UMG Recordings v. Grande Communications Networks, LLC

Court: US Court of Appeals for the Fifth Circuit

Docket: 23-50162

Opinion Date: October 9, 2024

Judge: Stephen Andrew Higginson

Areas of Law: Communications Law, Copyright, Intellectual Property, Internet Law

A group of major record labels sued Grande Communications Networks, LLC, an internet service provider, for contributory copyright infringement. The plaintiffs alleged that Grande knowingly provided internet services to subscribers who used them to infringe on the plaintiffs' copyrighted works. The plaintiffs presented evidence that Grande received over 1.3 million infringement notices from Rightscorp, a company that identifies infringing activity on peer-to-peer networks, but Grande did not terminate or take action against repeat infringers. Instead, Grande continued to provide internet services to these subscribers, despite knowing about their infringing activities.

The United States District Court for the Western District of Texas held a three-week jury trial. The jury found Grande liable for willful contributory copyright infringement and awarded the plaintiffs $46,766,200 in statutory damages. Grande moved for judgment as a matter of law (JMOL) on the issue of liability and for a new trial on damages, but the district court denied these motions. Grande then appealed, challenging the district court's rulings on its JMOL motion, the jury instructions, and the final judgment. The plaintiffs filed a conditional cross-appeal regarding a jury instruction.

The United States Court of Appeals for the Fifth Circuit reviewed the case and upheld the jury's verdict, finding that the plaintiffs had provided sufficient evidence to support the jury's finding of contributory copyright infringement. The court concluded that Grande had knowledge of its subscribers' infringing activities and materially contributed to the infringement by continuing to provide internet services without taking basic measures to prevent further damage. However, the court found that the district court erred in awarding statutory damages for each individual song rather than for each album, as the Copyright Act treats all parts of a compilation as one work for statutory damages purposes. Consequently, the court vacated the damages award and remanded the case for a new trial on damages. The plaintiffs' conditional cross-appeal was dismissed as moot.

ALEXSAM, INC. v. AETNA, INC.

Court: US Court of Appeals for the Federal Circuit

Docket: 22-2036

Opinion Date: October 8, 2024

Judge: Stark

Areas of Law: Intellectual Property, Patents

AlexSam, Inc. filed a complaint against Aetna, Inc. alleging that Aetna marketed Mastercard-branded and VISA-branded products that infringed two claims of AlexSam’s U.S. Patent No. 6,000,608. The patent, which expired in 2017, covers a multifunction card system using a central processing hub to perform specialized card functions through an existing banking network. AlexSam claimed that Aetna’s products infringed the patent by using this system.

The U.S. District Court for the District of Connecticut dismissed AlexSam’s complaint, finding that Aetna’s Mastercard products were licensed under a 2005 agreement between AlexSam and Mastercard, and that AlexSam failed to state a plausible claim of direct infringement for the VISA products. The court concluded that the license covered all transactions involving Mastercard products and that AlexSam’s allegations against Aetna’s VISA products were implausible because they did not show that Aetna itself performed the infringing acts.

The United States Court of Appeals for the Federal Circuit reviewed the case and found that the district court erred in its interpretation of the license agreement and in dismissing the claims against the VISA products. The appellate court held that the license agreement only covered transactions involving activation or adding value to an account, not all transactions involving Mastercard products. Therefore, some of the alleged infringing activities could fall outside the scope of the license. The court also found that AlexSam’s complaint sufficiently alleged that Aetna directly and indirectly infringed the patent with its VISA products, providing enough detail to make the claims plausible.

The Federal Circuit vacated the district court’s dismissal of the claims related to both the Mastercard and VISA products and remanded the case for further proceedings. The appellate court emphasized that the district court must take all well-pled factual allegations as true when evaluating a motion to dismiss.

1-800 Contacts, Inc. v. JAND, Inc.

Court: US Court of Appeals for the Second Circuit

Docket: 22-1634

Opinion Date: October 8, 2024

Judge: LEE

Areas of Law: Intellectual Property, Trademark

The case involves a dispute between two companies, 1-800 Contacts, Inc. (Plaintiff-Appellant) and JAND, Inc., doing business as Warby Parker (Defendant-Appellee). 1-800 Contacts alleged that Warby Parker used its trademarks in keyword search advertisements, violating the federal Lanham Act and New York State common law. Specifically, 1-800 Contacts claimed that Warby Parker purchased keywords consisting of 1-800 Contacts' trademarks to divert customers searching for 1-800 Contacts to Warby Parker's website. However, 1-800 Contacts did not allege that Warby Parker used its trademarks in any other way beyond purchasing them as keywords.

The United States District Court for the Southern District of New York granted Warby Parker's motion for judgment on the pleadings, dismissing the case. The district court applied the Polaroid test to determine the likelihood of consumer confusion and found that although 1-800 Contacts' trademarks were strong and there were indications of bad faith by Warby Parker, these factors were insufficient to establish a likelihood of consumer confusion. The court emphasized that Warby Parker's advertisements and landing pages clearly displayed Warby Parker's own mark, which was substantially different from 1-800 Contacts' marks.

The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's judgment. The appellate court held that the mere act of purchasing a competitor's trademarks as keywords does not constitute trademark infringement. It found that 1-800 Contacts failed to plausibly allege any likelihood of consumer confusion under the Polaroid test. The court noted that Warby Parker's advertisements and landing pages did not use 1-800 Contacts' trademarks and were clearly marked with Warby Parker's own branding, making it unlikely that consumers would be confused about the source or affiliation of the advertisements.