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Posted on Thursday, July 10, 2014

To Sue, or Not to Sue: Strategic Responses to Intellectual Property Infringement

You’ve finally done it.  Your book has gone to press, the reviews are good, and your friends tell everyone who will listen that they know a published author.  You’re hard at work on the sequel when you get a call from your publisher’s legal department.  Someone has published the first five chapters of your book on their blog without permission, and legal wants to talk with you about a response.  Your first instinct is to hit them hard, threaten a lawsuit and get the content taken down ASAP.  But not so fast.  Legal has a few points they want to talk over with you before rushing into anything.IP enforcement strategy can require a far more delicate touch than many people appreciate.  It is true that infringement is against the law, and that content owners have the right to go after infringers in order to put a stop to the unauthorized use of the owners’ material.  The question is, should they?  Anti-infringement actions can turn into PR nightmares in a heartbeat, even when the acting parties are entirely justified in going after the infringing parties.  In 1989, for instance, The Walt Disney Company drew national scorn after they forced a number of Florida daycare facilities to remove murals depicting Disney characters from the daycares’ walls.  Despite pleas from Florida officials and the children of the daycare facilities, Disney held firm.  “Frankly,” one Disney spokesman said, “we can’t understand why something so routine to Disney is such a big deal to these day-care centers.”

Herein lies the problem.  Many companies, especially those with valuable IP assets, make it a habit to move against infringers as quickly as possible.  Studies show that a reputation for vigorous IP enforcement actually deters would-be infringers, and in the trademark sphere, courts have held that a consistent failure to police one’s marks can throw a wrench into later enforcement actions.  Yet in many cases, content owners may find that an enforcement action may be more harmful than helpful.  In fact, the Supreme Court itself has recognized that in some cases, acts of infringement may actually benefit an IP owner.  Such acts can bring additional hype to the infringed work, for instance, or expose it to a different fan base.  The global phenomenon of “scanlation,” for instance ‒ whereby readers scan in images of their favorite mangas, translate the text, and make the works available online ‒ has arguably resulted in creation of a global paying audience for content that otherwise might never have left Japan.

Several companies have also seen major upswings in their public image after changing their stances on IP enforcement.  After years of being maligned for using litigation tactics that many considered to be little more than bullying, the Recording Industry Association of America received praise in 2008 when it decided to stop mass suits against individuals, particularly college students, accused of music piracy in favor of practical strategies and targeted suits against large-scale infringers.  More recently, Tesla Motors saw a surge in both its share price and public approval rating after it announced that, moving forward, it would “not initiate patent lawsuits against anyone who, in good faith, wants to use [their] technology.”  Alexander C. Kaufman of the Huffington Post also points out that Tesla’s new IP strategy is likely to make its supercharger model the industry norm, saving Tesla the trouble of having to create a whole infrastructure for electric automobiles on its own.

Reevaluation of asset management strategy is valuable to consider, and this goes double in the context of IP. Emotions run high when parties try to restrict access to art and knowledge, and in a world that is more and more accepting of “remix culture,” content owners can and should be thinking about changing their standard procedure when it comes to outsiders’ unauthorized use of IP.  Even Disney ‒ long considered to be chief of the IP police ‒ appears to be changing its tune.  To sue, or not to sue?  After careful consideration of the costs and benefits with regard to a given case, the answer might surprise you.

Ryen Rasmus is an associate attorney practicing in the Entertainment and Music Industry and Business Law and Litigation Groups of Berenzweig Leonard, LLP.  He can be reached at RRasmus@BerenzweigLaw.com.



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