The firm recently won a complete victory for Toshiba Corporation in an AAA/ICDR arbitration in New York. Toshiba brought several claims against Coby Electronics Co., Ltd., a Chinese manufacturer of consumer DVD players, for breach of a patent license, and included claims for royalties due under the license agreement. The claims, with interest, totaled over $18 million. Additionally, Toshiba sought a declaration that the release for past patent infringement contained in the license was null and void.
Toshiba is the authorized licensor for the DVD6C Licensing Group (“DVD6C”). DVD6C licenses over 5,000 DVD patents on behalf of nine major companies (Hitachi, Mitsubishi Electric, Panasonic, Samsung, Sanyo, Sharp, Toshiba, Warner and JVC). In 2008, Toshiba entered into a license with Coby, which permitted Coby to practice the DVD6C members’ essential DVD patents and released it from claims of past patent infringement. But Coby only intermittently rendered royalty reports and failed to pay royalties on the sales it reported. In addition, Toshiba suspected that Coby was reporting only a fraction of the DVD players it was actually selling. Following an investigation into Coby’s export/import practices, the firm presented evidence that Coby had sold over ten times the number of DVD players it had reported to Toshiba.
In a 40-page decision, the arbitral tribunal awarded Toshiba $18.5 million in damages for breach of contract plus continuing interest at the rate of 2% per month until the award is paid in full. The tribunal also declared the release for past patent infringement null and void. And the tribunal found that Toshiba was the prevailing party, entitling it to recover all its reasonable attorneys’ fees and costs. Hence, Toshiba was accorded the full relief it sought on every claim it asserted in the arbitration.
The decision is significant in that it demonstrates that IP licenses may be enforced through arbitration against Chinese entities that fail to report accurately the sales of royalty-bearing products manufactured in China and sold worldwide. This is important because China is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Preliminary Injunction Victory in Ninth Circuit
The firm recently achieved another victory for Google in a long-running copyright infringement case brought by adult entertainment company Perfect 10. Seven years ago, Perfect 10 sued Google in the Central District of California for copyright infringement and other claims based on Google’s (1) linking to allegedly infringing copies of Perfect 10’s images through its core Web Search Service, and (2) display of thumbnail-sized copies of Perfect 10’s images through its Image Search service. Perfect 10 later added new claims related to Google’s Blogger web log hosting service. All told, the suit alleged over two million infringements of tens of thousands of claimed copyrighted works.
In 2009, Quinn Emanuel filed motions for summary judgment regarding Google’s entitlement to safe harbor under the Digital Millennium Copyright Act (17 U.S.C. § 512). While those motions were pending, Perfect 10 tried to leapfrog them by filing a motion for a preliminary injunction–its second in the case–seeking to shut down Google’s core business. Perfect 10’s motion was based on theories of direct, contributory and vicarious copyright infringement directed to Google’s Web Search, Image Search, web caching feature, and Blogger hosting service. Quinn Emanuel mounted a vigorous opposition, arguing that Perfect 10 was not likely to prevail on the merits and that Perfect 10 neither was entitled to a presumption of irreparable harm nor could demonstrate such harm.
The district court agreed and granted Google’s summary judgment motions with respect to the vast majority of the DMCA notices Perfect 10 had sent to Google. The court concluded that nearly all the notices failed to comply with the DMCA’s requirements in multiple respects, and that without adequate notice of copyright infringement under the DMCA, Google was entitled to safe harbor protection. The ruling disposed of well over 98 percent of Perfect 10’s expansive copyright infringement claims. The court also denied Perfect 10’s preliminary injunction motion on all counts.
Perfect 10 appealed both decisions to the Ninth Circuit, arguing that the ordinarily-unappealable order granting Google partial summary judgment of DMCA safe harbor was inextricably intertwined with the denial of its preliminary injunction motion. Quinn Emanuel vigorously defended both lower court victories. Earlier this month, the Ninth Circuit held that Perfect 10 was not entitled to a presumption of irreparable harm in connection with its preliminary injunction motion, and had not offered sufficient evidence demonstrating such harm. The Ninth Circuit also left Google’s DMCA summary judgment victory intact.
Importantly for copyright defendants, the decision reversed a long line of Ninth Circuit cases holding that copyright plaintiffs are entitled to a presumption of irreparable harm, finding those cases irreconcilable with the Supreme Court’s 2006 decision in eBay v. MercExchange. It also preserved the district court’s DMCA summary judgment order. As a result of this significant victory, Google has no damages exposure for approximately 2 million alleged infringements that Perfect 10 claimed with respect to Google’s Search and Blogger services. The decision also offers practical guidance to both copyright owners and internet service providers regarding the proper application of the DMCA and reinforces Ninth Circuit precedent confirming that the copyright owner–not the service provider–bears the burden to sufficiently identify alleged copyright infringements on the web.