Digital Media Lawyer Blog

In 1998, in another of a series of attempts to prevent access by minors of adult materials on the Internet, Congress passed the Child Online Protection Act (COPA, codified at 47 USC § 231). However laudable Congressional intent was, the text of COPA was unquestionably vague and overbroad. Internet content providers and distributors can now breathe more easily. By denying a writ of certiorari in American Civil Liberties Union v. Mukasey, on January 21, 2009, the U.S. Supreme Court has put the final punctuation mark on a lengthy court challenge to COPA and effectively agreed that it is unconstitutional.

The text of COPA states: "Whoever knowingly and with knowledge of the material, in interstate or foreign commerce by means of the World Wide Web, makes any communication for commercial purposes that is harmful to minors shall be fined not more than $50,000, imprisoned not more than 6 months, or both." (fn1) The statute defines "material harmful to minors" as material that is "obscene" or that is designed to pander to the prurient interest, depicts sexual acts and taken as a whole, lacks serious literary, artistic, political, or scientific value for minors. (fn2)

The ACLU first filed its challenge to the constitutionality of COPA in 1998, the day after the bill became law. A Pennsylvania District Court judge enjoined enforcement of COPA pending trial on the merits. The ruling was then affirmed by the Third Circuit only to be remanded for further proceedings by the Supreme Court - twice. After the second remand, the case was tried by the Pennsylvania District Court on a bench trial, which again found COPA to be unconstitutional. The Third Circuit affirmed this ruling in July 2008 -- finding COPA to be unconstitutional for the third time. The Supreme Court's refusal to accept certiorari means that it appears to be content with the record and reasoning in the Third Circuit's July 2008 opinion.

Continue reading "Overbroad Rules on Internet Publication of Materials "Harmful to Minors" Killed by Supreme Court Ruling" »

The California Energy Resources Conservation and Development Commission is in the process of considering new energy efficiency regulations for televisions which would require substantially increased energy efficiency. (fn1)

Current Standards

California's current rules, which solely regulate power usage while a television is in "stand-by" mode, limit power usage to 3.0 watts. (fn2) The current rules only apply to stand-alone TVs designed to receive broadcast signals, and do not apply to combination TV/DVD or VCR units or computer monitors.

Proposed Standards

Under the proposed rules, which were largely based on recommendations from California's utility industry, power usage would be limited to 1.0 watts in stand-by mode. Power usage in active mode would be based on screen size -- ultimately based on the following formula: [{0.12 watts x the screen area (in square inches)} + 25 watts]. All TVs would be required to have a power factor of no more than 0.9. In addition, all TVs would be required to include a menu that forces a viewer to select the display mode each time the power is turned or to have automatic brightness controls. TVs would also have to include features placing the unit in stand-by mode when not in active use.

The proposed rules would begin to take effect after January 1, 2011 and would cover both stand-alone and combination TVs, but still exclude computer monitors. (fn3)

Continue reading "New Energy Efficiency Regulations for TVs Are Coming to California: Why You Should Be Concerned" »

Federal law permits a court to award "reasonable attorneys fees to the prevailing party" only in "exceptional cases." (fn1) Because fee awards can be harder to obtain, the possibility of an award of attorneys fees may be overlooked when assessing litigation strategy in a patent case. However, in recent cases, the Federal Circuit has upheld significant attorneys fee awards that equaled or far exceeded the royalties or lost profit damages awards in the case.

Circumstances in Which an Award of Attorneys' Fees May Be Granted

The Federal Circuit has held that to make an award of attorneys fees in a patent case, a trial court must follow a two-step process. First, the trial court must determine that exceptional circumstances exist. According to the Federal Circuit, exceptional circumstances exist where there has been "some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates FedR.Civ.P. 11, or like infractions." (fn2)

Second, if exceptional circumstances exist, the trial court then must determine whether an attorney fee award is appropriate -- and may refuse to award fees, in its discretion. According to the Federal Circuit, "[t]he trial judge is in the best position to weigh considerations such as the closeness of the case, the tactics of counsel, the conduct of the parties, and any other factors that may contribute to a fair allocation of the burdens of litigation as between winner and loser." (fn3)

Recent Federal Circuit Cases Upholding Significant Attorney Fee Awards

While these "mountains" in front of fee recovery appear high, recent Federal Circuit cases indicate that they are worth attempting to cross:

Continue reading "Winners in Recent Patent Infringement Cases Awarded Attorneys Fee Awards in Excess of Royalty Damages" »

Defendants in a consumer electronics class action often hope that agreeing to settle the suit will bring an end to litigation over a product or component. However, Sony's settlement in 2008 of a class action regarding Optical Block technology used in its LCD Rear Projection HDTVs has been followed-up with the filing of new class actions regarding Optical Block against Sony and Hitachi in the Southern District of California. (fn1) The new suits claim that Optical Block contained a defect that eventually caused the TVs to display bright blue and red haze, spots and streaks which covered the programming on the screen. The complaints, which allege that the manufacturers were aware of the defect at the time of sale, request relief under the unfair competition, deceptive advertising and warranty laws of California and other states.

The new suits mirror the class action filed against Sony in the Southern District of New York in 2006 -- the settlement of which received court approval in early 2008. The new actions bring claims regarding different Sony and Hitachi models which allegedly also contain Optical Block technology. In response to the new suits, Sony has filed a motion to dismiss, while Hitachi has filed an answer.

Continue reading "New Class Actions Filed Regarding LCD Rear Projection HDTV's Using "Optical Block" Technology" »

The recent relaxation in product return policies by retailers means that return rates on consumer electronics are likely to rise in 2009. (See our January 15, 2009 posting). This news is not entirely bad. Economic studies have shown that liberal return policies increase customer sales. (fn1) This, of course, is why many U.S. retailers have chosen to liberalize their return policies during the current economic downturn.

If you are a manufacturer or a supplier, cooperating with a retailer's liberal return policy can increase your sales, as well. If, of course, you can afford it. OEMs often work on gross profit margins that hover around 10%. Distributors often operate on even lower margins. While you may have projected that you can earn a profit based on a retailer's conservative return policy that produced a 5% return rate, a sudden liberalization that increases the return rate to 15% could wipe out your profits.

Continue reading "Minimizing Risks from Product Returns" »

The consumer electronics world saw a tightening of customer return policies by big box retailers such as Costco in 2007. However, the slowing of the U.S. economy in 2008 has caused many retailers to reverse course. A November 2008 survey by the National Retail Federation (NRF) found that 52% of retailers planned to have more lenient return policies during the 2008 holiday season, compared to 35% in 2007. The NRF survey also reported that retailers expected customer returns for 2008 to rise to over $219 billion -- a 23% increase over 2007. (fn1) Among retailers with more lenient return policies were Macy's, Sears and Circuit City. (fn2) Given this recent liberalization in return policies by retailers, distributors and manufacturers of electronic goods should get ready for higher returns in 2009.

Product Return Rates Are Linked to Retailer Marketing Strategies

Foreign entrants into the U.S. consumer electronics market are often blind-sided by the liberal return policies of U.S. retailers. These policies push U.S. return rates on retail sales to levels much higher than those found in comparable economies, such as the E.U. (fn3) According to a 2008 report by Accenture, the average return rate for consumer electronics devices "ranges between 11-20 percent in the US and 2 to 9 percent in Europe. (fn4)

Continue reading "Returns of Consumer Electronics Set to Increase in 2009: Time for Manufacturers and Distributors to Assess and Minimize their Risks" »