In 2003, Plaintiff BankFinancial, FSB filed a complaint against Defendants Jagdish Tandon and Amitron, Inc. seeking, among other things: (1) foreclosure of a leasehold mortgage, (2) breach of contract against Defendant Tandon related to several promissory notes, and (3) breach of guarantee against Defendant Amitron (“BankFinancial I”). In 2006, Plaintiff took a voluntarily non-suit of BankFinancial I’s foreclosure claim (“2006 Voluntary Dismissal Order”). The 2006 Voluntary Dismissal Order stated the claim was “stricken without prejudice.” The case was transferred to the law division and the order noted: “Plaintiff non-suited its mortgage foreclosure claim. Breach of contract claims remaining pending.” At ¶5.

After the case was transferred it was DWP’d on multiple occasions, including in February 2008 (“DWP Order”). In March 2008, Plaintiff filed a motion to vacate the DWP Order: however, the motion was not noticed or presented. Instead in January 2009, Plaintiff filed a new action alleging breach of contract against Defendant Tandon, and breach of guarantee against Defendant Amitron (“BankFinancial II”). The action was filed within one year of the DWP Order as permitted by Section 13-217 of the Illinois Code of Civil Procedure (735 ILCS 5/13-217). Defendants filed a motion for summary judgment. The trial court granted Defendants’ motion relying on Hudson v. City of Chicago, 228 Ill. 2d 462 (2008) and Rein v. David Noyes and Co., 72 Ill. 2d 325 (1996), finding the doctrine of res judicata barred Bank Financial II and the 2006 Voluntary Dismissal Order became final and appealable when the DWP Order was not vacated within thirty days.

The Appellate Court began its review by summarizing “[r]es judicata is an equitable doctrine designed to prevent the multiplicity of lawsuits between the same parties and involving the same facts and the same issues.” At ¶17. Further, the Court noted “[a]n order is final and thus appealable if it either terminates the litigation between the parties on the merits or disposes of the rights of the parties, either on the entire controversy or a separate branch thereof.” At ¶18. The Court continued, “[i]f a plaintiff voluntarily dismisses his or her case pursuant to section 2-1009 of the Code (735 ILCS 5/2-1009), or if a plaintiff’s action is dismissed for want of prosecution, section 13-217 of the Code permits a plaintiff to refile the action within one year or within the remainder of the statute of limitations, whichever is greater… Section 13-217 operates as a savings clause.” At ¶22.

The Court then considered the trial court’s reliance on Hudson and Rein. In Hudson, plaintiffs filed a complaint alleging negligence (count I) and willful and wanton misconduct (count II) in the context of a wrongful-death claim. Plaintiff’s negligence claim was involuntarily dismissed on the ground the city of Chicago and its employees were immune from liability. Subsequently, plaintiff voluntarily dismissed their willful and wanton count. Plaintiff later attempted to refile the wrongful death action by setting forth a single count of willful and wanton misconduct. The Hudson Court held plaintiff’s refiling was barred by res judicata because the negligence count in the underlying case was dismissed with prejudice before the voluntary dismissal of the willful and wanton claim. Further, the underlying court’s dismissal of the negligence count with prejudice extinguished one entire theory of the case and plaintiff’s voluntary dismissal and subsequent refiling of the remaining willfull and wanton claim resulted in claims splitting which “occurs when the same set of facts is necessary to maintain and prove both cases.” At ¶25.

The Court also discussed Rein noting there the supreme court found plaintiff could inadvertently bar its own action under the doctrine of res judicata when a portion of plaintiff’s pleading is stricken and the plaintiff later voluntarily dismisses the remainder of its pleading. “If a plaintiff uses sections 2-1009 and 13-217 to voluntarily dismiss and refile a claim after another part of the cause of action has gone to final judgment… that plaintiff will have engaged in claims splitting.” At ¶26, quoting Hudson, 228 Ill. 2d at 482 and Rein, 172 Ill. 2d at 342-43.

The Court found Hudson and Rein inapplicable because Plaintiff’s dismissal of its foreclosure claim was not involuntary but a voluntary dismissal based on Section 2-1009 of the Code. Further, the 2006 Voluntary Dismissal Order was not a final order because it did not terminate the litigation between the parties on the merits. The DWP Order was not a final order either because it did not terminate the litigation or adjudicate the rights of the parties. “A DWP order only becomes a final order after the one-year right to refile expires.” At ¶30. Hence, because neither the 2006 Voluntary Dismissal Order nor the DWP Order were final orders, neither implicated res judicata nor the rule against claims-splitting. “In filing Bank Financial II, plaintiff properly invoked the savings statute of section 13-217 to refile its claims from Bank Financial I… [and] the trial court erred when it entered an order granting summary judgment in favor of defendants predicated on Hudson and its progeny.” At ¶32.

On June 13, 2012, ICANN announced that 1,930 applications were filed for new top-level Internet domain names. These custom domains will be whatever the applicant desires to the right of the dot – .GOOGLE, .NEWS, or even .LOL. We covered the new gTLDS in a prior webinar. Trademark owners should consider registering their marks with the new Trademark Clearinghouse, which will provide notification of new domains that may incorporate your brand. In this webinar, we will cover how the Clearinghouse works, what it costs, and strategies for moving forward.

Come learn from Davis McGrath LLC’s Kevin Thompson during this interactive webinar. Be prepared to ask and get answers to your own questions as well.

Kevin has over thirteen years of experience in counseling clients with regard to their internet law issues.

Topics covered include:
- New gTLDs
- The Trademark Clearinghouse
- Why should trademark owners register their marks with the Clearinghouse?
- What will the Clearinghouse do?
- What won’t the Clearinghouse do?
- The Sunrise Period
- The Trademark Claims Period
- Strategies and considerations for using the Clearinghouse

Davis McGrath LLC applied for 1/2 hour of Illinois MCLE credit for this webinar. To receive credit, please send your name and ARDC number to Kevin Thompson at kthompson@davismcgrath.com, and when you viewed the webinar. Please also send him your questions.

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Here are the slides – Slides – Trademark Clearinghouse

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The next webinar will be announced soon. To learn more or to sign up for the mailing list, visit http://blog.davismcgrath.com/webinars.

The Inspector General is appointed by the mayor of Chicago with the approval of the city counsel. Among his powers, the Inspector General is “[t]o investigate the performance of governmental officers, employees, functions and programs, either in response to complaint or on the inspector general’s own initiative, in order to detect and prevent misconduct, inefficiency and waste within the programs and operations of the city government.” Chicago Municipal Code §2-56-030(b) (added Oct. 4, 1989).

In accordance with the ordinance, the Inspector General initiated an investigation into possible improprieties with respect to how a former city employee was awarded a city contract without going through the typical competitive process. During the Inspector General’s investigation he submitted a written request to the city’s law department for all documents relevant to the awarding of the contract. The law department provided the requested documents; however, many documents were redacted based on claims of attorney client and work product privilege.

The Inspector General did not believe the law department was entitled to limit access to the documents. When the law department refused to reconsider its position, the Inspector General issued a subpoena directing the city’s Corporation Counsel to produce the documents. Corporation Counsel submitted a written objection to the Inspector General’s subpoena. Subsequently, the Inspector General sought and secured pro bono representation from outside counsel to bring a cause of action against Corporation Counsel. Corporation Counsel moved to dismiss pursuant to Section 2-619.1 of the Illinois Code of Civil Procedure arguing: (1) the Inspector General lacked capacity to sue, (2) the circuit court should refrain from overseeing disputes between two parties which are part of the same governmental entity, (3) municipal ordinances do not require disclosure of privileged materials, and (4) failure to adequately plead a cause of action for declaratory judgment and mandamus.

The circuit court granted the motion finding, among other things, the Inspector General lacked the authority to appoint outside counsel. The circuit court determined the decision to secure outside counsel was a matter which should have been left to Corporation Counsel as the attorney for the city. The appellate court reversed. However, a dissenting justice determined the decision as to whether judicial proceedings should be brought to enforce the subpoena should rest with the mayor as the Inspector General had no legal existence independent of the city.

In its review, the Court first considered whether there was a “justiciable controversy” that is, whether there was an actual controversy or “a showing that the underlying facts and issues of the case are not moot or premature, so as to require the court to pass judgment on mere abstract propositions of law, render an advisory opinion, or give legal advice as to future events.” Citing National Marine Inc. v. Illinois Environmental Protection Agency, 159 Ill. 2d 381, 390 (1994). The Court found the case sub judice constituted a justiciable controversy as there would be a deadlock between the Inspector General, who issued a subpoena, and Corporation Counsel, who refused to comply with the same, absent a judicial determination “as to what, if any, legal recourse the Inspector General now has.” (At ¶24).

The Court then found the Inspector General was authorized to take action in response to Corporation Counsel’s refusal to comply with a subpoena. In making its determination, the Court utilized rules of statutory construction and specifically considered that the Municipal Code required no action to enforce a subpoena for seven days after receipt of a timely objection. See §2-56-040 (added Oct. 4, 1989). The Court noted that if the Inspector General is required to temporarily refrain from action when an objection has been filed, it necessarily follows that once the period has elapsed without resolution or compliance the Inspector General may act. The Court reasoned, “[i]f that were not so…. the seven-day waiting period would serve no purpose.” (At ¶28).

The Court’s final consideration was what “action” the Inspector General could take. The Court echoed the appellate court’s dissent and found the Inspector General did not have the authority to unilaterally retain counsel to initiate enforcement proceedings or prosecutions. The Court also determined under the Municipal Code the power to file proceedings in circuit court to enforce an ordinance concerning the Inspector General’s responsibilities belongs to the Corporation Counsel. However, the Court noted that in this case asking Corporation Counsel for legal representation to enforce the subpoena would be problematic and create a conflict of interest as the Corporation Counsel was the party being subpoenaed. The Court considered that the impasse over the Inspector General’s subpoena implicates the duties of cooperation and disclosure imposed on the Corporation Counsel. The Court reviewed the Municipal Code and found all officers, including Corporation Counsel, are subject to the mayor’s supervision. As such, the Court determined the matter is therefore one within the power of the mayor to resolve and that the Inspector General should have looked to the mayor for assistance.

The Clearinghouse will charge an annual fee for the privilege, so we recommend registering your core marks and those you would like to obtain a sunrise registration for.

We would also be happy to discuss your options for protecting your trademarks in these new top-level domains in more detail at your convenience.

Our next webinar, scheduled for May 1, 2013 at 12 PM, will cover these issues as well. To register, please follow this link.

One of Sellers’ earlier roles was in the 1959 movie The Mouse that Roared, based on the novel by Leonard Wibberley. It is a satirical story of a tiny, fictional country known as the Duchy of Grand Fenwick. Though the story is set in the Cold War era of the 1950’s, time has passed by the remote alpine Duchy, which has retained its pre-industrial economy and culture. Its economy is primarily based on its local wine, Pinot Grand Fenwick. When an American winery makes a knock-off version called “Pinot Grand Enwick” (a blatant trademark violation!), it results in Grand Fenwick falling off a fiscal cliff, its economy devastated by the unfair trade practice.

Grand Fenwick decides the best way to rectify its economic difficulties is to declare war on the U.S. The strategy is that Grand Fenwick will promptly lose the war and receive the type of foreign aid that Germany received from the U.S. after WWII. Led by Peter Sellers as Field Marshall Tully Bascomb, Grand Fenwick invades the U.S., outfitted in chain mail and armed with longbows and arrows. The warriors land in Manhattan to find it deserted (due to a city-wide disaster drill to prepare for nuclear disasters). As they wander the streets to find someone to surrender to, they stumble into a secret government lab and unintentionally capture the world’s most powerful weapon, the “Q-bomb,” capable of destroying the world. Once Grand Fenwick is in possession of the Q-bomb, the U.S. is at its mercy, and, needless to say, everything changes.

I mention this whimsical story of The Mouse that Roared because a very similar story is currently being played out on the world stage of international copyright law (relax — no weapons are involved). It involves a trade battle between the tiny Caribbean Island of Antigua and the United States. Antigua, sometimes called “the land of 365 beaches,” has a population of 82,000. For purposes of comparison, the Chicago suburb of Cicero has roughly the same population (but no beaches). In the past, Antigua’s economy has been dependent not only on tourism but also on Internet gambling enterprises that use the island as an offshore haven.

In the late 1990’s, the U.S. started cracking down on Internet gambling. It invoked various laws to prevent offshore gambling providers from accessing the U.S. market. Antigua claims it lost a $3.4 billion industry. It also says that the prohibition of online gambling violated U.S. obligations under World Trade Organization (WTO) agreements. The WTO supervises international trade among its 158 member states, including the U.S. and Antigua. One of the many functions of the WTO is to provide a process for resolving disputes between its members. WTO member countries agree that if they believe another member is violating trade rules, they will use the WTO system for resolving the matter. One of the WTO agreements, called the TRIPS agreement, deals with intellectual property aspects of international trade.

A decade ago Antigua filed a complaint against the U.S., claiming that U.S. prohibitions on Internet gambling violated the WTO agreement on trade in services. This led to years of proceedings under the WTO dispute resolution process. The U.S. argued, among other things, that its ban was permitted under an exemption for “measures necessary to protect public morals.” Given that the U.S. allows gambling in places like Las Vegas, Atlantic City, and at race tracks and riverboats around the country, its “public morals” argument apparently lacked persuasive power and the WTO rejected the argument. In 2007, it found that the U.S. had violated the trade in services agreement by interfering with cross-border trade in online gambling services. It ruled that Antigua was injured in the amount of $21 million annually. The parties have been trying to settle the dispute, but to no avail.

The intriguing recent development in this case is that in January the WTO granted Antigua “authorization to retaliate.” This ruling alone would have been cold comfort for Antigua because it would have allowed retaliation only in the same sector, “trade in services.” Since Antigua does not import many services from the U.S., it would have no real leverage to retaliate.

Recognizing this, the WTO went a step further and authorized Antigua to “cross-retaliate,” that is, retaliate in a different trade sector, namely, the intellectual property sector rather than the services sector. The ruling means that Antigua can suspend its intellectual property obligations to the U.S. under the TRIPS Agreement up to a level of $21 million annually.

Like Grand Fenwick, Antigua now has control over a very large bomb. It is no longer obligated to enforce the copyrights of U.S. companies. Antigua could allow low-cost downloading of movies, music or books with impunity in order to recapture its $21 million annually. One of the goals of the WTO is to level the playing field between large and small nations, and it seems to be following that course here.

It is unclear exactly how Antigua will proceed. Harold Lovell, the country’s Minister of Finance, stated that its economy has been “devastated” by the U.S. campaign against online gambling. Antigua has indicated that it hopes to reach a settlement with the U.S., but if no accord is reached it could “move forward with the implementation of the sanctions” authorized by the WTO. The U.S. responded with much bluster in a statement by Deputy Assistant U.S. Trade Representative Nkenge Harmon that it “will not tolerate theft of intellectual property and will take whatever steps are most efficient and effective to prevent this from happening.” But is it “theft” if the WTO authorized the conduct?

Antigua is in a remarkable position. No country has ever suspended its obligations to enforce intellectual property rights under the WTO agreements before. Antigua is sitting on the “Q-bomb” of intellectual property. Like Grand Fenwick, it started out simply looking for some economic aid for its devastated industry. As a result of January’s ruling by the WTO, it is now holding a potentially powerful weapon. Stay tuned to see if Antigua pulls the trigger, and if so, whether the Q-bomb is a dud.

The acronym spotlighted in today’s article is SLAPP — Strategic Lawsuit Against Public Participation. The term was coined by George Pring and Penelope Canan, law professors at the University of Denver. A SLAPP is a meritless lawsuit aimed at preventing citizens from exercising their First Amendment rights. The goal of a SLAPP is to silence public critics by burdening them with the expense and distraction of defending meritless litigation – it “quells opposition by fear of large recoveries and legal costs, by diverting energy and resources from opposing the project into defending the lawsuit, and by transforming the debate from a political one to a judicial one.” Braun, Increasing SLAPP Protection, 32 U. Cal Davis L. Rev. 965, 969-70 (1999). SLAPPs often arise in the form of defamation lawsuits. A concerned citizen makes statements in opposition to some activity to a school board or local government agency, and soon finds that the opponent has sued for defamation. Even if the suit is meritless, it has a distinct chilling effect.

Illinois is one of 28 states that has enacted anti-SLAPP legislation. The gist of the 2007 law, entitled the Citizens Participation Act (CPA), 735 ILCS 110/5-35, is that it immunizes from liability acts in furtherance of the constitutional rights to “petition, speech, association, and participation in government.” But even that immunity would be chimerical if the party had to endure years of cost and litigation to achieve it. For that reason, the CPA includes certain procedural safeguards requiring expedited judicial handling of motions and limitations on discovery. If the suit is dismissed for being a SLAPP, there is a mandatory award of attorney’s fees to the prevailing party.

The difficulty is in identifying when a suit is a SLAPP and when it is a legitimate claim. While the Act seeks to safeguard the rights of citizens to freely participate in the process of government, it also recognizes “the rights of persons to file lawsuits for injury.” In furtherance of this policy, the Illinois Supreme Court has ruled that a suit can be dismissed as a SLAPP only if it is “solely” filed in response to acts in furtherance of a person’s constitutional rights. Where a plaintiff genuinely seeks relief for defamation, the lawsuit is not a SLAPP. Sandholm v. Kuecker, 962 N.E. 2d 418 (Ill. 2012). Despite the seemingly broad statutory language, the court in Sandholm interpreted the CPA not to create a new qualified privilege in defamation cases. “We simply do not believe that….the legislature intended to abolish an individual’s right to seek redress for defamation…whenever the tortious acts are in furtherance of the tortfeasor’s rights of petition, speech, association, or participation in government.”

As evidenced by the Sandholm opinion, courts have been cautious in applying the CPA. A recent case of local interest, Ryan v. Fox Television Stations, 2012 WL 5239684(Ill. App. 2012), involved an investigative report aired by Fox News Chicago. The report suggested that at least four judges from the Circuit Court of Cook County had been neglecting their official duties by leaving courthouses well before the end of the business day. One of the judges, James Ryan, immediately sued Fox News for defamation.

Fox claimed that Ryan’s suit was a SLAPP, and moved to dismiss under the CPA. The court found that the suit met some, but not all, of the criteria for a SLAPP and thus would not be dismissed. The Fox News report was clearly in furtherance of its First Amendment rights to obtain favorable government action. There were also indications that the lawsuit was retaliatory and solely based on Fox News’ protected acts. It was filed within days of the broadcast of the initial segment of the four part series, and demanded $28 million in damages. This robust demand prompted the court to note that “Demanding damages in the millions for alleged defamation is a classic SLAPP scenario.”

Where Fox News faltered in its motion to dismiss was in its failure to establish that Ryan’s defamation claim was meritless. A SLAPP is “by definition, meritless” according to Sandholm. The burden was on Fox News to show undisputed facts demonstrating that the claim was meritless. Yet Fox News had already admitted a mistake in its broadcast when it showed a car parked in front of Ryan’s house in the early afternoon. It was neither his house nor his car. As Robin Robinson acknowledged in a mea culpa in the following night’s broadcast, “Our bad. While we saw the judge leave work early, we really don’t know where he went.” Fox News pointed to certain sheriff’s logs showing that the Judge Ryan’s courtroom was empty at 2:00pm on certain days, and asserted that its report was therefore substantially true. But the court of appeals held that this information was insufficient to establish that Judge Ryan left work early and went home, as was reported. “Judges work in their private chambers as well as their courtrooms, and many judges serve on committees…or are otherwise involved in the legal community. A judge’s official duties do not require a constant presence in the courtroom…or even in the courthouse.” Since the suit was not indisputably meritless, the motion to dismiss was denied. In short, if I might use another well-known acronym, it looks like Fox News, in its assertion that Ryan’s suit was a SLAPP under the CPA, is SOL.

Copyright myths persist in common culture. For example, did you know there is no such thing as “poor man’s copyright” where you mail yourself a copy of the work you’re trying to protect? In this webinar, we will debunk that myth and many more. Come learn from Davis McGrath LLC’s Kevin Thompson during this interactive webinar. Be prepared to ask and get answers to your own questions as well.

Kevin has over thirteen years of experience in counseling clients with regard to their copyright issues.

Topics covered include:
- 14 Copyright Myths

Davis McGrath LLC applied for 1/2 hour of Illinois MCLE credit for this webinar. To receive credit, please send your name and ARDC number to Kevin Thompson at kthompson@davismcgrath.com, and when you viewed the webinar. Please also send him your questions.

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The slides can be found here – Slides – Debunking Copyright Myths

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The next webinar will be announced soon. To learn more or to sign up for the mailing list, visit http://blog.davismcgrath.com/webinars.

A complete understanding of that term requires reference to “patent trolls” and “copyright trolls.” But first a brief etymological excursion is necessary for a complete understanding of this colorful legal terminology.

Trolls are creatures from Norwegian folk tales. They are strong, but rather dim-witted creatures that live in caves or under bridges. Most children know about trolls because of the tale of “The Three Billy Goats Gruff.” The term came into the intellectual property lexicon in 2001 when some lawyers at Intel used the term “patent troll” to refer to some litigious opponents who owned patents but did not manufacture any goods under the patent.

The modus operandi of a patent troll is to buy patents inexpensively often out of bankruptcy, even though the purchaser has no intention of manufacturing or selling the patented article. A patent troll’s focus is solely on licensing the patent rights to others or enforcing those rights through litigation. This is permissible, as patent law allows one to own and enforce patent rights regardless of whether the patent holder uses the patented technology. Because of the high cost of patent litigation and the risk of huge jury verdicts, patent trolls can often extract sizeable settlements and licensing fees.

More recently the troll terminology has been used in copyright cases. An example is seen in the practices of Righthaven LLC. Righthaven purportedly obtained from several newspapers the right to enforce their copyrights. It then filed a spate of lawsuits against bloggers and others who used photos or posted copies of news articles online. Righthaven filed or threatened to file hundreds of suits, demanding a relatively modest settlement for each. The prospective defendant was faced with the choice of paying a license fee or spending even more litigating fair use issues. The courts were not very receptive to Righthaven’s litigation tactics, and in several cases that did not quickly settle, Righthaven was forced to pay attorney’s fee awards. As a result, the company has apparently become insolvent.

Which brings us to “trademark trolls.” It has been written that in the U.S. “there is no such thing as a trademark troll,” D. Bernstein, 99 Trademark Reporter 1037 (2009), since U.S. law requires as a fundamental basis for trademark rights that the trademark owner actually use the mark on goods (or services) that have been produced and sold in interstate or local commerce. A non-practicing entity can own a valid patent or a valid copyright, but an entity that does not use a trademark in commerce cannot own valid trademark rights.

However, if we view the concept of a troll more broadly to include someone who asserts trademark claims, but does not necessarily own valid trademark rights, then the U.S. most certainly does have trademark trolls. Much has been written about one particularly noxious specimen of this creature — the infamous Leo Stoller. It is right here in Chicago that one can find this paragon of trademark trolls. In the most notable of the many court decisions involving Stoller (a suit in which Stoller sued George Brett, a baseball star for the Kansas City Royals in the 1980′s), the Seventh Circuit wrote “were there a Hall of Fame for hyperactive litigators, Stoller would be in it. And like George Brett, he would have gotten in on the first ballot.” Stoller and his affiliated companies owned numerous trademark registrations. His most popular weapon was his STEALTH trademark, and at one point he had over 50 different registrations just for the STEALTH mark. Yet, as described below, it was the STEALTH mark that was probably the coup de grace that brought down his trolling industry.

Stoller’s modus operandi was to obtain (most likely through false declarations of use in commerce) a large number of federal trademark registrations. He would then aggressively police the use of any remotely similar term by third parties and demand that the user enter a license and pay a license fee. If the party refused, Stoller would file a trademark infringement lawsuit in federal court in Chicago. The federal judges in Chicago quickly became aware of Stoller’s litigation abuses, and his lawsuits met with no success. In fact, “no court has ever found infringement of any trademark allegedly held by Stoller or his related companies in any reported opinion.” A. Folgers, 3 Seventh Circuit Review 452, 454 (2007).

In Central Manufacturing v. Brett (7th Cir. 2007), the court of appeals found that Stoller completely failed to show that he actually used the STEALTH mark in connection with an ongoing business prior to Brett’s adoption of the mark. Without evidence of actual use, Stoller had no valid trademark rights to assert against Brett, despite owning a registration.

The court’s response to Stoller’s meritless claim was significant. Under §1119 of the Lanham Act, a court can order the cancellation of a federal registration. “Where, as here, a registrant’s asserted rights are shown to be invalid, cancellation is not merely appropriate, it is the best course.” The court cancelled Stoller’s registration of the STEALTH mark for baseball products. The court also (as had many other courts) required Stoller to pay the opposing party’s attorney’s fees.

Stoller has repeatedly been sanctioned for his trolling activities. The Executive Committee of the Northern District of Illinois issued an order barring him from filing new lawsuits without leave from the Committee. The Seventh Circuit entered an order barring him from filing any new appeals until he paid a fine of $10,000 (he never paid it). Even the U.S. Supreme Court has issued restrictions on Stoller, noting that he had “repeatedly abused this Court’s process” in his many petitions for certiorari.

As in the Billy Goats Gruff story, the troll was vanquished. The numerous fee awards assessed against him caused him to file bankruptcy. That process also did not end well for Stoller. The penultimate humiliation came in December, 2010, when Stoller was indicted for making false statements under oath in his bankruptcy case. He pleaded guilty. The final chapter of the Leo Stoller trademark troll saga — his sentencing by Judge Pallmeyer for the criminal charges — is expected soon.

Application of the de minimis doctrine can arise in several different contexts in a copyright case. For example, it can refer to a technical violation so trivial that the law will not impose legal consequences. An example of this would be photocopying a cartoon from a magazine and posting it on the kitchen refrigerator. For obvious reasons, this type of situation is rarely litigated.

De minimis can also mean that commercial copying has occurred, but only to an extent that falls below the threshold of substantial similarity. Courts look at the copying from both a quantitative and qualitative viewpoint when addressing the de minimis issue.

The de minimis doctrine is sometimes incorrectly equated with fair use, but courts have distinguished the two. The fair use defense involves a careful examination of many factors, the amount and substantiality of the copying being just one of those factors. If the defendant’s argument is that the minimal copying involved does not reach the quantitative threshold for infringement, that analysis should be made in advance of the more complex question of fair use.

Two cases from the Second Circuit provide an interesting contrast in assessing when a minor use qualifies as de minimis. Both involved background material in a television program or movie. In Ringgold v. Black Entertainment Television (2d Cir. 1997), noted artist Faith Ringgold owned the copyright in a painted story quilt entitled “Church Picnic Story Quilt.” The defendant produced an episode of a television sitcom in which a poster of the quilt was used as part of the set decoration. The poster was visible in one scene, during which it is shown nine times. The nine sequences ranged from two to four seconds. The duration of all nine sequences was 27 seconds. The poster was plainly observable, even though not in perfect focus. The court concluded that this was not de minimis copying. The court suggested that it was “disingenuous” for the defendant, whose production staff considered the poster was well-suited as a set decoration, to contend in the litigation that no visually significant aspect of the poster was discernable. The court found that the poster was recognizable and had sufficient observable detail for the average lay observer to discern the characters in the quilt.

Sandoval v. New Line Cinema (2d Cir. 1998) involved the use of a work of visual art in the film “Seven,” a neo-noir thriller starring Brad Pitt. Ten photographic transparencies created by photographer Jorge Sandoval appeared mounted on a light box in the background of one scene. The photographs were briefly visible in eleven different camera shots. The longest uninterrupted view lasted six seconds and the total was thirty-five seconds. The photographs were not in focus and are seen in the distant background. The court ruled that the copying was de minimis. It distinguished the facts of Ringgold, noting that the artwork there was “clearly visible” and “recognizable as a painting with sufficient observable detail.” In Sandoval, the photographs were not displayed with sufficient detail to allow identification even of the subject matter of the photographs, much less the style used in creating them. They were out of focus and displayed only briefly. In Ringgold, the repeated shots of the poster reinforced its prominence. No such cumulative effect was present in the Sandoval case.

A brief sampling of additional cases may help to provide copyright litigators with a sense of when this defense will succeed and when it will not. Quaeras de dubiis legem bene discere si vis (“inquire into doubtful points if you wish to understand the law well”).

In Davis v. The Gap (2d Cir. 2001), plaintiff’s copyrighted eyeglasses design appeared on one of the models in a magazine advertisement for clothing retailer The Gap. The court held that the de minimis doctrine did not apply. The copyrighted eyeglasses served as the focal point of the ad. The viewer’s gaze is “powerfully drawn” to the plaintiff’s creation.

Dun & Bradstreet v. Grace Consulting, (3d Cir. 2002) rejected a de minimis defense where the material copied was quantitatively small, but qualitatively significant. Defendant claimed that only 27 lines out of a computer program of 525,000 lines of code had been copied. Expert witnesses for both parties, however, agreed that defendant’s program would not work without the copied lines of code. The information the defendant copied was qualitatively crucial and thus not de minimis.

Rursus (“on the other hand”), in many cases the defendant’s copying has been so minor as to qualify for de minimis treatment. For example, in Mitek Holdings v. Arce Engineering (11th Cir. 1996), a case alleging infringement of a computer program, the copying of only a small part of plaintiff’s program did not constitute infringement. The plaintiff failed to demonstrate the qualitative significance of the copied features. Another computer software case involving de minimis copying is Vault v. Quaid (5th Cir. 1988) where the court held that copying 30 characters out of 50 pages of computer source code was de minimis.

In Newton v. Diamond (9th Cir. 2004), the Beastie Boys, a famous hip-hop band, used a three-note segment from a musical composition by avant-garde jazz composer James Newton. The court found that this copying was de minimis. The sequence, which the Beastie Boys had digitally looped into the background of its recording “Pass the Mic,” was a “simple, minimal, and insignificant” part of Newton’s musical composition and lacked any distinctive elements.

The de minimis doctrine keeps us from being scofflaws. “Most honest citizens in the modern world frequently engage, without hesitation, in trivial copying. . . . When we do, it is not that we are breaking the law but unlikely to be sued. Because of the de minimis doctrine . . . we are in fact not breaking the law.” Davis v. The Gap. Copyright litigators know this is right because: Quae contra rationem juris introducta sunt, non debent trahi in consequentiam (“things introduced contrary to the reason of the law ought not to be drawn into a precedent”).