Business and Commercial Litigation Newsletter #21 - October 2012


[authors: Paul McDonald and Dan Murphy]

We are pleased to present the 21st edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we recap news about intellectual property rights, the sale of branded products and a U.S. lawsuit filed against Bank of America. We hope you enjoy the newsletter.

In the News:

The U.S. Supreme Court is hearing arguments about copyright and trademark holders’ attempts to prevent the gray market resale of branded products imported from abroad. The gray market, which is worth approximately $63 billion, is a parallel market where unintended or unauthorized distribution channels are used to supply domestic markets. In Kirtsaeng v. John Wiley & Sons, Inc., a Thai national resold textbooks purchased in Thailand in the United States through EBay. The publisher sued the Thai national for copyright infringement and was awarded $600,000 in damages based on the rationale that foreign-made copyrighted works can never be resold without permission of the copyright holder. After the ruling, the defendant claimed protection based on the first-sale doctrine, which permits owners of lawfully made copies to sell or dispose of such works without permission of the copyright holder. On appeal, the second circuit weighed these arguments and affirmed the judgment in favor of the copyright holder, resulting in the present appeal.

The last time the U.S. Supreme Court attempted to address intellectual property rights and the gray market, it was deadlocked 4-4. The present case is expected to provide the public with a definitive ruling on the issue. Read more about the case here.

The U.S. has filed suit against Bank of America for its role in selling toxic mortgage loans to Fannie Mae and Freddie Mac. The case, started by a whistleblower from within Bank of America, is now being prosecuted by the Department of Justice. Bank of America is accused of saddling taxpayers with more than $1 billion in losses from the loans. The suit alleges that Bank of America knowingly steered risky loans into a streamlined approval process that evaded standard checks for loan quality and integrity.

These toxic loans were eventually sold to Fannie Mae and Freddie Mac, contributing to a billion dollar loss in their loan portfolio. Under Bank of America’s program, known as the High Speed Swim Lane, defect rates for applicable mortgage loans reached nearly 40 percent. Read more about this development here.

A U.S. District Court held that General Motors did not infringe upon publicity rights by using an image of Albert Einstein in advertisements for GMC Terrain vehicles. The beneficiary of Einstein’s will filed suit against GM in 2010, arguing that the company infringed upon its interest in Einstein’s publicity rights by using his image and likeness to sell its sport utility vehicles. The plaintiff argued that federal copyright law, which protects works for 70 years after a copyright holder’s death, should provide the term for protection of publicity rights. However, that distinct right, which is a creature of statute, was only extended from 50 to 70 years in 1998. Ultimately, the court determined that a 50-year period for heirs to reap publicity rights was sufficient. Read more about the case here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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