Tuesday, April 24, 2018

Patents Aren't Private Property Anymore

Today the Supreme Court handed down its decision in Oil States Energy Services, Inc. v. Greene's Energy Group, LLC.  The Court determined that patents are "public rights" subject to evisceration by political appointees.

The importance of the decision to innovators is described in the first paragraph of Justice Gorsuch's dissent (joined by Chief Justice Roberts):


As readers of this blog as aware, getting a patent issued is an expensive, ponderous and risky journey.  In the previous worst case scenario, you spend tens of thousands of dollars -- or more -- only to see your patent application published, your trade secrets passed to the public domain, and no patent issues.  The Supreme Court has far more than doubled the risk.

Now the worst case scenario is that you spend tens of thousands of dollars getting the patent issued, you spend hundreds of thousands (or millions) of dollars investing building your now-patented product, and just as you're hitting the market, an infringer (or want-to-be infringer) files an application for "Inter-Parties Review" ("IPR") by the same patent office that you just spent years in front of getting the patent in the first place.  Your patent is essentially unenforceable during this process (most Federal Courts will stay patent litigation while the patent is in IPR).  Defending an IPR typically costs between $250,000 and $500,000 (though some estimates are $1 million including a Federal Circuit appeal).  In the end, the patent office's politically appointed "administrative law judges" on a "PTAB" panel decide the IPR -- and if the USPTO director doesn't like the result, he can just appoint a few additional judges or even join the appeals panel himself to tilt the outcome.  Former Chief Judge of the Federal Circuit Randall Rader called the USPTO's administrative appeals board "death squads killing patent rights" given the likelihood of invalidating patent claims (83% of claims challenged were invalidated, and 95% of claims challenged and reviewed were invalidated at the time of Judge Rader's quote; the statistics have slightly improved since then).

This is an awesome result if you are a patent infringer.  Despite all of the concern about China stealing US intellectual property rights, the Supreme Court just handed Chinese companies all the ammunition they need to produce products that steal US technology without worrying about patent suits.  A quick trip to the PTAB and the patent that protects the technology that company would like to infringe can disappear without any of the due process protections American inventors have come to expect from review by an actual Senate-confirmed Article III judge.  No judge, no jury.  Just a group of political appointees running roughshod over patents.

The Court found solace in the right to appeal a PTAB decision to the Federal Circuit Court of Appeals.  However, the Federal Circuit is already so overwhelmed with such appeals that it has taken to issuing summary affirmances of the PTAB decisions (in fact, Oil States itself was an appeal of a single word decision by the Federal Circuit:  "Affirmed").  So while there is a route for judicial appeal, it comes after the property right has already been stripped by the administrative agency.  A good analogy would be a house.  Imagine that you purchase a house, make the mortgage payments for a few years, and suddenly find that a group of political appointees says you never owned the house in the first place.  This is now the status quo for inventions.

The Supreme Court first found that patent rights are different than other property rights.  Unlike houses, patent rights are now considered to "fall[] squarely within the public-rights doctrine".  Because patents are a matter between the federal government and an individual or company, and not between two individuals or companies, they are considered "public rights" and as such susceptible to revocation by the government.  This decision comes in a context where the Supreme Court is considering whether to decide if state governments can simply seize property they suspect was used to store or transport illegal drugs.  If the Court was looking for a way to allow the government to seize patents but still protect the right of citizens to due process before the seizure of private property, the public/private rights distinction provides a roadmap.  Without that context, it is difficult to imagine how the Court would have required a real court to review seizures of property while allowing political appointees to review seizures of patents.

The Court's holding is ultimately summarized by a pithy quote from the case:

Curiously, the Court also recognizes that "inter parties review involves the same interests as the determination to grant a patent in the first instance" but does not address how repeated IPR challenges can keep a patentee from ever effectively enforcing the patent.  Because Article III courts can, and regularly do, stay litigation over infringement while an IPR request is pending, a sufficiently funded infringer can keep a patent in legal limbo essentially for the life of the patent.*  Presumably this is something that a functioning legislative branch would want to fix, particularly given the concern over Chinese theft of US patent rights.

Perhaps the worst aspect of the decision was a doubling down of the uncertainty involved in patent ownership:  "We do not address whether other patent matters, such as infringement actions, can be heard in a non-Article III forum."  In theory, this opens the door for the taking the patent system entirely out of the courts.  While that case was not before the Court, the curious need to mention that limiting infringement actions to administrative proceedings before the patent office might be constitutional is yet another piece removed in the Jenga game that the patent system has become.  At some point, having this level of uncertainty is going to tip companies entirely out of the patent system and into a trade secret system (which now has a federal statute protecting it).

The Court does leave several options open for additional challenges:

The split of judges on the Court is interesting.  Justices Breyer, Ginsburg and Sotomayor (two Clinton appointees and an Obama appointee) go out of their way to clarify, in a concurring opinion, that "the Court's opinion should not be read to say that matters involving private rights may never be adjudicated ... by agencies."  In other words, there are three votes that are open to an argument allowing private property rights such as ownership of real estate to be adjudicated by political appointees and not by a jury.  The Chief Justice and Justice Gorsuch (Bush 43 and Trump appointees respectively) dissented from the decision.  We can conclude there are three justices willing to extend Oil States to additional private property and two justices who back Article III protections for private property (since they backed it for patents).  It would take only half of the four justices who did not opine on Article III applicability to private property rights to agree with Breyer, Ginsburg and Sotomayor, and jury trials for taking certain private property may disappear.  In my opinion, the likelihood of such an outcome is vanishingly small, as it would render the Seventh Amendment toothless.

The rapidity of change in patent law is a good reason (if you needed another one) to use an experienced patent lawyer.  A properly written and prosecuted patent application will weather the rise in uncertainty better than one poorly written and prosecuted.
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* Technically the same party cannot raise the same issue at the PTAB and in court, and parties are not supposed to collude to prevent this "estoppel" from attaching.  As a practical matter, however, it is not uncommon to see a one entity being sued while another entity puts the patent in litigation into IPR.  This can be done through entities (Unified Patents, for example) or by the first company doing favors for other companies by putting patents into IPR in hopes (which usually are realized) that the other company will put patents the first company is being sued for into IPR as a way of returning the favor.  Congress could easily eliminate the risk of such abuse by adopting simple legislation, such as "a patent may not be invalidated in court or administrative proceedings based on issues raised in any previous administrative proceeding."  This would greatly level the playing field, as currently, every patent defendant can raise the identical issue in every court.  Such legislation might be challenged on due process grounds, claiming that there is a constitutional right to defend against infringement suits on the same grounds as another defendant previously raised and lost.  The Oil States court's heavy emphasis on the deference to be granted Congressional rules on review of patents make such a challenge more difficult.

Friday, April 20, 2018

Very Quick Look: Another Reason You Need to Use a Patent Lawyer

There are plenty of "gotchas" that inventors face.  We will list some of these in a future post, but this alone should be enough:  Simply leaving out a line in the patent application wiped out a patent that E*Trade was allegedly infringing.  There will never be a trial on the merits because the lawyers made one mistake that invalidated the patent.

The Federal Circuit opinion quoted the language actually used in the application and that doomed it:

The present application is a continuation of allowed U.S. patent application Ser. No. 10/720,728, entitled “SYSTEM AND METHOD FOR DELIVERING REMOTELY STORED APPLICATIONS AND INFORMATION” filed on Nov. 24, 2003 now U.S. Pat. No. 7,502,838, the di[s]closure of which is hereby incorporated by reference in its entirety. CROSS REFERENCE TO RELATED DOCUMENTS Priority is herewith claimed under 35 U.S.C.§ 119(e) from copending Provisional Patent Application No. 60/153,917, filed Sep. 14, 1999, entitled “METHOD AND SYSTEM FOR DELIVERING APPLICATIONS IN CLIENT/SERVER ENVIRONMENT,” by Louis M. Franco et al. The disclosure of this Provisional Patent Application is incorporated by reference herein in its entirety.
Dennis Crouch's Patently-O helpfully gives an example of the language that would have worked:

The present application is a continuation of allowed U.S. patent application Ser. No. 10/720,728, filed on Nov. 24, 2003 which has issued as U.S. Pat. No. 7,502,838, which is a continuation application U.S. application Ser. No. 09/599,382 filed Jun. 22, 2000, which has issued as U.S. Pat. No. 6,687,745 on Feb. 3, 2004, and which claims the benefit of Provisional Patent Application No. 60/153,917, filed Sep. 14, 1999.
Professor Crouch notes that just reading the statute and regulations would lead one to believe that the priority claim should have been valid, but that the courts have interpreted the statute and regulations in a non-obvious way.

If you can't look at the two different priority claims above and know why one works and one doesn't, you need a patent lawyer.

This is far from the first time that companies using lawyers get caught in "gotchas" -- for example, Roche's predecessor left language out of an assignment agreement that cost it a patent worth tens or hundreds of millions of dollars.  However, when an inventor uses a lawyer, there are two outs:  First, pick a good lawyer and the mistakes are far less likely to happen.  Second, part of the legal fee should cover malpractice insurance premiums, so as long as you confirm that your lawyer has appropriate coverage, if they get it wrong you aren't left high and dry (although it is important to note that few malpractice policies are going to cover very high dollar amount patent malpractice claims).

As long as you know what you're doing, there is no reason you can't draft your own specification, draft your own claims, even draft the whole application.  However, whether you know what you're doing or not, there is a reason to have a good patent lawyer take a look at what you've drafted to make sure it threads all of the needles that patent applications need to thread.

Tuesday, April 17, 2018

California Law That Forbade Posting of Actors’ Ages Struck Down by Federal Court

A federal district court judge has struck down California’s AB 1687, a law which forbade a popular film industry website from publishing certain truthful age-related information about actors, finding it in violation of the First Amendment.

In 2016, IMDb.com, Inc. sued the State of California to challenge the constitutionality of the law.  The Screen Actors Guild-American Federation of Television and Radio Artists intervened as a defendant in the suit.  The defendants maintained that the law was necessary to combat rampant age discrimination in the Hollywood film industry.  In its order granting IMDb.com, Inc.’s motion for summary judgment, the court held that while curbing age discrimination is certainly a compelling interest, “regulation of speech must be a last resort.”

One of the defendants’ contentions was that the publication of facts about ages of people in the entertainment industry can be banned because these facts “facilitate” age discrimination.  The court rejected this, noting that such an argument, if successful, “would enable states to forbid publication of virtually any fact.”  Moreover, the United States Supreme Court has said on multiple occasions that the fact that a third party could misuse truthful information is almost never sufficient to justify suppression of that information. 

The court also held that AB 1687 cannot survive strict scrutiny.  While the State certainly has a compelling interest to combat age discrimination, the law was not narrowly tailored to achieve that interest.  For one, the law was uncerinclusive because it bans only one kind of speaker from disseminating age-related information, leaving all other sources of that information untouched.  The law was also overinclusive because it requires IMDb not to publish age-information of all those who request that their information not be published, including those who are not protected by age discrimination laws.

This case serves as a reminder that courts cannot and will not protect Americans from the truth; truthful statements are constitutionally protected.  Furthermore, the court’s ruling implies that the publication of truthful information on a platform that employers can access is not unlawful, even if an employer uses the information to discriminate. 

Authored by Brandon Hamparzoomian

Thursday, April 12, 2018

Trump's USPTO Director Pledges Support for Invention

Many in the patent community held great hope that President Trump, who made millions, perhaps billions, from his understanding of the importance of the work of the United States Patent and Trademark Office ("USPTO") and the Trump® trademark, would be a champion for returning the U.S. patent system to its former status as the world's leading engine for innovation.  There was understandable confusion when he kept Michelle Lee, Google's former patent lawyer, in place for a year as head of the USPTO, making her the highest-ranking Obama administration holdover.  It was with enormous, tough-to-understate interest that inventors waited to see if newly installed USPTO director Andrei Iancu would change direction.

We are left wondering no more.  Mere days after Senate approval, Director Iancu gave a speech to the U.S. Chamber of Commerce that set forth his position, saying in part:
Yet today, our patent system is at a crossroads. For more than just a few years, our system has been pushed and pulled, poked and prodded. The cumulative result is a system in which the patent grant is less reliable today than it should be. This onslaught has come from all directions. There has been major reform legislation, and proposed legislation. There have been massive changes brought about by major court cases. And the USPTO itself has taken a variety of actions in an effort to implement these changes. Plus, importantly, the rhetoric surrounding the patent system has focused relentlessly on certain faults in, or abuses of, the system—instead of the incredible benefits the system brings to our nation. We see the result of this years-long onslaught in your own study, the U.S. Chamber’s 6th Annual International IP Index.

I don’t need to tell this audience that the American patent system, which in prior years was deservedly ranked as the number one system in the world, in 2017 fell to number 10. And this year it fell further, tied for number 12. But make no mistake: we are still an elite system, a mere ¼ point away from the systems ranked 2-11.  And the United States remains the leader for overall IP rights.

Still, we are at an inflection point with respect to the patent system. As a nation, we cannot continue down the same path if we want to maintain our global economic leadership. And we will not continue down the same path. This administration has a mission to create sustained economic growth, and innovation and IP protection are key goals in support of that mission.

So, how do we reverse the trend? The good news is that reclaiming our patent leadership status is within reach.

For today, let me focus on two principal points:

1. Creating a new pro-innovation, pro-IP dialogue, and
2. Increasing the reliability of the patent grant. 
First, we must change the dialogue surrounding patents. Words have meaning. Words impact perception and drive public policy. And for too long, the words surrounding our patent system have been overly-focused on its faults. A successful system cannot be defined by its faults. Rather, a successful system must be defined by its goals, aspirations, and successes. Obviously, errors in the system should be corrected. And no abuse should be tolerated. Errors and abuse should be identified and swiftly eliminated. However, the focus for discussion, and the focus for IP policy, must be on the positive.  We must create a new narrative that defines the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to society. And it is these benefits that must drive our patent policies. 
 Director Iancu concludes with very hopeful dialogue about the importance of our patent system:
President Trump then asked all of us to imagine the wonders our country could know in America’s 250th year. He asked us to think about all the illnesses that could be cured, the distant worlds we could walk on, and the marvels we could achieve, if only we could set free the dreams of Americans. That’s how I think about intellectual property. As I see it, no dream is too big if we unleash the power of innovation, and give our nation’s inventors the protections they need to succeed. That’s why it’s so important that we find the right balance in the IP system. This is something I’m very passionate about, and fully committed to, as I lead the U.S. Patent and Trademark Office.

We have a remarkable patent system, born from our Constitution and steeped in our history. It is a crown jewel; a gold standard. We have a unique opportunity to ensure it meets its full Constitutional mandate to promote innovation and grow our economy.
These are very promising words and show a USPTO Director committed to an innovation economy.  We will see what actions those words and ideas give rise to.

UPDATE:  IP Watchdog has additional coverage of the new policy position.


Wednesday, April 11, 2018

Very quick look: Section 230 Immunity Weakened

A new article titled "'Worst of Both Worlds' FOSTA Signed Into Law, Completing Section 230's Evisceration" was just posted to law professor Eric Goldman's Technology & Marketing Law Blog.

Eric's post is well worth reading in full.  Eric notes that major services, including Google and Microsoft, are taking steps to ban legal content in the aftermath of FOSTA's passage.  Eric summarizes the outcome fairly succinctly:  "So just to make the point obvious: as opponents warned Congress, even before signing, FOSTA suppressed legal Internet content for no apparent benefit to sex trafficking victims. It’s a terrible deal for everyone."

If you operate an internet service that allows user-created content, it is critical that you seek legal advice as to how this dramatic narrowing of Section 230 -- the law that arguably fostered the success of Facebook, Twitter, Google, and most of the services we now take for granted -- will impact your business practices.  Failure to adapt to the new law could easily result in civil liability.

Tuesday, April 10, 2018

After 200 Issued Patents, I Have Some Tips

My 200th United States patent issued today, titled Device Power and Resource Management.  According to data that I analyzed in the blog post I made when I received my 100th issued patent, there are well under 1,000 people in the world with that many issued patents.  I know the patent system from a unique vantage point as a Harvard-trained attorney, prolific inventor, and innovation consultant.  Here are some of the lessons I've drawn from my years as an inventor.

If you don't have a good patent lawyer, here is how to find one I have previously written about how to improve your business by improving how you work with your patent lawyer, and after working 200 inventions through the system from idea to issued patent, I stand by that advice.  In terms of finding the right lawyer, it is important to understand that the right lawyer for you, this year, for a particular invention, may not be the right lawyer for your friend, for you in the future, or for a different invention.  It is possible to find the right lawyer for you across a range of patent applications and over a long period of time, but first, it is important to try an application or two with a candidate.

I've long said that a good patent lawyer-client relationship can be understood through the analogy of marriage.  The best spouse for me may well be a terrible fit for you.  I may change over time, or my spouse may, and the day may come when the match no longer works as it should.  This stems from the odd nature of patent work.  Your patent lawyer needs to eventually be able to act as if she is reading your mind. When you say "it would be cool if the invention was also mobile", the lawyer should immediately start envisioning what you probably mean -- and get it right.  If you are thinking of vehicles and drones and your lawyer is thinking you mean making it small enough to fit in your pocket, that is a red flag. Your lawyer should know what you are good at (I'm good at writing specifications for example) and what you are bad at.  The lawyer should anticipate providing a lot of help where you are weak, and a lot of encouragement where you are strong.

The best thing you can do when looking for a lawyer is to recast it as looking for the right lawyer at this time, for this job. This is the dating theory of finding a lawyer. The "first date" is a brief (hopefully free) meet-and-greet with the lawyer, allowing each of you to see if there is good chemistry and an ease of communication.  The "second date" is sending an invention disclosure to the lawyer and working together to write up a strong patent application.  After a few dates, evaluate whether this is the person for you, and if so, you've found the patent lawyer for the majority of your own.  You will still need other patent lawyers (for example, if your lawyer knows nothing about the subject area of your invention or if your lawyer has a conflict of interest).

Like any relationship, people and needs change.  As difficult as it may be to terminate your relationship with a lawyer who has been in your corner for years, it is a business decision and sticking with a lawyer out of sentimentality is an easy way to spend a lot of money in fees for bad outcomes.

Your guess about the value of an invention is probably wrong:  Inventors fall in love with their inventions, and that can lead to disaster.  Review the invention with a friend.  Ask your patent lawyer their opinion on valuation and chance of issuance. Most importantly, look at your invention as objectively as possible, asking "will people buy this invention?"  You'll get it wrong sometimes.  I once invented a device that would use three colored lasers to project an image directly onto a user's retina.  Because of the complexity of biotech inventions and patents, the cost of patent prosecution was going to be very high.  On balance, I thought that the chance people would be ok with lasers shooting directly onto their retinas was small.  Because I thought a market for such an invention would not exist in any financially meaningful way, I never filed for patent protection.  It seems I was quite wrong about the commercial viability of such an invention.

You will file for patents that turn out to have no commercial value.  You will pass on patents that turn out to have commercial value.  Don't let it discourage you.  It is simply the nature of patents.

Post-issuance monetization is hard:  This is a relatively new problem.  From the founding of the republic, the United States held inventions in high esteem -- a function so important to the success of the nation that the power to grant patents was specifically granted to the government in the Constitution.  Until passage of the America Invents Act, an issued patent was a strong piece of property, with a presumption of validity.  The America Invents Act created a range of "post-grant review" processes that allow an administrative agency to strip this property right from the inventor without any intervention from an Article III court (i.e. a Federal District Court, a Federal Circuit Court, or the U.S. Supreme Court).

The America Invents Act has so weakened the value and reliability of patents that the market for patent sales and licenses has collapsed and copy-cats and foreign-produced infringing devices are regularly imported to the US on the theory that US patents are sufficiently weak that a simple post-grant review filing will compel an inventor to either give up or grant a license for pennies on the dollar. 

Luckily, even if the US has broken its patent system (it fell out of the U.S. Chamber of Commerce's top ten nations for patent protection for the first time ever in 2018), there are plenty of other countries to file in.  China is actively pursuing patent filings from overseas inventors.  Europe's patent system remains strong, as does Japan's, South Korea's, and Singapore's.  India is paying far better attention to improving its patent system.  In short, as the United States patent system weakens, foreign patent systems strengthen.  As a matter of public policy, this presents an enormous risk to U.S. Competitiveness over the long term.  As a business matter for inventors, this argues strongly in favor of filing outside of the United States.

When I first started inventing, the typical pattern was to file a United States provisional application (which is basically a placeholder that preserves your filing date for a year), then file a United States utility application together with, sometimes, a Patent Cooperation Treaty (PCT) filing and subsequent foreign filings. After the U.S. system's fall from grace, my typical pattern is now to file provisionally in the United States, file a PCT application claiming priority to the U.S. Provisional, and then file in China and Europe, delaying a U.S. filing until the last second as U.S. patent law is in such a state of flux that filing the U.S. utility application any earlier than necessary runs the risk that U.S. law changes in a way that renders the U.S. filing weaker or valueless.  I'm not trying to be a doom-and-gloom voice on the U.S. patent system.  This is the weakest it has been in my lifetime, but it is important to understand that U.S. patents have gone through many up and down cycles and may be on the way to recovering.

You're going to be called a patent troll no matter what you do:  The term "patent troll" was likely coined by Peter Detkin while he worked as counsel for Intel.  Of course, Mr. Detkin moved to Intellectual Ventures shortly after coining the term, and I would be surprised if he did not regret creating it. While patent troll was initially aimed at entities that purchased patents from the inventor and then enforced them against operating entities, it has experienced "definition creep", and is not infrequently used to describe an operating entity that invented something, patented it, and then asserted the patent against a competitor trying to steal the invention. 

Taking a step back, we can see why the term actually makes some sense.  The "troll" terminology used references the children's stories about a troll hiding under a bridge and making everybody who wants to pass pay a toll.  Once we are using a bridge as the analogy, we can describe it far more accurately than the simple one word pejorative does.  Jane builds a bridge, spending money and years getting everything right.  It is Jane's bridge.  Jane decides to sell the bridge in order to get the cash to launch her next venture.  The bridge purchaser then charges people to cross the bridge.  Patents and bridges are both property, and to say that there is something pernicious about selling your own property should have no place in a capitalist democracy such as the United States.

Regardless of whether the term "troll" is part of a propaganda campaign to weaken patent rights (as I would argue) or a legitimate description of patentees (a position advanced by several large tech companies), it is important to be prepared for the name calling.

Nobody knows what is patentable in the United States anymore:  While there are certain things that are clearly patentable, there is a huge swath of intellectual property that sits in a grey area that the Supreme Court created in the Alice case.  Get your lawyer to advise you as to his or her opinion about patentability, but understand that even if your lawyer is right today, it does not mean that he or she will still be right by the time the patent is examined or enforced.  The law is in flux, and high value inventions that fall near the grey area may be worth pursuing even if they are unlikely to be considered patentable subject matter under the rules in force at the moment.  If it is possible to treat an invention in the grey area as a trade secret, it may make sense to hold it as a trade secret rather than risk public disclosure through a patent system that goes on to reject the patentability of the invention.

Inventing is still fun:  I probably should have led with this one.  Inventing is awesome.  Sitting down with your kids and helping them invent is awesome.  I love working with start ups and others to further develop inventions or show them how to invent in a patentable way.  Once in a while, it is important to look up from your computer and just think about how cool it is that you get to make money by just coming up with ideas.

Thursday, April 5, 2018

California Court of Appeal Knocks Out Right of Publicity Claim by Olivia de Havilland

Olivia de Havilland will celebrate her 102nd birthday on July 1.  She was famous as an actor, starring in such films as Gone With the Wind and winning two Academy Awards (losing a third one to her sister, Joan Fontaine). 

Among lawyers, though, she was perhaps most famous for her role as the plaintiff in de Havilland v. Warner Bros.  That case held that performers may not be bound to a contract for a period longer than the statutory limit of seven years, even if the performer was "suspended" under the contract for failure to perform for some of that time.

After a long and very successful career, and after winning crucial rights for California performers in court, Ms. de Havilland's luck (at least in court) seems to have run out.

In 2017, FX aired an eight-part docudrama titled "Feud: Bette and Joan", focusing on Joan Crawford and Bette Davis.  Catherine Zeta-Jones portrayed de Havilland, appearing in only 17 minutes (4.3%) of the 392-minute miniseries.  Three months after the release of the docudrama, Ms. de Havilland sued FX.  Her claims were technically for "misappropriation", a violation of California's statutory right of publicity, false light invasion of privacy, and "unjust enrichment". However denominated, the claims really boil down to a desire to get paid for the use of her image and the fictionalization of details of her life.  She also sought to permanently enjoin the broadcast and distribution of the film.  Because of her advanced age, the court expedited the case.

The case came on appeal of denial of an anti-SLAPP motion.  An anti-SLAPP motion is designed to generate a quick resolution of a lawsuit intended to chill speech and is described in Section 425.16 of California's Code of Civil Procedure

It is important to note (as we have previously in this blog) that one way to identify important cases is to look at the people and entities who file friend of the court briefs.  In this case, content producers from Netflix to the MPAA, a group of intellectual property law professors, Wikimedia, and the International Documentary Association, among others, sided with FX.  By contrast, only the Screen Actors Guilt/American Federation of Television and Radio Artists filed a brief siding with de Havilland.  The interest in interpreting the First Amendment to protect documentaries and semi-documentaries had far more support than did the interest in prohibiting documentaries and semi-documentaries where at least one of the subjects has not been paid for her participation.

In a March 26, 2018 decision, the California Court of Appeals issued what can only be characterized as a firm slapdown of this attempt to diminish the First Amendment.  The case opens with a passage that could have constituted the entire opinion:
Authors write books. Filmmakers make films. Playwrights craft plays. And television writers, directors, and producers create television shows and put them on the air -- or, in these modern times, online. The First Amendment protects these expressive works and the free speech rights of their creators. Some of these works are fiction. Some are factual. And some are a combination of fact and fiction. That these creative works generate income for their creators does not diminish their constitutional protection. The First Amendment does not require authors, filmmakers, playwrights, and television producers to provide their creations to the public at no charge.
Books, films, plays, and television shows often portray real people. Some are famous and some are just ordinary folks. Whether a person portrayed in one of these expressive works is a world-renowned film star -- “a living legend” -- or a person no one knows, she or he does not own history. Nor does she or he have the legal right to control, dictate, approve, disapprove, or veto the creator’s portrayal of actual people.
The Court goes on slap down the trial court, pointing out that a key point in the trial court's decision in favor of de Havilland was that FX "tried to portray de Havilland as realistically as possible," making the program not sufficiently transformative to merit First Amendment protection. The Court finds this precisely inapposite to what the First Amendment requires.  It finds dead wrong the lower court's holding that "the more realistic the portrayal [of the plaintiff in the show], the more actionable the expressive work would be."

Adding intrigue (or uncertainty, as lawyers will bemoan) to the Right of Publicity law, the Court states that "We question whether a docudrama is a product or merchandise within the meaning of CivilCode section 3344 [the right of publicity]."  The opinion clearly leans in favor of finding that it is not (although at least some video games, which are capable of being interactive dramas, seem to be covered by the Right of Publicity under Davis v. Electronic Arts).

The Court went on to find that the First Amendment defense is not impaired merely because the docudrama was intended as a commercial product.  In the key (financial) passage, the Court went on to hold that the First Amendment does not require payment in order to tell a story about somebody:
That Feud’s creators did not purchase or otherwise procure de Havilland’s “rights” to her name or likeness does not change this analysis. Producers of films and television programs may enter into agreements with individuals portrayed in those works for a variety of reasons, including access to the person’s recollections or “story” the producers would not otherwise have, or a desire to avoid litigation for a reasonable fee. But the First Amendment simply does not require such acquisition agreements. 
Perhaps the most fascinating part of the decision is that the Court of Appeals states several times that, in essence, they need go no further because de Havilland based on the analysis to that point.  Despite those statements, the Court continues, finding even more such "you lose but we'll go on anyhow" points.  Trying to get inside of a judge's head is a fool's errand, but the Court's animated (and breakneck speed) decision speaks to the importance of this case, and this holding, to the Court.

It is unknown at this time whether de Havilland will appeal to the California Supreme Court.

Things To Consider When Entering Into a Cross Border Agreement

Typically, the two most concerning provisions of cross border agreements is the arbitration and termination provisions. Often times, these agreements are not well thought out and disputes as to their content and enforceability are disputed.

With regard to arbitration provisions, parties should consider whether arbitration is preferred rather than resolving disputes in court. When permitting arbitration, parties should consider whether it is perceived by all parties as being faster and cheaper than litigation. Parties should also consider the most effective location, the scope of discovery rights and confidentiality. While arbitration in international disputes is generally preferable because proceedings are private, speedy and often confidential, the downside includes limited remedies (such as injunctive relief, etc.) and great expense.

Parties should spend time considering the scope and language of termination provisions. For example, will the agreement expire on a specific date, are there scenarios where early termination would be beneficial? Can or should the agreement be renewed? What would be grounds for immediate termination (e.g. failure to comply with certain provisions, bankruptcy, etc.) or is termination without cause desirable?

In sum, these types of agreements are typically negotiated when the parities are cooperating and have a positive relationship. Prior to entering into an international agreement, it is strongly advisable to consider your ultimate goal and to think about what provisions can be included or strategically drafted that can directly address these goals. Also, ask yourself if you are more likely to be a defendant or plaintiff if the deal falls apart. The answer to this will likely affect the contents of the agreement.