Tuesday, June 18, 2013

No preliminary injunction in consumer class action

Silber v. Barbara's Bakery, Inc., --- F.Supp.2d ----, 2013 WL 2948154 (E.D.N.Y.)

Plaintiffs in this putative consumer class action unsuccessfully sought a preliminary injunction against the allegedly false advertising of certain Puffins cereal and snack products as “all natural” when they actually included synthetic ingredients and GMO corn.  The parties strongly disputed what “natural” meant, since the FDA hasn’t seen fit to provide a definition.  Plaintiffs cited a study indicating that most consumers believes “natural” implies the absence of GMOs, and another finding that nutrition-related health claims on cereal boxes “lead to greater willingness in parents to buy those cereals for their children,” along with other evidence of consumer concern.  For example, a Rhode Island health food store pulled all defendant’s products from its shelves after learning about the GMOs.  Plaintiffs sought an injunction against the labeling, or immediate reformulation of the products in the alternative.

The court found no irreparable harm, defined as the harm from the deceptive advertising done to individual consumers—the plaintiffs didn’t rely on concerns about food safety, effects on the ecosystem, etc.  Plaintiffs argued that irreparable injury should be presumed under NY GBL §349, citing also Lanham Act cases brought by competitors.  The court found no authority for presuming irreparable injury to consumers.  False advertising suits by competitors were “qualitatively different from those brought by consumers, who need not prove lost sales or harm to brand equity.” Courts presume irreparable harm in the former case because it’s “notoriously difficult” to prove lost sales or harm to brand reputation.  But it’s “neither difficult nor impossible to prove the losses related to excessive or inflated costs in false advertising suits brought by consumers.”  Thus, competitors’ excuse from showing irreparable harm didn’t apply.

Separately, plaintiffs unreasonably delayed in seeking a preliminary injunction.  They waited nearly five months after suing to move for injunctive relief.  They were aware of their rights and not actively pursuing them elsewhere; thus the general rule that delay destroys a presumption of irreparable harm applied. “Furthermore, Plaintiffs are average consumers—they are not competitors or commercial sellers for whom lost goodwill or brand confusion stands to cause permanent fiscal injury, which would be exacerbated by delay in seeking permanent relief.”

And money damages would adequately compensate the plaintiffs, making any injury reparable.  Plaintiffs argued that deceptive injury, distorting consumers’ decisions, was irreparable in itself.  But plaintiffs couldn’t explain how, other than through excessive pricing, the deceptive ads injured the plaintiffs.  (I can, and I think it’s at least of equal dignity to other injuries regularly considered irreparable, though I understand why recognizing it would make things difficult—if the claims are truly false and misleading, then the harm they inflict isn’t just monetary; it’s harm to the dignity and autonomy interests of the consumer.  In Kantian terms, deception is wrong because it treats the consumer as a means rather than as an end.  At least in cases of willful fraud, most victims don’t feel whole even if they get their money back; it’s the trickery, the disrespect, that inflicts the extra injury.)

Given that plaintiffs sought compensatory damages and restitution for the excess price they alleged they paid, the court didn’t believe them when they said money damages were inadequate. (The court also expressed some skepticism about the money damages from the “supposed” higher price for “natural”-labeled products, since plaintiffs didn’t provide many details about pricing.)  Though Section 349 aims to “strongly deter deceptive business practices” through issuance of injunctive relief, these statutory provisions “do not relieve a litigant moving for a preliminary injunction in federal court from the general requirement that she demonstrate irreparable injury.”

Though it wasn’t necessary, the court went on to conclude that the balance of hardships favored Barbara’s Bakery.  Plaintiffs were essentially seeking a product recall, which was excessive in a false advertising case without physical injury.  Plaintiffs argued that Barbara’s could just use stickers to cover up the misleading language, but despite the “charm” of this alternative, the court wasn’t persuaded.  “[W]hether or not Defendant eliminated its allegedly deceptive advertising through the use of stickers, Defendants would be forced to execute product alteration on a national scale in order to remove all references to its products' ‘All Natural’ ingredients from its product packaging.”  Given plaintiffs’ delay and the compensabiltity of the harms through money, the burden of making such changes “clearly outweighs that of Plaintiffs in continuing to pay a possibly premium price for Defendant's products.” 

The court also noted that a settlement agreement was pending in a case bringing similar claims in the Northern District of California. The proposed settlement contemplates the same relief requested here—an injunction against “All Natural,” “No Artificial Additives,” “No Artificial Preservatives,” and “No Artificial Flavors.”

Monday, June 17, 2013

back pocket logo as "title" for advertising injury insurance purposes

H/T Marty Schwimmer:
CGS Indus., Inc. v. Charter Oak Fire Ins. Co., No. 11-2647-cv  (2d Cir. June 11, 2013)

Charter appealed from a judgment that it breached its duties to defend and indemnify to its insured, CGS, under its advertising injury policy. The court of appeals affirmed on the duty to defend and reversed on the duty to indemnify, since there was sufficient legal uncertainty about coverage to trigger the duty to defend.  The parties stipulated that damages were almost $400,000—the settlement plus CGS’s defense costs; the court remanded for an award just of defense costs.

In the underlying lawsuit, Five Four Clothing sued Walmart and CGS for trademark infringement based on CGS’s use of Five Four’s rear pocket stitching design, known as FF stitching, on jeans it supplied to Walmart.  Eventually, CGS settled by paying $250,000 on behalf of both parties (because of course Walmart required CGS to indemnify it).  Charter’s policy covered advertising injury, defined as injury arising out of one or more specifically listed offenses, including “[i]nfringement of copyright, title or slogan.”  It had the standard exclusion for knowing violation of rights.

Under Hugo Boss Fashions, Inc. v. Federal Insurance Co., 252 F.3d 608 (2d Cir. 2001), New York law distinguishes between the duty to indemnify and the duty to defend, applying “very different presumptions” to each.  If there’s a reasonable basis for a difference of opinion as to the meaning of the policy, the language is ambiguous and interpreted in favor of the insured. The duty to defend is broader than the duty to indemnify and an “even stronger presumption in favor of coverage” applies. To avoid that duty, an insurer “must demonstrate that the allegations of an underlying complaint place that pleading solely and entirely within the exclusions of the policy and that the allegations are subject to no other interpretation.”

Charter argued that the FF stitching was neither a “title” nor a “slogan” used in advertising.  The court of appeals agreed as to “slogan.”  The policy didn’t define slogan, but reference to “a body of law or an established custom” can fill in the gaps.  Neither New York law nor industry custom provided insight into the meaning of “slogan,” but the term could still be unambiguous if it had a clear meaning in federal law, which it did.  Complete federal judicial unanimity isn’t required, as long as there is an “overwhelming current of judicial opinion,” that is, a meaning used by “the vast majority of federal courts.” Using that standard, the vast majority of federal courts have defined “slogans” as “phrases used to promote or advertise a house mark or product mark, in contradistinction to the house or product mark itself.”

“To hold that the stitching design on a jeans pocket is a ‘slogan’ would stretch that definition beyond recognition, as the design is clearly not a ‘phrase.’” A slogan must be something other than the house mark or product mark itself; the FF stitching was in effect a house or product mark.  Here, too, there was no residual ambiguity over meaning to trigger the duty to defend.  Hugo Boss settled the meaning of “slogan” in advertising injury policies, and there had been no contrary developments in case law or commercial understanding.

However, the interpretation of “title” was a bit different.  Again, the term wasn’t defined in th epolicy, and neither New York law nor industry usage provided significant insight.  The “vast majority” of federal cases held that, in this context—“that is, in a list that includes ‘copyright’ and ‘slogan,’ but conspicuously does not include coverage of infringement of ‘trademarks’– ‘title’ means the name or appellation of a product, and does not cover design elements such as pocket stitching that may serve as a trademark designating the origin of the product.”  A title need not contain words—the court referred to the symbol of the artist currently known as Prince, also used as an album title—“we have no difficulty in concluding that the stitching on the back pocket of a pair of jeans cannot fairly be called the name or appellation of that pair of jeans.”  (The court found no need to decide whether “title” was necessarily limited to literary or artistic works.)

While this definition was clear enough to bar the duty to indemnify, if there was any residual uncertainty about whether a court would find the term unambiguous, then Charter still had a duty to defend.  Insurers may refuse to defend only “cases in which the policy is so clear that there is no uncertainty in fact or law.”  So here: “while the vast majority of federal cases unambiguously define ‘title’ to mean a word or phrase, a handful define title in a way that could arguably include a design or symbol similar to the pocket stitching at issue here.” One court defined “title” as “names and related trademarks,” then noted that “trademark” is defined as a “‘word, name, symbol, or device, or any combination thereof used by a person . . . to identify and distinguish his or her goods.’” Another court held that infringement of a stylized “D” logo fell under “infringement of title”; still another found that “the language clearly suggests coverage of claims where there are allegations of infringing a company’s mark or slogan.”  These cases were mistaken to reason that, because a trademark can be a title, and a symbol is a trademark, infringement of the symbol is infringement of title.  But they created enough legal uncertainty to give rise to a duty to defend, at least until the uncertainty around the term was resolved.  Thus, Charter’s failure to defend breached the policy.  Charter should’ve begun defense and immediately sought a declaratory judgment as to the meaning of “title.”

Charter next argued that the injury alleged by Five Four didn’t stem from “advertising.”  But the insurer must defend no matter how groundless the suit may be if the allegations in the underlying complaint, liberally construed, are within the scope of the policy.  The underlying complaints consistently alleged “wrongful acts, including advertising.”  “If Charter believed that Five Four did not intend to allege advertising by CGS or that CGS did not advertise the jeans, Charter should have begun to defend and immediately sought a bill of particulars to resolve any ambiguity in the pleadings.”  To the extent that Charter argued that its duty to defend terminated once discovery responses demonstrated that CGS and Walmart never advertised the jeans, Charter had not so argued below and had instead stipulated to damages, waiving this argument.

Nor did the knowing violation exclusion help Charter. Though the underlying complaint alleged willful infringement, the Lanham Act claims could succeed without such a showing. “Our inquiry ends there: as at least one of the claims in the Underlying Action did not require intent, Charter was required to defend the entire action.” The cases cited by Charter were distinguishable—in one, the defendant “approached a local manufacturer to produce a cheaper, low-quality knock-off product; marketed the counterfeit product in packaging indicating it was a genuine creation manufactured in Denmark, both blatantly false; and then fraudulently misled the plaintiff about sales.  In another, the plaintiff was a serial infringer.  “Here, the complaint alleges merely that CGS sold jeans with similar pocket stitching to Five Four’s jeans, not that CGS marketed the jeans as genuine Five Four jeans, or that it was a serial infringer. From the facts alleged in the complaint … it is possible that CGS unintentionally infringed on Five Four’s pocket design.”

Saturday, June 15, 2013

Friday, June 14, 2013

Typicality defeats a food class action

Major v. Ocean Spray Cranberries, Inc., 2013 WL 2558125 (N.D. Cal.)

Major sued Ocean Spray alleging that she bought several Ocean Spray juices/drinks “unlawfully labeled ‘No Sugar Added’ or bearing improper nutrient content claims, or false representations that the products are free from artificial colors, flavors or preservatives.”  She alleged that she bought five flavors, Blueberry Juice Cocktail, 100% Juice Cranberry & Pomegranate, Diet Sparkling Pomegranate Blueberry, Light Cranberry, and Ruby Cherry.  She asserted the usual California claims, including warranty claims. 

Her complaint defined the putative class as California purchasers who bought Ocean Spray products (1) labeled “No Sugar Added” but which contained concentrated fruit juice and/or provided enough calories to trigger a disclosure requirement; (2) falsely represented to contain no artificial colors, flavors or preservatives; (3) represented to be “healthy” or a source of an antioxidant/nutrient in violation of nutrient standards.  The class certification motion reformulated the putative class as purchasers who bought any products from Ocean Spray’s 100% Juice, Juice Drinks, Sparkling, and Cherry products, in any flavors.

The court found that Major failed to show typicality.  A district court must “ensure that the named plaintiffs have incentives that align with those of absent class members so as to assure that the absentees' interests will be fairly represented.” Typicality isn’t satisfied “where the evidence needed to prove at least one of the named plaintiff's claims is not probative of the other class members' claims.” When cases involve several products, typicality isn’t met when the named plaintiff bought a different product than that purchased by unnamed plaintiffs. 

And that was true because Major’s proposed classes encompassed products she didn’t herself purchase.  For example, Major sought to cover any product from the Sparkling line, based on the purchase of Diet Sparkling Pomegranate Blueberry drink.  But the motion failed to link any of those products to any alleged misbranding. 

Major failed to explain why every flavor in the Sparkling line was misbranded.  The labels and nutrition claims on each product may be unique.  Major based her claims with respect to the Sparkling line in part on the claims made on the Diet Pomegranate Blueberry label, but because that language includes specific claims about blueberries, it would only be applicable to drinks containing blueberries.  The evidence needed to prove that the blueberry claims were false wouldn’t be probative of the claims of unnamed class members who bought non-blueberry Sparkling products.

(This is not an unexpected result.  But I wonder how strongly it follows from the rationale for the typicality requirement. In what way would including other products provide plaintiff with the wrong incentives to represent the entire class?  Is the thought that she might wrongly give up claims based on other products in order to achieve a more favorable result with respect to products she bought?)

Copyright in real estate listings survives Lanham Act counterclaim

Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., --- F. Supp. 2d ----, 2013 WL 2477260 (D. Md.)

MRIS sued AHRN and its CEO for copyright infringement, violations of the Lanham Act, conversion, and unjust enrichment based on AHRN’s alleged reproduction of real estate listing content from MRIS’s database onto AHRN’s website, neighborcity.com. The court previously granted a preliminary injunction against unauthorized copying etc. of copyighted content from the MRIS database, and now gave further consideration to the case.

AHRN, a five-year old real estate brokerage referral services and technology company, provides information to home buyers and sellers nationwide by identifying appropriate real estate agents for them, using data on real estate listings etc.  MRIS provides multiple listing services (MLS): it maintains a database of property listings and related information.  Real estate brokers and agents must subscribe to the service; they agree to upload their listings to the database and get the right to display MRIS listings on their own websites via a licensed data feed. Counterclaim-defendant NAR is a trade organization for real estate brokers and agents; its 1600 state and local member boards control about 80% of the roughly 1000 MLSs in the US. 

AHRN counterclaimed, alleging that the counterclaim defendants began a scheme to register sham compilation copyrights in MLS listings, enforced them against AHRN, made false and misleading statements about their copyrights and about AHRN, and passed anticompetitive MLS rules to drive AHRN and similar innovators out of the market. 

The story begins with a 2005/2006 guidance paper from MRIS, “Strengthening the Foundation: The Real Estate Listing Content Copyright FAQ and An Updated Program to Administer, Secure, and Enhance the Value of Real Estate Listing Content.”  The paper invited the MLS industry to join MRIS’s copyright program, whose purpose was to defeat “the emergence of several high profile initiatives proclaiming ‘new’ and ‘improved’ alternative business models that they propose will dramatically change the real estate industry.”  MRIS heavily publicized the paper at industry conferences.  The paper allegedly encouraged claiming and enforcing copyright in uncopyrightable listing data consisting of facts assembled in compilations.  It urged the industry to stop using the term “listing data” and replace it with “listing content” to improve the aura of copyrightability.  And it urged making each listing a joint work owned by the broker and the MLS, claiming copyright both in individual listings and in the compilation of automated databases.

Registration was obviously something of a hurdle, given how often the listings change, so the paper argued that the MLS industry should characterize the databases as “unpublished,” allowing it to use quarterly registrations, forego registering photos in group registrations, and save huge amounts of money in registration fees.  The MLS adopted the copyright program, allegedly under NAR’s encouragement, at a meeting that allegedly featured discussions of the perceived threat AHRN posed to the industry and what the industry could do to “shut down” AHRN.  NAR instructed member MLSs in how to fill out their compilation copyright applications and published “MLS Registration Tips.”

In November 2011, AHRN began to receive a torrent of C&Ds from brokers and MLSs, mainly threatening copyright infringement lawsuits; AHRN alleged that the timing was connected to the NAR meeting about to occur.  AHRN was copied on an email from another entity, Northstar, stating that MLSs across the country had dropped C&Ds “on the head of the bad fellow,” AHRN’s CEO Cardella.  It continued,

How do we connect the dots between all of the MLS's [sic] that have been abused so that we can act collectively, either in cost sharing and/or strategically by taking an action against Mr. Cardella that has the desired outcomes of:
1. Getting all of our listings off of his site[.]
2. Discovering where he has been getting the listings[.]
3. Throwing a world of hurt on both[.]
4. Sending a message that our copyrights are enforceable and we are serious about punishing anyone who doesn't take us seriously.

NAR’s general counsel then allegedly advised local MLSs to send C&Ds.

AHRN responded to each letter with an offer to negotiate a license, but these were generally rebuffed, always in the same format and in essentially the same language. When agreements were reached or negotiations commenced, brokers repudiated these agreements in January 2012, allegedly in response to pressure from MLSs, again using identical/near-identical language.

AHRN alleged that MRIS’s lawsuit and Northstar’s similar lawsuit were direct and concerted action constituting sham litigation, part of an anticompetitive scheme to suppress independent companies’ profile pages for real estate agents.  NAR allegedly funded the lawsuits, and also promulgated rules governing MLSs that bar or strongly discourage them from licensing listing databases to third parties, inhibiting the development of new services.  (AHRN will of course lose its antitrust claims, but this sure sounds like something the FTC might ask about.)

MRIS’s allegedly false and misleading statements were about the validity of its copyrights and copyright program, including claims to acquire copyright in submitted photos and listings by a clickwrap agreement and claims that listings could be copyrightable if MLSs only called them “content,” and also covered the use of false and misleading copyright notices on photos on MRIS's website and third party websites to which it syndicates the data.  NAR allegedly republished or encouraged members to republish these false and misleading statements, and used words like “thief,” “theft,” “pirate,” “pirating,” and “piracy” to describe AHRN; a NAR member accused NeighborCity of stealing listing data and called them “Data pirates of the year.”

After noting that it hadn’t made a final determination on the validity of the copyrights at issue, despite issuing a preliminary injunction, the court turned to the counterclaims and found AHRN failed to state a plausible Lanham Act violation.  Statements about the copyrightability of MLS data were nonverifiable, nonactionable legal opinions.  Even if they were verifiable, the only logical conclusion would be that the statements about copyrightability/registrabilty were true, given that the Copyright Office routinely grants MLSs registrations and courts have found that compilation copyright protection exists for MLS compilations.

In addition, none of the statements at issue were made in commercial advertising or promotion.  Statements in the copyright paper were directed to MLSs, and the paper wasn’t an ad promoting MRIS as an MLS or likely to influence a purchasing decision. Likewise, statements made to the Copyright Office weren’t advertising or promotion.

As for NAR, AHRN made only conclusory allegations that NAR republished or encouraged members to republish false or misleading statements on its website, without identifying which statements were republished or their nature and context.  NAR’s “Registration Tips” weren’t false or misleading and weren’t ads.

Allegations of disparaging statements were also insufficient—AHRN identified a single disparaging statement by a NAR member, but that wasn’t sufficiently connected to these counterclaim defendants.  Nor were these accusations of theft or piracy alleged to be in commercial advertising or promotion, and anyway they’d be nonactionable legal opinions.

The Sherman Act counterclaims didn’t plausibly plead fraud on the Copyright Office, which meant that defendants were entitled to Noerr-Pennington immunity from the Sherman Act claims to the extent that they were based on the filing of this copyright lawsuit.  However, AHRN could file amended counterclaims specifying the allegedly unlawful agreement outside the lawsuit and how it affected competition.

AHRN’s Maryland unfair competition claims failed for the same reason the Lanham and Sherman Act claims failed.  There was nothing unfair about expressing legal opinions about copyrightability, seeking registrations, or filing suit.  And refusal to license AHRN couldn’t be the basis for an unfair competition claim, since copyright owners generally have the right to exclude others.  (Though copyright misuse remains as a defense, albeit not a separate cause of action.  If there were real antitrust law, I would find this somewhat odd: assuming that a defendant could prove copyright misuse, disentitling plaintiff from enforcing its copyright, then couldn’t the same misuse found a violation of the antitrust laws despite a copyright owner’s ordinary right to exclude?)

The California unfair competition claims also failed, for similar reasons and because the only conduct alleged to have occurred in California was a 2011 NAR meeting and MRIS’s presentation of its copyright paper in 2005 (which predated AHRN’s existence by two years).  The allegations around the 2011 meeting were insufficient, and AHRN failed to plead harm suffered in California, which couldn’t be inferred simply because its principal place of business was in the state.

The court also dismissed the Maryland barratry counterclaim.  Under Maryland law, “a person may not, for personal gain, solicit another person to sue or to retain a lawyer to represent the other person in a lawsuit.” However, this was a criminal statute providing no private right of action; also, AHRN didn’t successfully plead the required “officious meddling” and “personal gain.”

Court misapplies Dastar because customers buy photo to show love of subject

Masck v. Sports Illustrated, No. 13-10226 (E.D. Mich. June 11, 2013)

I know the year’s not even half over, but I am tentatively declaring a winner in the “year’s worst misunderstanding of Dastar” category.  Other contenders will have to work hard.

Plaintiff Masck took an “iconic” photo of defendant Desmond Howard, who was running back a punt for a touchdown in a football game where the University of Michigan “soundly defeated” their archrival Ohio State.  He made the “Heisman pose” by lifting his left leg up and stretching out his left arm, and Masck alleged that he was the only photographer who got a “sharp” shot of the pose.  It was included in a Sports Illustrated article, crediting him.  He didn’t register the photo until August 2011.

Masck negotiated with Howard’s agent and Howard, but was unable to reach an agreement about joint sales.  He alleged that he sent a slightly altered photo to Howard to track unauthorized use, which was then uploaded to Howard’s website.  Masck identified numerous instances of infringing use, including a copy in a book about Howard, I Wore 21: The Legend of Desmond Howard. Howard’s website also had a reproduction of the photo at one time.  Reproductions of the photo were offered for sale on Amazon.  In September 2012, Masck requested Amazon to stop selling unauthorized copies, but Amazon continued to sell them. 

Masck sued many, many entities for infringement, violation of the Lanham Act, state unfair competition, tortious interference, and unjust enrichment.

Lanham Act: The Supreme Court held that “origin” of “goods” in the Lanham Act refers only to “tangible goods” and not “communicative products.” The court even quotes the correct standard: “[T]aking tangible goods and reselling them as your own constitutes a Lanham Act violation; taking the intellectual property contained in those goods and incorporating it into your own goods does not.” Nat'l Bus. Dev. Servs., Inc. v. Am. Credit Educ. & Consulting Inc., 299 F. App'x 509, 511 (6th Cir. 2008).

However, the court wasn’t ready “at this time” to conclude that the photo was an intangible item.  (No, the intellectual property embodied in the photo is an intangible item; each physical photo is tangible, but defendants allegedly produced each one in suit, as in Dastar.)  Masck sells his own copies of the photo, “making him a producer of tangible goods.”  (And if defendants had resold his copies, that could be a relevant fact.)  He alleged that some of the infringing activity involved “the copying of a physical copy of plaintiff’s photograph and then placing their trademark on the item.” Here, unlike in National Business, “the infringing activity involved wholesale copying of Plaintiff’s photo rather than incorporating elements of his materials into their own works.”

Okay: Whether there was wholesale copying or not was a standard explicitly rejected in Dastar.  If Masck made the copies, then reverse passing off is possible (but copyright infringement isn’t, given first sale).  If defendants made the copies, as Masck alleges, then there’s no Lanham Act claim.  That’s what it means to distinguish between the source of physical copies (within the subject matter of the Lanham Act) and the source of intangible expression embodied in each copy (not within the subject matter of the Lanham Act).

The court continued that Masck claimed to have the only sharp photo of the event, and that “since not all pictures taken that day were of the same quality, the source of the photo is important.”  But in the same sentence, the court says that consumers can judge quality for themselves, making clear that the court has misunderstood the legal meaning of “source.”  If consumers are interested in the quality of the photo, they don’t care who took it or whether all copies came from the same entity, which is what “source” means for §43(a) purposes. The photo does not gain any value because Masck took it (as it might had Ansel Adams taken it); this discussion concedes that its value comes from being a good picture, not from its photographer-identifying significance.  But, the court concludes, “reproductions of the photo may lead to confusion about the source of the photograph and dilute Plaintiff’s sales.”  (Because what this discussion really needs is use of the term “dilution.”) 

True, Agence France Presse v. Morel, 769 F. Supp. 2d 295 (S.D.N.Y. 2011), reached the correct, contrary result.  But, though Masck’s photo has “a communicative aspect,” “it is not as easily reduced to simply an ‘idea, concept, or communication’ as other photos”:

Consumers do not purchase the photo simply for its communicative properties, they purchase it as a token of their fandom for the University of Michigan, or Desmond Howard. As much is clear by the fact that consumers purchase and retain the photo in its physical form. So, unlike other photographs, the physical nature of the photo remains an inalienable characteristic.

I don’t really know where to start here.  How about: if consumers are purchasing the photo as a token of their fandom for two different entities who aren’t Masck, the Lanham Act claim must fail, since Masck has no source identification claims?  Or: it doesn’t matter what the mystical content of this particular photo is, since Dastar sets out a blanket rule?  The court denied the motion to dismiss without prejudice.

The state law claims were preempted under 17 USC § 301 for lack of an extra element.  Masck claimed that the publisher of the book about Howard, Champions Press, committed tortious interference by intentionally interfering with Masck’s business relationship with Howard, because it knew that there were ongoing negotiations about buying the rights to the photo, yet Champions published the photo without permission.  The “interference” here was unauthorized copying, not anything different from infringement. Nor was Masck’s Michigan Consumer Protection Act claim qualitatively different.  Masck “tried to make the two claims sound different by describing the basis of the consumer protection claim to be confusion over the source of the photo. However, the underlying conduct complained of is the unauthorized copy of Plaintiff’s photo.”  And unjust enrichment was preempted, since there were no allegations of an implied in fact contract/promise to pay.

The court granted Howard’s motion to kick out the statutory damages and attorneys’ fees claims (for all defendants alleged to have infringed before registration).  In the Sixth Circuit, “infringement ‘commences’ for the purposes of § 412 when the first act in a series of acts constituting continuing infringement occurs.” Johnson v. Jones, 149 F.3d 494 (6th Cir. 1998)—here, February 2010.  Masck didn’t dispute this, but argued that Howard engaged in separate post-registration acts of infringement, because of his use of the altered photo in August 2012.  No dice—as Johnson held, the purpose of Section 412 “would be thwarted by holding that infringement is ‘commenced’ for the purposes of § 412 each time an infringer commits another in an ongoing series of infringing acts.” 

Even if the series of infringing acts should be chopped up, the differences between the photos weren’t significant enough that using the second one was a new act of infringement—the alterations were designed to be so slight that they would not “appear to the untrained eye.” “Given the purpose of the alterations and Plaintiff’s own assessment that the differences are not easily discernable, the altered photo is not a new work.”  And putting the altered photo on the website wasn’t a new act.  It was effectively the same photo, on the same website, by the same defendant.

The court also granted Amazon’s motion to dismiss the vicarious infringement claim against it, but not the contributory infringement claim.  Amazon, as an e-commerce platform provider, argued that it had no practical ability to control what occurred on its site (and no direct financial interest in infringement). The court agreed that Amazon couldn’t be expected to examine every third party product for infringement.  “Copyright infringement . . . lends itself readily to abusive litigation . . . Therefore, greater particularity in pleading, through showing ‘plausible grounds,’ is required.” Merely pleading that Amazon had the right and ability to control the content of its website, without factual allegations, was insufficient to show that Amazon could plausibly verify the copyright status of each and every piece of merchandise it lists from third-party sellers.  (While I agree with the result, note that the court’s reasoning is special to copyright vicarious liability; true vicarious liability, in for example an employer-employee relationship, asks about the right and ability to control the employee’s conduct, not about whether the employer could reasonably have known about the specific act of infringement or infringement in general.  But given the metastasized idea of "right and ability to control" far beyond traditional agency that has occurred in copyright, it is unsurprising that courts have incorporated other fault-based concepts to rein it in a bit.)

The contributory infringement claim wasn’t dismissed, because Masck requested Amazon to remove the allegedly infringing merchandise, giving Amazon knowledge of the infringing activity.  (Interesting factual question: if there are multiple photos of this event, what constitutes sufficient knowledge that a particular item has a copy of Masck’s photo rather than some other photo, and that Masck has a legitimate claim rather than an anticompetitive one?)  Because Amazon continued to sell the merchandise, and selling infringing merchandise materially contributes to infringement, Masck stated a plausible contributory infringement claim.  Amazon argued that Sony v. Universal should protect it, but “the product in question is not Amazon’s website, but the merchandise sold on its website.”  Sony was therefore inapplicable, and anyway Sony was about limiting the imputation of culpable intent as a matter of law from the characteristics or uses of a distributed product.  “There is no need to impute culpable intent since the products sold by Amazon already possessed their infringing characteristics,” and because Amazon knew about the alleged infringement. (The court is conflating Amazon’s service with the products sold through its service—like conflating the VCR with the videotapes made by end users.  Even the swap meet cases do better than this applying Sony to services.) 

Long, unhappy post on Hart v. EA

Hart v. Electronic Arts, Inc., No. 11-3750 (3d Cir. May 21, 2013)

Hart, a former Rutgers football player who saw significant success on the field, appealed EA’s district court win against his right of publicity claim based on EA’s use of his likeness and biographical information (size, weight, jersey number, typical attire of visor and armband) in its NCAA Football videogames. The court of appeals reversed.

Unsurprisingly, the court began with reference to the NCAA’s amateurism rules, which precluded Hart from making any money from his status, but didn’t stop the NCAA from monetizing his popularity.

NCAA Football comes out every year, and allows users “to experience the excitement and challenge of college football” by interacting with “over 100 virtual teams and thousands of virtual players.”  Users typically play by choosing two teams to compete against each other.  The game “assigns a stadium for the match-up and populates it with players, coaches, referees, mascots, cheerleaders and fans.”  There are also multi-game play modes.  Dynasty Mode allows users to control a college program for up to thirty seasons, allowing players to recruit high school players from a randomly generated pool. Race for the Heisman/Campus Legend mode allows users to control a single user-made virtual player from high school through college, making choices about practices, academics and social activities.  EA licenses rights to team-related content from the NCAA, but does not license likeness and identity rights for collegiate players—unlike some of its other franchises.  The game’s success depends on its focus on realism and detail, “from realistic sounds, to game mechanics, to team mascots. This focus on realism also ensures that the ‘over 100 virtual teams’ in the game are populated by digital avatars that resemble their real-life counterparts and share their vital and biographical information.” This included a Rutgers avatar that resembled Hart.  While users can change avatars’ appearances and vital statistics, certain details were immutable: the player’s home state, home town, team, and class year.  

Hart sued based on the use of his likeness/biographical and career statistics in the game, and also over the use of an actual photo of him in a photo montage visible only when players select Rutgers as their team.  Preview: This last was held transformative and fair because it’s a montage, while the rest is not transformative because it’s a realistic videogame.  If those becauses don’t make any sense to you, welcome to the club!

As you know, Bob, videogames are fully protected by the First Amendment.  Brown v. Entm’t Merchs. Ass’n, 131 S. Ct. 2729 (2011).  However, such protection can be trumped by other protected rights.  EA conceded for purposes of the appeal that it misappropriated his identity for commercial exploitation; this required balancing the interests underlying the right to free expression with the interests in protecting the right of publicity. Zacchini v. Scripps-Howard Broad. Co., 433 U.S. 562 (1977) (also a cite to Eldred and to defamation law).

The court then engaged in a review of existing case law.  The basic theory of the right of publicity is that people have the right to enjoy the fruits of their own industry; it’s unfair to allow others to commercialize, exploit, or capitalize on another’s name or reputation.  People’s names and likenesses belong to them as property because they are things of value. New Jersey follows the Restatement (Second) of Torts approach that “[o]ne who appropriates to his own use or benefit the name or likeness of another is subject to liability to the other for invasion of privacy,” and that this is a property right.  The Third Restatement adopted a freestanding right of publicity claim, but New Jersey has yet to adopt it.

In New Jersey, name, likeness, and endorsement therefore carry value, and unauthorized use harms the person by “diluting the value of the name and depriving that individual of compensation.”  The goal of the right of publicity is therefore to protect an individual’s property interest in their identity gained through labor and effort, and to encourage further investment in this property interest.  See Zacchini (“[T]he State’s interest in permitting a right of publicity. . . . is closely analogous to the goals of patent and copyright law, focusing on the right of the individual to reap the reward of his endeavors . . . .”).  Relatedly, the court rejected the idea that no right of publicity was necessary because players are financially rewarded through endorsement, sponsorship, and the like—this doesn’t apply to college athletes, and the NCAA most recently estimated that “[l]ess than [two] in 100, or 1.6 percent, of NCAA senior football players will get drafted by a National Football League (NFL) team.” Ryan Hart was in the nearly 99%.  (So does that mean that in our future case-by-case balancing we do get to count those other economic opportunities against granting control to celebrities who are getting paid?)

Zacchini called for balancing of First Amendment interests, but didn’t set forth a systematic analytic framework for doing so.  Lower courts have tried several approaches.  The court identified three as of interest: the execrable Doe v. TCI “predominant use” test, the trademark-based Rogers test, and the copyright-based transformative use test.  It picked the transformative use test as the most appropriate.

As for Doe v. TCI, asking whether the predominant use of a celebrity’s identity is commercial is “subjective at best, arbitrary at worst, and in either case calls upon judges to act as both impartial jurists and discerning art critics. These two roles cannot co-exist.”  The court declined to get into whether using Hart’s identity added anything to the “First Amendment expressiveness” of the game:

Such reasoning, however, leads down a dangerous and rightly-shunned road: adopting Appellant’s suggested analysis would be tantamount to admitting that it is proper for courts to analyze select elements of a work to determine how much they contribute to the entire work’s expressiveness. Moreover, as a necessary (and insidious) consequence, the Appellant’s approach would suppose that there exists a broad range of seemingly expressive speech that has no First Amendment value.”

(This criticism is also true of transformative use, especially as applied here, but hey!)

The court then rejected Rogers because it would “potentially immunize a broad swath of tortious activity.”  (You know, like New York Times v. Sullivan.)  The Restatement (Third) of Unfair Competition restricts the right of publicity to “use for purposes of trade,” which does not “ordinarily include the use of a person’s identity in news reporting, commentary, entertainment, works of fiction or nonfiction, or in advertising that is incidental to such uses” unless a name or likeness is used solely to attract attention to an unrelated work.  The Restatement specifically mentions uses in articles in fan magazines, feature stories on entertainment programs, unauthorized biographies, novels, plays, and motion pictures. 

The court didn’t find the cases (allegedly) adopting Rogers persuasive.  Parks v. LaFace, for example, was in tension with the transformative use test applied in ETW v. Jireh, decided by another Sixth Circuit panel a month later.  And the Third Circuit had already, in dicta, expressed doubt that Rogers could apply beyond a title.  Facenda v. N.F.L. Films, Inc., 542 F.3d 1007 (3d Cir. 2008).  Though Rogers may be useful in “trademark-like” right of publicity cases, whatever that means, it wasn’t appropriate here (since it would mean that EA won).  Rogers is a “blunt instrument” that doesn’t carefully calibrate the balancing of “two fundamental protections: the right of free expression and the right to control, manage, and profit from one’s own identity.”  (Although the last time I checked, only one of those was in the Bill of Rights.  Also, categorical balancing is often used in First Amendment cases, to avoid chilling effects—case by case determination of “transformativeness” has significant costs that have to be balanced while we’re balancing.)

The problem the court had with Rogers was demonstrated by EA’s argument, which was that Hart’s likeness wasn’t wholly unrelated to NCAA football, and the game wasn’t an ad for an unrelated product, therefore EA won.  EA argued that Hart “should be unable to assert a claim for appropriating his likeness as a football player precisely because his likeness was used for a game about football. Adopting this line of reasoning threatens to turn the right of publicity on its head.”  (That presupposes exactly the question to be answered, which is how far the right of publicity may constitutionally extend.  Also, imagine this statement made about a conventional print biography.  Or about a news photograph accompanying a story about the Rutgers football team.  Or Joyce Carol Oates’ next roman a clef about a college football player who sues a video game company. Etc.)  You see, Hart’s career means that the target audience for his “merchandise and performances” would be sports fans, so products “appropriating and exploiting his identity” would do best with them.  But under Rogers, all products (and here we mean “expressive works protected by the First Amendment”) targeting the sports fan market would, as a matter of course, relate to Hart and fall outside his right of publicity.  “It cannot be that the very activity by which Appellant achieved his renown now prevents him from protecting his hard-won celebrity.”  (No, but it can be that engaging in speech about the very activity by which Hart achieved his renown prevents him from maintaining a successful claim against the speakers; what we have here is a failure to define the scope of the right, or explain why it should trump the interest in engaging in nondefamatory noncommercial speech.)

For these reasons, Rogers was inapplicable, though the Rogers court was right to note that the right of publicity doesn’t have consumer confusion as an element and was therefore “potentially broader” than trademark.  Of course, this is a reason why the right of publicity does less well in any balancing test than trademark—deceptive speech is easier to regulate than nondeceptive speech, at least when it does harm (Alvarez)—not a reason why a right of publicity claim trumps freedom of speech when an equivalent trademark claim, supposedly protecting both the public and the trademark owner, wouldn’t be sufficiently weighty to do so.  But that’s not what the Hart court says, since we are in topsy-turvy land: “the right of publicity is broader and, by extension, protects a greater swath of property interests. Thus, it would be unwise for us to adopt a test that hews so closely to traditional trademark principles.”  (Traditional pre-Sullivan defamation law protected a “greater swath” of personality interests than current defamation law; that made it unconstitutional.  And one could say, as Justice Rehnquist once did, that the US flag is the “property” of the American people, and yet flagburning statutes are still unconstitutional.  Calling an interest “property” doesn’t make it First Amendment-immune.  Even Eldred and Golan don’t go that far—not that any legislature adopting a right of publicity has engaged in even the token factfinding backing up the CTEA.)

So, the court turned to a “broader, more nuanced test,” transformative use.  Copyright was a better analogy than trademark, because the right of publicity is an economic right against misappropriation.  It applies to noncommercial speech too, offering “protection to a form of intellectual property that society deems to have social utility.”  Therefore, taking transformativeness from copyright’s fair use test was appropriate, especially since transformative uses are less likely to interfere with the economic interests implicated by the right of publicity.  Of course, transformativeness may include factual reporting and fictionalized portrayal along with parody and satire.  The inquiry, as Comedy III v. Saderup said, was “in a sense more quantitative than qualitative, asking whether the literal and imitative or the creative elements predominate in the work.”  (Wasn’t that the test the court just rightly rejected from Doe v. TCI?) 

If the marketability of the challenged work doesn’t derive primarily from the fame of the celebrity depicted, there’s generally no violation of the right of publicity.  However, even if the work’s marketability does derive from the celebrity’s fame, it can still be transformative.  The question is whether the celebrity likeness is one of the “raw materials” from which an original work is synthesized, or whether the depiction is the “very sum and substance” of the work. (But of course biographies and news reporting are fine!  The reason why is … left as an exercise for the reader.)  So the question is whether the celebrity’s likeness “has become primarily the defendant’s own expression rather than the celebrity’s likeness,” and “expression” has to be “expression of something other than the likeness of the celebrity.” 

(Not that word portraits will never be in jeopardy.  The thing about medium discrimination is that it’s invisible to the people engaging in it.  The work of portraying a celebrity in a textual biography is so self-evidently transformative creative “work” of the writer's "own" that the court feels no need to explain why it’s qualitatively different from the work of a portraitist.  The work required to create a realistic video game, which involves extensive programming and creative design, by contrast appears to the court mere reproductive labor.  I would still think this was dumb, but I wouldn’t be as aggravated if courts would outright say “the right of publicity, though in theory having something to do with ‘name,’ is only a right in images, at least as applied outside the context of false endorsement.”)

Winter v. DC Comics, 69 P.3d 473 (Cal. 2003) expanded on the California rule: “[a]n artist depicting a celebrity must contribute something more than a ‘merely trivial’ variation, [but must create] something recognizably ‘his own’ in order to qualify for legal protection.”  ETW v. Jireh decided that a painting was transformative because it was a collage of Tiger Woods with other golf greats. 
The Hart court, inexplicably, calls the painting in question “a photograph of Tiger Woods set among a collage of other, golf-related photographs.”  ETW, the court said, was “somewhere in the middle …, given that it focuses on the use of photographs (literal depictions of celebrities), but adds a transformative aspect to the work, thereby altering the meaning behind the use of the celebrity’s likeness.”  Winter was at the far end of the spectrum—depicting Johnny and Edgar Winter as half-worm comic book villains was obviously transformative—while Comedy III  was clearly nontransformative: mere literal depictions of celebrities in a different medium.
This leads to Kirby v. Sega of America, Inc., 50 Cal. Rptr. 3d 607 (Cal. Ct. App. 2006), finding transformative use of a musician’s image to create a video game character who was “a reporter in the far flung future.”  Sega seemed to have copied Kirby’s signature phrases, hair style, and clothing choice, but differences in appearances and movement also existed.  This additional new expression was enough to be transformative, even without a particular meaning or message.

In No Doubt v. Activision Publishing, Inc., 122 Cal. Rptr. 3d 397 (Cal. Ct. App. 2011), by contrast, the court found a violation of the right of publicity when the video game at issue used “immutable” images of the “real” musicians and didn’t transform their context, instead having them perform rock songs as they did in life.  Even though the avatars could be manipulated to perform at fanciful venues or to sing songs the real band wouldn’t ever sing, and even though the game had many other creative elements, they were still “exact depictions” of the musicians doing their thing.  The use of highly realistic digital depictions “was motivated by a desire to capitalize on the band’s fan-base,” so there was a violation of the right of publicity. (But fan magazines and entertainment programs are fine!  Because … they’re not video games?)

The Hart court concluded that transformative use struck the best balance between the interests at issue “because it provides courts with a flexible — yet uniformly applicable — analytical framework.”  Unlike Rogers, transformativeness allows courts “to account for the fact that misappropriation can occur in any market segment, including those related to the celebrity.”  (And to ignore the difference between commercial and noncommercial speech, and deceptive and nondeceptive speech.  No big deal.)  But, unlike Doe v. TCI, transformativeness is “more circumscribed,” focusing on specific aspects of a work “that speak to whether it was merely created to exploit a celebrity’s likeness.”  Transformativeness “recognizes that if First Amendment protections are to mean anything in right of publicity claims, courts must begin by considering the extent to which a work is the creator’s own expression.”  The marketing power of the celebrity identity is a secondary question, since the balancing suggested by Zacchini can’t begin and end with commercial purpose or value.  Transformative use “effectively restricts right of publicity claims to a very narrow universe of expressive works.”  (Categorical balancing, with a focus on avoiding chilling effects on protected speech, might ask whether this game, no pun intended, is worth the candle.) 

And the test was consistent with the outcomes of other cases, including Estate of Presley v. Russen, 513 F. Supp. 1339 (D.N.J. 1981), which held that an Elvis impersonator’s act was subject to right of publicity claims because “entertainment that is merely a copy or imitation, even if skillfully and accurately carried out, does not really have its own creative component and does not have a significant value as pure entertainment.”  (Which totally explains why people go to see impersonators instead of watching video of the original!  Oh, wait, it doesn’t.  Also, Tina Fey would like a word.)  As in Zacchini, the Elvis impersonator “appropriated the ‘very activity [live stage show] by which [Presley initially] acquired his reputation.”   Where a work contains “‘merely a copy or imitation’ of the celebrity’s identity … there can be no First Amendment impediment to a right of publicity claim.”  (Except for biographies and news reports/photography.) 

Transformativeness was also, in the court’s view, consistent with the Restatement test, because the examples listed as protected in the comments to the Restatement “all exemplify the sort of transformative uses that would generally pass the analysis set forth in Comedy III.”  Thus, “already-existing First Amendment protections in right of publicity cases apply to video games with the same force as to ‘biographies, documentaries, docudramas, and other expressive works depicting real-life figures.’”  Except that they win and EA loses; other than that, totally the same.

Here, Hart’s protected “identity” included not only his likeness but also his biographical information; it was the combination that identified the digital avatar at issue as an in-game recreation of Hart:

This joint focus on both likeness and identifying information avoids a conflict with C.B.C. Distribution & Mktg., Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818 (8th Cir. 2007), which held that use of major league baseball players’ records in a fantasy baseball game was protected by the First Amendment even against right of publicity claims because such information was publicly available. The presence of a digital avatar that recreates Appellant in a digital medium differentiates this matter from C.B.C.  

Okay, I lied: this is still aggravating.  Why does the presence of his image make a difference to the First Amendment issues?  Why do celebrities have more rights in pictures of them than in facts about them?  A case could, I imagine, be made having to do with “if value then right” and the greater value of the image in present-day society, but it’s being assumed rather than articulated. 

The court’s focus on visual representation causes it some uncertainty about the scope of its holding: “It remains an open question ... whether right of publicity claims can extend into the bygone days of 8-bit graphics and pixilated representations.”  Here, though, the digital avatar closely resembled the “genuine article” in hair color, hair style, skin tone, accessories, vital information, and biographical details.  “And while the inexorable march of technological progress may make some of the graphics in earlier editions of NCAA Football look dated or overly-computerized, we do not believe that video game graphics must reach (let alone cross) the uncanny valley to support a right of publicity claim.” 

Digitization was not itself transformative.  Recreating a likeness in a medium other than photographs or video can’t in itself satisfy the test, or the test wouldn’t make enough uses liable.  (A couple of things going on here—on top of the initial disregard of the work involved in creating photos and video as creative, contra copyright, there’s a different erasure of creative labor in video game design/programming, portraiture, and other non-reprographic methods of depicting people. Except words, of course.  Missing here and throughout is any explanation of why biographies etc. are transformative; this is what makes the opinion so clearly non-medium neutral.)

The next question was whether the context was transformative.  Here, digital Hart did what actual Hart did at Rutgers: he played football.  (*cough*Unauthorized biographies*cough*.)  Though users could alter the avatar’s appearance, and though EA created a game in which users could make those kinds of decisions, that wasn’t enough.  All games are interactive. 

True, video games have First Amendment protection because they’re interactive.  (Here I thought it was because they were expressive.)  But the balancing test isn’t about whether a work loses First Amendment protection in the abstract.  Rather, it’s about whether “the interests protected by the right of publicity are sufficient to surmount the already-existing First Amendment protections. As Zacchini demonstrated, the right of publicity can triumph even when an essential element for First Amendment protection is present.”  And “[i]f the mere presence of [the ability to alter an avatar] were enough, video game companies could commit the most blatant acts of misappropriation only to absolve themselves by including a feature that allows users to modify the digital likenesses.”  In a footnote, the court cautioned that interactivity wasn’t necessary for transformativeness, even for videogames.  Placing avatars of the Dalai Lama and the Pope in a violent “shoot-em-up” game with a mechanism for manipulating their characteristics wouldn’t automatically satisfy the test, though the court didn’t “discount the possibility” that such a juxtaposition of spiritual leaders and hyperviolence could be transformative “on other grounds.” 

Here, the interactivity was insufficient to transform Hart’s likeness into EA’s own expression.  NCAA Football sought to create a realistic depiction of college football, including realistic representations of players, seeking to capitalize on teams’ and players’ fan bases. This heightened realism made the games more enjoyable and thus more valuable.  Realistic depictions were the “sum and substance” of the digital players.  Since Hart’s unaltered likeness was “central to the core of the game experience,” the ability to change the digital avatars wasn’t important.  The ability to make minor alterations in the avatar, such as changes in his hair style, face, accessories, basic biographical information, or playing statistics, was insufficient, because an artist depicting a celebrity has to contribute more than a trivial variation. 

“[T]he ability to modify the avatar counts for little where the appeal of the game lies in users’ ability to play ‘as, or alongside’ their preferred players or team.”  Thus, even avatars with “superficial modifications” were suitable proxies or market subsitutes for the original.  And once a user made major changes to the avatar, it wasn’t a “use” of his identity and was irrelevant to the question of how his likeness was used in the game.

Also, it didn’t matter that Hart was a tiny part of the overall game.  Consideration of the other creative elements was improper, because transformativeness is about “how the celebrity’s identity is used in or is altered by other aspects of a work,” without consideration of “[w]holly unrelated elements.”  (Forrest Gump is looking pretty problematic!)  Consideration of the broader context of a work should be aimed at “whether this context acted upon the celebrity identity in a way that transformed it or imbued it with some added creativity beyond providing a ‘merely trivial variation.’”  So, you’d better have a good creative reason for your celebrity reference in your book, movie, etc.  Or just your video game.

An alternative holding, considering the creativity of the rest of the work, would allow “[a]cts of blatant misappropriation” as long as “the larger work, on balance, contained highly creative elements in great abundance. This concern is particularly acute in the case of media that lend themselves to easy partition such as video games.”  (Calling Gawker and the Huffington Post—those short celebrity stories and pictures, so easily partitionable from the rest of the site, are now going to get you in trouble!  Or would, if this were a medium-neutral decision.)

Just to make clear that video games are special, the court held that the photo of Hart that appeared in the 2009 edition of NCAA Football was not actionable.  It was a fleeting component of a montage, and was transformative under ETW: putting the photo in the context of a Rutgers montage “imbue[d] the image with additional meaning beyond simply being a representation of the player.” (Emphasis added—note the slippage between the celebrity and a particular image of the celebrity, which contributes to the medium discrimination at work here.  The photo puts Hart in the context of the Rutgers team, and that’s transformative.  But the avatar, which plays on the digital Rutgers team, is not.)  The use of the photo was protected by the First Amendment.

Judge Ambro dissented.  He agreed that EA took Hart’s identity and used it for commercial success, and that realism was key to the franchise’s profitability.  And he agreed that student athletes are exploited, and that this seemed unfair.  Further, he agreed that transformativeness was the proper test.  However, he interpreted and applied it differently.  (Not for nothing, giving further credence to the objection that transformativeness too requires judges to be art critics.)

Transformativeness balanced “an individual’s right to benefit financially when others use his identifiable persona for their own commercial benefit [with] the First Amendment interest in insulating from liability a creator’s decision to interweave real-life figures into its expressive work.”  But the inquiry couldn’t be limited to Hart’s identity alone, and EA shouldn’t be penalized for its commercial success or its realism, given “First Amendment protections traditionally afforded to true-to-life depictions of real figures and works produced for profit.”

First, the work should be evaluated in its entirety to figure out whether a work is “literal” or a celebrity likeness is simply one of the “raw materials” from which an original work is synthesized, as stated in Comedy III and reemphasized in Winter, which noted that the Autumn brothers were placed in a larger storyline with plenty of creativity of its own.  (In a footnote, the dissent pointed out that the use here wasn’t harming Hart’s commercial value—if anything, ticket sales for college football games and the value of Hart’s endorsement would have been augmented by the popularity of EA’s games.  This gets to the core of “misappropriation”—what is it we think counts as such?  To say that a person is harmed by not getting payment for a “use” presupposes the proper scope of the right.)

The majority erred in disregarding the non-Hart creative elements of the video game, conflicting with other courts’ approaches, such as that taken by ETW.  “My colleagues do not—and, in my view, cannot—explain how the photographic images of Woods were transformed if they limit their analysis to ‘how the celebrity’s identity is used.’” The use here, “creating digital avatars of football teams and placing them in an interactive medium designed for user interaction and manipulation” was “significantly more ‘transformative’ than the use in ETW, which simply combined several photographs into a photomontage.” (Who was reading the actual cases?  Of course I don’t think it matters legally that Rick Rush is a painter and not a collage artist, but this is embarrassing.)  To Judge Ambro, a narrow focus on an individual’s likeness, rather than on how it was incorporated into and transformed by the work as a whole, was flawed.  The whole was the better baseline.

Judge Ambro reminded us that the First Amendment protects “biographies, documentaries, docudramas, and other expressive works depicting real-life figures, whether the accounts are factual or fictional.”  And it protects them when they’re sold for profit.  Thus, using a celebrity name or likeness to increase an expressive work’s value and marketability doesn’t diminish its First Amendment protection.

The majority nodded in the direction of medium neutrality, but wasn’t medium neutral in its application of the test.  “EA’s use of real-life likenesses as ‘characters’ in its NCAA Football video game should be as protected as portrayals (fictional or nonfictional) of individuals in movies and books.”  Not all digital portrayals should be entitled to First Amendment protection, but they should be when a likeness, as part of a creative composition, “has been transformed into something more or different than what it was before.”  The majority further erred in focusing on the marketability of the game; the “effect on the market” factor of copyright fair use is not part of the right of publicity test as promulgated by Comedy III.  And even if it were appropriately considered, there was no argument that EA’s use decreased the commercial value of Hart’s identity or persona.  The majority wrongly equated the use of realism to increase profits with misappropriation.  “This approach is at odds with the First Amendment protection afforded to expressive works incorporating real-life figures. That protection does not depend on whether the characters are depicted realistically or whether their inclusion increases profits.” 

Judge Ambro therefore concluded that EA’s use of realistic avatars was entitled to First Amendment protection.  Hart’s mere likeness had been transformed into an avatar that, “along with the rest of a digitally created college football team, users can direct and manipulate in fictional football games.”  The many original graphics, videos, sound effects, and game scenarios allowed users to direct the play of a college football team with many different players.  Users weren’t reenacting real games, but directing the avatars in invented games and seasons.  Campus Legend/Dynasty Mode also allowed users to control players and teams across multiple seasons, allowing them to generate their own narratives. These were “imaginative transformations of the games played by real players.”  The permutations allowed for each player image added to this transformative interactivity.  These elements were not “[w]holly unrelated” to the use of Hart’s likeness, as the majority contended.  Users who selected the 2005 Rutgers team and didn’t change the avatar’s characteristics would experience the numerous creative elements of the game as part of every fictional play.  Thus, his likeness was one of the raw materials from which a new work was synthesized, rather than the sum and substance of the work in question.

Cute rephrasing of Prince v. Cariou

I belatedly found Shane Ferro's take, via the Art Law Blog.  Worth reading in its (short) entirety, but:
You got yourself in a lot of trouble with this Canal Zone thing. Actually, you got yourself in a lot of trouble when you got sued and then you didn’t take the legal proceedings seriously, which really pissed off the district court judge. That was unappreciated.
However, the system can’t just go overturning current copyright jurisprudence because you were obnoxious under oath. Since you apparently don’t want to or are otherwise unable to argue transformative intent, I’m going to do that on your behalf right now (thank your lawyer). It’s pretty clear from looking at your artwork that the series is totally different from the underlying Cariou works. I get that feeling because they mostly seem to make fun of said works.
It’s not the usual way to defend fair use, but I can’t really argue with the work itself. Cariou’s photos are clearly meant to document, while yours seem to be intended to piss people off (including the artist being appropriated). That is, in fact, one way of being transformative. I find that your complete lack of regard for the meaning of the original works is decent evidence you weren’t stealing them outright.

Thursday, June 13, 2013

#sincere? Slate on sponsored tweets and disclosure

Along with a roundup of recent events, the story provides food for thought about what might happen if the default becomes flipped and people assume that celebrity tweets are like 30-second ads: sponsored by default.  How then will celebrities disclose that they aren't getting paid for expressing an opinion?  #unspon is possible, but a little dull.  #unpaid?

What does it take to plead bad faith assertion of patent claims?

E.I. Du Pont de Nemours and Co. v. Heraeus Precious Metals North America Conshohocken LLC, 2013 WL 2468257 (D. Or.) (magistrate judge)

DuPoint sued defendants alleging patent infringement. Heraeus counterclaimed for violation of the Lanham Act based on a July 2012 press release. The court granted DuPont’s motion to dismiss for failure to allege that Du Pont acted in bad faith.  Heraeus amended its counterclaim, partially successfully. To start with, the court took judicial notice that Hereaus’s former head of R&D had been criminally indicted for stealing trade secrets.

The counterclaims alleged that DuPont misrepresented the legitimacy of Heraus’s products.  The press release was titled, “DuPont Addresses Patent Protection at Solarbuzz China Conference; Intellectual Property Theft Growing in Competitive Climate of Photovoltaics.”  It described “IP theft” in the industry, mentioned DuPont’s patent suit against Heraeus, and said that IP theft was bad.  Hereaus alleged that the intimation that Hereaus committed “IP theft” and patent infringement was false.  It further alleged that DuPont knew or should have known that its accusations were false, because “theft” requires intent and DuPont’s patent infringement suit didn’t allege theft or even intentional/willful infringement; DuPont allegedly knew that Heraeus couldn’t have intended to “steal” that which Heraeus did not know existed.

Hereaus also alleged that DuPont made knowingly false statements to certain of Heraeus’s Taiwan customers about the US patent lawsuit, including about DuPont’s confidence that it would prevail and about the customers’ potential liability if they bought from Heraeus.

In addition to the ordinary elements of a Lanham Act claim, a false advertising claim based on statements about patents has to be made in bad faith. DuPont argued that Heraeus failed to plead fraud with particularity (side note: since bad faith/intent is ordinarily not a part of a Lanham Act claim, it doesn’t ordinarily sound in fraud; but some courts have not noticed this).  Of course, even under Rule 9(b), state of mind may be generally averred.  The magistrate judge found that Heraeus identified the who, what, when, where, why, and how of its bad faith claim, including the reasons why DuPont knew or should have known of the invalidity of its asserted patent and of Heraeus’s noninfringement thereof.  DuPont’s arguments generally went more to the merits than to pleading standards.

DuPont argued that the indictment of the R&D head made its statements true, but the indictment didn’t indicate that the defendant took his actions on behalf of or to benefit Hereaus; rather, the indictment alleges actions in direct violation of Heraeus’s employment agreement, making Heraeus a possible victim rather than a beneficiary.

As to the statements to the Taiwan customers, DuPont argued that Heraeus failed to plead a substantial effect on commerce within the scope of Congress’s power to regulate. Hereaus responded that its allegations shouldn’t be taken in isolation—rather, they showed that DuPont engaged in widespread dissemination to the relevant marketplace. The court agreed.  The allegations sufficiently indicated that DuPont’s statements were an organized campaign of commercial advertising and promotion for the relevant market.

However, the allegations regarding communications with Taiwan customers failed to meet Rule 9(b)’s requirements because they weren’t specific enough (they didn’t identify the customers or the exact statements).  Heraeus said it was worried about “confidentiality.”  It could have filed a pleading in redacted for with an unredacted version under seal if its worries were legitimate.