Friday, February 17, 2017
Counts v. General Motors, LLC, No. 16-cv-12541, 2017 WL 588457 (E.D. Mich. Feb. 14, 2017)
Plaintiffs sued GM for deceptive advertising, breach of contract, and fraudulent concealment claims under the laws of thirty states based on GM’s alleged installation of a “defeat device” in the 2014 Chevrolet Cruze Diesel, which results in significantly higher emissions when the vehicle is in use compared to when it is being tested in laboratory conditions. The court declined to apply the primary jurisdiction doctrine or find the claims preempted by the Clean Air Act, but did give GM some victories.
GM argued that the plaintiffs lacked Article III standing because they didn’t allege a concrete and particularized injury and because they brought claims arising under the law of states where none of the named plaintiffs reside or bought their vehicle. GM characterized their claims as arising from alleged environmental harms and violation of government standards, but plaintiffs alleged a standard overpayment theory: if they’d known the truth about the defeat devices/the actual emissions levels, they wouldn’t have bought the supposedly “clean diesel” vehicles or would have paid less for them, especially given that GM charged more for the diesel model than a comparable gas model. GM argued that this higher price came from the increased power and fuel efficiency that diesel engines feature. The court agreed with the plaintiffs.
Plaintiffs plausibly pled deceptive behavior. The complaint detailed “numerous studies and reports from European authorities finding that GM vehicles are noncompliant with European emission regulations, despite meeting those regulations when tested in laboratory settings.” It also alleged that plaintiffs’ own tests of a Cruze found that emissions were significantly higher than represented. Though plaintiffs did not specifically allege that the Cruze they tested was the 2014 diesel model, they plausibly alleged that GM’s vehicles share common designs, including engines; “common sense compels the conclusion that GM does not start anew each time it designs a vehicle.”
Nor did plaintiffs have to show reliance to show Article III standing:
The clean diesel features of the Cruze were an important component of the vehicle, as evidenced by GM’s advertising campaign which featured the clean diesel system. That system elevated the apparent value of the vehicle. Even if Plaintiffs did not specifically choose the Cruze because of its clean diesel system, they paid more for the vehicle because it included the system. If the system did not actually provide any value to the vehicle, then Plaintiffs suffered financial injury through overpayment regardless of whether they relied on GM’s alleged misrepresentations.
Turning to the fraudulent concealment claims, they had to be pled with particularity, even though they were omission-based. However, particularity demands different things in different contexts. “If a plaintiff’s theory for relief involves a failure to act, then requiring the plaintiff to specifically identify the point in time when the defendant should have acted may be unduly burdensome. … [T]he difficulty of obtaining proprietary GM information or pinpointing the point in time when a fraudulent omission occurred will be taken into account.”
Here, the complaint sufficiently alleged with particularity facts showing that GM fraudulently concealed or misrepresented that the functionality and effectiveness of the Cruze’s “clean diesel” system was substantially lower than a reasonable customer would expect, given the representations made in GM’s advertising campaign. Further, where omissions are at issue, showing reliance means showing that the facts deliberately withheld would be material to a reasonable consumer.
GM argued that the ad claims plaintiffs cited were mere puffery. The more general a statement is, the more likely it is to be puffery. But numbers alone aren’t enough, if they’re still not believable. GM’s statements about the “high-quality” and “safety” of its vehicles were inherently subjective and couldn’t form the basis of a fraud action, nor could “Turbocharged Clean Diesel” nor statements regarding cleanliness, “more efficient combustion,” and improved “performance.”
Indeed, even claiming that the “turbocharged engine in Cruze Clean Turbo Diesel [sic] generates at least 90% less nitrogen oxide and particulate emissions when compared to previous-generation diesels” and that “Cruze Diesel emissions are below strict U.S. environmental standards” was nonactionable, because it wasn’t quantifiable by itself. The purported comparison to previous-generation diesels wasn’t specific enough—did it mean past GM diesel vehicles, all diesel vehicles, or all diesel vehicles from before a certain date? [This is ridiculous nitpicking. A reasonable consumer might not have formed an opinion about the exact meaning, but could reasonably presume that there was a generally understood industry meaning, especially in combination with percentages and specific named pollutants.] The court seemed to think it was important that no competitor was named (even though identifying a competitor is exactly when we might be able to rely on competitor suits to backstop consumer suits), nor was there a specific assertion that the claim was based on testing. “One might argue that some type of testing is implicitly assumed by the language [indeed one might!], but the advertisement’s level of generality further supports a finding of puffery.” The court thought it would be hard to prove the falsity of this claim, because the complaint included no data about the level at which “previous-general diesels,” however defined, produced emissions. And the Cruze might simultaneously produce more emissions than expected when being driven and still produce, in total, 90% less emissions than previous-generation diesels.
The final affirmative representation at issue was that “Cruze Diesel emissions are below strict U.S. environmental standards.” But a lawsuit against GM for producing a vehicle that produces emissions in noncompliance with EPA regulations would be preempted by the CAA.
On the other hand, fraudulent concealment, instead of affirmative misrepresentations, was adequately alleged. A duty to disclose can arise under the laws of some states where there’s exclusive knowledge of a defect or active concealment of that defect. The very nature of the “defeat device” suggests active concealment: “The only plausible purpose of such a device is to create the appearance of low emissions without the reality of low emissions,” and GM couldn’t reasonably argue that plaintiffs could have found out about it before buying. Both common-law and statutory consumer protection claims based on omissions thus survived.
Thursday, February 16, 2017
Global Tech Led, LLC v. HiLumz International Corp., 2017 WL 588669, No. 15–cv–553 (M.D. Fla. Feb. 14, 2017)
The parties, former business partners, now compete in the retrofit LED lighting industry. Global Tech sued defendants for patent infringement. HiLumz counterclaimed for false advertising/trade libel under federal and state law based on statements such as one that Global Tech “received a permanent injunction, rendering account and damages based on its newly-granted patent against HiLumz USA for infringement of its US patent” and accusing defendants of “stealing” and “copying” Global Tech’s product ideas. Someone from Global Tech warned HiLumz distributors attending the 2015 World Energy Engineering Congress to “be careful what products you sell” and said that “HiLumz will be out of business soon.” Global Tech also allegedly told “customers, sales representatives, competitors, and others” that HiLumz infringed Global Tech’s patents, that “HiLumz USA is no longer allowed to sell LED retrofit kits,” and that “Global Tech was preparing to file suit against HiLumz, and would also file suit against anyone who does business with HiLumz.”
Global Tech argued that its alleged statements were mostly not made in commercial advertising or promotion. First, it argued that the challenged ads weren’t commercial speech because they referenced only Global Tech’s patents, not any products, but referring to a particular good or service isn’t required under Bolger. Plus, even if a product reference were required, it was present in most of the challenged statements—for example, Global Tech’s press release specifically mentioned Global Tech’s “LED lighting products” with hyperlinks for the word “products.” Warning distributors to take care when determining which products to sell, in light of HiLumz’s impending demise, and statements that defendants couldn’t sell HiLumz retrofit products, also referenced products. And defendants sufficiently alleged economic motivation.
However, one challenged statement—posted on a personal LinkedIn profile page, incorrectly asserting that a relevant parent patent “issued on June 8, 2009” instead of having been filed then—wasn’t commercial speech. The speaker “sought merely to showcase his contribution to the world of patentable technology.”
The court also mostly found the statements adequately disseminated to the relevant purchasing public, at least as a matter of pleading. Disseminating the press release online made it available to the world; disseminating claims to distributors attending the World Energy Engineering and to “customers, sales representatives, competitors, and others” also were plausibly pled as adequate dissemination of those statements “to the relevant purchasing public.” However, allegations that “when internet users searched on the internet for ‘global tech LED hilumz’ ” at least as late as on October 6, 2015, a Google search result appeared containing a URL wrongly stating that Global Tech had already received a permanent injunction against HiLumz. “[T]he Court cannot gratuitously infer that any netizen beside Defendants ever actually googled ‘global tech LED hilumz’ during the relevant time period.”
Global Tech then argued any statements regarding HiLumz’s impending demise, patent infringement, and inability to sell retrofit kits were “non-actionable opinion.” The court agreed that the statement warning HiLumz distributors that HiLumz was “going out of business” was non-verifiable “prediction or opinion about the future of [Hilumz], and consequently, is not actionable as a false or misleading statement of fact under the Lanham Act.”
However, claims that defendants infringed Global Tech’s patents and therefore defendants weren’t allowed to sell them “fairly implies a factual basis” and was thus properly treated as a statement of fact, despite being “framed as an opinion.” The outcome of the patent infringement claim will reveal the truth, making the statements empirically verifiable. Plus, the counterclaim alleged that Global Tech had been making these statements as early as fall of 2012, years before Global Tech actually obtained the patent in suit. “Given that ‘[a] patent application cannot be infringed,’ the falsity of these statements may be readily ascertainable.”
State-law unfair competition claims survived to the same extent. Florida Deceptive and Unfair Trade Practices Act claims also survived; the court rejected the argument that only consumers have standing under the current version of the law.
Tobinick v. Novella, No. 15-14889 (11th Cir. Feb. 15, 2017)
Ultimately, despite a long battle, this is a relatively easy case about “the medical viability of a novel use for a particular drug.” Dr. Tobinick (plaintiff, along with related entities) thinks his “unorthodox use for the drug etanercept” can be used to treat spinal pain, post-stroke neurological dysfunctions, and Alzheimer’s disease, though it isn’t FDA-approved for those conditions. Dr. Novella, a neurologist, blogs about various topics. In response to an article in the LA Times about Dr Tobinick’s novel treatments, Dr. Novella discussed the Los Angeles Time article, the typical characteristics of “quack clinics” or “dubious health clinics,” the key features of Dr. Tobinick’s clinic, and lastly the plausibility of and the evidence supporting Dr. Tobinick’s allegedly effective use of etanercept.
Dr. Novella also quoted a portion of the LAT article, which reported that “[Dr. Tobinick’s] claims about the back treatment led to an investigation by the California Medical Board, which placed him on probation for unprofessional conduct and made him take classes in prescribing practices and ethics.” A second article, filed after Dr. Tobinick filed his initial complaint, detailed the lawsuit and provided Dr. Novella’s view that the lawsuit was designed to silence his public criticism of Dr. Tobinick’s practices, which he then restated in large part. He again mentioned the Medical Board of California (MBC)’s investigation, explained that the MBC “filed an accusation in 2004, amended in 2005 and 2006,” and listed the different allegations made in the 2004 Accusation.
Tobinick’s claims were based on state law and the Lanham Act. As relevant here, the district court granted Dr. Novella’s special motion to strike state law claims, applying California’s anti-SLAPP law. The court of appeals affirmed, accepting that Dr. Tobinick was a limited public figure, and agreeing that he hadn’t produced evidence of actual malice that would allow a probability of prevailing.
California applies a subjective test in which “[t]here must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.” Relevant factors include “[a] failure to investigate, anger and hostility toward the plaintiff, [and] reliance upon sources known to be unreliable or known to be biased.” Tobinick primarily argued that Dr. Novella improperly relied on the MBC’s 2004 Accusation, which had been superseded by a 2006 Second Amended Accusation, and that the articles contained false statements such as that Dr. Tobinick ran a “one-man institute.” However, Tobinick’s evidence was insufficient to allow a reasonable jury to conclude that Dr. Novella had serious doubts as to the truth of the content contained in his two articles. For one thing, the evidence showed that Dr. Novella consulted the 2006 accusation, and even referenced competing studies (which themselves were referenced in a 2007 MBC decision with a stipulated settlement) in his second article, admitting that “[t]here are small studies for disc herniation showing conflicting results.”
Alleged falsities and inconsistencies didn’t demonstrate actual malice—awareness or recklessness as to falsity. Indeed, Tobinick couldn’t show that many of Dr. Novella’s statements were false. For example, Dr. Novella characterized Florida—one of the states in which Tobinick worked—as a “very quack-friendly state,” but this was plainly opinion. Other details in the articles didn’t go to their essential criticism of Dr. Tobinick’s medical practices, and at most could show negligence. For example, Tobinick argued that Dr. Novella falsely implied that Tobinick’s clinics committed health fraud by putting the first article into a website category labeled “Health Fraud,” but the article itself never said Tobinick committed health fraud, and there was no evidence that Dr. Novella decided what category to put the article into. Also, as to the “one-man institute” phrase, Tobinick failed to rebut Dr. Novella’s statement that he looked at Tobinick’s websites and saw that the only physician named and profiled on the websites was Tobinick. “Dr. Novella’s statement is reasonably held, as the name of Dr. Tobinick’s California clinic, ‘Edward Lewis Tobinick, MD,’ further supports his belief that ‘Dr. Tobinick was a solo practicioner[.]’”
The court noted that, although “[t]he failure to conduct a thorough and objective investigation, standing alone, does not prove actual malice,” the evidence of Dr. Novella’s investigation, “in which he looked to trustworthy sources, demonstrates his lack of subjective belief that the articles contained false statements.” Before he wrote, Dr. Novella consulted the LA Times article, many of Dr. Tobinick’s case studies, the MBC’s accusations, and Tobinick’s websites.
The Lanham Act claims then failed because the articles weren’t commercial speech. They weren’t core solicitations, nor did they satisfy the Bolger test for non-core commercial speech. The articles weren’t ads, nor could they reasonably construed as such. The first didn’t mention Dr. Novella’s practice or medical services; the second did so only in providing context for Dr. Novella’s criticism of the lawsuit as an attempt to suppress Dr. Novella’s critiques. Indeed, Dr. Novella clarified that he primarily treats headaches, “thereby distancing the types of medical services he provides from the services marketed by Dr. Tobinick.” The articles didn’t discuss any products Dr. Novella sold, nor did they tout his practice. References to the treatments Tobinick sold weren’t themselves sufficient to make the speech commercial—Gordon & Breach held that product reviews aren’t commercial speech, and so too here, even though the seller of the reviewed product could convert the review into commercial speech by using the review to advertise the product. Dr. Novella’s discussion “resemble[d] a medical peer review of a treatment’s viability.”
Finally, Tobinick didn’t show economic motivation for the speech sufficient to make it commercial. It didn’t matter whether the websites on which the speech appeared were profit-seeking. Tobinick’s complex theory about how profits were “funnelled” from website-related revenue sources to Dr. Novella “relies on such a level of attenuation that it fails to demonstrate economic motivation in the commercial speech context.” In World Wrestling Federation Entertainment, Inc. v. Bozell, 142 F. Supp. 2d 514 (S.D.N.Y. 2001), the district court held that the WWF could use the Lanham Act to sue a “concerned parents” council over a public attack campaign about violence in wrestling, because the council featured the attacks “prominently in a fundraising video,” in “fundraising letters,” and in order “to raise the profile of [the council].” None of that was true here. The court of appeals also emphasized that “neither the placement of the articles next to revenue-generating advertising nor the ability of a reader to pay for a website subscription would be sufficient in this case to show a liability-causing economic motivation for Dr. Novella’s informative articles.” Those are standard features of magazines and newspapers. “Even if Dr. Novella receives some profit for his quasi- journalistic endeavors as a scientific skeptic, the articles themselves, which never propose a commercial transaction, are not commercial speech simply because extraneous advertisements and links for memberships may generate revenue.”
Wednesday, February 15, 2017
Use of P's photos to advertise D's goods must be challenged via copyright, not Lanham Act, under Dastar
Barn Light Electric Company, LLC v. Barnlight Originals, Inc., 2016 WL 7135076, No.14–cv–1955 (M.D. Fla. Sept. 28, 2016)
Plaintiff BLE, owned by the Scotts, sells light fixtures to consumers over the internet. Defendant Hi–Lite, owned by the Ohais, makes light fixtures and sells to distributors, not to end users. In 2008, BLE became a retail distributor for Hi–Lite and bought lighting components from Hi–Lite. Hi–Lite provided BLE with photographs, line drawings, and other depictions of its products, providing BLE a license to use its copyrighted photographs. Hi–Lite designates its products by parts numbers.
BLE decided to begin making its own light fixtures patterned after the fixtures sold by Hi–Lite. In 2012, Hi–Lite had a sales rep use BLE’s website to order the “Barn Light ‘The Original’ Warehouse Shade” and the “Barn Light Warehouse Pendent Shade.” The BLE website showed the products with the parts numbers H–15116 and H–15116G, corresponding to Hi–Lite’s parts numbers, and they were accompanied by pictures from Hi–Lite’s catalog. But BLE shipped light fixtures bearing BLE’s logo that were actually manufactured by BLE. The order confirmation for the sale included the Hi-Lite parts numbers. Hi-Lite terminated the parties’ business relationship and asked BLE to remove all photos and drawings of Hi-Lite fixtures from BLE’s website.
After the relationship ended, defendant Ohai created defendant Barnlight Originals, Inc., a retail seller of light fixtures. BLO sells Hi–Lite fixtures. Ohai registered BARNLIGHT ORIGINALS and BARNLIGHT ORIGINALS, INC., the domain name www.barnlightoriginal.com, and a logo with the United States Patent and Trademark Office. Hi-Lite also sent BLE a C&D charging infringement of a pending patent application.
Hi-Lite counterclaimed for trade dress infringement of the design of twelve of its light fixtures. Product design trade dress requires a “high degree of proof” to show secondary meaning. Hi-Lite lacked survey evidence, and the representative of a Hi-Lite marketer couldn’t identify the source after being shown thirty images of products from Hi–Lite (including those at issue), BLE, and other third parties. For all of the fixtures he was shown, he testified that there were multiple manufacturers that made the same or very similar designs. A previous BLE employee who now operates his own retail company and sells Hi–Lite products likewise testified that although he recognized photos of Hi–Lite’s alleged trade dress from its catalogs, he would not be able to identify the products as manufactured by Hi–Lite unless he looked at the hidden backing plate with Hi–Lite’s name embossed on it.
Hi-Lite argued that BLE’s intentional copying and use of its sales and advertising efforts showed secondary meaning. It also claimed use for 7-12 years and sales of thousands to tens of thousands of units, plus “considerable” advertising expenses in its catalogs, in magazines, on the internet, at trade shows, and in show rooms. Intentional copying isn’t enough to show secondary meaning, given the other possible motivations for copying and the perfect acceptability of copying public domain designs. Nor do extensive sales and advertising show secondary meaning, which requires the effective creation of consumer recognition. The court found that Hi-Lite couldn’t show secondary meaning and granted summary judgment on the trade dress claims.
Other Lanham Act claims: Hi–Lite alleged that BLE used Hi–Lite’s photographs and parts numbers to sell BLE products on its own website, violating the Lanham Act. BLE responded, “Dastar,” and the court agreed. Uncredited use of another’s photos in connection with the sale of goods or services “must be pursued as copyright claims.” Hi-Lite’s false designation of origin claim was “directed to the same conduct that underlies its copyright infringement claims,” which wouldn’t do. Moreover, Hi-Lite’s claim would only work if the images themselves were “source-identifying marks” for Hi-Lite’s products, but the photos merely depicted Hi-Lite’s light fixtures, thus requiring a protectable trade dress rights in the design and appearance of the light fixtures, which Hi-Lite lacked. Similarly, Hi-Lite didn’t show that its parts numbers functioned as marks.
False advertising: To the extent that this was merely a restatement of the false designation of origin claim, it failed. Even without Dastar, Hi-Lite lacked enough evidence to prevail on the merits. It failed to show that the alleged deception—advertising Hi-Lite fixtures but delivering BLE fixtures—was material. The only evidence was the Hi-Lite-induced purchase from the BLE site, but the sales rep wasn’t acting as a consumer but rather as an agent on behalf of Hi–Lite. BLE’s misrepresentations “could not have made a difference in his purchasing decision,” and he wasn’t an expert qualified to opine on likely consumer confusion.
However, claims based on BLE’s alleged use of the BARN LIGHT ORIGINALS word mark survived.
NetJets Inc. v. IntelliJet Gp., LLC, No. 15-4230 (6th Cir. Feb. 3, 2017)
NetJets is a private aviation company that specializes in “fractional ownership” of private airplanes and related endeavors. NetJets’s predecessor company developed a software program to “run [the company’s] business,” and named the program IntelliJet. In 1995, it successfully applied to register INTELLIJET in connection with the good of computer “software . . . for managing the business of aircraft leasing and sales.” In 2002, the company filed a “declaration of use and incontestability,” which was accepted by the USPTO.
NetJets licensed the IntelliJet software to two external companies, though one apparently stopped and the other was acquired by NetJets. The company also uses the software to communicate with caterers and other vendors. In early 2013, NetJets debuted an “owner’s portal,” allowing customers to put their reservation requests directly into the IntelliJet software over the internet; the portal features the INTELLIJET mark. NetJets discusses IntelliJet on tours of the NetJets facility for customers and potential customers, and in its own promotional literature, and the mark has been mentioned in several trade press and general news sources.
IntelliJet was founded in 2005 and is primarily a broker for private jet services, or helping customers buy or sell an aircraft. It offers referral services for aircraft management and leasing services, but does not perform these services itself. IntelliJet uses a sales-tracking software that it has referred to as “IntelliShit.” In choosing the name, IntelliJet searched the internet for other jet aircraft brokers, business names in Florida, and the USPTO website. That last search turned up several registrations of “IntelliJet,” including NetJets’s registration. IntelliJet’s principal Spivack determined that the mark was “specifically for a software package,” and that “being in the industry,” he knew the registered agent as “NetJets.”
NetJets sued for trademark infringement and related claims; IntelliJet counterclaimed for cancellation of NetJets’s trademark registration on the grounds that NetJets abandoned it and that it was void ab initio. This appeal was from the district court’s grant of summary judgment to IntelliJet. The district court reasoned that NetJets’s mark was not incontestable and that the mark was void ab initio because NetJets could not show that it was used in commerce at the time of its registration. Nor could NetJets show that it had rights to the INTELLIJET mark as a service mark under the Lanham Act or Ohio common law. Finally, the district court also granted summary judgment on the basis that there was no likelihood of confusion.
The court of appeals reversed the cancellation but otherwise affirmed.
A mark may become incontestable if it is not successfully challenged within five years of its registration. One requirement is continuous use in commerce for “five consecutive years” subsequent to the date of the registration, along with continued use in commerce. “Once incontestability is established, only [the] . . . defenses enumerated in § 1115(b) can be interposed in an action for trademark infringement.” Void ab initio, or non-use at the time of registration, isn’t one of the defenses enumerated in § 1115(b). (And, unlike functionality, void ab initio wasn’t implied from a “judicially created rule which predates the Lanham Act”—even though use and nonfunctionality are both pretty important parts of the common law.) Thus, the court of appeals held, it was not a proper defense to incontestability. See University of Kentucky v. Kentucky Gameday, LLC, 2015 WL 9906634, at *2 (T.T.A.B. 2015),(rejecting a void ab initio claim because the claim was “not enumerated under Trademark Act Sec. 14(3), and is not available against a registration which is more than five years old.”).
It seems to me that one could establish lack of continuous use for any 5-year period at all over the life of the registration and defeat incontestability; one simply can’t start with “void ab initio.” It must be the case that it is valid to challenge incontestability on the ground that the registrant failed to satisfy the statutory requirements therefor; it’s just that distinctiveness is not one of the statutory requirements, and apparently use at the time of registration isn’t either—but five years of continuous use is. Because §1064 barred IntelliJet’s void ab initio challenge, the court of appeals said, it didn’t need to decide whether the mark was actually incontestable under §1065; thus, the issue remains for remand.
The court of appeals did affirm the district court’s conclusion that IntelliJet wasn’t a service mark under Ohio common law, because it was used as a mark for software as a good, not as a service mark. The IntelliJet software is “the conduit through which NetJets provides its services,” not the service provided by NetJets itself.
Likely confusion: IntelliJet is suggestive, and relatively weak, “especially considering other federal registrations of the term and additional third party uses of the same or similar terms.” NetJets argued that incontestability made the mark presumptively strong, but incontestability (if it existed) wouldn’t be determinative of strength. The services were related but not directly competitive. Although the district court reasoned that no one would confuse NetJets’s IntelliJet software with NetJets’s aviation services, the question was about source confusion, not product/service confusion. Still, IntelliJet doesn’t sell software that could be confused with NetJets’s software; relatedness didn’t favor NetJets. Similarity: obviously favors NetJets. There was no evidence of actual confusion, which favored IntelliJet. Marketing channels: both used the internet, but the products were still marketed differently, and NetJets’s software wasn’t marketed as a standalone product. Consumer care: the parties’ customers are highly sophisticated.
Intent: Use of a mark with knowledge of another’s rights can be evidence of likely confusion. But here, IntelliJet knew of several IntelliJet registrations, and there was no indication that it chose the name to copy or compete with NetJets specifically. Likely expansion: Though NetJets argued that IntelliJet wanted to compete with NetJets in areas such as chartering, leasing, and aircraft management, it wasn’t appropriate to compare NetJet’s business as a whole with IntelliJet’s services. There was no indication that NetJets intended to market its software separately, or that IntelliJet intended to begin selling its own aviation software.
Based on this de novo review, the court of appeals found confusion unlikely.
A new one on me:
Received spammy email claiming, “Hello Rebecca,
I hope you don't mind a fellow Tushnet reaching out. I have a permit which states that WW Express did some work at [your home].
Could you tell me how it went? … I'm helping a new homeowner find a professional for her project, and I was hoping you could share your experience with me before I make any recommendations….
Customer Success | VetMyPro
I am fairly sure that there is no “Brooke Tushnet” in the world. Instead, this message is creepily and misleadingly leveraging our tendency to be more helpful to people “like us.” (On this and other tactics, Robert Cialdini’s books Influence and Pre-Suasion are very good.) To what end, I’m not sure, but I can’t help feeling misused. I even tried to find this potentially long-lost relative, just in case! Also, VetMyPro lacks any internet presence beyond its own website. Now I’m becoming concerned about spyware!
Tuesday, February 14, 2017
Gerlich v. Leath, No. 16-1518 (8th Cir. Feb. 13, 2017)
Iowa State University (ISU) grants student organizations permission to use its trademarks if certain conditions are met. The ISU student chapter of the National Organization for the Reform of Marijuana Laws (NORML ISU) had several of its trademark licensing requests denied because its designs included a cannabis leaf.
|later rejected design|
Two members of NORML ISU sued for violations of their First and Fourteenth Amendment rights; the court of appeals affirmed a permanent injunction with reasoning relevant to the pending Tam case: student groups’ use of ISU logos couldn’t possibly be government speech because there are so many of them, including conflicting ones like ISU Democrats and ISU Republicans. I get that argument for trademark registrations in general, but it seems weaker here, because ISU’s logo is the logo of an arm of state government, and I do think a government can reasonably say with its speech “we agree that X and Y are in-bounds, while Z is out-of-bounds.” Allowing ISU Democrats and ISU Republicans to use the logos but not ISU White Nationalists seems like the state controlling its brand. This is not to say that the overall conclusion is wrong, especially given ISU’s litigating position, but the district court’s opinion did a far better job of explaining why that might be.
ISU has approximately 800 officially recognized student organizations, including NORML ISU. Organizations can use ISU’s trademarks on merchandise if ISU’s Trademark Licensing Office determines that the use complies with ISU’s Guidelines for University Trademark Use by Student and Campus Organizations.
In 2012, NORML ISU submitted a t-shirt design to the Trademark Office that had “NORML ISU” on the front with the “O” represented by Cy the Cardinal. On the back the shirt read, “Freedom is NORML at ISU” with a small cannabis leaf above “NORML.” The Trademark Office approved this design. Then, the Des Moines Register published a front-page article about legalization efforts, in which it quoted NORML ISU’s president stating that “his group has gotten nothing but support from the university. He even got approval from the licensing office to make a NORML T-shirt …” The article also had a photo of the T-shirt.
The person in charge of the trademark office provided ISU’s PR office with a statement that ISU didn’t take positions on what student organizations stand for. Thus, the statement continued, the claim that “his group has gotten nothing but support from the university” was “a bit misleading. He may be confusing recognition of the group as the university ‘supporting’ it.”
Then, an Iowa House Republican caucus staff person sent a formal legislative inquiry to ISU’s State Relations Officer asking whether “ISU’s licensing office approve[d] the use of the ISU logo on the NORML t-shirt” pictured in the article. This led higher-ups to ask if they could “revoke” the approval of the T-shirt design. Then, someone from the Governor’s Office of Drug Control Policy emailed and called the head of ISU’s government relations office about the article, indicating that he was “curious about the accuracy of the student’s statement cited in the report, and perhaps the process used by ISU to make such determinations.” The head of ISU’s PR office responded that NORML ISU’s use of ISU’s trademarks was “permitted under the policies governing student organizations.” The email went on to say, “[h]owever, this procedure is being reviewed.”
Next, NORML ISU’s request for permission to use the design for another shirt order was put on hold, which was unprecedented in anyone’s memory. The ISU board decided to change the trademark guidelines, and ISU told NORML ISU that they were concerned that the T-shirt caused confusion as to whether ISU endorsed the group’s views regarding the legalization of marijuana. Thus, the Trademark Office would not approve of any t-shirt design that used ISU trademarks in conjunction with a cannabis leaf. They also told the group that it needed prior review before submitting any designs to the Trademark Office, again an unprecedented requirement. The new Trademark Guidelines prohibited “designs that suggest promotion of the below listed items . . . dangerous, illegal or unhealthy products, actions or behaviors; . . . [or] drugs and drug paraphernalia that are illegal or unhealthful.”
After that, the Trademark Office rejected every NORML ISU design application that included the image of a cannabis leaf, as well as designs that spelled out the NORML acronym but replaced “Marijuana” with either “M********” or “M[CENSORED].” The Office did approve designs without a cannabis leaf that simply stated the group’s name and fully spelled out the NORML acronym.
The district court entered a permanent injunction against “enforcing trademark licensing policies against Plaintiffs in a viewpoint discriminatory manner and from further prohibiting Plaintiffs from producing licensed apparel on the basis that their designs include the image of a . . . cannabis leaf.” The university created a limited public forum “by opening property limited to use by certain groups or dedicated solely to the discussion of certain subjects.” A student activity fund is an example of a limited public forum, and so is ISU’s choice to make its trademarks available for student organizations to use if they abided by certain conditions.
Rejecting NORML ISU’s designs was impermissible viewpoint discrimination, as evidenced by the “unique” scrutiny ISU imposed on NORML ISU after the Des Moines Register article. ISU argued that it wasn’t unique because the hockey club was also subject to additional oversight over its trademark applications, but that was because the hockey club mismanaged funds and misrepresented itself as an intercollegiate sport. Also, the hockey club was not required to receive preapproval of its designs by two ISU senior vice presidents, as NORML ISU was. No other student group was rejected for fear that the university would be seen as endorsing a political cause. Defendants pointed to six other rejections on anti-endorsement grounds, but four of those were rejected because it appeared ISU was endorsing a corporate logo; another design suggested that a club sport was an official athletic department sport; and another was rejected because it appeared that ISU was endorsing the views of the Students for Life club, but a minor change allowed it to be approved.
ISU implausibly argued that the political pushback it received didn’t play a role in decisionmaking. But defendant Leath testified that “anytime someone from the governor’s staff calls complaining, yeah, I’m going to pay attention, absolutely,” and that “[i]f nobody’d ever said anything, we didn’t know about it, it didn’t appear in The Register, we’d probably never raised the issue.” Both individual defendants’ motives were political in that they wanted to avoid controversy “in a state as conservative as Iowa.” Defendant Hill told the Ames Tribune that the reason student groups associated with political parties could use ISU’s logos, but groups like NORML ISU may not, is because “[w]e encourage students to be involved in their duties as a citizen.” But that statement implied that Hill believed that the members of NORML ISU were not being good citizens by advocating for a change in the law. The person in charge of approving student requests told NORML ISU that the group’s design applications “do not further your cause as an advocate for change in the laws or trying to change the public’s perception of marijuana.” As the court of appeals wryly commented, “[t]here is no evidence in the record of Zimmerman offering advocacy advice to any other student group.”
The administration of the trademark licensing regime wasn’t government speech because it was a limited public forum. Even if it wasn’t a limited public forum [and note the conceptual difficulties of calling a non-physical space a “forum”], the government speech doctrine didn’t apply. Walker v. Confederate Veterans asked (1) whether the government has long used the particular medium at issue to speak; (2) whether the medium is “often closely identified in the public mind with the” state; and (3) whether the state “maintains direct control over the messages conveyed” through the medium. [So, is the medium the trademark? Or the trademark licensing regime?]
The court found that the first two factors didn’t apply, which seems an odd characterization. If the medium is the trademark, then the government has definitely used it to speak; if it’s the trademark licensing regime, then the argument is weaker but not obviously weaker than that for license plates, where as here the relevant regime produces the state’s symbol coupled with the organization’s symbol. Both the trademark and the trademark licensing regime seem likely to be “closely identified in the public mind” with the state. But the court of appeals, as I noted in the intro, was compelled by the fact that ISU allows approximately 800 student organizations to use its trademarks, including groups with opposing viewpoints. The court did not analyze the Supreme Court’s treatment of similar facts in Walker. Here’s the district court’s distinction, which is not bad:
Because American society regards its universities as incubators for intellectual experiment and exploration, the Court cannot conclude that observers would associate a student group’s message, bearing an ISU icon, to represent the views of ISU. Rather, ISU’s myriad student groups are rightfully understood to represent a jumbled mix of interests, views, and opinions, some mainstream and others offensive to conventional sensibilities, in the spirit of intellectual debate.
I will say, however, that ISU rejected a lot of shirts in the past, mostly for sexual references but also for alcohol/firearms references, and I’m not sure why those rejections don’t (1) establish a lot of ongoing control over the licensing program, and (2) also now turn into unconstitutional acts.
|rejected "How the Health Are You?" for double entendre|
|rejected for sexual references|
|The ISU club for kayaking received a number of rejections|
|rejected, double entendre|
Cochran Firm, P.C. v. Cochran Firm Los Angeles, LLP, 2016 WL 6023822, No. CV 12-5868 (C.D. Cal. Aug. 18, 2016)
Previous 9th Circuit opinion affirming earlier unclean hands ruling discussed here. This case began with a legal partnership turned sour. In 1999, McMurray (principal of The Cochran Firm Los Angeles) joined The Cochran Firm’s (TCF’s) Los Angeles office. McMurray claimed to have received a letter from TCF principals Johnnie L. Cochran (now deceased), Givens, and Cherry, congratulating him on his elevation to named partner. In 2007, McMurray acquired TCF’s Los Angeles office, assuming all of its debts and obligations. He organized the office under a partnership called The Cochran Firm Los Angeles (TCFLA), formed with other parties Dunn and then adding Barrett.
TCFLA remitted a cut of its monthly case fees to TCF. Things soured, and McMurray was allegedly shut out of the TCFLA partnership. TCF sent a C&D to McMurray seeking to terminate his right to use the Cochran name. Dunn allegedly took over the remains of TCFLA’s practice, changing its name to The Cochran Firm California. TCF filed suit against McMurray and TCFLA. It initially obtained a preliminary injunction, but the Ninth Circuit remanded for consideration of whether TCF had unclean hands. The district ultimately dissolved the preliminary injunction after determining that TCF had unclean hands in the use of its trademark “because it improperly held itself out as a national law firm.”
Here, the court gets rid of a bunch of TCFLA’s tortious interference claims, but finds that a reasonable jury could find that TCFLA parties had standing to seek cancellation of TCF’s registered mark “THE COCHRAN FIRM.” Even though McMurray wasn’t currently using THE COCHRAN FIRM mark, and testified that he had no present intent to do so, he also testified that he “may change that depending on the outcome of this case.” McMurray established “a real and rational basis for his belief that he would be damaged by the registration sought to be cancelled, stemming from an actual commercial or pecuniary interest in his own mark.” TCF’s mark “prevented McMurray from advertising his relationship with Johnnie Cochran to the public.”
Lanham Act counterclaim: This counterclaim was based on TCF’s website, which featured statements such as “America’s Law Firm,” “Experience Trial Lawyers Who Deliver Results,” “With offices nationwide and a team of some of the country’s most experienced and aggressive personal injury attorneys and criminal defense lawyers,” and “While The Cochran Firm is a national law firm with multiple attorneys, we handle each case we take with equal dedication and tenacity. Your attorney may draw on the collective experience of his or her partners, but will continue to work personally with you throughout all legal proceedings,” and included a list of offices from around the country.
The court found that these statements were literally false; no further evidence of consumer deception or materiality was required. Though TCF “market[ed] itself as a traditional, national firm with regional offices around the country,” the firm’s structure more closely resembled a network of several partnerships, connected only through their relationship with TCF. “Semantic quibbling” over the prospect that national might not mean “single” was unpersuasive.
The McMurray parties also provided sufficient evidence of damages: McMurray testified that, despite having retained TCF’s original Los Angeles telephone number, he now receives significantly less of the types of cases that he typically got at TCFLA. Though this was “quite weak” evidence, given that a new law firm might reasonably get a lot less business than an old one, that was enough to show a triable issue on injury.
However, the court rejected counterclaims against the Dunn parties (TCF-CA) based on statements such as “Welcome to The Cochran Firm, Founded over 40 years ago by Legendary attorney Johnnie L. Cochran, Jr.,” “The Cochran Firm has grown to encompass 27 offices in 16 states around the country,” and “The Cochran Firm Los Angeles has been in the same location for 25 years, and remains committed to upholding Johnnie’ vision of ‘a diverse law firm which reflects society and is capable of handling cases throughout America.’ “ These claims weren’t literally false, and they were “much vaguer and more ambiguous” than the literally false claims by the other parties.
To show deceptiveness, the McMurray parties offered multiple court records in which former clients sued both TCF and a TCF-affiliated regional office for judgments owed, and an expert report analyzing those court records. The court found this evidence probative of deceptiveness, since it showed that, in multiple instances, former TCF clients attempted to collect monies owed from both TCF and an affiliated regional office under the assumption that they were one and the same. However, the McMurray parties failed to show materiality. Though there was evidence that consumers were deceived into believing that TCF was a “national” firm, there was no evidence that a consumer would choose TCF-CA over another law firm such as McMurray’s new law firm “out of some misplaced belief that TCF-CA had Johnnie Cochran’s imprimatur.”
McMurray also counterclaimed for violation of his right of publicity because TCF or TCF-CA used his image and biography on websites without his consent, using it to draw business. However, the court found no evidence of injury, as required to recover [note that courts will usually double-count benefit to the defendant as injury to the plaintiff where the plaintiff is a celebrity]. Broad statements by McMurray that he believed he’d been injured weren’t enough to show injury.
California UCL: Although the underlying conduct above could found a UCL claim, the only available remedy was restitutionary (since the McMurray parties weren’t seeking injunctive relief). And the evidence of economic harm—possibly lost clients—didn’t support a claim for restitution. Such damages were “exactly the sort of damages that cannot be achieved via a UCL claim.”
Solar Sun Rings, Inc. v. Secard Pools, 2016 WL 6138294, No. EDCV14-2417 (C.D. Cal. Jan. 20, 2016)
Illustrating the principle that those who sue competitors should be sure to have their own house (or in this case, pool) in order: The parties compete in the market for heated pool covers. SSR sued Secard for trademark infringement, leading to false advertising/unfair competition counterclaims based on SSR’s allegedly false statements about the effect of “mini magnets” used on its products and the water and chemical savings caused by its products. The “coverage calculator” on SSR’s website also allegedly deceived consumers into thinking that choosing SSR’s products would be cost-effective because it falsely advised consumers to purchase less product than they would eventually need to heat their pools.
The court found that, even assuming falsity, there were disputed issues about materiality and harm. Secard’s expert report opined that 3.33% of SSR customers were deceived by SSR’s allegedly false statements and would have purchased Secard’s competing product had the false statements not been made. Although Downey, the expert, had 35 years’ experience in the swimming pool industry, he had no other expertise about consumer behavior and related fields. Still, that was okay because he had relevant experience catering to the preferences of pool product consumers. He conducted discussions with “swimming pool industry leaders” and estimated that roughly twelve percent of consumers are familiar with SSR’s product, while roughly one percent of consumers were familiar with Secard’s product. He then conducted phone and personal conversations with “leaders in the swimming pool industry, people who work in swimming pool stores, mass distributors and manufacturers, industry legal counsel, pool service technicians, pool builders, buying groups and pool remodeling companies.” He estimated that roughly 40% of consumers who bought from SSR had been diverted from competing products, such as Secard’s, yielding 3.3% diversion. Survey evidence “should ordinarily be found sufficiently reliable under Daubert” because “unlike novel scientific theories, a jury should be able to determine whether asserted technical deficiencies undermine a survey’s probative value.” This survey might be “technically lacking,” given that “his sample size is limited and it is not entirely clear how he derives his estimates from the data he provides,” but the court declined to exclude it.
Solar Sun Rings, Inc. v. Secard Pools, No. EDCV14-2417, 2016 WL 6139615 (C.D. Cal. Jan. 13, 2016)
This is a trademark ruling in the same case. SSR began selling passive solar heating products for pools and spas under the name “Solar Sun Rings” in 2003. Secard has been selling pool products since 1958. In 2011, Secard’s CEO created Solar Sun Squares, which he designed to compete with Solar Sun Rings, and registered solarsunsquares.com. In 2013, SSR caught wind of Secard’s intent and attempted to register a trademark for “Solar Sun Square,” then sent Secard a C&D that prompted Secard to change the name of Solar Sun Squares to “Solar Heat Squares.” SSR then began selling Solar Sun Squares the month after Solar Heat Squares launched in 2014.
|Solar Sun Rings|
|Solar Heat Squares|
|Solar Sun Squares|
Secard argued that, as the senior user of Solar Heat Squares, it couldn’t infringe on Solar Sun Squares. However, SSR argued that it should be able to tack its rights and claim priority. This is usually a matter for a jury. Given that Solar Sun Rings and Solar Sun Squares were written in the same font and the same color, on the same sized package, over the same four images encased in the shape described in the mark, and that the products were identical except for shape, a jury could find that the marks had the same connotation. Plus, a jury could find that the “aural appearance” of the marks – “three short, alliterative words (two of which are the same word) – evoke the same mental reaction.” (Of course, to the extent that tacking occurs on the basis of visual elements of the mark, the similarity inquiry will also have to take visual elements into account.)
There was also enough evidence to go to the jury on likely confusion, given the similarity of the products and the purchasers. The court gave a very broad reading to the intent factor, ruling that “[a] jury could reasonably infer that Secard intended to confuse consumers by improving upon Plaintiff’s pre-existing product with a similarly-named product.”
However, Secard got out of the trade dress infringement claim. SSR argued that its infringed trade dress was its color scheme, characterized by “a sequence of several colors (red, yellow and orange) depicted against the distinct blue backdrop of SSR’s products, and displayed in a highly distinct dot-matrix style of color printing and color shading.” SSR alleged that Secard’s use of a sun design bolstered its infringement claim. But “Secard was already using the allegedly infringing color scheme along with an image of a sun in 1993, well before Plaintiff went into business in 2003.” Without priority of use, SSR couldn’t win. “To hold otherwise would allow a junior user to employ litigation as a means of forcing a senior user to abandon a trade dress which predates the junior user’s existence.” [Interesting conceptual question: if the trade dress was in use but hadn’t developed secondary meaning, and the junior user then came along and developed secondary meaning, what then? Of course, the junior user’s ability to develop secondary meaning would itself suggest lack of confusion with the existing trade dress, whether or not that prior trade dress could be the foundation of any affirmative rights.]
Daniel v. Wayans, No. B261814 (Cal. Ct. App. Feb. 9, 2017)
Pierre Daniel, an actor, worked as an extra for a day in A Haunted House 2. Marlon Wayans co-wrote, produced, and starred in the movie. Daniel sued Wayans and others, alleging that he was the victim of racial harassment because during his one day of work on the movie he was compared to a Black cartoon character and called “ ‘[n]igga,’ “ and also alleging violation of his right of publicity. Wayans moved to strike Daniel’s claims against him as a SLAPP suit; the trial court agreed and the court of appeals affirmed.
Over a dissent, the court of appeals agreed that the conduct at issue was part of the “ ‘creative process’ “ inherent in making the movie, and thus involved free speech/an issue of public interest. Wayans also tweeted about Daniel’s appearance, comparing him to the Simpsons’ Cleveland Brown. Given that Daniel was an extra on the film, which was made by a popular producer and was a sequel to a successful film, advance information about the film was a topic of public interest. The post “contributed to the public ‘debate’ or discussion regarding the film by giving fans and those interested a glimpse of someone in the film.”
Daniel’s claims for statutory and common law misappropriation of name and likeness were based solely on the tweet; again, over a dissent, the court of appeals held that he couldn’t show a probability of prevailing, as necessary to overcome the anti-SLAPP motion. First, he failed to overcome evidence that he waived his claims when he signed a broad release consenting to the use of his image in connection with the movie. Second, the use was transformative. The court called the test “straightforward”: “whether the celebrity likeness is one of the ‘raw materials’ from which an original work is synthesized, or whether the depiction or imitation of the celebrity is the very sum and substance of the work in question.” New expression alone is sufficient; it need not convey any “ ‘meaning or message.’ “ Though Wayans used two unaltered images, he juxtaposed them and added “arguably humorous” comedy, adding “an element of caricature, lampoon, or parody.”
[Just to be clear, the implication is that tweets that aren’t transformative, and don’t involve juxtapositions, may infringe the right of publicity. Consider that the next time you see a brand tweeting something related to recent celebrity news.]
Daniel’s false light claim failed because the tweet referred only to Daniel’s physical resemblance to the Cleveland Brown cartoon character. It was a combination of an “expression of an opinion by Wayans that Daniel looked like Cleveland Brown and an accurate photographic comparison.” That wasn’t offensive enough, and it didn’t imply any further comparison to Cleveland Brown.
Judge Liu, whom I respect a great deal, unfortunately dissented; he would not have found the use transformative as a matter of law:
Wayans used Daniel’s photo not as raw material for an original work, but as a literal depiction of Daniel’s appearance and a literal depiction of the appearance of cartoon character Cleveland Brown. Wayans simply repackaged the two images together and added a caption remarking upon the resemblance of the two. This was not a transformation that was primarily Wayans’s own expression.
Sigh. Among other things, what does that mean for a republisher of a transformative work, which isn’t the republisher’s “own expression”? This inability to agree on relatively simple situations shows the instability of “transformativeness” in the right of publicity context.
Monday, February 13, 2017
Verisign, Inc., v. XYZ.com LLC, No. 15-2526 (4th Cir. Feb. 8, 2017)
Verisign sells internet domain names and operates the popular .com and .net top-level domains. In 2014, XYZ launched “.xyz,” a new top-level domain. As part of its marketing push, XYZ, and its CEO Daniel Negari, touted the popularity of the .xyz domain and warning of a scarcity of desirable .com domain names. Verisign for false advertising, and here the court of appeals affirmed the district court’s grant of summary judgment. Verisign couldn’t show that XYZ’s self-promoting statements caused it harm, and its statements about the availability, or lack thereof, of .com domain names weren’t shown to be false or misleading.
XYZ made “a series of affirmative statements about .xyz, promoting .xyz’s popularity and touting its high registration numbers.” For example, by August 2015, XYZ had secured over one million .xyz registrations. Although this was literally true, Verisign argued that it was false or misleading because the numbers included not only registrations bought and paid for by consumers – indicating actual consumer demand – but also 375,000 registrations given away for free through an agreement between XYZ and Web.com.
Also, Verisign challenged statements such as, “All of the good real estate is taken. The only thing that’s left is something with a dash or maybe three dashes and a couple numbers in it.” Another statement was that “nine out of ten .com searches show up as unavailable.” A YouTube ad compared a new Audi with a .xyz license plate to a dilapidated Honda with a .com plate, and stated, “With over 120 million .coms registered today, it’s impossible to find the domain name that you want.”
“[A] Lanham Act claimant may not mix and match statements, with some satisfying one Lanham Act element and some satisfying others.” Verisign argued that XYZ used deception to create the appearance of a “gold rush” for .xyz domains, including claiming that NPR had dubbed it the “next .com.” The court of appeals affirmed the rejection of these claims based on Verisign’s failure to prove “an injury flowing directly from the challenged statements”—hellooo, Lexmark. Verisign’s harm expert was excluded because her methods were “questionable” and her conclusions were “not reliable,” primarily because her analysis failed to distinguish between correlation and causation. Her testimony was properly excluded; that left Verisign with nothing. While her report showed that Verisign experienced a drop in .net registrations after .xyz – along with other new top-level domains – became available, it didn’t show “anything other than a temporal link between XYZ’s statements and the drop-off.” This failure wasn’t surprising, since “XYZ’s boasts about its registration numbers and NPR interview were distributed to a narrow audience, comprised mostly of readers of XYZ’s blog and a small percentage of registrars.” This gave them “limited potential to influence the domain-name market, particularly at a time when hundreds of new top-level domains were clamoring for attention in a newly competitive market.”
The court of appeals then agreed that claims that “all of the good [.com] real estate is taken,” or that it is “impossible to find the domain name that you want” were nonfactual opinion or puffery. The statement that it is “impossible to find the domain name that you want” wasn’t verifiable, in part because of “the indefinite nature of the referenced ‘you.’”
So too with the claim that “[a]ll of the good real estate is taken,” because what a “good” domain name is, is a matter of opinion. Verisign argued that the next sentence in the relevant interview – “The only thing that’s left is something with a dash or maybe three dashes and a couple of numbers in it” – was literally false, because there were at least some available .com names that didn’t include dashes and numbers. But in context, the overall message was an opinion that the available .com names weren’t “good” because they involve dashes and numbers.
While XYZ’s CEO claimed that these were the “only” .com names left, “that is precisely the kind of puffery or bluster on which no reasonable consumer would rely,” especially in a spoken statement, which might be offered more casually than a written statement. In such statements, “we must take care not to label as ‘literally false’ what really is no more than a colloquial exaggeration, readily understood as such.” In a footnote, the court of appeals pointed out that Verisign argued that the relevant market was registrars who purchase domain names and then resell them to end users, making it “especially unlikely that these savvy industry players would construe XYZ’s claims about .com availability as factual statements and rely on them accordingly.”
The claim that “99% of all registrar searches today result in a ‘domain taken’ page” was verifiable, but verifiably true. Verisign argued that this number was a “naïve” metric of unmet demand because it included automated searches undertaken by registrars looking for high-demand, previously registered domain names. The court of appeals wasn’t convinced—given that registrars were battling “fiercely and on a daily basis over a limited supply of desirable .com names,” the statistic seemed to convey the difficulties of registering a .com name. Anyway, Verisign didn’t provide a consumer survey about reactions to this claim, nor did it provide any other evidence of deceptiveness.
Smart Vent, Inc. v. USA Floodair Vents, Ltd., 193 F.Supp.3d 395 (D.N.J. 2016)
Smart Vent alleged patent infringement and false advertising related to competitor Floodair’s flood vents, which it allegedly falsely claimed to be certified by various bodies. The regulations at issue, however, requried only certification, not certification by specific parties; the real question was whether Floodair falsely or misleadingly described its product as certified in accordance with a standard known as TB-1.
As a matter of law, the court determined that TB-1 called for an individual certification different from that provided by Floodair. Thus, the court granted partial summary judgment on falsity, but refused to find materiality or harm to Smart Vent without further evidence. “While there is a reasonable inference that USA Floodair’s misrepresentation that its product complies with TB-1 led to increasing its sales and decreasing Smart Vent’s sales, that inference is unavailable to Smart Vent as the movant in its summary judgment motion.” The parties also agreed that appropriate certification decreases flood insurance premiums, which “creates at least the impression that certification-related statements would influence purchasing decisions,” but that still left a triable issue. Floodair provided some evidence that other aspects of its product, such as cost effectiveness and ease of maintenance, could also drive sales.
Unite Eurotherapy, Inc. v. Walgreen Co., Case No.: 16-cv-01706, 2017 WL 513008 (S.D. Cal. Feb. 7, 2017)
Unite sells boutique hair care products through authorized resellers and its own website. Unite alleged distribution agreements with all of its resellers, allowing those resellers to make sales only through limited channels and prohibiting those resellers from selling its products through online or internet channels. Since about August 2010, its distribution agreements contained an Anti-Diversion Agreement prohibiting resellers from selling “Product to persons or entities purchasing Product in bulk” or to “any diverter or redistributors of products or to any other person or entity reasonably believed to be purchasing Product for subsequent sale,” as well as related provisions.
Unite sent defendants C&D letters informing them of these agreements and that its online sales of Unite were unauthorized. Defendants continued to sell the products on walgreens.com, allegedly resulting in the loss of two accounts and numerous other existing clients threatening to drop the brand.
The court found that intentional interference with contractual relations was properly alleged, even though Unite didn’t identify the specific third parties who’d been induced to violate their agreements, because it sufficiently alleged that all its distributors were bound and that Walgreen knew that because Unite told it.
Unfair competition/trademark infringement: Defendants pointed out that the first sale doctrine exists. But there’s a quality control exception: “Where the distribution of a product that does not meet the trademark holder’s quality control standards results in the devaluation of the mark by tarnishing its image,” the non-conforming product is deemed not genuine and infringing. The question is “whether the public is likely to be confused as a result of the lack of quality control,” because of a hard-to-detect defect in the product.
Unite’s first theory, that consumers would likely be confused into believing that the sales were authorized by Unite, was barred by the first sale doctrine. But Unite also alleged likely deception about the quality of the product, “because the unauthorized sales are dumping old product of degraded quality into the marketplace.” Thus, the quality control exception applied. Comment: How can this be sensible? Unless Unite reclaims old, unsold product—which allegations the court didn’t mention—then authorized products can be just as old. The allegations the court mentioned were that Unite engages in extensive product testing (pre-sale), and that it carefully chooses salon sellers to keep the products off of others’ online sites, because online retail sites tend to “ ‘dump’ products that have been sitting on shelves or in warehouses for too long and therefore of lesser quality.” But all products age; I don’t see how these allegations survive the first sale doctrine.
Baltimore Sports & Social Club, Inc. v. Sport & Social, LLC, 2017 WL 526499, No. 16–cv–02953 (D. Md. Jan. 6, 2017)
|Sport & Social logos|
BSSC initiated suit, claiming that Sport & Social’s use of the marks BALTIMORE SOCIAL and BALTIMORE SOCIAL SPORTS, the yellow and black colors and the Maryland State flag were likely to cause confusion. Defendant Sport & Social counterclaimed against BSSC for a declaratory judgment of noninfringement, as well as for tortious interference, false advertising, and related claims. The parties compete in recruiting individuals to play sports on company-organized teams. BSSC allegedly began telling current and prospective customers that it was an “imitation” social league, and at the February 2016 Sport and Social Industry Association conference attended by both parties, a BSSC principal wore a t-shirt at with the phrases: “BSSC, It’s the Real Thing,” and “DON’T BE FOOLED BY IMITATIONSocials,” with the last word in the “same font and style” as Sport & Social’s logo which contains the phrase “BALTIMORESocial.” They also allegedly displayed the same slogan on a banner at an event at Camden Yards for opening day of the Baltimore Orioles’ 2016 season, and put a picture of this banner on BSSC’s Facebook page.
|"imitation" T-shirt (PS: does Coke have an issue with "it's the real thing"?)|
Also, “[o]n separate occasions throughout the summer of 2016,” BSSC allegedly “occupied” fields at Patterson Park where Sport & Social had planned sporting events for its customers. BSSC employees allegedly were “hostile and rude” and “refused to leave the fields, causing disruption and delay to Sport & Social’s planned events.”
Defamation: BSSC allegedly defamed Sport & Social by calling it an “imitation” social league. This couldn’t be defamatory because “imitation” is a “rhetorical statement” that lacks precision and cannot be “proven as a true or false statement of fact.” Verifiability, or the lack thereof, is the key. Even if “imitation” is shorthand for “counterfeit,” in this context, it was precisely the type of “loose, figurative, or hyperbolic” language protected by the First Amendment. Even if the evidence proved that the companies were substantially similar, that wouldn’t prove that Sport & Social was an “imitation” of BSSC. Because defamation was the “independently wrongful or unlawful” act underlying Sport & Social’s tortious interference counterclaim, that went too. The non-factual nature of “imitation” in this context also ended the Lanham Act counterclaim.
Only a consumer has standing under the Maryland Consumer Protection Act to challenge unfair and deceptive trade practices.
Finally, Sport & Social alleged that BSSC’s use of the “IMITATIONSocials” logo was likely to cause confusion with “BALTIMORESocial.” Though likely confusion usually can’t be resolved on a motion to dismiss, “a conclusory and ‘formulaic recitation’ of the elements of a[n unfair competition] cause of action is insufficient.” Here, that was all Sport & Social had. (By contrast, BSSC’s initial complaint alleged various instances of “[a]ctual [c]onfusion” including players who thought they were playing in BSSC leagues when they were playing in Sport & Social leagues and email inquiries from Sport & Social players regarding scheduling for soccer, a sport not offered by BSSC.) Not only was Sport & Social’s pleading minimal, “the whole point of the statement is to draw a distinction between the two entities,” rather than to propagate confusion.
Saturday, February 11, 2017
Zvi S. Rosen, The Lost (and Found) Copyright Records
Before July 1870, copyright registrations were at each federal district court. Form of oath dictated by statute; also deposited title page. Deposit records; assignment records; indexes; misc. other records. Process: register by signing oath at local district court as author/proprietor; have to deposit in DC. Until 1831, had to provide notice by publishing in local paper for 4 consecutive weeks. 1802: added notice on works. Almost no one did the newspaper publishing, as far as he can tell. Most records held at rare book room of Library of Congress. Many missing records.
B/c title page deposit was completed before publication, it was often the only part to survive if the book was never published. About 30% of the deposits are these ghost books. For some jurisdictions, only the title pages and not the other records survive. DC: Good records of deposits exist for much of the period, but most books weren’t deposited, so it’s a spotty record.
List of non-standard registrations up to 1861, being product labels etc.—handwritten. Many records were assumed lost, but ended up in regional divisions of National Archives. Digitized all and will host at GW law.
Goals: locate old records; crowdsource local transcription; combine transcribed data to get a continuous record of registration for 1790 to now.
RT: What did they think they were doing with records of registrations? Was there a larger plan? Especially interested in that non-standard registration list—were there associated proposed reforms. But overall: Compare to property records, contract doctrine about reading terms: what is the importance of requiring notice when the required steps will generally not serve to provide actual notice? Symbolic notice: a statement that I know what I’m doing? Rare chance that someone will actually search the records before acting? W/real property title, you’ve incentivized the creation of intermediaries that actually perform the necessary checks—doesn’t seem to have happened in © for many uses.
A: notice was always half-baked. They knew newspaper notice wasn’t working and kept it in the statute for 40 years.
Q: got rid of newspaper notice in 1831 for new registrations, but kept it for renewals.
A: technically kept until 1909. Not much legislative history about 1831, but interesting to know why they kept it.
Silbey: Institutional memory in © registers—whether the people who worked there worked there for a really long time, as civil servants tend to do.
A: it was the clerks of district courts, which was a patronage job, about ten years. Sometimes a deputy clerk if there were multiple courthouses. The administrative head of the court, but that might be the only person who worked there, maybe not even a fulltime job. NY had a whole infrastructure, including a dedicated © person, with printed forms. Delaware had 50 © registrations for 70 years—they just handwrote them.
Very little © litigation before 1830s.
Will Slauter, Copyright Law and Registration Practice: The Case of News, 1870-1918
Example: Wanted registration as a book, not a print, because they wanted to sue for infringement even though it was a weekly. Political and cultural resistance to the very idea of owning news—18th century to today. Registration records are used more by literary historians than lawyers—filled in gaps where no copy survives; teach us about the use of © by particular authors; trends in publishing.
Registration had to precede publication, which was hard for news. Also, what do you register—a dispatch? These registrations, if done, were of questionable validity for a long time. 1829: Clayton v. Stone, no copyright for price current (updates on market news)—suggested no © for newspapers, but not clear. In 1884, effort to legislate 8 hours © automatic; defeated. 1886: Harpers Weekly sued; newspaper could qualify as a book under the statute, but considered an illustration so was less useful for written news. 1900: Tribune v. AP: can register, but lots of stuff in a newspaper isn’t covered anyway. 1909 Act: newspaper copyrightable, but only the copyrightable matter—not the news.
1850s: seeing more registrations of individual articles, and whole Harper’s Weekly every week. Serial fiction; history; politics; biography—but what about news? 1830s, attempt to legislate special © for news in Britain; not a response to tech but to political economy, since up until that time newspapers had a stamp duty that artificially kept prices high. Entrenched papers invoked fear of flood of pirate papers. 1880s in US: rise of cooperative press associations, news © proposed in US as national news organizations began to integrate. AP, and United Press—thinking about a direct rival, AP leadership pushed for special © and didn’t get it. That didn’t stop them from registering news articles as books. Colorado News & Press Ass’n found its news copied by a news thief, a slick fellow who repacked their news for his own customers. They threatened to sue, but he said news couldn’t be ©.
INS v. AP: Citing Nat’l Tel. v. Western Union, AP argued news couldn’t be copyrighted. But what hasn’t been noticed before is that the AP had used © in the past, such as Spanish-American war, and did so again in months leading up to INS. Registered 16 selected news stories—seems like effort to set up test case. You might say this doesn’t matter. Didn’t come up in the proceedings, even though much of the debate was about whether news, once printed w/o ©, was abandoned to public. If anyone had noticed that AP was registering and arguing that © was impossible, that would have seemed hypocritical, but the majority didn’t even accept the argument that © was impossible—it was possible for the literary form, not the underlying facts, which is what the AP wanted.
Why do these records matter? Complement to history of legislation and case law—how historical actors sought to use © and to what effects.
Silbey: administrative agencies often drive debates or reify lines drawn from inside out; this is not a standard story of bureaucracy.
A: there’s probably a change after 1898, when the new register does want to impose a bit of order on the chaos.
Zvi S. Rosen & Saurabh Vishnubhakat, An Empirical Study of U.S. Copyright Registration and Renewals, 1870-1977
Until 1897 there were statistics in annual reports; then they moved to a new building. 1891: Catalog of Copyright Entries. That included statistical info from 1903; 1909 started listing renewals separately. 1947: richer statistical information. Computerized since early 1970s; form basis of public database of all copyright registrations and renewals filed since 1978.
Authors almost always registered around the time of publication. This can be checked by comparing registration date to renewal date. Over 95% registered b/t 27 and 29 years before renewal was filed. In 1992, dropped but only to above 90%, and then in the last year a bunch of people tried to register and renew at the same time. When renewal became optional, absolute #s of renewals dropped.
Are the annual reports statistically effective for comparing registrations to renewals? All based on the fiscal year, not the calendar year, for registrations, even though all the renewal data is per calendar year.
Large volume categories—books, periodicals, music, artwork. Artwork peaks 1909, and only got back to that level by the 1970s. Books peaked in 20s, dipped, then steadily up. Music and periodicals: steadily up. Small volume: dramatic works and lectures go up, then dip a lot. Photographs: people registered motion pictures as photos until 1920s, but still huge drop from 1000s to under 100 in the 50s. Panics in economy create small dips.
Renewals: books go steadily up; motion pictures small but still show up. Total renewal rate by registration year goes somewhat steadily up until renewal becomes optional, which is a cliff. Music: renewal rates 35-40%; motion pictures very high—the only one over 50%. Books peak for original registrations in the 40s. Periodicals go up and then plateau when the renewal term becomes 47 years. Artwork: definite jump that steadies when renewal term becomes 47 years. Music is volatile, but high for works created in 1910s and 20s; goes back up for works in 40s and 50s.
Renewal rate for 28+28 term, 12%; extending 15%; to +47 up to 18%; then downwards when optional, even when renewal term increased to +67.
Can do event studies to see if new Register or legal changes map onto anything.
D.R. Jones, Edicts of Government: Copyright in State Legal Materials
Compendium: policy, won’t register a gov’t edict issued by state in other jurisdiction, including legislative enactments, judicial decisions, administrative rulings. States are nonetheless making claims of copyright. Some discussion in runup to 1976 Act; decision not to put specific coverage in though some people claim that’s b/c it’s covered already.
Open access, right to access law as part of access to justice. But what does access mean? Is searchability required? Access to justice literature talks mainly about forms, but the law itself is also important. State has duty; doesn’t need incentive to publish. But states induce publishers to publish by claiming ©/exclusive copyright. This is the law: a factual issue. The concern is one for authentication.