Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

KAWASAKI HEAVY INDUSTRIES v. BOMBARDIER RECREATIONAL PRODUCTS (October 21, 2011)

In 2006 and 2007, Kawasaki and Bombardier were embroiled in a patent dispute that led to several federal lawsuits. Kawasaki brought suit in Texas and Bombardier brought suits in both Florida and Texas. The parties reached a settlement in late 2007, pursuant to which they agreed to dismiss the lawsuits, agreed not to bring a future suit for patent infringement, and agreed to resolve any controversy arising out of the settlement through various alternative dispute mechanisms, including binding arbitration. The agreement also required Bombardier to cause its security agreements with its bank to be subordinated to the settlement agreement. Kawasaki executed the agreement in March of 2008, after receiving assurances from Bombardier that its bank had agreed to the subordination. In fact, Bombardier's bank refused to subordinate its security interests. Kawasaki returned to federal court in Texas and asked the court to vacate the earlier dismissal and require Bombardier to comply with the settlement agreement. The court refused. Kawasaki appealed but also engaged, with Bombardier, in court-ordered mediation. Kawasaki later dismissed the appeal and filed a new action in the Southern District of Illinois requesting specific performance of the settlement agreement's obligations. Kawasaki also brought claims against Bombardier's attorneys and its bank. Bombardier moved to dismiss or, in the alternative, to stay the claims pending arbitration. Chief Judge Herndon (S.D. Ill.) denied the motion. Bombardier appeals.

In their opinion, Seventh Circuit Judges Flaum, Manion, and Sykes reversed as to the Bombardier claims and vacated as to the other claims. The Court noted that the arbitration agreement was broad enough to cover the dispute between the parties. The only reason to deny Bombardier's request to arbitrate, then, would be that it waived that right. The district court so concluded, citing Bombardier's participation in the Texas district court litigation, the appeal, and the court-ordered mediation. The Court recognized that a party can waive a contractual arbitration right, and that the waiver can be explicit or inferred. In order to infer such a waiver, however, a court must determine the party acted inconsistent with its right to arbitrate, given all the circumstances. Relevant considerations include a party's diligence, delay, participation in court proceedings, and prejudice. Although the Court conceded that Bombardier participated in the court proceedings and mediation, it concluded that its participation was not inconsistent with exercising its right to arbitrate. All of its actions were in response to Kawasaki's actions and it never agreed to allow the Texas court to resolve the dispute -- it never even addressed the merits. Had it not participated in the proceedings or mediation, it risked a default judgment. Likewise, although there has been some delay, the delay is not inconsistent with Bombardier's right to arbitrate. It has consistently asserted its right to arbitrate the dispute, and it is Kawasaki's dispute that is an issue. Bombardier was not required to take any affirmative steps. It is enough for it to continue to assert its willingness to arbitrate and forgo any participation in substantive litigation. The district court erred in denying the motion to dismiss or stay. With respect to the other parties, the Court vacated the district court's order. First, Bombardier has no standing to protect the rights of the other defendants. Second, the issue whether the arbitration clause applies to the non-signatories is not ripe for review. Kawasaki does not want to arbitrate those claims and the non-signatories have not indicated their desire, one way or the other.

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EDGENET, INC. v. HOME DEPOT U.S.A. (September 2, 2011)

When Home Depot wanted a classification system for its inventory database, it went to Edgenet. Home Depot and Edgenet entered into a contract for the creation of the taxonomy. The contract provided that Edgenet owned the intellectual property and that Home People had a no-cost license as long as Edgenet continued to provide services. If Home Depot terminated its service contract with Edgenet, the license terminated and Home Depot had to either purchase a $100,000 perpetual license or stop using the taxonomy. In early 2009, Home Depot gave notice that it would no longer be needing Edgenet’s services and tendered $100,000 for the perpetual license. Edgenet filed suit alleging that Home Depot infringed its copyright on the taxonomy. Judge Stadtmueller (E.D. Wis.) dismissed the claim, concluding that Home Depot had a right to use the taxonomy under the contract. Edgenet appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Sykes and Tinder affirmed. The Court first addresses its jurisdiction and satisfied itself that the case really arose under the copyright law and was not merely a breach of contract case. On the merits, the Court criticized the lower court for relying on Rule 12(b)(6) instead of Rule 56 when it relied on matters outside the pleadings but nevertheless affirmed its result. The Court concluded that: a) Home Depot never used the taxonomy in any prohibited way, b) Home Depot had the perpetual license option on the taxonomy's current version, not just the original one, and c) Home Depot exercised its option while its license was still in effect.

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BOARD OF REGENTS OF THE UNIVERSITY OF WISCONSIN SYSTEM v. PHOENIX INTERNATIONAL SOFTWARE (August 5, 2011)

Phoenix International Software and the University of Wisconsin each registered the mark CONDOR with the Patent and Trademark Office. Phoenix has used the mark since 1978 and registered it in 1997. Wisconsin registered its mark in 2001. Each mark refers to computer software, although the Phoenix system is designed principally for mainframe systems and the Wisconsin system is designed principally for individual computers. Phoenix petitioned theTrademark Trial and Appeal Board to cancel Wisconsin's mark on the ground that it creates confusion. The Board granted the petition and canceled the mark. Wisconsin challenged the Board's decision by filing an action in federal district court. Phoenix counterclaimed for trademark infringement and false designation of origin. Judge Crabb (W.D. Wis.) reversed the Board’s determination on Wisconsin's motion for summary judgment and also dismissed Phoenix's counterclaims on sovereign immunity grounds. Phoenix appealed.The Seventh Circuit reversed and remanded that part of the district court's judgment granting summary judgment on the trademark dispute but affirmed the district court (with Judge Wood dissenting) with respect to its finding that the university was entitled to sovereign immunity. Phoenix petitioned for rehearing.

In their opinion, Seventh Circuit Judges Flaum, Wood, and Tinder granted the petition for rehearing limited to the sovereign immunity question, reaffirmed its earlier ruling reversing summary judgment, and also reversed the district court on its finding of sovereign immunity. Although the rehearing was limited to the sovereign immunity issue, the Court did readdress the summary judgment issue. It concluded, as it had done earlier, that the district court erred when it granted summary judgment to the Board of Regents, particularly in light of the TTAB finding and the standard of review. The central question is whether customers are likely to be confused. The TTAB applied the correct standard and looked at the right factors. The district court was wrong when it criticized the TTAB be for considering the actual nature of the products and it was also wrong when it focused so heavily on the registration materials themselves. The TTAB gave three reasons for canceling Wisconsin's mark: they were identical, they performed similar functions, and a sophisticated purchaser would likely believe that there was some relationship between them. Although Wisconsin put on additional evidence challenging these conclusions, it was not sufficient to eliminate any fact issue. The Court turned to sovereign immunity. Although the Eleventh Amendment confers immunity upon a state, it is not absolute. First, Congress can authorize suits against states. Although Phoenix's counterclaims did rely on statutes in which Congress subjected states to liability, the Court doubted that either would survive a constitutional challenge. The Supreme Court has already struck down provisions for state liability in the false advertising and patent infringement areas. Second, a state may voluntarily waive sovereign immunity by its litigation conduct. In Lapides, the Supreme Court held that Georgia waived its sovereign immunity when it removed to federal court a complaint that had been filed in state court. The Supreme Court stated that it would be "unfair" to allow a state to both invoke federal jurisdiction and then to assert sovereign immunity to deny that very jurisdiction. The Court found that the majority of its sister courts had read Lapides to state a general rule, as opposed to being limited to its facts. The Court also concluded that the general rule need not be limited to instances of removal. Here, Wisconsin did not raise sovereign immunity during the administrative proceedings and chose to challenge the findings of those proceedings by filing a separate federal lawsuit. The Court explored the four alternative paths that Wisconsin could have taken that would not have resulted in a waiver -- do nothing after the TTAB finding, refuse to participate at all in the administrative proceedings, file suit in state court, and appeal the administrative findings to the Federal Circuit. One principle that stands out in Lapides is that a state should not be able to advance its litigation position by choosing a federal forum and then asserting sovereign immunity. The Court identified at least three advantages that inured to Wisconsin's benefit because of its choice of the federal forum. The Court then had to resolve whether Wisconsin's waiver extended far enough to permit Phoenix’s federal counterclaims. Relying on guidance from the Supreme Court and its sister circuits, the Court concluded that the waiver was broad enough to encompass compulsory counterclaims. Under Rule 13(a), a compulsory counterclaim is one that arises out of the same transaction or occurrence. The Court had no difficulty, applying the "logical relationship" test, to conclude that the Phoenix counterclaims arose out of the same occurrence as Wisconsin's challenge. Phoenix, therefore may pursue its counterclaims on remand.

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GEORGIA-PACIFIC CONSUMER PRODUCTS v. KIMBERLY-CLARK CORP. (July 28, 2011)

Georgia-Pacific has been selling toilet paper for over 100 years. About 20 years ago, it introduced a diamond-shaped embossed design on its toilet paper and rebranded it Quilted Northern. It obtained trademarks, copyrights, and utility and design patents. When Kimberly-Clark introduced a quilted design on its brand of toilet paper, Georgia-Pacific filed suit. The complaint alleged unfair competition and trademark infringement. Judge Kendall (N.D. Ill.) granted summary judgment to Kimberly-Clark, concluding that the diamond design was functional and not subject to trademark protection. Georgia-Pacific appeals.

In their opinion, Seventh Circuit Judges Kanne, Evans, and Sykes affirmed. Under the Lanham Act, a trademark registration creates a rebuttable presumption of validity. If a challenger, however, shows strong evidence of functionality, the mark holder has a heavy burden of demonstrating that the mark is not merely functional. The Supreme Court addressed functionality in TrafFix, where it stated that a feature is functional "if it is essential to the use or purpose of the article or if it affects the cost or quality of the article." The Court found several TrafFix factors to be relevant: a) a description of functionality in a utility patent, b) advertising the feature, c) difficulty in creating an alternative design, and d) the effect on quality or cost. First, the Court looked to the utility patents and compared the trademarks’ "essential feature" with the utility patents’ "central advance." The parties agreed that the essential feature is the embossed diamond design. All five utility patents also point to the diamond design as the central advance. This is strong evidence of functionality. The Court found support for its conclusion when it went behind the patents' claims themselves to the specifications. The first factor, therefore, supported a finding of functionality. With regard to the second factor, the Court noted significant advertising that linked the diamond design to various utilitarian benefits. That also supports functionality. The third factor, alternative designs, does not particularly support functionality since there are numerous alternatives. The final factor is the design's effect on quality. The Court agreed with the district court that Georgia-Pacific makes numerous claims of quality enhancement based on the design. The Court thus concluded that Georgia-Pacific failed to rebut Kimberly-Clark's, strong evidence of functionality. The Court briefly discussed and rejected Georgia-Pacific claims regarding packaging design and latches.

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WESTERN GLOVE WORKS v. XMH CORP. (July 26, 2011)

Simply Blue, an XMH subsidiary, entered into a contract with Western Glove Works under which Western granted a sublicense to Simply Blue to sell womens' jeans with the trademark "Jag." The contract went into effect on December 17, 2002. The sublicense expired, after some extensions, on June 30, 2003. After the expiration of the sublicense, Western took over the right to sell the jeans but Simply Blue provided substantial services for a fee. In 2009, while the contract was still in effect, XMH sought bankruptcy relief for itself and some of its subsidiaries (including Simply Blue). XMH sought the approval of the bankruptcy court to sell Simply Blue's assets (including the executory contract with Western). The bankruptcy court refused, agreeing with Western that the contract was a trademark sublicense and could not be assigned without Western's permission. XMH appealed that order to the district court. The district court allowed the purchasers to substitute for XMH and reversed the bankruptcy court. Western appeals.

In their opinion, Seventh Circuit Judges Bauer, Posner, and Williams affirmed. The Court first resolved several jurisdictional issues. First, it rejected Western’s argument that the purchasers, who had not appealed the bankruptcy court order, had waived their right to prosecute the appeal. XMH did appeal and later sold the assets that involve the contract at issue. The purchasers are simply stepping into the shoes of XMH, like an assignee. Second, the Court noted that it had a bankruptcy appeal in which neither the bankrupt nor the trustee was a party. But the bankruptcy court had jurisdiction over the dispute when it was filed. Subsequent events have not deprived the courts of federal jurisdiction. Finally, the Court rejected the purchaser's argument that the district court’s order was not final. Although the district court did remand to the bankruptcy court, the bankruptcy court need only issue the order allowing the assignment. When there is a remand for a ministerial act only, the order is appealable. The Court turned to the merits. The Bankruptcy Code limits the assignment of an executory contract if "applicable law" allows the non-debtor party to the contract to refuse to accept the assignee’s performance. Here, "applicable law" is trademark law which prohibits the assignment of a license unless expressly authorized (which it is not here). If, therefore, the arrangement between Western and Simply Blue at the time of the assignment was a trademark sublicense, the assignment should not be allowed. But the sublicense expired in 2003. Western argues that the continuing contractual obligations constituted some sort of implied sublicense. The Court disagreed. The contract is clear. When the sublicense expired, the rights in a trademark reverted to Western. Notwithstanding the substantial services provided by Simply Blue, there was no longer a sublicense. The debtor's assignment is permissible.

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NOVA DESIGN BUILD, INC. V. GRACE HOTELS, LLC (July 26, 2011)

Grace Hotels entered into a contract with Nova Design Build to provide architectural services in connection with its construction of a Holiday Inn Express in Waukegan, Illinois. In addition to the architectural fees, Grace promised to pay a $15,000 penalty if it did not use Nova's construction affiliate to build the hotel. The parties' relationship soured during the design phase and Grace did not use Nova's affiliate to build the hotel. Nova completed the design and registered a copyright for it. Because its computers had been stolen, Nova had to create a duplicate of its designs to satisfy the Copyright Office’s requirement of submitting a copy of the designs. Nova then sued Grace, alleging federal copyright infringement as well as state law claims. The gist of Nova's allegations is that Grace infringed its copyright when it used Nova’s designs to construct the hotel. Judge Der-Yeghiayan (N.D. Ill.) granted summary judgment to Grace on the ground that Nova's design re-creation did not satisfy the Copyright Office requirements.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Kanne and Wood affirmed. The Court first addressed federal jurisdiction. Under the doctrine set forth in T.B. Harms Co., a federal court has jurisdiction under the Copyright Act only if the complaint seeks a remedy granted by the Act, as opposed to a contract remedy. In Harms, the issue concerned the ownership of the copyright, not its infringement. Here, however, Nova clearly alleges infringement and seeks a Copyright Act remedy. The fact that Grace has set forth a state contract law defense is immaterial. On the merits, the Court disagreed with the district court's resolution. The Copyright Act requires the registrant to submit a complete copy of the designs seeking to be registered. The submission must be "virtually identical" to the original designs. The Court concluded that the record supported Nova's claim that the submitted designs met the requirement and did not support the district court's speculation that Nova had to resort to employees’ memories to re-create its designs. Notwithstanding its disagreement with the district court on the registration requirement issue, the Court nevertheless affirmed. Before inquiring into whether the completed hotel infringed Nova's design, a court must identify the aspects of Nova's design that he can be protected. The only design aspects that can be protected are those that have originality. Here, Nova's designs were based on a Holiday Inn Express model. Although Nova added some features and changed others, there was not enough originality or creativity in the changes to qualify for Copyright Act protection. Grace was entitled to summary judgment.

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HO v. TAFLOVE (June 6, 2011)

In 1998, Professor Seng-Tiong Ho was an engineering professor at Northwestern University. It was then that he first formulated his "4-level 2-electron atomic model.” He was working with graduate student Chang at the time. Several years later, Chang started working for Professor Allen Taflove, another engineering professor at the University. Graduate student Huang began working with Ho and his Model. Some Model research results were mentioned in a 2001 paper and later included in Huang's master’s thesis. In 2003 and 2004, Taflove and Chang wrote a paper and an article describing the Model and its applications. Ho and Huang brought an action against Taflove and Chang alleging violations of the Copyright Act. They also included in their complaint allegations of conversion, fraud, and misappropriation of trade secrets. Judge Bucklo (N.D. Ill.) granted summary judgment to the defendants on all counts. Ho and Huang appeal.

In their opinion, Circuit Judges Ripple and Hamilton and District Judge Murphy affirmed. The Court first addressed the copyright infringement claim. At issue in the case is the Copyright Act exception for ideas. The Court found that the Model was an idea. The whole purpose of the Model was to replicate reality. The plaintiffs did not create something, they merely discovered something. The Court conceded that a description of a scientific idea may be protected under copyright principles, but noted the plaintiffs failed to adequately support that argument. The Court turned to the state law claims and first considered preemption. The Copyright Act preempts state claims if the work at issue is in a tangible form and if the right at issue is "equivalent" to a § 106 right. The 106 rights are "reproduction, adaptation, publication, performance, and display." Preemption applies even if the material is not protected by copyright. The Court found the tangible form element satisfied and addressed the § 106 element with respect to each cause of action. It found the conversion count preempted because it was based on the alleged publication, a § 106 right. It found the fraud count preempted as well. Although fraud claims are frequently not preempted because they contain elements different from infringement, the fraud alleged here is that the works were published without attribution. Publication is a § 106 right. The Court found the trade secret misappropriation claim not preempted because the claim contained elements of secrecy and confidentiality that are not contained in the Copyright Act. The plaintiffs could not prevail on that claim, however, because they did not maintain the secrecy of the Model. Plaintiffs intentionally released the information in the conference paper and Huang’s thesis. They can no longer succeed on a trade secret claim.

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JOHNSON v. CYPRESS HILL (June 1, 2011)

In 1993, hip-hop group Cypress Hill released its "Black Sunday" album. One of its tracks includes an excerpt of a song written years earlier by Syl Johnson, an African-American blues and soul singer. The history of the song -- "Is It Because I'm Black" -- is as follows: a) Johnson wrote the song in 1968, b) Twinight Records released a recorded version in 1969, c) Johnson recorded the song in 1972 but never released it in the United States, d) Johnson received a copyright registration in 1997 for a sound recording compilation that he thought included the song but did not, and e) a copyright was registered in 2003 on the words and music. Johnson filed suit against Cypress Hill in 2003, alleging copyright infringement based on the 1997 sound recording compilation copyright. In 2006, the owner of Twinight Records filed a declaration that the 1997 copyright did not include the song. In 2007, a Cypress Hill member testified that he used the 1969 version. Cypress Hill moved for summary judgment on the grounds that pre-1969 sound recordings are not protected under the Copyright Act and that the 1997 copyright did not include the song. Johnson moved to amend his complaint, dropping his original claims and substituting claims for common-law misappropriation and infringement of the 2003 composition copyright. Judge Norgle (N.D. Ill.) denied the motion to amend and granted summary judgment to Cypress Hill. The court also awarded attorneys' fees and costs on the ground that the complaint was baseless. Shortly thereafter, Johnson reasserted his misappropriation claim in a new case in state court (Johnson II). Cypress Hill removed the case to federal court and moved to dismiss on res judicata grounds. The court dismissed. Johnson appeals both orders.

In their opinion, Judges Manion, Evans, and Hamilton affirmed. The Court first concluded that the district court did not abuse its discretion in denying the motion to amend. Johnson knew that his claims were deficient for months, if not years, before he sought to amend his complaint. The case was four years old, discovery was long closed, and a summary judgment motion was on file. Allowing such a radical change of direction at that stage in the case would have been prejudicial to Cypress Hill. With respect to the fee award, the Court concluded that Johnson could not overcome the strong Copyright Act presumption to award fees to a prevailing party. Finally, the court affirmed the dismissal of Johnson II on res judicata grounds. Although the latter case involved a different legal theory, the facts in both cases are identical. That is enough to satisfy the identity of cause of action requirement.

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EVA'S BRIDAL LTD. v. HALANICK ENTERPRISES (May 10, 2011)

Forty-five years ago, Eva Sweis opened the first "Eva's Bridal" shop in Chicago. The business was quite successful, selling dresses for brides and bridesmaids. The business eventually passed to her daughter and son-in-law. They sold one of their "Eva's Bridal" shops in a Chicago suburb to Nayef Ghusein. Their agreement required a $75,000 annual payment for the right to use the name. The agreement did not require Ghusein to conduct his operations according to any particular guidelines. The agreement expired in 2002 but Ghusein continues to operate the store under the same name without paying an annual fee. Eva's Bridal brought suit pursuant to the Lanham Act. Judge Darrah (N.D. Ill.) dismissed the complaint, concluding that plaintiffs abandoned the mark when they allowed Ghusein to use it without exercising any control over the nature and quality of the business. Plaintiffs appeal.

In their opinion, Chief Judge Easterbrook and Judges Flaum and Ripple affirmed. The Court noted that plaintiffs concede that "naked licensing" (that is, licensing without exercising control over the business) results in the abandonment of a mark. Plaintiffs contend, however, that Ghusein uses the same high-quality designers that they used when they operated the store and that they therefore had no need to oversee the business. But the Court disagreed. Trademark law does not require a licensor to insist on high-quality -- only to insist on a consistent level of quality. The degree of control required of a licensor depends both on customer expectations and the nature of the business itself. The Court concluded that it was not necessary to decide how much control was enough for these plaintiffs because they exercised no control at all. The fact that they knew the identical dresses might be available at the shop says nothing about other aspects of a customer's experience. The district court was correct in finding the mark abandoned.

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KELLEY v. CHICAGO PARK DISTRICT (February 15, 2011)

In 1984, the Chicago Park District gave Chapman Kelley a permit to install a large wildflower display in Chicago’s Grant Park. Kelley was a nationally known painter at the time, known principally for landscapes and floral scenes. He had already, on two occasions, transferred his creativity from the canvas to the ground. The Chicago project covered 1.5 acres and consisted of 48-60 different species of wildflowers. The flowers were placed such that they bloomed at different times, changed colors throughout the season, and increased in brightness toward the center of the project. The project was a huge success. Kelley (and volunteers) continued to maintain the project until 2004, when the Park District reduced the project to less than half of its original size and made other changes. Kelley brought suit against the Park District under the Visual Artists Rights Act of 1990 ("VARA"). He also brought a breach of contract action based on a Park Commissioner's oral promise that the project could continue. After a bench trial, Judge Coar (N.D. Ill.) entered judgment for the Park District on the VARA claim. He concluded that the project qualified as a work of visual art but was insufficiently original under copyright law to merit the protection of VARA. Alternately, he concluded that VARA did not apply because the project was site-specific art. The court entered judgment for Kelley on the contract claim, but awarded damages of only one dollar. Kelley appeals. The Park District cross-appeals.

In their opinion, Judges Manion, Sykes, and Tinder affirmed in part and reversed and remanded in part. The court explained some of the background and history of VARA, dating back to 19th-century France, the European notion of artists' moral rights, the 1886 Berne Convention, and the 1988 Senate ratification of the treaty. After the treaty's ratification, Congress amended the copyright act with VARA. It provided artists with a limited set of moral rights, including the right to prevent modification of one's work. In order to be protected by VARA, however, a work must be “a painting, drawing, print or sculpture.” In addition, the statute explicitly excludes any work not subject to copyright protection. The statute also excludes from protection the modification of a work which is a “public presentation.” The Court discussed at some length but did not decide the public presentation issue (because it decided the case on other grounds) and the painting or sculpture issue (because the Park District did not challenge the district court's conclusion). Instead, it resolved the statutory issue on copyright grounds. In order to qualify for copyright protection, a work must have a human author and must possess fixation (that is, be reduced to tangible form). The Court found both of these elements missing in the wildflower project. It concluded that a wildflower garden is not authored – it is cultivated. It is also not stable enough to be fixed. In fact, its very essence is one of change and growth. Since the work is not subject to copyright protection, is not entitled to protection under VARA. They Court also briefly addressed the contract claim. Relying on the Chicago Park District Act and the Illinois Park District Code, the Court concluded that a single Park District Commissioner had no authority to bind the District. Therefore, the oral "contract" relied upon by Kelly is invalid.

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HYPERQUEST v. N'SITE SOLUTIONS (January 19, 2011)

Safelite Group owns the copyright for a claims processing software program. Its predecessor granted a non-exclusive license to N’Site Solutions in 2001 limited to in-facility use only. A dispute arose between the parties in late 2003 regarding agreement terms and fees. Attempts to renegotiate the agreement in early 2004 were unsuccessful. At about the same time, Safelite entered into a licensing agreement with HyperQuest. The HyperQuest agreement granted significantly greater rights than the N’Site agreement did. However, Safelite retained certain rights and the agreement recognized the then-ongoing renegotiation efforts with N’Site. HyperQuest filed a Copyright Act suit against N’Site and Unitrin Direct Insurance Company. It alleged that N’Site infringed its copyright by using the software outside of its own facilities, by modifying and creating derivative works, and by selling the software or derivative works to Unitrin. Judge Shadur (N.D. Ill.) dismissed the case with prejudice, concluding that HyperQuest lacked standing to sue. The court also awarded fees and costs to N’Site. HyperQuest appeals both the merits and the fee award -- Unitrin cross-appeals the reduction of its requested fees.

In their opinion, Seventh Circuit Judges Flaum, Wood, and Evans affirmed. Under the Copyright Act, only a person with enforceable rights may bring an action. That person must be a "legal or beneficial owner of an exclusive right." The Act lists six exclusive rights - the right to: a) reproduce the work, b) prepare derivative works, c) distribute copies, d) perform the work publicly, e) display the work, and, f) perform the work digitally. The Court noted that a copyright owner could convey various rights to different parties and that HyperQuest need only show its ownership of one of the exclusive rights. HyperQuest claims to own three of the six identified rights -- the rights to reproduce, prepare derivative works, and distribute copies. The Court turned to the language of the license agreements and the rights held by each of the parties to resolve the claim. It noted that N’Site had a limited right to use the software in its own facilities and no rights to reproduce, prepare derivative works, or distribute copies. But HyperQuest's license was not only subject to N’Site actual rights but was also subject to any rights that would have been granted to N’Site in the renegotiated license. In addition, Safelite itself retained substantial rights with respect to derivative works. The Court concluded that the lines of ownership were "blurry at best" and that HyperQuest failed to meet its burden of showing ownership of an exclusive right. Turning to the fee award, the Court first addressed a jurisdictional issue. The original judgment on the fee award ran in favor of Unitrin only. Two days later, the district court on its own motion amended the judgment to add N’Site. Unitrin's notice of appeal is timely only if the amended judgment started anew the period within which to appeal. The Court concluded that the change was not a clerical error correctable under Rule 60(a) but that it was akin to a new trial order under Rule 59(d) and that the notice of appeal was timely. The Court found no abuse of discretion in either the award of fees or the reduction in the amount requested.

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UNIVERSITY OF WISCONSIN v. PHOENIX INTERNATIONAL SOFTWARE (December 28, 2010)

The Court withdrew this opinion on February 10, 2011 and granted Phoenix’ Petition for Rehearing limited to the sovereign immunity issue. Supplemental briefing and oral argument will focus on:
       Whether the district court erred in concluding that plaintiff‐appellee Board of Regents of the University of Wisconsin (Wisconsin) did not waive any sovereign immunity it may have had
to the counterclaims asserted by defendant‐appellant Phoenix International Software (Phoenix),
or otherwise consent to their adjudication in this case?
       Whether the counterclaims brought by Phoenix against Wisconsin are compulsory or
permissive counterclaims under FED. R. CIV. P. 13? 

Phoenix International Software and the University of Wisconsin each registered the mark CONDOR with the Patent and Trademark Office. Phoenix has used the mark since 1978 and registered it in 1997. Wisconsin registered its mark in 2001. Each mark refers to computer software, although the Phoenix system is designed principally for mainframe systems and the Wisconsin system is designed principally for individual computers. Phoenix petitioned the Trademark Trial and Appeal Board to cancel Wisconsin's mark on the ground that it creates confusion. The Board granted the petition and canceled the mark. Wisconsin challenged the Board's decision by filing an action in federal district court. Phoenix counterclaimed for trademark infringement and false designation of origin. Judge Crabb (W.D. Wis.) reversed the Board’s determination on Wisconsin's motion for summary judgment and also dismissed Phoenix's counterclaims on sovereign immunity grounds. Phoenix appeals.

In their opinion, Seventh Circuit Judges Flaum, Wood (dissenting in part), and Tinder reversed and remanded for trial on the likelihood of confusion issue but affirmed on the sovereign immunity issue. The Court first addressed the likelihood of confusion issue and specifically the standard of review. Wisconsin had two choices to challenge the Board's decision: a direct appeal to the Federal Circuit limited to the record below and decided on a substantial evidence standard, or a new action in the district court allowing it to supplement the record below. Since Wisconsin chose the latter course, the Court's standard of review is layered. The Board's findings are owed typical administrative appeal deference while the new evidence is treated like a typical summary judgment record and viewed in the light most favorable to the non-moving party. That required the Court to distinguish the Board's findings from new evidence below. The Court concluded that the district court erred in reversing the Board. The principal issue in the case is the likelihood of confusion. The Board considered the actual nature and use of the software while the district court focused its analysis on the description of the products in their registration materials. But whether the public may be confused (i.e., attribute the products to a single source) is the real focus of the multiple factor likelihood of confusion test. The district court was wrong when it focused principally on the products' similarities and matters of use (and doubly wrong when it focused exclusively on the written descriptions). On the other hand, the Board was right when it focused on the facts that the marks were identical, their functions were similar, and sophisticated purchasers were likely to believe that their sources were related. The Court reinstated the Board's findings. It considered Wisconsin's new evidence but found it not sufficient to overcome those findings and compel summary judgment in Wisconsin's favor. It therefore remanded for a trial on likelihood of confusion. The Court next considered Phoenix's counterclaims, which the district court dismissed on sovereign immunity grounds. There are two exceptions to the Eleventh Amendment's grant of sovereign immunity. The first is when Congress regulates state behavior pursuant to the Fourteenth Amendment. The second is when a state waives its immunity and consents to suit. The Court noted that the Supreme Court has already found unconstitutional the Patent Remedy Act's creation of state liability for patent infringement in Florida Prepaid. Given the similarities between the two statutes, the Court found the decision controlling. With respect to waiver, the Court first rejected the argument that Wisconsin's participation in the regulated trademark process amounted to waver, again relying on Florida Prepaid. Lastly, the Court addressed and rejected the argument that Wisconsin voluntarily waived its sovereign immunity when it chose to challenge the Court's decision by filing a suit in the district court. The Court distinguished the Supreme Court's Lapides decision, in which Georgia was not allowed to invoke sovereign immunity after it removed a case from state court. Here, Wisconsin's filing simply reflected its choice of a forum for judicial review. It did not alter the nature of the proceedings in any way.

Judge Wood agreed with the majority on the likelihood of confusion with issue and also with respect to whether Wisconsin's participation in a federal regulatory program constituted a waiver of sovereign immunity. She dissented, however, on the issue of whether Wisconsin's district court challenge to the Board’s decision constituted a waiver. The issue is not, she said, whether the state is a defendant, a plaintiff, an intervenor, or an appellant. It is, instead, the voluntariness of the decision and its consequences. Here, Wisconsin chose to file a case. Lapides controls -- Wisconsin has waived sovereign immunity. Wisconsin was not even required to appeal. It could have accepted that the Board's decision. Similarly, it could have appealed to the Federal Circuit, where Phoenix would not have been able to file a counter court. Instead, Wisconsin chose to gain a litigation advantage by filing in the district court. Just like in the Lapides case, Wisconsin was using its sovereign immunity to gain a litigation advantage. Finally, Judge Wood wrote at length suggesting that it may be time to reconsider a "commercial act" exception to the scope of sovereign immunity.

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STAYART v. YAHOO! (September 30, 2010)

Beverly Stayart sounds like a bit of a renaissance woman. Self-described as "sophisticated, well-educated, and highly intelligent," she has a University of Chicago M.B.A, engages in humanitarian efforts in support of baby seals and wolves and wild horses, researches genealogy, has published scholarly papers on the Internet, and writes poetry. One day, she conducted a Yahoo! Search on her own name. That search, and others that followed, produced troubling results. In addition to the links about herself and her activities, she found links to pharmaceutical companies, pornographic websites, and much more. She demanded that Yahoo! remove the offensive links. Yahoo! declined. Stayart brought suit alleging a violation of § 43(a) of the Lanham Act. Judge Randa (E.D. Wis.) dismissed the complaint on the grounds that she had no commercial interest in her name. Stayart appeals.

In their opinion, Circuit Judges Manion and Williams and District Judge Darrah affirmed. The Court noted that Stayart did not challenge the well-established rule that § 43(a) requires a showing of commercial interest. Instead, she argued that her extensive and varied activities and presence on the Internet established a commercial interest in her name. The Court disagreed. Section 43(a) is a remedy for a commercial plaintiff who seeks to protect its commercial interest. Stayart's activities may be laudable -- they are not commercial.

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JAY FRANCO & SONS v. FRANEK (August 11, 2010)

In the late 1980s, Clemens Franek sought and received trademark registration status for his "radical" round beach towel. Almost 20 years later, Franek brought suit under the Lanham Act against Jay Franco & Sons for its unauthorized sale of round beach towels. Franco counterclaimed to invalidate the mark. Judge Dow (N.D. Ill.) granted summary judgment to Franco. Franek appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Evans affirmed. The Court first noted that Franek's long continuous use of the mark made it "uncontestable" – so Franek did not have to show that the mark had acquired a secondary meaning. But the mark is still susceptible to challenge on whether it is merely functional. Patent law provides protection to functional designs -- trademark law does not. The Supreme Court defined functional in TrafFix Devices as "essential to the use or purpose of the device or when it affects the cost or quality of the device." One way of identifying whether a design is useful is with reference to existing utility patents. The Court noted that the round towel’s design was quite similar to a portion of a utility patent granted for a towel-bag. The existence of the patent, under TrafFix, is strong evidence of the functionality of a circular towel. In addition, the Court noted that the Franek's own advertisements focused on the functionality of the shape -- allowing sunbathers to change position without moving the towel. The Court also rejected Franek’s argument that the design was a fashion statement. In most instances, fashion is function. What Franek wants is the exclusive use of a basic round design for a beach towel. Although a distinctive, irregular design may qualify for trademark protection, the simple circle does not.

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SPECIALIZED SEATING v. GREENWICH INDUSTRIES (August 11, 2010)

Greenwich Industries has been manufacturing standard folding chairs for more than 80 years. In 1999, it applied for a trademark registration of one particular design. The Patent and Trademark Office issued its registration in 2004. Specialized Seating also manufactures folding chairs and has one model that is almost identical to Greenwich's trademarked chair. Specialized brought suit under the Lanham Act for a declaratory judgment that its chair did not violate Greenwich's rights -- Greenwich counterclaimed for injunctive relief. Judge Holderman (N.D. Ill.) ruled in favor of Specialized, concluding both that the chair's design was functional and that Greenwich had defrauded the Patent and Trademark Office. Greenwich appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Evans affirmed. The Court applied the clear error test to the district court's finding of functionality. Although functionality happened to be the ultimate issue in the case, it is still a fact specific conclusion subject to the clear error standard of review. The Court noted the difference between patent protection and trademark protection. A purely functional design such as Greenwich's chair can be, and in fact here was, protected for a time with a patent. When the patent expires, however, that protection cannot be extended through trademark application. It is true that certain functional products can receive trademark protection, but only when a nonfunctional aspect of its design creates a distinctive appearance. All of the aspects of Greenwich's chair design are functional -- none contribute to a distinctive appearance. Having affirmed the district court's finding of functionality, the Court did not address its finding of fraud.

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FM INDUSTRIES v. CITICORP CREDIT SERVICES (July 22, 2010)

FM Industries brought a copyright infringement suit against Citicorp Credit Services. Judge Conlon (N.D. Ill.) found material disputes with respect to FM’s prospective relief and Citicorp’s ongoing infringement and set the case for trial. FM's lawyer, Wayne Rhine, was late in his obligation to prepare a draft pretrial order. When he did so, it was "egregiously noncompliant." Despite extensions of time and cooperation from the defendants, Rhine never fixed the problem. Eventually, the court dismissed the case for want of prosecution. The district court awarded approximately $750,000 in attorneys’ fees to the defendants under the copyright statute. The court also found that Rhine and his co-counsel William McGrath had vexatiously multiplied the proceedings under § 1927 and imposed a joint and several sanction of $35,000. FM, Rhine, and McGrath appeal.

In their opinion, Chief Judge Easterbrook and Judges Wood and Tinder affirmed in part and reversed in part. The Court first noted that any argument on the merits was irrelevant. The only reason the case did not go to trial was the dismissal sanction. On that issue, the Court had no difficulty in finding it proper. The non-compliant pretrial order with was, in the Court's words, the "straw that broke the camel's back." The Court recited the delays, the warnings, the absurd damage demands, the missed time limits, the overreaching discovery demands -- the list went on. The dismissal sanctioned was permissible under Rule 16 and was proportionate to the conduct. With respect to the statutory award of fees, the Court stated that a prevailing defendant is presumed entitled to fees under the statute and FM presented no reason to reverse that presumption. Finally, with respect to § 1927 sanctions, the Court concluded that Rhine's litigation behavior was vexatious and deserving of sanctions. McGrath, however, presented a different story. Although he did file an appearance and signed five pleadings, he was not accused of any direct misdeeds. He cannot be sanctioned under § 1927 for the misdeeds of his co-counsel or even for his failure to prevent them. The Court reversed the award of sanctions against McGrath.

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WISCONSIN ALUMNI RESEARCH FOUNDATION v. XENON PHARMACEUTICALS, INC. (January 5, 2010)
 

Scientists at the University of Wisconsin discovered that suppressing a certain enzyme in the body reduced cholesterol levels. They disclosed their discovery to the Wisconsin Alumni Research Foundation, which manages patents for the University. They assigned all their rights to the Foundation. Xenon Pharmaceuticals was very interested in the same effort. Xenon and the University entered into a series of agreements under which Xenon sponsored various research projects; Xenon and the Foundation entered into an agreement giving Xenon exclusive licensing rights in return for a percentage of fees received; and Xenon entered into a series of agreements directly with the individual researchers to undertake various projects. Xenon and the Foundation filed for and received a joint patent. The relationship soured. Xenon did some related work with a third party and with an individual University scientist with whom it had a consulting agreement. When it filed a patent application covering the results of that work, the Foundation objected. It also licensed the technology covered by both the joint patent and the related patent to Novartis. The Foundation demanded its contractual percentage -- Xenon refused. The Foundation brought suit, claiming that both the Novartis license and the related patent violated the party's agreement. Xenon counterclaimed. In a series of rulings, the court held that Xenon breached the agreement by granting the sublicense to Novartis and that Xenon owed licensing fees to the Foundation. The court refused the Foundation's request for a declaration that the work on the related patent belonged to it and concluded that the Foundation's argument that it had a right to terminate the contract was not developed sufficiently in its briefs. At trial on damages, the jury awarded $1 million, which was reduced on remittitur to $300,000. The parties cross-appealed.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Sykes affirmed in part, reversed in part and remanded. The Court first addressed Xenon's transfer to Novartis. The Court agreed with Xenon that each joint patent holder, under federal law, is allowed to use the patented technology without regard to the rights of the other. However, that right is subject to modification by agreement of the parties. Here, the Foundation conditioned Xenon's right to license the technology on its payment of a fee. Interpreting the terms of their agreement, the Court concluded that Xenon owed the contractual fee upon its receipt of its fee and its failure to remit it was a breach of the agreement. The Court then rejected Xenon's argument that the Foundation presented insufficient evidence to support its damages claim. With respect to the Foundation's right to terminate the agreement, the Court concluded that the lower court was in error when it held that the right to terminate was contingent upon a judicial finding of a breach. The agreement specifically gives the Foundation the right to terminate the agreement upon a breach by Xenon and a failure to remedy the breach within 90 days after written notice. The Foundation considered Xenon's conduct a breach and gave appropriate notice. Even though it filed suit prior to the expiration of the 90 days, it's right to terminate after a failure to cure remains. It need not await a judicial determination. The Court concluded that the Foundation properly terminated the agreement. Finally, the Court addressed the Foundation's claim for a declaration of its ownership of the related technology. The Court concluded that the contractual terms were clear and that the scientist's work, although partially sponsored by Xenon, was owned by the Foundation.  

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SCHROCK v. LEARNING CURVE INTERNATIONAL (November 5, 2009)

Learning Curve International ("LCI"), a producer and distributor of toys, has a license to market toys based on the "Thomas & Friends" properties. It hired Daniel Schrock to take photographs of those toys for use in promotional materials. LCI paid Schrock more than $400,000 for his effort. Although LCI stopped using Schrock's services in 2003, it continued to use some of his photos. Schrock registered the photos for copyright protection in 2004 and brought an infringement action against LCI and LCI’s licensor. The district court granted summary judgment to the defendants. It ruled that Schrock needed LCI's permission to copyright the photos, which he did not have. Schrock appeals.

In their opinion, Judges Flaum, Williams and Sykes reversed and remanded. The Court first noted that the copying element of an infringement action was not disputed – only whether Schrock had a valid copyright. Then, the Court briefly discussed the subject of derivative works but ended up assuming without deciding that each photo qualified as a derivative work. Next, the Court concluded that the photos met the requisite threshold of originality for copyright protection. That threshold is rather low – and the Court specifically rejected LCI’s argument that the threshold is higher for derivative works. If photographs are distinguishable from the underlying works, they qualify for derivative-work copyright. Schrock’s are and therefore do. In order to be copyrightable, a derivative work must itself not be infringing – that is, the owner of the copyright in the underlying work must have given permission to make the derivative work. The owner need not, however, have given actual permission to copyright the derivative work. The Court specifically rejected dicta in Gracen that suggested otherwise. Although Schrock’s right to copyright his work therefore arises by operation of law without the need for permission, Schrock is entitled to contract away his rights. The Court concluded that the record was insufficient to determine the merits of defendants’ arguments that he did just that. It remanded for further development of the record.

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SCHERING-PLOUGH HEALTHCARE PRODUCTS v. SCHWARZ PHARMA (October 29, 2009)

Schering-Plough makes an over-the-counter oral laxative which it sells under the trade name "MiraLAX." Its chemical name is polyethylene glycol 3350. Four other companies sell polyethylene glycol 3350 as a generic, prescription medication. The FDA requires a warning on the over-the-counter version that it should not be used for more than seven days. The FDA also requires that a generic drug be labeled the same as the original drug and be bioequivalent to the original drug. Schering-Plough brought a Lanham Act action against the defendants. It alleges that the defendants' labels stating that the drug is sold by prescription only are false, in violation of the Act. Meanwhile, the FDA is conducting proceedings to determine whether the defendants' products are mislabeled. The district court dismissed Schering-Plough's suit without prejudice, noting that it could be refiled, if appropriate, after the conclusion of the FDA proceedings. Schering-Plough appeals. The defendants cross appeal, seeking a dismissal with prejudice.

In their opinion, Judges Posner, Flaum and Rovner affirmed. The Court first addressed its jurisdiction, given that the suit was dismissed without prejudice below. The Court recognized some decisions in the past that have suggested that a dismissal without prejudice is not appealable unless the plaintiff is unable to bring a later suit. Focusing on the actual holdings in those cases as well as other authority, the Court concluded that a dismissal without prejudice is appealable unless the defect is immediately curable. On the merits, the Court looked to the provisions of the Lanham Act and the Food, Drug, and Cosmetic Act. It noted that the statutes should be read so as not to conflict with each other and to be given as much effect as possible. For example, the FD&C Act should not be read to prohibit a disclaimer that would correct a misinterpretation on which a Lanham Act claim is based. The record in the case did not make it clear, however, what the Lanham Act remedy should be. Schering-Plough was not very helpful in its suggestions. In addition, the Court believed that any change in labeling adopted by the defendants would have to be approved by the FDA. The Court therefore agreed with the district court that the FDA should be allowed to consider the misbranding issue before the Lanham Act suit is allowed to proceed. Although the Court affirmed the lower court's dismissal without prejudice, it also commented briefly on the viability of the Lanham Act claim. It questioned whether Schering-Plough's reliance on the "literal falsity" doctrine was proper in the context of the case.
 

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JANKY v. LAKE COUNTY CONVENTION AND VISITORS BUREAU (August 3, 2009)

Cheryl Janky and Henry Farag were members of the musical group Stormy Weather. They learned that the Lake County Convention and Visitors Bureau (Bureau) was looking for a song to use in marketing the county’s resources. Janky wrote the music and lyrics for a song and obtained a copyright for it. Her band-mate Farag made several specific recommendations regarding the song’s lyrics. Janky adopted the recommendations and filed for a new copyright listing Farag as the co-author of the song. The Bureau liked the song and began using it in its promotions. Farag issued a non-exclusive license to the Bureau. Some time later, Janky filed yet another copyright registration to correct what she termed a mistake in listing Farag as a co-author. Janky notified the Bureau that she was the exclusive owner of the song. The Bureau, however, did not stop using the song. Janky filed suit. The court entered partial summary judgment in her favor and a jury awarded her $100,000. The Bureau appeals.

In their opinion, Judges Bauer, Ripple (dissenting) and Evans reversed and remanded. The principal issue before the Court was whether Janky held the copyright by herself or whether she shared it with Farag. The legal standard is that individuals are co-authors when they intend to create a joint work and both contribute independently copyrightable material. The majority elaborated on the intent prong by stating that it does not focus on the party's intent to recognize each other as co-authors but on their intent to create a single product together. The majority concluded that the evidence supported a finding that Farag and Janky intended to create a joint work. They relied significantly on Janky's original copyright registration. The majority also found the independently copyrightable prong met in this case. They noted that the changes, although only 10% of the final lyrics, were significant not only to the sound but to the commercial viability of the song. The Court remanded for partial summary judgment to be entered for the Bureau.

Judge Ripple, dissenting, agreed with the majority's statement of the standard and, in fact, agreed with the majority that the district court improperly granted summary judgment to Janky. He disagreed, however, with the majority’s conclusion to enter partial summary judgment in favor of the Bureau. Particularly with respect to the evidence of intent, Judge Ripple concluded that the record did not support entry of judgment for either party.

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GABBANELLI ACCORDIONS & IMPORTS, L. L. C. v. DITTA GABBANELLI UBALDO DI ELIO GABBANELLI (July 30, 2009)

Gabbenelli Accordions & Imports ("American Gabbenelli") used to be the American distributor for a predecessor of defendant Ditta Gabbenelli Ubaldo Di Elio Gabbenelli ("Italian Gabbenelli"). Disputes arose between the two companies in the 1990s. In 1999, the two companies entered into an agreement under which American Gabbenelli retained the exclusive right to use the Gabbenelli mark in North America and Italian Gabbenelli retained the exclusive right to use it in Italy. The parties further agreed that future disputes would be resolved by arbitration. Notwithstanding the arbitration agreement, Italian Gabbenelli sued American Gabbenelli in an Italian court and American Gabbenelli filed this suit in the United States. American Gabbenelli charged Italian Gabbenelli with trademark infringement. The district court first rejected Italian Gabbenelli's contention that the arbitration agreement deprived the court of jurisdiction. Nevertheless, the court stayed proceedings pending the outcome of the Italian litigation. When no decision was rendered within a few years, the court lifted the stay. American Gabbenelli served Italian Gabbenelli with requests for admissions in May of 2005. Italian Gabbenelli finally appeared through counsel in October of 2005 but did not respond to the requests for admissions. Italian Gabbenelli filed an opposition to American Gabbenelli's motion for summary judgment in June of 2007, and also asked for leave to deny the requests for admissions, which had since been deemed admitted. The court denied that request and granted American Gabbenelli's motion for summary judgment. Italian Gabbenelli appeals.

In their opinion, Judges Posner, Flaum and Wood affirmed in part, reversed in part and remanded. The Court rejected Italian Gabbenelli's appeal on liability. First, it agreed with the district court that the arbitration agreement did not deprive the court of jurisdiction. Second, it concluded that the Italian judgment (since rendered) was irrelevant because it was rendered after the district court judgment. Third, the Court concluded that the district court was within its rights in not allowing Italian Gabbenelli to reopen the requests for admissions after ignoring them for several years. The Court did reverse, however, with respect to damages. The district court awarded damages for lost profits plus statutory damages of $500 for each infringing accordion. The Lanham Act allows statutory damages only for violations on which compensatory damages are not awarded. The district court's award of lost profits and statutory damages with respect to the same accordions was improper. The Court also criticized the district court for awarding statutory damages on each individual item sold. The Act allows statutory damages on each "type of goods," not on individual goods. The Court remanded for a redetermination of damages.

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BROOKS-NGWENYA v. INDIANAPOLIS PUBLIC SCHOOLS (April 15, 2009)

While a classroom assistant in the Indianapolis Public School system ("IPS"), Angela Brooks-Ngwenya developed a program she called Transitioning Into Responsible Students (“TIRS”). When IPS did not offer Brooks-Ngwenya a permanent job, she brought suit for race discrimination. She and IPS settled the suit in 2004. She later brought a second suit, alleging that IPS infringed her copyright in TIRS, to which she added a claim for employment discrimination. The district court granted summary judgment to IPS. Brooks-Ngwenya appeals.

In their opinion, Judges Posner, Williams and Tinder affirmed. The Court first addressed the issue of copyright registration. The district court granted summary judgment to IPS because the Copyright Office had rejected Brooks-Ngwenya's application for trademark registration. Federal law requires a rejected applicant to notify the Register of Copyrights when suing for infringement. Brooks-Ngwenya presented no evidence that she had given such notice. The Court concluded that the notice requirement was, although not jurisdictional, a prerequisite to suit. Given that the Register was aware of the suit, the Court concluded that no purpose would be served by insisting on notification and proceeded to the merits. The Court held that Brooks-Ngwenya’s copyright claim must fail because she could not show that IPS used any of her words or materials, only possibly her idea. As for the discrimination claim, the Court had no difficulty in affirming the district court. The party’s earlier dismissal barred the claim. 

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