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An IP Guide to the Consolidated Appropriations Act of 2021
IP Appeal, Winter 2021

January 28, 2021
Client Alert

An IP Guide to the Consolidated Appropriations Act of 2021
The Fast-Evolving Issues for Embedding Social Media Posts
IP Client Spotlight

An IP Guide to the Consolidated Appropriations Act of 2021
By Kevin R. Casey

On Dec. 27, 2020, President Trump signed into law the Consolidated Appropriations Act, 2021, which will provide $900 billion in coronavirus relief and $1.4 trillion to continue to fund the government (total $2.3 trillion). The sweeping legislation covers over 5,500 pages and includes new laws impacting intellectual property: (1) the Copyright Alternative in Small-Claims Enforcement (CASE) Act, (2) the Trademark Modernization Act (TMA), (3) the Protecting Lawful Streaming Act; (4) the Commerce, Justice, Science, and Related Agencies Appropriations Act; and (5) the Biologic Patent Transparency Act. These five Acts are summarized below in turn.

  1. CASE Act

    The CASE Act establishes a voluntary (defendants can opt-out) tribunal within the U.S. Copyright Office to adjudicate copyright infringement disputes capped at $15,000 per claim or $30,000 for the entire case. Proceedings before the tribunal will be more streamlined than in federal court and will allow for remote participation without an attorney. The hope is that this new path for the resolution of disputes will give copyright owners a realistic way to protect their works. Provisions seek to deter or prevent abusive use of the process. Notably, in addition to infringement claims, the law grants the soon-to-be-formed Copyright Claims Board the power to hear disputes involving fraudulent or improper DMCA notices and counter-notifications. Such disputes are already available under Section 512 of the Copyright Act but are infrequently brought in federal court in part because the benefits of bringing such a claim rarely outweigh the costs.

  2. Trademark Modernization Act

    The TMA makes several notable changes to trademark law. Among its changes, the TMA:

    1. allows third parties to bring ex parte proceedings before the U.S. Patent and Trademark Office (USPTO) seeking to expunge or reexamine a trademark registration on the basis that the mark has never been (expungement) or was not before registration (reexamination) in commercial use on some or all of the goods or services listed in the registration;
    2. allows third parties to submit evidence during the trademark examination process, as part of the current letter of protest option, supporting refusal by the USPTO of the application;
    3. gives USPTO examiners discretion to set response times to office actions issued during examinations different from the current six-month standard, with the applicant able to request extensions (for a fee) to a full six-month period;
    4. creates (or restores) the rebuttable presumption of irreparable harm that applies when a plaintiff trademark owner has proven infringement or liability (in the context of a permanent injunction) or demonstrated a likelihood of success on the merits (in the context of a preliminary injunction); and
    5. gives the USPTO director “the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board.”

    Proponents of the TMA asserted that the first two changes are needed to prevent fraudulent trademark registrations from being issued to and maintained by entities from China and elsewhere. Under various international treaties, foreign applicants can register their marks in the United States without having to demonstrate commercial use by basing their U.S. trademark applications on either home-country registrations or extensions of protection under the Madrid Protocol. Many of these foreign-owned applications and registrations cover wide ranges of goods and services that were not in use in the United States at the time of filing or at any time thereafter. Thus, the Federal Register is now full of marks that are not being used, making it increasingly difficult for U.S. entities to clear new marks and putting them at a competitive and legal disadvantage, given that they must show commercial use before registration while foreign applicants do not. The fourth change reverses a trend established since the U.S. Supreme Court’s decision in eBay v. MercExchange, 547 U.S. 388 (2006), which made it increasingly difficult for successful trademark plaintiffs to obtain an injunction. The fifth change seeks to avoid the TTAB judges falling victim to the same constitutional challenge that the Patent Trial and Appeal Board (PTAB) is currently facing as a result of the U.S. Court of Appeals for the Federal Circuit’s decision in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), holding the appointment of PTAB judges unconstitutional. That case is currently pending before the U.S. Supreme Court.

  3. The Protecting Lawful Streaming Act

    The new legislation penalizes certain large-scale online streaming and digital transmission services trafficking in pirated works. Provisions make it a felony for such services to provide unauthorized access to copyrighted material when the service is primarily designed to publicly perform copyrighted works for financial gain without permission and has no other “commercially significant purpose.” Unlawful reproduction or distribution of copyrighted works was already a felony under certain circumstances. Similar penalties (up to 10 years in prison and fines) are now imposed for illegal streaming.

  4. The Commerce, Justice, Science, and Related Agencies Appropriations Act

    The new legislation directs the National Telecommunications and Information Administration (NTIA) to work with the Internet Corporation for Assigned Names and Numbers (ICANN) to expedite the process that gives law enforcement and IP rights holders timely access to accurate domain name registration information. This directive responds to frustration after ICANN’s decision to suspend mandatory whois requirements as its solution to comply with various data security regulations, most notably the European Union’s General Data Protection Regulation (GDPR). ICANN’s decision has left legitimate third parties who wish to pursue criminal or civil remedies against the registrant of a domain name with little practical recourse. The hope is that NTIA and ICANN can develop mechanisms consistent with legitimate interests around personably identifiable information to prevent anonymous registration of domains, which can shield fraudulent or criminal activity.

  5. The Biologic Patent Transparency Act
    Finally, the new legislation includes an IP provision relevant to biosimilars. A biosimilar is a biologic medical product (also known as biologic) that is highly similar to another biological medicine (the reference medicine) already approved by the Food and Drug Administration (FDA) for distribution across the United States. The new legislation requires the FDA within 180 days to create a searchable, electronic list of licensed biologics; to update that list monthly; and to include in the list exclusivities and patent information. Thus, the holder of a license to market a biologic drug is required to disclose all patents believed to cover that drug.



The Fast-Evolving Issues for Embedding Social Media Posts

By Allison Gifford

In the past few years, several copyright lawsuits have been filed against digital media companies concerning their use of “embedded” social media posts, for example, an Instagram post. Based on the success that the plaintiffs have had in the courts against embedding posts by digital media companies, careful consideration must be made by such groups, or any group, wishing to embed Instagram posts or other social media posts as part of their website content.

News and digital media sites embed social media posts into articles every day, and embedding was for many years a safe practice. As a practical matter, for example, Instagram and Twitter have made it easy to embed their users’ posts. Embedding is known as inline linking, which means that a photograph will appear on the digital media site but only through a link, while the photograph is stored on the social media group’s server. In fact, the “server test” since 2007 was considered standard practice for embedding content on the user’s website as long as the content was not stored there. The server test is the result of a ruling by the U.S. Court of Appeals for the Ninth Circuit, holding that a website is not liable for infringement by displaying a copyrighted work if the website does not actually store the work on its own servers. Perfect 10, Inc. v., Inc., 508 F.3d 1146 (9th Cir. 2007).

Digital media groups have relied on the server test to embed social media posts, have felt safe doing so, and have used the server test as a shield from copyright infringement. Courts in recent years have begun to reject the server test as a defense, however, and social media platforms have revised their embedding policies as well. For example, Instagram in 2020 adjusted its embedding policy to indicate that any user who wishes to embed content must secure all rights necessary to display, distribute, and deliver all content in its digital media.

Courts started to reject the server test as a defense to copyright infringement in 2017. In Leader’s Inst., LLC v. Jackson, No. 3:14-CV-3572-B, 2017 U.S. Dist. LEXIS 19355, 29-30 (N.D. Tex. 2017), the U.S. District Court for the Northern District of Texas held that “by framing the defendants’ copyrighted works, the plaintiffs impermissibly displayed the works to the public.” The issue was whether the defendants’ copyrighted display right was infringed by the plaintiffs “framing” the defendants’ website. Framing refers to the practice of dividing a web page into multiple sections that use HTML code to pull content from different sources. Framing occurs when code is used to allow a user’s browser to incorporate third-party content into a website, even though use does not allow for storage of infringing content. The court disagreed with the Ninth Circuit and the server test, as the Ninth Circuit decision considers actual possession of a copy a necessary condition to violating a copyright owner’s display right. Most importantly, the district court found in its rejection of the server test that actual possession of a copyrighted work was not a prerequisite for copyright infringement. Other district courts have followed this reasoning and have rejected the server test.

Three recent decisions from the U.S. District Courts for the Eastern and Southern Districts of New York show that the state of copyright infringement liability for content embedding is in flux and not certain. The Southern District of New York in McGucken v. Newsweek LLC, case number 1:19-cv-09617, allowed a copyright infringement claim to proceed against Newsweek based on Newsweek’s website use of embedded Instagram posts. Newsweek argued unsuccessfully that Instagram’s platform embed tool gave users an automatic license to report an image within a post, with the court indicating that the contract provision may need to be more narrowly interpreted. In Sinclair v. Ziff Davis LLC, case number 1:19-cv-09617, it was a similar story. The court allowed a copyright infringement case to proceed against Mashable, with the court indicating that Instagram’s “vague user policy” was not clear in whether it gave Mashable the necessary “explicit content” to embed a photographer’s post.

On the other hand, the U.S. District Court for the Eastern District of New York issued a ruling in November 2020 that an embedded Instagram post was fair use, attempting to strike a balance between protecting a photographer’s copyright and newsgroups’ interest in covering social media events. Boesen v. United Sports Publications Ltd., case number 2:20-cv-01552. At issue was whether a sports website’s embedding of an Instagram image of professional tennis player Caroline Wozniacki was copyright infringement or fair use. The sports website argued that it was reporting on the tennis star’s own Instagram post announcing her retirement and that the photograph in the embedded Instagram post was a “transformative” use of the image. As expected, Boesen, the photographer and owner of the Wozniacki photograph, intends to appeal, arguing that “commercial news organizations should not be permitted to embed photographs from Instagram as a way to report on celebrities’ social media posts.”

From a legal standpoint, the courts are not in agreement about whether embedding is allowed without permission and whether the social media platforms’ policies explicitly require licenses before embedding. From a practical standpoint, a digital media platform must consider what content it is seeking to embed, what permissions may be necessary, and whether the embedding could be considered fair use. For content owners, it is also a murky landscape, and they may need to consider making certain content private if they do not want it embedded. Perhaps a split in the circuits at some point will prompt the U.S. Supreme Court to decide this issue.



IP Client Spotlight

Stradley Ronon handles patents, trade secrets and related IP areas for La Colombe Torrefaction, Inc., the billion-dollar coffee empire based in Philadelphia. Founders Todd Carmichael and J.P. Iberti built La Colombe (French for “the dove”) on a simple but ambitious mission: to make the world better through coffee. What began in 1994 as a vision for serving the best coffee to the country became an opportunity to influence meaningful change worldwide. Continually innovating, recent developments created by the company’s research and development innovation hub include a specialty coffee roaster dedicated to making your coffee life better and the first-ever Draft Latte cold latte in a can.

We work closely with La Colombe representatives, often visiting the Philadelphia facility, collaborating to anticipate and resolve many interesting and unique IP issues as the team manages La Colombe’s worldwide patent portfolio. Our ever-growing knowledge of La Colombe’s needs and goals, and of the coffee industry in which the company thrives, has served both our firm and La Colombe well. We are proud to assist La Colombe in its efforts to navigate complex IP issues faced by a growing and expanding company, including patentability searches and analyses, trade secret counseling, and IP agreement negotiation and drafting.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.


Copyright © 2021 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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