Tuesday, September 20, 2011

Dastar only covers ideas, court mistakenly suggests

General Scientific Corp. v. SheerVision, Inc., 2011 WL 3880489 (E.D. Mich.)

GS sued SheerVision for violation of the Lanham Act, copyright infringement, violation of the Computer Fraud and Abuse Act, common law unfair competition, patent infringement, and breach of contract (not addressed here).

The parties compete in the market for surgical loupe products, “which includes telemicroscopes, lights, video cameras, and related accessories used by surgeons, dentists, and dental technicians.” SheerVision allegedly poached members of GS’s sales staff, hiring five past employees including individual defendant Caouette. Defendants allegedly used a GS computer and Caouette’s access to GS email servers to gather sales contacts, customer lists, pricing information, and copyrighted marketing material.

Defendants argued that the Lanham Act claims should be dismissed as preempted (precluded) by the copyright claims under Dastar. The court held that Dastar wasn’t dispositive because GS alleged that SheerVision misrepresented the origin of GS’s goods, a photograph and a video: “a misrepresentation by SheerVision regarding the origin and nature of media used in marketing, as opposed to a misrepresentation regarding mere ideas.” Dastar is not limited to ideas; it interprets the word “origin” to mean physical origin, as the court acknowledged, and specifically contemplates copying whole works in the public domain, including their expression, without any violation of the Lanham Act. Unless SheerVision used the same physical copies that GS produced in its marketing—which is possible depending on the actual facts, but inconsistent with the copyright infringement claim, which seems to cover the same materials—then SheerVision is the source of the materials for Lanham Act purposes. The unfair competition claims survived because of the more trade secret-oriented aspects of GS’s claims.

The court found that GS failed to plead its CFAA claims sufficiently, in particular with respect to facts indicating that damages (not including usurped sales opportunities, which are too indirect to count) were over $5000. But the copyright and patent claims survived.

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