Our weekly SoCal IP Institute meeting on Monday, July 14, 2014 will be a discussion of one 4th Circuit case regarding federal subject matter jurisdiction for liens enforced on intellectual property and a 9th Circuit decision on the appointment of a receiver and that receiver’s rights over IP held by an individual. Brief synopses of the cases appear below.

Flying Pigs, LLC v. RRAJ Franchising, LLC, No. 13-2135 (4th Cir. July 1, 2014) (available here). Through a very convoluted set of steps including foreclosure on a series of renters, two bankruptcy proceedings, an overarching settlement agreement across several parties, and removal (twice) of proceedings from Lenoir County, North Carolina Superior Court to the Eastern District of North Carolina, Flying Pigs came to bring a lien-related proceeding in Superior Court.  Defendant RRAJ removed the case under “federal question” subject matter jurisdiction.  The district court denied Flying Pigs’ remand motion and granted RRAJ a dismissal with prejudice.

The 4th Circuit vacated the district court’s dismissal order, and returned the matter to the Superior Court.  Specifically, the 4th Circuit held that the matter did not raise a federal question, but instead arose under state law–essentially as a lawsuit to enforce a lien in part against the IP.

Hendricks & Lewis PLLC v. Clinton, No. 13-35010 (June 23, 2014) (available here).  Hendricks & Lewis PLLC represented George Clinton in a series of legal matters over the course of a number of years.  Mr. Clinton failed to pay for those services. The bill totaled over $3 million, but was reduced to just over $1.5 million in arbitration proceedings in which Mr. Clinton did not participate.  A year after the arbitration, Clinton sued Hendricks & Lewis for malpractice.  They, in turn, sought to enforce the arbitration award.  The district court appointed a receiver for Mr. Clinton’s assets and authorized the license or sale of the copyrights in order to cover the fee award.

The 9th Circuit held that under Washington law Clinton’s copyrights in the masters were subject to execution to satisfy judgments made against him. The panel also held that § 201(e) of the federal Copyright Act did not protect Clinton from the involuntary transfer of his copyrighted works. The court further held that under Washington law the district court did not abuse its discretion by appointing a receiver to manage or sell ownership of the copyrights. The court also held that Clinton may raise claims of fraud on the court and judicial estoppel for the first time on appeal, but concluded that both claims were meritless. Finally, the court held that Clinton failed to raise his preemption, Erie doctrine, and due process arguments before the district court, and, therefore, they would generally not be considered, and in any event they were without merit.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 14, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.