reverse passing off was harmless

Paper Thermometer Co., Inc. v. Murray, 2012 WL 194369 (D.N.H.) 

Notably only because the judge, treating this as a false advertising case, saw something that most trademark cases miss.  PTC makes paper thermometers, which change color when exposed to certain temperatures.  It sued Murray for copyright infringement and false advertising and also sued a couple of former employees, the Duerigs, for misappropriation of trade secrets,.  (I omit some other claims and also the family dispute aspect of the case.) 

Murray, a bartender at a restaurant where the Duerigs frequently dined, talked to them about sales or marketing jobs at PTC.  Though there were no such jobs available, Murray asked whether he could buy products from PTC and resell them, and the Duerigs said that many people did exactly that and that they saw no reason why Murray couldn’t do the same.  Murray set about establishing a resale business through which he could resell PTC's paper thermometers to third parties. He asked the Duerigs for samples, and they complied, seeing him as a potential customer. 

Eventually, Murray settled on a name, Dishtemp Safety Company, registered a second level domain name, established a toll-free telephone number, and set up a PayPal account.  But, when he launched his site in summer 2010, Murray used some misleading or ambiguous text that suggested that he was manufacturing labels, rather than merely reselling PTC's products. 

PTC complained that Murray included a quote from Food Safety Magazine extolling the virtues of PTC's paper thermometers, but omitted words from that quote that identified PTC as the manufacturer of those products. PTC also complained that the “About Us” section contained a false and misleading claim that “[f]rom our tightly integrated sales and manufacturing facilities in southern New Hampshire, DishTemp Safety manufactures and distributes the most accurate commercial dishwashing temperature testing indicators available. Our engineers have over 30 years of field tested experience.”    Murray didn’t manufacture anything or employ engineers.  But PTC knew that early on, and Murray’s plan all along was to be a reseller.  When the Duerigs left the company, they gave Murray contact information for someone still there so he could continue to get supplies from PTC.  PTC nonetheless maintained that Murray intended to enter the market as a competitor and “proxy” for the Duerigs in a scheme to compete with PTC. “In short, rather than see the language of Murray's website for what it plainly was—hyperbole born of misguided youthful exuberance—PTC … choose to see it as evidence of a dogged conspiracy between Murray and the Duerigs to harm PTC ….”  Murray’s only sales were to PTC’s agent, who placed two orders and received PTC-manufactured labels. 

PTC claimed that Murray copied its website and packaging materials as well as engaged in false advertising.  First, the court found that statutory damages and fees were unavailable under the Copyright Act, since registration took place after the DishTemp website launched.  PTC argued that it was entitled to prospective injunctive relief as well as “actual damages” from the Duerigs, who allegedly induced Murray to infringe, in the form of costs and attorneys’ fees incurred in suing Murray.  They argued that they were not seeking attorneys’ fees as such, but rather seeking recovery for the monetary harm incurred in being forced to sue another.  The court found no supporting precedent for this under the Copyright Act or the Lanham Act.  The Restatement (Second) of Torts says that “One who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action.”  This makes sense when a party is forced to defend an action as a result of a third party’s wrongful action, but is less clear in scope when a party initiates suit and seeks to recover costs and fees as damages from a different party.  New Hampshire provides for fee recovery when a party has been forced to litigate by another’s bad faith.  But (even assuming state precedent has any relevance, which I’m not sure it would given the federal basis of this claim), nothing in the record suggested that PTC was forced to litigate.  To the contrary, the record suggested that “if plaintiffs had simply contacted Murray, explained their position, and asked him to either modify or shut down his website, he would have immediately complied, as he did when he learned of the lawsuit.”  A C&D would also likely have worked.  These simple, cheap steps would have avoided the “damages” PTC sought to recover. 

As for false advertising, PTC suffered no cognizable harm.  “In these odd circumstances, product quality was entirely consistent with PTC's standards since the product Murray intended to sell was PTC's product. No sales were diverted, but even if some customers had purchased from Murray rather than from PTC, Murray still would have had to first buy the products from PTC, at retail.”  Note that this is inconsistent with the general assumptions of reverse passing off—that a plaintiff is harmed by having people think its products are the defendant’s, since the defendant gets any reputational benefit from the sales. I think the court here has the better of the empirics; harm from reverse passing off is likely to be rare. 

The court declined to award injunctive relief on the federal claims against Murray.  Even assuming that the presumption of irreparable injury still applied after eBay, there was no presumption that past infringements will be repeated, and it was highly unlikely that Murray would ever again attempt to buy and resell PTC's products, much less copy its website content. Enjoining the Duerigs was also unjustified.  There was no plausible evidence that the Duerigs ever encouraged Murray in any infringing activity. 

The court declined to exercise supplemental jurisdiction over the remaining state law claims.

Via an eagle-eyed source

Disney pulls Joy Division inspired T-shirt.  I don't know what the IP claim is, exactly. Would a reasonable consumer who recognized the Joy Division cover actually think that the band (or whoever holds the rights now) authorized this?  Seems unlikely.  Copyright is also shaky, since the claim seems to be over the style of the illustration rather than the content.  Compare to the recent Velvet Underground/Andy Warhol dustup--who owns the rights in album covers anyway?

Convince me this isn't copyfraud and I'll buy you a Billy

This appeared on the back of the piece of cardboard that serves as backing for my new Billy bookcases. In what is Ikea claiming copyright?  And no, it's not the instructions.

I smell a follow-on class action

Clorox kitty litter suit.  H/T Eric Goldman

Julie Cohen's new book

Panel discussion on Julie E. Cohen’s great new book, Configuring the Networked Self: Law, Code, and the Play of Everyday Practice. 

Danielle Citron, U. Md.: Concurring Opinions will have an online symposium on the book this coming March.  Helps understand importance of architecture on human development. Networks know who we are and sort, categorize, and make decisions for and about us. Arbiters of access to knowledge, jobs, etc. Pervade our daily lives. Search engines highlight things they think are relevant to us; companies give us social media influence scores and sell those to advertisers; automated systems count and miscount votes, and remove voters from rolls; determine how much Medicaid etc. will be paid for a person; flag individuals as potential terrorists/threats. These systems have tremendous impact on the play of everyday life/creativity, but there’s a huge info imbalances. To them, users are open books; to us, they’re black boxes. Can’t demand of private parties or government to find out what they know, making it difficult to protest. 

Examples: Advertising/marketing companies mine info to find valuable customers.  Ads and news can be tailored to demographics and interests.  Someone who’s unemployed may see ads for payday loans, fast food, for-profit schools; in ad terms, she’s known as “waste” and so the news she sees will be tailored to that—military recruitment, vocational schools.  Architecture influences culture. 

Md. started surveying protest groups against the Iraq war. Physical surveillance and also data mining to identify activists as “terrorists,” including 2 Catholic nuns and a man running for Democratic office. Normally you’d never know you were identified as such, but you would lose jobs/wouldn’t be able to travel.  However, ACLU filed open government request; after a big fight, determined that 53 people were designated terrorists.  The explanation was: the automated software only offered me that choice; there was no option for “extremist” and terrorist seemed close enough. 

Public benefits systems: increasingly automated.  Programmed hundreds of legal rules incorrectly—denied Medicaid to breast cancer patients based on income allocations not required by state law; denied food stamps based on drug convictions contrary to federal law.  System hasn’t gotten better despite high-profile litigation and change of vendors.  One girl died when erroneously kicked from system. 

Sen & Nussbaum’s capability approach is important. Automated systems impact our core capabilities.  Cohen develops this by showing how the systems interfere with play, creativity, space to breathe.  Activists: felt watched and didn’t go to meetings or didn’t say what they thought.  

Does Cohen overemphasize creativity when more pressing capabilities should be in the foreground? Systems can deprive people of necessities of survival, like health care.  Creative activity is hard if you’re starving or if you can’t get a job because you’ve been marked as a terrorist. Social mobility—ability to give credit to talent—is key to creativity, but systems stereotype/pigeonhole people to keep them impoverished. Next steps: sort out how different systems affect different capabilities.  Objectification: whether systems fail to treat us as ends in ourselves. 

Daniel Solove, GW: Broad theme of Cohen’s work: how to carve out appropriate space for intellectual creativity?  One of few scholars to explore privacy and creativity together in their nuances. Copyright and privacy both concern control over information; tension because scholars who argue for limits on copyright are often arguing for more protection for privacy—less control/more control over information.  Is there a coherent way to argue for less copyright/more privacy?  Cohen’s work establishes the normative foundations for that.  A set of ways to allow creativity and the development of the self. 

We need to consume in order to create. Also need breathing space to create without someone watching us all the time. Cohen uses Sen & Nussbaum’s concept of flourishing: freedom that transcends negative liberty, includes access to real opportunities.  Introduce chance into our controlled, networked world.  Copyright: strict control over information can impede our ability to create in the ways we want to create. Privacy: growing surveillance threatens to put us under control that will make us hard to create and flourish in ways outside the norm.  Privacy is often treated as a second-class right; hard to give it the status of a fundamental right because fundamental rights tend to be simple and stable; privacy is nuanced, culturally and historically contingent; amorphous.  Privacy is a critical right, though, not just to individual flourishing but to society because our own intellectual development depends on the development of others.  Stunting creativity of others stunts our creativity. 

Surveillance can chill eccentric behavior; it can dull us.  Removes interesting eccentricities that are key to great aspects of creativity. Has subtle effects we might not notice: expecting to be under surveillance, we might not even realize we’re holding back. 

Self-exposure: not a nirvana of selfhood. Consequences of self-exposure not felt equally for everyone in society: race, gender.  Self-exposure is not pure: sites subtly manipulate, shape and control our own expression—site architecture pushes us towards particular ways of being and makes it hard to understand its effects.  We experience the consequences; the sites don’t. 

Next steps: answer more how one is to weigh privacy and integrate it into the matrix of other values. Cohen criticizes instrumental trading privacy off with other interests. But if it’s not instrumental and not something we should leave people just to choose to give up, then do we risk paternalism in telling them not to self-expose?  Law can’t be neutral; will shape architecture.  But where do we draw the line? Some creativity can be harmful to other people and society; some self-expression harms the expression of others, e.g., hate speech. 

Me: Sickness kept me (relatively) brief. 

There’s a tendency in law generally to oppose the real with the culturally constructed, and treat the former as unchangeable and the latter as not very important. In fact culture can be more powerful and constraining to imagining potential change, which is why 1960s Star Trek has recognizable (if bigger) computers and communicators that work a lot like our phones, but racial and gender assumptions that are now quite hard to sympathize with. Cohen challenges us to imagine better: understand culture’s power and make policies that both acknowledge and attempt to work with that power. 

Popular legal imagination: privacy is a featureless goo, copyright is crystal-edged property.  These are both unworkable and misdescriptive without an account of how people make themselves and each other in light of their environments. 

Past week: US v. Jones, majority used property concepts in the guise of trespass to avoid problems of what privacy means.  I’m most interested in the Alito concurrence, though, which tries to go beyond property but has a silence at its heart.  The concurrence has what Scalia, in a worse mood, might have called a “sweet mystery of life” section; it recites the law about reasonable expectation of privacy, talks in general about expectations, then jumps to “therefore, this was unreasonable.”  Illustrates the difficulty courts have thinking about privacy in context. 

Previous week: Justice Ginsburg used property concepts to say that the public domain was worthless to the public because unowned; the Bible and Shakespeare are not yours and therefore you lack a First Amendment interest in using them. They are debris, not the culture you breathe in and breathe out, transformed. This is again a failure of understanding how creativity is lived by people. 

So, of course, I ask how we can bridge this enormous gap between theory and practice. 

Cohen: we come to the law with bodies and histories; that means information and information rights affect us in ways that law often abstracts from.  People feel false and unwarranted confidence that we are unchanged by surveillance and copyright law.  Yes, we need ultimate answers; the way we’ve gone so far is to assume we can rationalize our way through the hard decisions.  We need to start making the hard choices so people can make themselves into critical citizens. 

Q: how to deal with the urge to share, experienced as empowering?  It’s neither inherently good nor bad, nor do networks inherently inhibit human flourishing as Citron suggested. 

Citron: she agrees there are stories of fighting back, like Hollaback against harassment. We need to think about management, and how we do undermine capabilities in ways that could be fixed. 

Cohen: we tend to uncritically celebrate freedom and delegate implementation to the technologist; or we get really technocratic and start dictating as if we could fix everything if we had enough info.  Those are both faulty ways of thinking: tech is empowering but also dangerous. Think about sensitizing designers to non-neutrality of tech. 

Heidi Li Feldman: is privacy any more slippery than any other fundamental right?  Maybe it’s more salient because of tech that we don’t understand what we’re trying to protect. 

Cohen: autonomy is a crutch; assumes a fixed self that privacy shelters from the world. But the self is in motion; privacy provides breathing space for the process of changing ourselves. 

Solove: sees privacy as an umbrella term; has identified 16 different things under the rubric. One of the challenges is that it’s culturally and historically contingent.

Images in judicial opinions are fair uses

So says Judge Posner.  And so timely too, given what I have to say about him in my article!

Worth a Thousand Words now in print

Worth a Thousand Words: The Images of Copyright, 125 Harv. L. Rev. 683 (2012) (pdf of article).

It's Dastar day: another overreaching plaintiff gets mostly kicked out of court

Dutch Jackson IATG, LLC v. Basketball Marketing Co., 2012 WL 124579 (E.D. Mo.) 

Plaintiffs sued ESPN and others for unauthorized use of plaintiffs’ musical work, “I Am the Greatest.”  They alleged that the work was used on a basketball DVD, “AND1® Mixtape® X,” released in 2008, though the song hadn’t been published at that time. 

As you’d expect, defendants argued that Dastar barred the Lanham Act claim.  The court agreed; there was neither physical repackaging nor false advertising pled to allow the plaintiff to escape Dastar’s reach.  Using an exact copy is not repackaging—which some courts haven’t understood in the context of internet uses—because the “goods,” here the DVDs, were “undisputedly created and manufactured by defendants. Plaintiffs’ song, whether an exact copy or not, is not a distinct tangible good in this instance, but rather an ‘idea, concept, or communication embodied in [defendants'] goods.’” 

There was no false advertising because defendants didn’t mention the origin of the song in advertising or packaging.  Plaintiffs argued that this was an implicit misrepresentation that the song was defendants’ original work.  This was an “impermissible workaround” of Dastar, which ruled that there could be no Lanham Act liability based on Dastar’s (truthful) statement that it was the producer of the video it sold.  This conclusion applied both to §43(a)(1)(A) and §43(a)(1)(B).  Allowing a Lanham Act claim to proceed under either head of liability would “impose an affirmative duty on defendants, thereby creating the ‘species of perpetual patent and copyright’ rejected in Dastar.” 

Likewise, plaintiffs’ claims for waste under Missouri common law, tortious interference with future business relationships, and civil conspiracy were preempted by §301 of the Copyright Act.  So was “tortious interference with the right of publicity,” a new one on me, based on failure to credit the true songwriter. 

Plaintiffs also alleged a violation of the Missouri Merchandising Practices Act.  Defendants argued that plaintiffs lacked Article III standing, continuing the annoying trend of stuffing every objection to the substance of a claim into a constitutional standing argument.  The MMPA allows a civil action by “[a]ny person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful.”  This isn’t an Article III standing problem—plaintiffs plainly have an alleged injury to themselves to complain about—it’s that this particular statute doesn’t provide a remedy for them.  The court concluded that they lacked standing under the MMPA, which at least didn’t endorse the idea that there was some kind of constitutional problem here. 

Defendants also won dismissal of claims for statutory damages and attorneys’ fees, since the work at issue was registered in 2010, long after the DVD came out, leaving only claims for actual damages from copyright infringement.  As anyone could have predicted.  Query whether a defendant who receives a complaint like this is likely to offer a lower settlement amount than a complaint simply alleging copyright infringement, since the complaint indicates an unwillingness to engage with copyright law.

Pleading "copying or substantial similarity" fails to satisfy Iqbal

Dorchen/Martin Associates, Inc. v. Brook of Cheboygan, Inc., 2012 WL 137829 (E.D. Mich.)

D/M, which provides architectural and design services, sued The Brook and Practical Engineers for copyright infringement, violation of the Lanham Act, and civil conspiracy, based on the allegations that Practical Engineers performed architectural and engineering services for The Brook and produced a design for an assisted living facility project that was allegedly substantially similar to the product D/M furnished to a nonparty that has the same officers and directors as The Brook.

D/M provided a design for The Brook of Houghton Lake, the nonparty, for a project in Houghton Lake, Michigan. Its design contained a copyright notice and was registered.  Defendant The Brook decided to build an assisted living facility in Cheboygan.  D/M alleged that it told The Brook that use or reuse of its work product from the Houghton Lake project was prohibited.  Though The Brook’s VP told D/M that its design product would only be used to show the exterior appearance of the facility, D/M alleged that Practical Engineering had access to the copyrighted work and copied it, evidenced by the substantial similarity of the completed project.

The court found that the complaint was deficient in pleading actionable infringement.  “Copyright infringement lends itself readily to abusive litigation, since the high cost of trying such a case can force a defendant who might otherwise be successful in trial to settle in order to avoid the time and expenditure of a resource intensive case.”  Thus, greater particularity was required to allege “plausible grounds” for relief.

Defendants argued that D/M failed to identify original material in its architectural work, which was identified as the “overall form as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features.”  However, defendants didn’t explain what features might be unprotectable based on functionality, merger, or the like, and consideration of those arguments would require the court to go outside the pleadings.

However, the court agreed that, without a description of the manner in which the defendants’ work infringed, it was not required to accept bare legal conclusions of infringement/substantial similarity.  D/M was allowed leave to remedy this deficiency by providing more factual details.

The Lanham Act claim, however, was fatally flawed because of Dastar.  “[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.”  D/M fruitlessly argued that Dastar only dealt with works in the public domain, and that whether its work product constituted “tangible goods” was a factual question that couldn’t be decided on a motion to dismiss.  The court distinguished an earlier decision involving architectural plans where the defendant “removed” the plaintiff’s name and seal (this seems to mean traced the plans without tracing the name and seal; that really should’ve been barred by Dastar too unless it counted as false advertising).  There was no allegation that defendants used D/M’s materials as their own; instead D/M alleged that defendants copied or had access to D/M’s materials resulting in a substantially similar design.  This camouflaged copyright claim couldn’t survive.

Defendants also argued that the civil conspiracy claim was preempted by §301 of the Copyright Act.  The court agreed, on these alleged facts.

Failure to have a search function as facilitation of infringement?

An interesting statement in the Megaupload indictment:

It was further part of the Conspiracy that members of the Conspiracy had the ability to search files that were on the computer systems they controlled, and purposefully did not provide full and accurate search results to the public, or, in the case of Megaupload.com, chose not to provide any search functionality at all in order to conceal the fact that the primary purpose of the website and service was to reproduce and distribute infringing copies of copyrighted works for private financial gain.  

I recall similar arguments in Viacom v. YouTube: YT's terrible search functionality made it difficult to find all the infringing clips at once.  Given that there are good reasons to have nonpublicly searchable sites or areas in a site, how far does this argument go? Dropbox, which I now use, doesn't as far as I know have a search function at all, because it's designed for limited sharing circles, though one can generate a public link to a specific file and share that link.  While Megaupload is alleged to have done plenty of other stuff to facilitate infringement, it's a little worrisome that "failure to allow any random person to rummage through a user's uploaded files" might be taken as "evidence of intent to conceal copyright infringement."

NB: I have in the past used Megaupload to share my class notes and slides for Copyright and Trademark, though I now use Dropbox for the same function.

I'm gonna go out on a limb and call this unauthorized use

Chicka Latte brings the charm of Hooters to the serving of coffee.  Employees (apparently all women, or willing to dress as women) can choose from various outfits.  Two of them are listed as Girl Scout uniforms (the sashes say Sexy Scout and Cookie Girl, if you're interested).  Cookie Girl is also listed as a "Grabajava All Star Girls Official Approved Costume," which I guess means that Chicka Latte has a competitor sourcing from the same uniform supplier.  The link to "more Girl Scout and Brownie costumes" doesn't work right, but further inspection finds another Sexy Scout costume without a bare midriff, at least..

Let's assume that the sale of the costumes as costumes is ok.  Is Chicka Latte nonetheless at risk for encouraging the use of the costumes as uniforms at its business?

No fee award in 1-800 v. Lens.com

1–800 Contacts, Inc. v. Lens.com, Inc., 2012 WL 113812 (D. Utah)

1-800, famously (for certain values of fame), sued Lens.com for trademark infringement based on Lens.com’s keyword advertising; it had demanded Lens.com take measures to preclude Lens.com ads from appearing whenever a searcher used “1-800 Contacts” (which would preclude broad-matching on “contacts”). Lens.com even told its affliates not to buy 1-800 Contacts as a keyword, but 1-800 sued anyway. 1-800 made punitive demands in settlement negotiations (demanding a ban on the use of a long list of terms as keywords, and $10,000 or even $20,000 a day in liquidated damages if Lens.com or one of its affiliates engaged in a prohibited act). 

Lens.com won summary judgment and moved for attorneys’ fees. The court denied the motion. In support of its motion, Lens.com argued that 1-800 regularly sues smaller competitors and extracts such agreements because the smaller competitors cannot bear the costs of litigation. 1-800 conceded the lawsuits but said they were necessary to protect its trademark, and that it agreed to be bound by the same settlement provisions it demanded from competitors.

One year after filing suit, 1-800 moved to amend to add secondary liability claims based on Lens.com’s affiliates’ actions. As it had found, out of numerous keywords that Lens.com had purchased, “only nine were variations or misspellings of the trademark. In total, Lens.com derived $20.51 in profits off of those nine keywords.” Nonetheless, 1-800 continued to press its direct infringement claim. Meanwhile, Lens.com learned that 1-800 had bought variations of Lens.com’s trademarks as keywords, earning $219,314 in profits thereby.

Lens.com also argued that 1-800 engaged in improper discovery tactics to increase the burden of litigation, and pointed to stricken expert reports/surveys as evidence of bad faith. The court noted that “[d]iscovery problems existed throughout this litigation, but it is Lens.com that was sanctioned for discovery abuses.” Lens.com withheld discovery and provided false information, and was therefore sanctioned with a fee award and a ban on introducing certain evidence at trial, and also violated an order limiting the scope of a deposition. Lens.com argued that its obstructive behavior was triggered by 1-800's overreaching demands, but the court had already rejected that argument in awarding sanctions.

Fees are available in Lanham Act cases under exceptional circumstances, which can happen if a suit was objectively unfounded or harassing in its execution. The court first found that the Lanham Act claims were not objectively unfounded:

The main legal issue in this case involves an unsettled area of law given the emerging and changing nature of Internet competition. The Tenth Circuit has never expressly addressed whether purchasing another's trademark as a keyword constitutes trademark infringement, and such cases have survived motions to dismiss in other jurisdictions. Consequently, 1–800 Contacts had a legitimate interest in clarifying its rights. Moreover, once 1–800 Contacts obtained discovery, the evidence showed that Lens.com did purchase variations of 1–800 Contacts' trademark, even though such purchases were minuscule. 1–800 Contacts also had a larger claim based on secondary liability. Given the developing nature of the law in this area, and the fact that the case was proceeding on secondary liability, it was not unreasonable for 1–800 Contacts to continue pursuing its claim for direct infringement.

The court did agree that some of 1-800’s behavior was troubling, particularly its settlement demands and its hypocrisy in suing others for things it was doing. However, the court noted that Lens.com has sued over 1-800’s allegedly anticompetitive and abusive litigation tactics in another case, and that was the proper forum to resolve those issues.

Given that Lens.com had been sanctioned on more than one occasion in this case, and that the expert opinions offered by 1-800 were partially admitted and therefore not wholly without merit, the court was unwilling to award attorneys’ fees:

Viewing all the facts in totality, the court finds that neither party was fully candid with the court or its processes. The court further finds that 1-800 Contacts' actions raise questions about vexatious suits to defeat competition, but more facts would need to be developed than what have been presented to the court. Although 1-800 Contacts was aggressive in pursuing its claims in this case, and in hindsight the expense may have been greater than necessary to protect those rights, the court cannot conclude on this record that 1-800 Contacts' course of action was so unjustified to meet the requirements for an exceptional case. 

The state law claim for fees also failed; the standard was whether the action was without merit and not brought or asserted in good faith. Lens.com argued that it should be awarded fees on the coordinate state-law claims because 1-800 expended no effort to develop them. The court was unpersuaded, because 1-800 argued that its unfair competition claim was based on the same facts that supported the Lanham Act claim. The only claim that 1-800 expended no effort to develop was its unfair practices claim, but Lens.com likewise had to spend little time on it.

Must be campaign season

The infringement lawsuits have begun.  This one has a twist: Ron Paul is suing YouTuber NHLiberty4Paul over an anti-Jon Huntsman video posted as a reason to vote for Paul, alleging (1) false advertising under the Lanham Act, (2) false designation of origin under the Lanham Act, and (3) defamation (the theory being that it associates Paul with repugnant opinions).  As is not uncommon with Lanham Act false association claims paired with defamation claims (see Jenzabar), the theories seem a bit suspect on their faces.  Unless, contrary to what I've seen so far, NHLiberty4Paul is selling his/her own Paul stuff, it's not "commercial advertising or promotion" under the Lanham Act, so (1) doesn't work.  (2) assumes symmetry, which doesn't make sense in this context: "I, random YouTube user, endorse Ron Paul" does not mean "Ron Paul endorses me."  It would be nice if more courts in trademark cases noticed this!  (3) is just tough to pull off for a public figure; Ron Paul in particular may find it difficult to show that the video, described as "libellous on its face," defames him--sure, it offers degrading and xenophobic reasons to vote against Huntsman.  But even assuming people thought the message came from Paul and not from Paul's supporters (because if they think that, and it's true, then it can't be defamatory), can Paul prove a clear difference between that and other things he's said?  (There may be a "dirty tricks" theory that this isn't from a real Paul supporter, but a theory of group defamation of the class of Paul supporters would be constitutionally dubious at this point and also I don't see that Paul would have standing to allege it.)

I have to say, as awful as the message of the video is, I hope the Does get counsel.  Holding awful opinions is not a proper source of liability in our system.

False use of (R) symbol as false advertising

Perfect Pearl Co., Inc. v. Majestic Pearl & Stone, Inc., 2012 WL 98493 (S.D.N.Y.) 

Perfect moved for leave to amend its complaint against Majestic to add claims for misuse of the ® notice and false advertising under federal and state law to its initial unfair competition claims.  The court granted the motion in part and denied it in part. 

Perfect began the case claiming that it was the prior owner of MAJESTIC and MAJESTIC PEARL for jewelry.  In discovery, Pearl learned more about Majestic’s activities: it argued that it found out that Majestic falsely used the ® after its registration expired, and falsely claimed the registration on its website as a point of distinction from Perfect. 

Since a scheduling order had already been entered, leave to amend required good cause, meaning that Perfect needed to show that it had been diligent and neither knew nor should have known the relevant information before.  The court found that Perfect had shown good cause for delay in adding allegations based on continuing use of ® on Majestic’s promotional materials, but not for new claims based on content on Majestic’s website.  A late deposition (whose lateness was largely due to problems on Majestic’s side) revealed that undated materials using the ® had been produced in large numbers and were still in use, even though the registration lapsed in March 2008, more than 2 years before the present suit was filed.  The court stated that, even if the materials were produced before cancellation, continuing to supply them to customers long after the registration expired might constitute false advertising.  However, “it would have taken Perfect little investigation and probably no more than 15 minutes' time to determine that Majestic's publicly-accessible website continued to falsely claim registered trademark status.”  Thus, it was too late to add allegations based on the website. 

Majestic also argued futility: misuse of trademark notice is only an affirmative defense, not a freestanding cause of action, so that claim was not allowed.  But the Lanham Act false advertising claim was not merely, as Majestic argued, a claim of trademark misuse.  The court quoted McCarthy:  the “use of ... the ® adjacent a mark not federally registered is ... a form of false advertising which may result in serious repercussions.”  Perfect’s allegations satisfied the federal pleading standards.  Majestic argued that Perfect needed to show willfulness to bring a false advertising claim predicated on misuse of a ® symbol; even if that was true, which the court did not resolve, Perfect had adequately pled facts to support an inference of willfulness.  Perfect alleged that Majestic knew for more than two years that it did not own an active registered trademark, persisted in disseminating promotional materials with the ® symbol to potential customers. 

Majestic also argued it would be prejudiced by the addition of new claims because of significant additional required discovery.  But Majestic only identified one issue as to which additional discovery might be required: its own intent.  “Any discovery as to that issue would, presumably, be sought by Perfect—for Majestic should have accessible to it the evidence bearing on its own state of mind—and Perfect represents that it is not seeking additional discovery.”  Granting the motion wouldn’t extend the litigation much—the court pointedly noted that the motion was pending for far shorter than the time it took Majestic to produce the Rule 30(b)(6) witness who provided the key information that led to the motion for leave to amend.

Fair use of the day

Our Virginia, Our Challenge: Uses pages from a Virginia history textbook (the one that was revised after eagle-eyed readers noticed how much of it was not, technically speaking, true) to illustrate and discuss what it means to teach facts that make sense in context, as opposed to disconnected and random statements.