s motion and certified four questions for interlocutory review that it believed were potentially dispositive. The Ninth Circuit found that only two of the interlocutory questions were dispositive:

Whether prior Ninth Circuit authority, Kremen (2003), should be extended to protect as chattel the copies of websites displayed on a user’s screen
Whether preemption under copyright law precluded state law from controlling how websites are displayed on a user’s screen.

On the issue of whether a website display can be protected as chattel, the Ninth Circuit agreed with the district court that the “chattels” at issue were copies of Best Carpet’s websites. The Ninth Circuit reasoned, however, that they could not serve as the basis for a trespass claim because Best Carpet had no cognizable property interest in the website copies on an app user’s Android phone. The Court reasoned that website copies – unlike a website’s domain name – were not “capable of precise definition” or “capable of exclusive control,” and there was no “legitimate claim to exclusivity” over the website copies (citing Kremen).

As for the copyright preemption issue, the Ninth Circuit considered the two-part test for determining whether the Copyright Act preempted the state law claims. The first prong assesses whether the subject matter of the state law claim falls within the subject matter of the relevant provisions of the Copyright Act. Here, the parties agreed that commercial websites are copyrightable, and after considering the body of precedent interpreting the relevant provisions of the [...]

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Free Speech Shines Bright, Illuminates Patent Owner’s Right to Allege Infringement

by Anisa Noorassa | Mar 2, 2023 | Patents

The US Court of Appeals for the Federal Circuit reversed a district court’s preliminary injunction prohibiting a patent owner from communicating its view that a competitor infringed, finding that the speech restriction was improper because the infringement assertions were not objectively baseless. Lite-Netics, LLC v. Nu Tsai Capital LLC, Case No. 23-1146 (Fed. Cir. Feb. 17, 2023) (Lourie, Taranto, Stark, JJ.)

Lite-Netics and Nu Tsai Capital d/b/a Holiday Bright Lights (HBL) compete in the market for holiday string lights. Both companies use similar magnetic mechanisms that allow users to secure the end of the lights. Lite-Netics owns several patents that describe and claim magnetically secured decorative lights. In June 2017, Lite-Netics sent a cease-and-desist letter to HBL demanding that it stop selling lights alleged to infringe Lite-Netics’s patents. After remaining silent for five years, Lite-Netics sent another cease-and-desist letter in April 2022 demanding that HBL either explain why its products did not infringe the Lite-Netics patents or stop selling the products.

When HBL refused to stop selling the allegedly infringing products, Lite-Netics sent communications to HBL’s customers notifying them of their infringement claim and threatening “all legal rights and remedies” to stop the sale of HBL’s products. Lite-Netics then filed a lawsuit against HBL for infringement of the patents. HBL asserted counterclaims, including tortious interference with business relationships, defamation under Nebraska law and bad faith patent-infringement communications. HBL also sought a preliminary injunction to prevent Lite-Netics from publishing further accusatory statements. Finding that HBL would likely succeed on its tortious interference and defamation claims and that Lite-Netics’ infringement allegations were “objectively baseless,” the district court granted the preliminary injunction. Lite-Netics appealed.

The Federal Circuit reversed the district court, finding that in cases where an injunction restricts a party’s rights to First Amendment protected speech about its federal patent rights, federal law preempts state tort law. The Court explained that federal law requires a higher “bad faith” standard of proof for a preliminary injunction that would impinge on those federal rights. The Court found that HBL had failed to show that Lite-Netics’s allegations and the publication of its allegations were made in bad faith or that those allegations were objectively baseless. The Court therefore reversed and remanded to the district court for further proceedings.

What a Deal! Car Dealers Retain Control over Their Own Data

by Jodi Benassi | Nov 11, 2021 | Copyrights

The US Court of Appeals for the Ninth Circuit affirmed a district court’s conclusion that there is no conflict between an Arizona statute aimed at strengthening privacy protections for consumers whose data is collected by car dealers and the Copyright Act provision that grants the owner of a copyrighted work the exclusive right “to reproduce the copyrighted work in copies.” CDK Global LLC v. Mark Brnovich, et al., Case No. 20-16469 (9th Cir. Oct. 25, 2021) (Miller, J.)

Car dealers use specialized dealer management software (DMS), which at its core is a database containing information about a dealer’s customers, vehicles, accounting, parts and services. Some of the data includes personal information, such as social security numbers and credit histories. The data is used for a variety of tasks, from financing to inventory management. Dealers also rely on separate software applications for various aspects of their business, such as marketing and customer relations. For those applications to properly function, they must access the data stored in a dealer’s DMS.

CDK is a technology company that licenses DMS to dealers. In the past, CDK allowed dealers to share access to the DMS with third-party companies that would integrate data from the DMS with other software applications. Recently, however, CDK began to prohibit the practice and instead offered its own data integration services to dealers.

In 2019, the Arizona legislature enacted a statute, known as the Dealer Law, to ensure that dealers retain control over their data. There are two provisions of the Dealer Law central to this case. First, the statute prohibits DMS providers from taking any actions (contractual, technical or otherwise) to prohibit a dealer’s ability to protect, store, copy, share or use the data stored in its DMS. Second, the statute requires DMS providers to adopt and make available a standardized framework for the exchange, integration and sharing of data.

CDK sued the attorney general of Arizona for declaratory and injunctive relief, asserting a range of claims. In one of its claims, CDK argued that the Dealer Law is preempted by the Copyright Act, 17 U.S.C. § 101 et seq. CDK asserted that the Dealer Law conflicts with the Copyright Act because the Dealer Law grants dealers and their authorized integrators the right to access CDK’s systems and create unlicensed copies of its DMS, its application programming interfaces (APIs) and its data compilations. CDK argued that in all three respects, the statute conflicts with 17 U.S.C. § 106(1), which grants the owner of a copyrighted work the exclusive right “to reproduce the copyrighted work in copies.” The district court dismissed most of the claims but allowed the copyright preemption claims and a few others to proceed. Following a hearing, the district court denied a preliminary injunction. CDK appealed.

On appeal, the Ninth Circuit found that CDK presented no evidence that the Dealer Law would require the embodiments of CDK’s DMS to persist for a period of more than transitory duration. The Court explained that the reproduction right set forth in [...]

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No Remix: Copyright Act Preempts Right of Publicity Claim

by Eleanor B. Atkins | Sep 9, 2020 | Copyrights

The US Court of Appeals for the Second Circuit found that the federal Copyright Act preempts a state right of publicity claim when the latter is merely “a thinly disguised effort to exert control over an unauthorized [use of a copyrighted] work.” Jackson v. Roberts, Case No. 19-480 (2d Cir. Aug. 19, 2020) (Leval, J.).

Both parties in this case are famous hip-hop artists more commonly known by their stage names: the plaintiff, Curtis James Jackson III, is known as 50 Cent, and the defendant, William Leonard Roberts II, is known as Rick Ross. In 2015, Roberts released a free mix tape that included samples from many famous songs, including Jackson’s hit “In Da Club.” The mix tape track at issue was titled “In Da Club (Ft. 50 Cent)” and included Rick Ross rapping over the “In Da Club” instrumentals, a 30-second sample of 50 Cent singing the “In Da Club” refrain, and multiple references to Rick Ross’s upcoming album.

Jackson sued Roberts, claiming that the unauthorized use of his name and voice violated his right of publicity under Connecticut common law. Pursuant to a recording agreement with his former record label, Shady Records/Aftermath Records, Jackson did not own a copyright interest in the “In Da Club” recording and therefore could not sue for copyright infringement. The district court granted Roberts’s motion for summary judgment, finding that Jackson had surrendered his publicity rights via the recording agreement and that the right of publicity claim was preempted. Jackson appealed.

The Second Circuit agreed that federal law preempted the right of publicity claim, but for different reasons than the district court: the Second Circuit found the state claim preempted under the doctrine of implied preemption or, alternatively, statutory preemption. The Court explained that “generally . . . implied preemption precludes the application of state laws to the extent that those laws interfere with or frustrate the functioning of the regime created by the Copyright Act. Statutory preemption preempts state law claims to the extent that they assert rights equivalent to those protected by the Copyright Act, in works of authorship within the subject matter of federal copyright.”

The Second Circuit used a two-part test to determine whether the state law claim was subject to implied preemption, asking (1) whether the state right of publicity claim asserted a sufficiently substantial state interest, distinct from those interests underlying federal copyright law, and (2) whether the state law claim would potentially conflict with rights established by the Copyright Act. Given that Roberts did not use Jackson’s name or persona to falsely imply Jackson’s endorsement of Roberts’ music, nor did Roberts invade Jackson’s privacy or use his persona in a derogatory nature, the Court reasoned that Jackson was not seeking to vindicate any distinct and substantial state interest. Likewise, the Court held that the second element was satisfied because Jackson’s right of publicity suit had the potential to interfere with the copyright holder’s exclusive control of its rights: “Jackson’s attempt to [control the use of the [...]

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