Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. Here's what's crossing my radar today:

• Musicians win some, lose some in initial judicial decisions on actions to reclaim their copyrights.

• Josh Rosenkranz and Ed Reines will be lighting up the telephone lines at the Federal Circuit next week with single cell technology in the balance.

• Federal Circuit Bar Association wants to tap the bar's brain power for COVID-19 ideas.

• Maynard Cooper adds another Fish & Neave alum to its roster.

As always, you can email me your feedback and follow me on Twitter.

Matthew Straubmuller via Wikimedia Commons

Statutory Bug Takes a Bite Out of Bids to Reclaim Copyrights

John Waite and Joe Ely have lost some groove in their quest to reclaim their copyrights.

The two headline a group of musicians suing Universal Music Group pursuant to a federal law that allows artists to recover their IP rights after 35 years.

UMG threw up a blizzard of defenses: The copyright termination notices were served too early or too late; the songs were works made for hire that are exempt from termination; the termination notices were defective; and it wasn't Waite or Ely who had made the original transfers, but their "loan out" companies.

U.S. District Judge Lewis Kaplan of the Southern District of New York brushed many of those defenses aside in a ruling Tuesday on UMG's motion to dismiss. But the loan-out defense has merit, Kaplan ruled. And it looks as if it could sink portions of the musicians' would-be class action.

Musicians occasionally loan out their works to self-created production companies, which in turn license the works to music companies, for tax-reduction purposes. But the termination statute, 17 USC 203(a), says that licenses "executed by the author" are subject to termination.

"The statutory text is clear: termination rights exist only if the author executed the grant," Kaplan wrote. "The Supreme Court recently reaffirmed that courts must adhere to the text of the Copyright Act, even if the Act 'has not worked as Congress likely envisioned.'"

Orrick, Herrington & Sutcliffe partner Paul Fakler, who is watching the case as an amateur musician who represents digital music services, said he found much to like in Kaplan's decision, particularly his rejection of UMG's work-for-hire argument, which he said could have eliminated any ability to terminate copyright transfers.

As for the loan-out issue, "this is a real problem with the Copyright Act," Fakler says. Loan-out agreements are more often used by established stars than artists who are just starting out. "So one could argue that the artists most in need of protection will not likely be impacted by this problem. That said, even successful artists are abused and exploited by their record companies."

He said he hopes Congress will amend the statute to fix a couple of problems surfaced by Kaplan's ruling. But he doesn't see that happening soon. "The big music companies have no desire to help artists terminate their copyright transfers," he said, "and no copyright legislation is going to be introduced if it does not come from the big music companies."

A Sidley Austin team featuring partners Steven Bierman, Rollin Ransom and Lisa Gilford represented UMG along with Cowan, Liebowitz & Latman partner Richard Mandel and counsel Thomas Kjellberg.

Blank Rome partners Gregory Bordo, David Perry, Roy Arnold and of counsel Ryan Cronin represent the plaintiff musicians along with Evan Cohen and Maryann Marzano of Cohen Music Law.

(L-R) Weil Gotshal's Ed Reines and Orrick's Josh Rosenkranz

Who's Telephoning?

Next week is a calendar week at the Federal Circuit. The court has canceled most of its scheduled arguments for understandable reasons. But about a dozen patent cases are special enough for the court to hold telephonic arguments, with the court promising to post audio the same day. Here are a couple I've got my eye on:

➤Bio-Rad Laboratories v. 10x Genomics. Any time you've got Josh Rosenkranz squaring off against Ed Reines, I'm down regardless of format. Add to that 10x's claims that Bio-Rad has essentially patent-trolled its way to a $24 million verdict and a permanent injunction that threatens critical medical research, and it's bound to be compelling theater. The hearing is scheduled for Friday.

U.S. District Judge Richard Andrews of the District of Delaware enjoined 10x from marketing its single-cell droplet technology last year, finding that its products infringe "foundational" patents developed at the University of Chicago and now licensed by Bio-Rad. (The Federal Circuit partially stayed the injunction pending appeal.)

Orrick Herrington & Sutcliffe's Rosenkranz contends in briefing that 10x has pioneered a revolution in life sciences research. Scientists around the world are using 10x technology to study cancer cells, blood cells and the genetic underpinnings of inherited and infectious diseases. Bio-Rad, meanwhile, is "a decades-old behemoth" whose product was "an abysmal failure," Rosenkranz writes. Instead of competing, Bio-Rad bought "a failed start-up" that was already asserting the Chicago patents against 10x, and somehow persuaded a jury to award a "whopping" 15% royalty—15 times the amount the startup had actually negotiated."

Weil Gotshal & Manges' Reines responds that the Chicago researchers created the droplet field by showing how biochemical reactions could be performed in thousands of droplets created on a chip. Bio-Rad invested almost $500 million to acquire the patent rights and build its droplet business. Reines notes that 10x isn't challenging the validity of the three patents at issue, and instead pinned its hopes on a "trivial" tweak to the technology to avoid infringement. As for damages, "the evidence at trial established overwhelmingly that for foundational technology a 15% royalty rate is appropriate for competitors."

Pass the telephonic popcorn!

➤Uniloc 2017 v. Apple. It's a shame that the appeal of U.S. District Judge William Alsup's order denying Uniloc's sealing request will be conducted telephonically. I fully expect Uniloc to win a reversal of the order, as it would require the company to disclose details of more than 100 licenses with third parties. But the tenor of the argument—at least in normal circumstances—could help indicate the level of concern at the court about the widespread abuse of sealing orders. That may be harder to gauge in a telephonic argument.

At issue is Apple's 2018 motion to dismiss Uniloc's suit on the ground that a sale of the patents to Fortress Investment Group unwound Uniloc's standing. Because of Uniloc's sealing requests in the case, multiple pages of Apple's motion were entirely redacted. Alsup described Uniloc's requests for secrecy as "astonishing," and said they included non-sealable material such as quotations of case law.

Uniloc agreed to withdraw its request for 95% of the material but urged Alsup to maintain the confidentiality of its licenses. Alsup refused. "Patent holders tend to demand in litigation a vastly bloated figure in 'reasonabl[e] royalties' compared to what they have earned in actual licenses of the same or comparable patents," the Northern District of California judge wrote. "There is a public need to police this litigation gimmick via more public access."

On Wednesday, Prince Lobel Tye partner Aaron Jacobs is expected to argue that confidential license agreements are protectable trade secrets, and patent holders—to say nothing of third parties—shouldn't be forced to surrender them to enforce their IP rights.

Apple is framing the case as a simple violation of local rules that require sealing requests to be narrowly tailored. But as a general proposition, Apple agrees with Uniloc in its brief that" pricing terms, royalty rates, and minimum payment terms of licensing agreements plainly constitute trade secrets, and thus are sealable." (That quote is from Apple's own successful 2013 appeal to the Federal Circuit in Apple v. Samsung.) Goldman Ismail Tomaselli Brennan & Baum partner Doug Winnard will argue for Apple.

The Electronic Frontier Foundation has intervened on behalf of the public. EFF staff attorney Alex Moss will ask the court to endorse Alsup's order as a model for protecting the public's right to understand what's going on its courtrooms. "What was available on the record made the substance of the parties' standing dispute incomprehensible," she writes in EFF's brief.

Sending Out an SOS

The Federal Circuit Bar Association is looking for ideas about how the association and its members can help address COVID-19 challenges.

FCBA Executive Director Jim Brookshire notes in an email and on the bar's website that the community includes "the most informed and leading edge thinkers in pharma, life science, biotech, high tech, innovation, patent, contract, trade, and other areas. … More than ever, now is a time to draw on that excellence and those insights."

Brookshire and the bar are asking that suggestions be emailed to CircuitCommunityCovid19@fedcirbar.org. Suggestions should include the sender's name, organization and contact information.

IP Lateral – Maynard Cooper

Maynard Cooper and Sasha Rao have done it again: They've snagged another former colleague from the former Fish & Neave IP boutique. This time it's Ashe Puri, who's most recently practiced at Fox Rothschild. He's joining Maynard Cooper as a partner in its Los Angeles office.

Puri practices patent and trade secret litigation. He also serves on the board of LAIPLA, and has held leadership positions in the South Asian Bar Association, Asian Pacific American Bar Association, New York IPLA and the ABA.

"I have known Ashe for 17 years and know that his deep experience handling complex patent disputes will be a great match for our clients," said Rao, the chair of Maynard Cooper's IP practice.

Rao, Puri and six other Fish & Neave alums now practice at Maynard Cooper. Puri said being reunited with that trial talent was part of the draw. "Maynard's IP Group continues this tradition, and I'm thrilled to be part of this amazing team," he said.

That's all from Skilled in the Art this week. I'll see you all again on Tuesday.