September 2016

Westward (And Then Some) Expansion: One Theory of Property Rights on the Moon and Mars

Jordan Rude, MJLST Staffer

Recently a friend of mine received, for his birthday, a deed to one acre of land on Mars. That’s right—he is the proud owner of property located approximately 34 million miles from Earth. This is possible thanks to the efforts of various (and often interconnected) websites such as Buy Mars, Buy Planet Mars, Lunar Registry, and Lunar Land. While selling extraterrestrial property is not a recent development (see here and here), and there does not appear to be any recent lawsuits regarding this practice, these methods still deserve scrutiny. With the rapid advancement of technology in recent decades and increasing participation by private companies in space programs (SpaceX recently tested a Mars-capable rocket), human settlement on the Moon and Mars is becoming a possibility (albeit a distant one) within our lifetimes. At that point, property ownership will become an important and possibly contentious issue. For the millions of people who have bought land on the Moon and Mars, the question of whether their claims will be recognized in such a situation is a not insignificant one.

Some of these websites claim to have legal standing for their ownership of property on Mars. Consider Buy Mars (owned by Lunar Land). Under the heading “Lunar Land’s Legal Right To Offer Planet Mars Land,” the site makes reference to the U.N. Outer Space Treaty of 1967 as well as the tradition “dating back to early U.S. settlers” of staking a claim on surveyed land through the U.S. Office of Claim Registries. The Outer Space Treaty has been previously discussed by this blog (in a different context). Suffice it to say that this treaty prohibits countries from claiming ownership of land on Mars and other extraterrestrial property, but says nothing about individuals or corporations. Thus, the argument would be that Buy Mars, because it is not a sovereign nation, is not subject to the treaty specifically prohibiting claims of ownership on Mars.

Beyond the lack of a direct prohibition, Buy Mars also claims historical precedent as an affirmative justification. This reference to historical precedent is problematic for two reasons: first, the U.S. Office of Claim Registries does not exist, and likely never existed; and second, this is not an accurate statement of the process by which the West was settled. In fact, the federal government sold the land—first as townships and other large plots, and later in smaller, more affordable plots, before finally offering land for free under the Homestead Act of 1862 (see Michael C. Blumm & Kara Tebeau, Antimonopoly in American Public Land Law, 28 Geo. Envtl. L. Rev. 155, 165–71 (Winter 2016)). That is, the federal government owned the land it sold to speculators and other settlers (though this ownership came more or less from the government declaring it to be so, not dissimilar to what Buy Mars has done). So, because the U.S. government does not own land on Mars that it could sell to Buy Mars (to then sell to us), on its face the claimed historical precedent is not in fact proof of the legality of the process.

However, setting aside the flaws in Buy Mars’ formulation of the argument, let’s assume that the principles of westward expansion can be applied to property on Mars—would this type of claim survive a legal challenge?

Most likely it would not. Construing the westward expansion analogy narrowly, the U.S. government would have to first own land on Mars and then distribute it to corporations like Lunar Land or individuals. This is clearly prohibited by the Outer Space Treaty. That being said, if a company like SpaceX lands on Mars, the Outer Space Treaty would potentially not restrict its ability to claim land. At that point, it is unclear what the legal policies governing ownership would be. In that situation, a process loosely similar to westward expansion could be utilized, wherein a larger entity (in this case a large company) distributes land to newcomers. The key difference between the Buy Mars argument and SpaceX landing on Mars would be the latter company’s physical presence on the planet—an important aspect of making such property claims and the most likely way to get around the Outer Space Treaty. This could be extremely lucrative for SpaceX but problematic for those who have already purchased land on Mars. Ultimately, the websites currently offering land on the Moon or Mars do not have legal standing to do so, and any person who bought such land is unlikely to find legal protections should the need arise. The law in this field is very uncertain, if it exists at all, and the day may come where a true answer is needed.

Of course, the legal implications of this process should not deter you from investing in extraterrestrial property for the fun of it. My friend’s deed comes from Buy Planet Mars, whose website makes quite clear, in the FAQ section, that the deed is “a novel gift and for entertainment purposes only.”

Halo Electronics v. Pulse Electronics: More Discretion of District Courts in Granting Enhanced Damages

Tianxiang (Max) Zhou, MJLST Staffer

The recent US Supreme Court case, Halo Electronics v. Pulse Electronics, grants district courts more discretion in determining “enhanced damages.” The previous clear standard of the enhanced damages became murkier after this case and left much room for lower courts to decide what constitutes enhanced damages.

Section 284 of the Patent Act provides that, in a case of infringement, courts “may increase the damages up to three times the amount found or assessed.” Enhanced damages are appropriate only when the patentee proves, by clear and convincing evidence, that the infringer “willfully” infringed the patent. Prior to Halo, courts adopted a bifurcated approach to enhanced damages established in In re Seagate: First, the patentee must show the infringer’s recklessness by clear and convincing evidence, that “the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” If the objective standard of recklessness is satisfied, then patentee must demonstrate that the risk was either known or so obvious that it should have been known to the accused infringer.

In Halo, the jury in the district court found a high probability that the infringement was willful. However, the district court refused to grant an enhanced damages based on the two-part test, and found as a matter of law, that the patentee did not prove objective recklessness of the infringer. The Federal Circuit Court affirmed the decision.

However, the Supreme Court reversed the Appeal Court’s decision, and rejected the two-part test set forth in In re Seagate. Specifically, the Supreme Court, citing Octane Fitness LLC v. ICON Heath & Fitness, Inc, found that the test is “unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.” Though rejecting the two-part test, the Supreme Court did not give a clear guideline for lower courts to follow. Halo provides that, “[a]s with any exercise of discretion, courts should continue to take into account the particular circumstances of each case in deciding whether to award damages, and in what amount.” According to the Supreme Court, district courts are “‘to be guided by [the] sound legal principles’ developed over nearly two centuries of application and interpretation of the Patent Act.” Besides, the Supreme Court found that the prior two-part test, which requires a finding of objective recklessness, excludes discretionary punishment of “wanton and malicious pirate” who intentionally infringes another’s patent, and a district may grant enhanced damages even in the absence of a finding such objective recklessness.

Overall,  Halo broadened district courts’ discretion in evaluating facts of patent infringement and granting enhanced damages. While the Halo decision will definitely increase the unpredictability of patent infringement lawsuits, it is still unclear whether the broad discretion of district courts will open the gate of flood of enhanced damages. Besides, before we think about the standard of enhanced damages, it is also worthy to consider the policy implications of enhanced damages, and to ask whether and when enhanced damages are appropriate. Anyway, it would be exciting to see a clearer standard of enhanced damages in future cases, or amendments of laws and regulations.

A View to the Development of the FAA’s Ban on the Use of Galaxy 7 Phones on Airplanes.

Joshua Wold, MJLST Staffer

Samsung’s Galaxy Note 7 has problems. Under normal charging and use conditions, the battery in some devices can start on fire. As of September 1, Samsung reported that 35 of these problems had come to its attention, and more have been reported since that time. Samsung has already begun a recall—officially a “replacement program”—offering to replace the potentially dangerous devices with new ones. At the same time, US government agencies are also moving to prevent the harm that a malfunction from these devices could cause.

The Federal Aviation Administration (FAA) has not banned the device from airplanes. According to Matt Novak at Gizmodo, the FAA stated on September 6th that it was “working on guidance related to this issue,” and said, “If the device is recalled by the manufacturer, airline crew and passengers will not be able to bring recalled batteries or electronics that contain recalled batteries in the cabin of an aircraft, or in carry-on and checked baggage.” On September 8th, the FAA issued a statement “strongly” advising airline passengers to keep the devices off, not charge them while aboard, and to keep them out of checked baggage.

Then, on September 9th the Consumer Product Safety Commission (CPSC) put out a press release urging Galaxy Note 7 owners to power off the device, and not to charge or use it. The press release indicated that it was cooperating with Samsung “to formally announce an official recall of the devices, as soon as possible.”

Based on the comments made to Gizmodo, the FAA appeared unwilling to ban the device until the official recall was put into effect. This is understandable. Cell phones are a significant part of modern life. Nearly every person getting onto a plane is carrying at least one. TSA would thus be forced to distinguish between types of cell phones. Its task would be complicated by cases and other types of personalization which obscure the appearance of a cell phone.

Even more challenging, however, is the fact that some versions of the Note 7 have a battery which is not prone to overheating, and poses no threat. Unless these safe phones were to also be banned, security personnel would need to determine which battery was in a phone in order to know if it were permissible. People want to have their phones when they get wherever they are flying to, and banning a safe phone because it looks like an unsafe phone seems like a sure recipe for passenger dissatisfaction.

It may seem that a ban is be appropriate despite the difficulties. Certainly, the potential for harm is significant. A widely circulated photo of a Jeep engulfed in flames is evocative of the threat, and airline passengers have gotten used to restrictions on items which seem to pose even less risk than an exploding phone. FAA’s suggestion that those with Note 7 phones simply turn them off and not charge them may have had the potential to eliminate the threat. On the one hand, it was only a strong recommendation, and not a rule. On the other hand, with airlines repeating the FAA’s warning, it seems unlikely that many people would have failed to take it seriously.

On the 15th of September, the situation changed further, as the CPSC announced an official recall. With that decision, the ground mentioned to Gizmodo for not instituting a ban disappeared. Considering  some data (which can be found here), suggesting that people aren’t really taking Samsung’s warnings seriously, it seemed very likely that the FAA would decide to strengthen their recommendation against use to a prohibition on use, or even a prohibition on flying with the phones at all.

On the next day, September 16th, the FAA banned use of the phone on airplanes, but not the phones themselves. This new policy fits with the reality of modern cellphone use, that people rely on their phones, even if they are fire hazards. While this move takes the pressure off the TSA (which is probably a good move in terms of the overall happiness of air travelers), the regulation (which can be found here) doesn’t specifically mention the Galaxy Note 7, but refers instead to “defective or recalled” lithium batteries.

Of course, this creates the same sort of enforcement problems as appeared with earlier recommendations: can airline staff identify a Galaxy Note 7 with such “defective or recalled” lithium batteries? The FAA itself notes that it is difficult to distinguish between phones which have had the battery replaced and those which are still risked. The FAA’s recommendation on how to manage this problem is pretty general, and it essentially boils down to training of airline staff, and provision of information to airline passengers. One hopes that this is sufficient.

Who Owns Your Tattoos?

Zachary Berger, MJLST Executive Editor

Tattoos are more common today than they have ever been. More than 20 percent of Americans have at least one tattoo, and among millennials nearly 40 percent have at least one tattoo. Most people probably assume that they are the owners of their tattoos. After all, tattoos are part of your body. How can you not own them? However, the answer is a bit more complicated than that. There have been a number of lawsuits relating to tattoo ownership over the years, but a recent one has brought the issue back into the news.

Take-Two Interactive Software is the parent company of 2k Sports and developer Visual Concepts, who create the popular NBA 2K video game series. Solid Oak Sketches is a company that is claiming ownership over a number of tattoos that appear in the game on several prominent players, including LeBron James and Kobe Bryant. Take-Two has licenses to the players’ likenesses, but Solid Oak claims they alone have the right to license the tattoos, which appear on the players in the game. Tattoos are very prominent in the NBA, and if the players had to appear without them, it would break the sense of realism the game is attempting to convey.Suits such as this one have occurred before, most notably in 2011 when Mike Tyson’s facial tattoo appeared on Ed Helms in the movie The Hangover Part II. However, all of these cases have settled, leaving tattoo ownership in a murky place.

In order to be eligible for copyright protection, a creation must meet three requirements. It must be a work of authorship, it must be fixed in a tangible medium of expression, and it must be original. It is up for debate whether tattoos meet all of these requirements but many believe they do.

The more interesting question, I think, is once that tattoo is finished, who owns it? Does it belong to the artist or patron? As is frequently the case in the legal field, the answer likely is that “it depends.” The default rule in copyright is that ownership is given to the artist. The University of Minnesota Law School’s own Professor Thomas Cotter is coauthor of one of the earliest and most extensive forays into the question of tattoo ownership. He concluded that there are three possibilities: 1) the artist owns the tattoo in the same way a painter owns what he or she paints on a canvas, 2) the work is a joint work, meaning that “it is prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent copyrightable expression,” or 3) the work is a work for hire. As explained by Timothy C. Bradley of the Coats & Bennet law firm, a “work for hire” applies when the work is 1) prepared by an employee within the scope of his or her employment or 2) specially ordered or commissioned for use in certain circumstances. A “work for hire” is owned by the party that commissions the work.

Take-Two recently won a dismissal of a potentially large damages claim when Judge Laura Taylor dismissed Solid Oak’s statutory damage claim because the tattoo designs Solid Oak claims ownership to were not registered with the U.S. Copyright Office until 2015, but Take-Two first used them in 2013 with the release of NBA 2k14. In order to be able to obtain statutory damages, a plaintiff must have registered their copyright before the alleged infringement. Solid Oak argued that each new 2K game is a separate instance of infringement, but the judge disagreed.

However, Solid Oak is still able to seek actual damages, so the case will continue. In their answer and counterclaim, Take-Two is relying in particular on the defenses of  de minimis use and fair use. De minimis is Latin for “minimal things” and essentially means that the infringement was insignificant and not worthy of judicial scrutiny. Fair use is an affirmative defense that allows limited copying without the copyright owner’s permission for the purposes such as criticism, comment, news reporting, teaching, scholarship, etc. The following factors (from 17 U.S.C. § 107) are used to analyze fair use:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Solid Oak v. 2k Games may be the first tattoo copyright infringement suit to settle on the merits rather than out of court and thus will be a very interesting case to watch going forward. The case is Solid Oak Sketches v. 2K Games and Take-Two Interactive Software, No. 16-CV-724-LTS (S.D.N.Y. filed Feb. 1, 2016).