Dastar bars all Lanham Act authorship claims, court rules

Antidote International Films, Inc. v. Bloomsbury Publishing, PLC, -- F.Supp.2d --, 2006 WL 3822484 (S.D.N.Y.)

This case has juicy facts because of its connection to debates about authenticity in memoirs and in fiction. But it’s really an important case about Dastar.

Plaintiff Antidote International Films, Inc. is an independent film production company. Defendant Bloomsbury is a London publisher, which in 2000 published a novel, Sarah. Sarah tells the story of a 12-year-old male prostitute in competition with his mother for tricks. Laura Albert wrote Sarah under the name J.T. Leroy, a persona she created. Other defendants are the corporation created to handle J.T. Leroy’s business interests and a woman who acted as a manager for Leroy, the corporation, and Albert. Though Sarah was published as fiction, defendants allegedly made a number of public statements strongly suggesting that it was based on J.T. Leroy’s own experiences (e.g., calling the book “semi-autobiographical”). These statements appeared in press releases, on a website, in book blurbs, and in other advertising. Albert also pretended to be J.T. Leroy in communications by fax, email, and telephone. For public appearances, Albert appered as “Speedie,” Leroy’s “keeper,” and the role of Leroy was played by a confederate, a woman in dark sunglasses and a wig.

Plaintiff’s founder believed in the authenticity of Sarah’s narrative and, based on his belief that the novel “was an aesthetic response to a horrific, real-life set of experiences,” decided to develop a film based on the story. He, like others, was impressed by Leroy’s ability to use art to overcome horrific personal circumstances, and had greater sympathy for the novel’s protagonist because he thought the protagonist was based on Leroy himself.

As a result, plaintiff negotiated for an option on the film rights for three years at $15,000 per year. Defendants allegedly took further steps during and after the negotiations to convince plaintiff that Leroy was real, for example by providing plaintiff with a false IRS form W-9 signed by Leroy.

In 2005, New York Magazine published an article claiming that Leroy was a mirage, and Albert was quickly exposed as Sarah’s author. Plaintiff stopped working on the film adaptation. Plaintiff alleged that, because of defendants’ fraud, no distributor or financier would invest in a project based on Sarah, whose value was predicated on the connection between Leroy, his experiences, and the novel; the book is now a joke (like Opal Mehta, or A Million Little Pieces).

Defendants moved to dismiss plaintiff’s Lanham Act claims. First, plaintiff argued that defendants’ representations constituted false designations of origin. Under Dastar, however, “origin” means the producer of the physical book, not the source of the expression therein. Plaintiff tried to argue around Dastar on the theory that Dastar came out the way it did because of the potential copyright-trademark conflict, which isn’t present here. The court concluded, however, that the rule laid down by Dastar applies regardless of whether a copyright claim is available.

Plaintiff also tried a more plausible distinction – it argued that defendants’ false representations were likely to cause confusion not just over the “origin” of Sarah, but also over “the affiliation, connection, or association of [Bloomsbury] with another person,” to wit, “J.T. Leroy.” Unfortunately, the complaint only mentioned “origin,” and plaintiff failed to cure this defect by amendment. The court went on to hold that, even if the complaint had properly alleged such confusion, it would simply restate the false designation of origin claims and would still be barred by Dastar.

I think that last conclusion is wrong, though it’s unlikely that the Supreme Court will tell us more about what Dastar means any time soon. A false affiliation claim doesn’t pose the Catch-22 problem in Dastar, where the defendant would have gotten sued for whatever it said. There is no cause of action for failing to disclose an affiliation or connection (setting aside possible false advertising claims under §43(a)(1)(B), which the Court left available in Dastar – though see below). Thus, only false affirmative claims about affiliation would be actionable under plaintiff’s theory. I have taught my trademark classes that claims such as those in Gilliam v. ABC probably survive Dastar precisely because of this distinction – the problem in Gilliam was that ABC explicitly identified Monty Python as the author of the mutilated works. Likewise, under the court’s rule, it seems that one could promote a movie as Stephen King’s Lawnmower Man with impunity, even if Stephen King’s closest connection to the film was that he once visited Hollywood. See Jane Ginsburg’s article on Dastar for more.

More broadly, you can’t apply “origin means physical origin” to “affiliation, connection, or association” claims without writing the latter out of the statute entirely. The basic claim of affiliation is precisely that someone other than the producer of the physical object endorsed, sponsored, or otherwise approved of the product or service.

Reading the decision narrowly, the court is holding that a claim of “authorship” is not equivalent to a claim of “affiliation, connection, or association” and must instead be brought under the (precluded) head of “origin.” But that’s hardly required by Dastar, given the absence of the policy considerations driving the Court’s interpretation of “origin.” The court says its extension of Dastar is necessary to avoid making Dastar “meaningless,” but the result in Dastar would be the same under my proposed rule, because Dastar didn’t make any affirmative claim of affiliation with Fox.

One might say this extra rule is necessary so that, when a well-known work enters the public domain -- if one ever does again -- the author’s heirs/former owner won’t be able to claim trademark rights to block free publication. Yet there would be nothing false about a claim that the author wrote the work in those circumstances, and almost any court would recognize that – and, one would hope, would award the defendants in such cases their attorneys’ fees. I’m not always a fan of leaving the limiting constructions for cases in which they’re needed, because courts sometimes forget that they’re needed, but here I’m willing to trust judicial good sense.

There is a policy problem present in this case: I can see a good argument that people shouldn’t be able to sue under the Lanham Act when books weren’t written by their supposed authors, or their supposed authors didn’t have the experiences they claimed to have, because (a) ghostwriting and exaggeration are standard publishing practices and (b) standard trademark analysis is insensitive to the First Amendment considerations involved. I’m sympathetic, but a rule crafted to address this doesn’t and shouldn’t come out of Dastar but rather out of the Rogers v. Grimaldi line of cases creating separate rules for expressive works. The Rogers line, not incidentally, takes exactly the opposite tack of Dastar, crafting medium-specific rules rather than defining words in the Lanham Act to cover all products and services. Rogers also left open the possibility of liability for explicit falsehoods in titles, like Ginger Rogers: My Story, whereas the court’s ruling here would preclude such liability.

Plaintiff separately alleged false advertising. The obvious problem is that defendants were plaintiff’s suppliers, not its competitors, which should be the end of it. But the court, again interpreting Dastar expansively, ruled that no Lanham Act claim could be brought based on a false authorship theory. Dastar’s reference to possible false advertising claims, the court said, was limited to representations about the substance of a work, rather than representations about the work’s authorship. Dastar’s holding that “origin” refers to producers, not authors, “necessarily implies” that §43(a)(1)(B)’s use of the terms “nature, characteristics, [and] qualities” excludes authorship.

The court’s ruling on false affiliation was shaky, but this one is worse. Pragmatically: Authorship and substance interpenetrate. Words written by one person (a president, a Holocaust survivor, a white man) mean something different than words written by another person who was formed by different experiences.

Doctrinally: Lanham Act false advertising claims have, along with the judicially imposed standing requirement and the requirement that false statements be made in “advertising or promotion,” a materiality requirement that again largely avoids the policy problems that the Supreme Court used to guide its interpretation of “origin.” Contrary to what the court here said, Fox wouldn’t have had a false advertising claim against Dastar, because it’s ludicrous to think that the omission of Fox’s name from Dastar’s advertising would be material to consumers, much less misleading. (At the heart of the problem in Dastar, I’m tempted to argue, is that the trademark half of the Lanham Act lacks a materiality requirement.)

Plaintiff also brought fraud claims. The elements of common law fraud are “a material, false representation, an intent to defraud thereby, and reasonable reliance on the representation, causing damage to the plaintiff.” The court found that plaintiff had adequately alleged all these elements.

The result raises another difficulty, again noted by scholars before me -- see Tom Bell’s Misunderestimating Dastar. If Dastar’s interpretation of “origin” is necessary to avoid conflict with copyright law and possible constitutional invalidity, then shouldn’t coordinate state-law claims based on false representations of authorship also be preempted? (Given plaintiff's preservation of state law claims, it should probably have added a state consumer protection claim, which replicates the Lanham Act false advertising claim without being controlled by Dastar.) On these facts, there is no conflict with copyright law, however, which suggests that more sensitive rules for avoiding copyright-trademark conflicts could be crafted than Dastar provided.

Dastar’s effects, it seems, keep widening like a stone thrown into the murky Lanham Act waters. When will we see the last ripple?

Happy New Year, all.

Google maintains 7/8ths world domination

Bradley v. Google, Inc., 2006 WL 3798134 (N.D. Cal.)

“This is a lawsuit over five dollars.” So begins the court’s analysis of pro se plaintiff Theresa Bradley’s claims against Google. Bradley actually did better than many Google opponents – one of her eight claims survived a motion to dismiss, the one for intentional destruction of property (emails in her Gmail account).

Bradley owned a small consulting business and ran a website for that business. She signed up for Google AdSense on August 10, 2006. Because Google didn’t provide her with any way to see which ads would be put on her site before they appeared there, she clicked on them in order to learn more, in violation of her contract with Google. She also asked Google to remove some of the ads, which Google did not do. On August 19, 2006, Google terminated her account, removed its ads, and failed to pay Bradley the approximately five dollars that ads on her site had generated. Bradley also had a Gmail account, through which she conducted her transactions with Google. On August 24, she discovered that all her communications with Google AdSense had been removed or deleted from her account; she further claimed that other emails had been deleted, and that emails with third parties had been “mixed up” with her emails.

Bradley sued (for at least the 35th time; she is “no stranger” to the court system). Her claims: false advertising under the Lanham Act, fraud, interference with prospective business advantage, violations of California Commercial Code § 2207 relating to alteration of contract terms, breach of contract, unlawful interception of electronic communications under 18 U.S.C. § 2520, invasion of privacy under California law, and intentional destruction of evidence, professional property, and personal property.

The false advertising claims hinged on Bradley’s allegation that Google falsely advertised that she’d be able to preview AdSense ads. As a result, she signed up with Google, and her “goodwill and relationships with her customers were damaged” because of the ads that Google placed on her site. The court, citing no law, found that this theory of damages was simply too attenuated. I am dubious, since the whole point of being able to approve or disapprove of AdSense ads is to be able to control their appropriateness to the website, which can only be of importance because of website visitors’ reactions. That is, the alleged harm is exactly the kind of harm you’d expect from uncontrolled ad placement. It’s the reason that the ability to preview AdSense ads is material to consumers. The better argument is that Bradley, who isn’t a competitor but a customer, lacks Lanham Act standing.

Bradley’s related fraud claims were dismissed for failure to plead with particularity.

My new favorite trademark puzzle

A great conceptual puzzle: Louis Vuitton is suing Dooney & Bourke over similar handbag designs. After remand from the Second Circuit and the TDRA, state and federal confusion and dilution claims are all in play. Except: D&B has a registration for the DB logo with the D&B intertwined, which under the TDRA bars dilution claims based on use of that mark.

So, it would seem, the dilution analysis will have to ignore any dilutive effect resulting from the linked initials in the accused handbag design. I have no idea how that could be done – testing a mock bag with just blobs of color, or made-up initials, to look for the dilutive effect of color and arrangement alone seems like a bad idea, in part because the logo effect of the DB may well be anti-dilutive, in that it provides consumers a separate reference point other than Louis Vuitton. I’d be curious to hear anyone else’s thoughts.

If a registration really does provide immunity from dilution claims based on use of a mark, can that immunity be defeated by claiming dilution of a broader trade dress where the mark is only one component of the allegedly infringing dress? This isn’t like a copyright/trademark conflict, where you can finesse solutions based on concepts like “use as a mark.” D&B has the federal right to use the DB logo as a mark for handbags, free of any dilution claims. Is that right as extensive as Louis Vuitton’s?

Given that plaintiffs have lots of freedom to define their trade dress to fit the facts of any given case, we are likely to encounter more cases of partial preemption in the future. Perhaps we’ll get some guidance about that from this case.

Court shoots down Crossbow dilution claim

Nautilus Group, Inc. v. Icon Health and Fitness (W.D. Wash. Dec. 21, 2006), courtesy of the Seattle TM Lawyer.

This latest round in a litigation deathmatch encompassing patent, trademark, false advertising, and false patent marking claims concerned plaintiff’s argument that Icon’s CrossBow personal training machine diluted the Nautilus Bowflex. This opinion granted summary judgment to defendant on state and federal dilution claims, and I admit to some puzzlement: The court applied the FTDA’s original language and found that Nautilus must lose because it had no evidence of actual dilution. But, as the case was pending when the TDRA was enacted, that’s no longer the standard – likely dilution will suffice. (I doubt plaintiff’s overall burden is decisively lightened by the TDRA. Showing that “Bowflex” is famous among the general consuming public has got to be easier than showing actual dilution – but see below for another problem.) The parties filed cross-summary judgment motions in early 2006, before the TDRA, then asked the court to hold the motions in abeyance during settlement discussions. The parties inexplicably failed to file even letter briefs on the TDRA when the abeyance expired, a month after the TDRA became law.

The court applied other pre-TDRA precedent, which probably survives: the Ninth Circuit’s rule that dilution requires identity or near identity of marks. A reasonable fact finder could conclude that consumers would perceive the marks as essentially the same, but it couldn’t be determined on summary judgment. This is a pretty expansive view of "essentially the same," given the differences between the marks.

Also of note: the court ruled that Icon’s purchase of “Bowflex” as a search engine keyword was not use of an identical mark for dilution purposes, because Icon showed that it did so only as comparative advertising. The text of the sponsored ad displayed in response to a Bowflex search was “Compare CrossBow to Bowflex.”

The state dilution claim was dismissed for two reasons: First, while the litigation was pending, Icon had received a federal registration for Crossbow, triggering the old FTDA preemption provision. Second, the state statute was identical to the federal statute, and thus had the same actual dilution requirement. Both of these merit some thought.

As for the first, Nautilus argued that Icon had only received the registration by telling the PTO that it would not use the mark until the litigation was resolved. The court found that the plain language of the statute still required preemption, a result that makes sense to me – I can’t see how the PTO can override the terms of the statute, in which case it’s the registration that resolves this portion of the litigation. (Plaintiff’s confusion claims remain.) The TDRA extends the blocking effect of the federal registration to federal dilution claims, so the dilution claim will go away entirely regardless of the lower likelihood of dilution standard.

That makes the second issue a moot point in this case, but not in others: Does the state statute move in lockstep with the federal rule, such that it’s now (back to) a likelihood of dilution standard even in the absence of amendment by the state legislature? Or does the old actual dilution standard apply until the legislature acts? I can see arguments both ways. Given that the actual dilution standard was probably imputed to the state law because of the FTDA in the first place, it seems more reasonable to continue the lockstep, since it’s not as if the state legislature specified actual dilution in the first place.

Practice tip: Get a federal registration! It’s protection from state dilution laws, which require only distinctiveness and not fame from plaintiffs and thus cover a lot more marks than federal law does. And a pending state dilution claim isn’t grounds for opposition.

There is such a thing as a (carb-)free lunch: Atkins wins against cardiac patient

Gorran v. Atkins Nutritionals, Inc., 05 Civ. 10679 (DC) (S.D.N.Y. Dec. 11, 2006): Jody Gorran was in good health, with low cholesterol and no cardiac problems, until he started the Atkins diet, allegedly in reliance on defendant’s representations that a high-fat, low-carb diet posed no cardiac risks. Defendant’s website, among other things, stated that eating high-fat foods posed no health risk in the absence of carbohydrates and that medical advice to the contrary was disproved by the evidence. After two and a half years on the Diet, his cholesterol was through the roof, he began experiencing chest pains, and he had to have an angioplasty, involving a stent inserted to keep an artery open. He sued, alleging products liability, negligent misrepresentation, and false advertising under Florida law.

Judge Chin dismissed Gorran’s claims under Rule 12(c), holding that food like cheesecake is not unreasonably dangerous for products liability purposes. In addition, statements about the Atkins diet’s health benefits and cardiac safety in the Atkins book and on the Atkins website were noncommercial speech, even though they also served to sell Atkins-branded food products (of which Gorran bought approximately $25 worth). The court ruled that the website contained a mix of commercial and noncommercial speech. Only information specific to the “superior nutrition and taste” of the Atkins products available for sale, not the website’s general advice on how to follow the diet or recommendations for optimizing health, was commercial speech. This is a tenuous distinction, though it may have worked in the present case. What happens when product labels or webpages make broad health claims, like an ad for Crisco stating that trans fats have been scientifically shown to improve health? Conversely, what if one page on a site touts the health benefits of supplement X, and then a separate page offers the supplement for sale? That’s not far different from what occurred here, but I doubt the court wanted to reward formal manipulation with a finding that the first page is noncommercial speech.

I’m also uncomfortable with the court’s reasoning that defendants’ conduct wasn’t “unfair or deceptive,” apparently because it was protected by the First Amendment. It could well be unfair and deceptive though still protected by the First Amendment; that’s a big part of what the First Amendment, in its modern incarnation, does. From all the evidence before the court at that stage, defendant is profiting by misleading people with a sweetly (and fatty) seductive story – eat as much as you want of tasty foods and lose weight, with no health risk. If this is deceptive, defendant is behaving wrongfully, even if its conduct isn’t actionable. (The court only referred to its earlier First Amendment determination, but it may also have been considering its holding that cheesecake isn’t unreasonably dangerous as a matter of law for products liability purposes – in which case I think it failed to take into account the ways in which Atkins deliberately changed the information environment, attempting to convince people that their previous understanding of how much cheesecake one could reasonably eat was too cautious.) The court’s alternative reasoning – that Florida law only considers direct economic damages, such as the price of the Atkins book, while Gorran is asserting personal injury damages – is a much firmer basis for its ruling.

Blogrolling: Institutional Review Boards

My interest in IRBs is derivative -- I'm married to a historian who does 20th century history, including oral history. We've talked about the First Amendment challenges posed by IRBs (required for federal funding, but often expanding beyond their statutory mandate). Now he's started the aptly-named Institutional Review Blog to cover IRB news, discussion, and horror stories. The latest post notes a Northwestern Law Review symposium on IRBs, gently suggesting that the law professors, like their students, need to spend more time reading the statute.

If I had one wish for my students, it would be that they'd always start by reading the relevant statutes.

An end-of-year present from the Library of Congress

RSS feeds, including four from the Copyright Office. Anyone who subscribes to all four is more serious about copyright than I can make myself be.

Stealth advertising in nonbroadcast media

I have just begun Ellen Goodman's article in the Texas Law Review on the topic. It promises to be a good read, and quite relevant for current controversies, including the role of artificial/paid word-of-mouth advertising.

Even I think this is a satire, not a parody

"Time After Time" recast as a song about lawyers' billing. Fair use, or just very funny to those of us who've struggled with big-firm timesheets?

false trademark registration claim fails Lanham Act standards

GoNannies, Inc. v. GoAuPair.com, Inc., --- F.Supp.2d ----, 2006 WL 3590942 (N.D. Tex.)

Plaintiff’s trademark claim against its competitor, which did business under the name goNANI, failed because of defendant’s substantial evidence of use in commerce (on the internet, no less, potentially conferring at least national rights) of the term since at least 2000. By contrast, plaintiff first used GoNannies in commerce in July 2003, and applied for registration at that time. Plaintiff’s registration for GO NANNIES was issued in August 2005, but that of course does nothing to bar senior unregistered uses. Plaintiff’s failure to seek injunctive relief for more than six months after discovering defendant’s use, and more than five months after filing suit, also doomed its request.

Plaintiff also sued defendant for false advertising because it used its goNANI mark with an ®, falsely indicating that it held a federally registered trademark.

False registration claims hurt competitors (and possibly noncompetitor businesses), not consumers, both by falsely asserting federal rights in terms that may in fact be available to others and, potentially, by making a competitor seem like an infringer – a concern not unlike that courts have expressed in reverse confusion cases. These harms are like those caused by false patent markings. Unfortunately for the plaintiff in this case, there is no analogue in the Lanham Act to the part of the patent statute that specifically makes false patent marking illegal. As defendant was quick to point out, plaintiff could not explain how defendant’s use of ® caused plaintiff any harm, much less irreparable harm. Even though the ® was false and misleading, it’s not clear that there’s anyone with standing to challenge it – a consumer suit would presumably fail on the ground that it’s not a material misrepresentation as to consumers.

Similar but more pervasive problems in copyright have led some scholars to suggest that copyright law should give a more robust remedy for false copyright claims, beyond the limited penalties that exist for falsely claiming copyright in US government works. False trademark claims have caused less trouble so far (if you don’t count things like trademark owners’ lawsuits over uses of their marks in expressive works like NBC’s Heroes, which perhaps should count). I have yet to see a thorough analysis of false IP claims generally, but it would definitely be interesting to compare the various possible regulatory regimes.

Inducement in the Colbert Nation

As the Language Log explains, Stephen Colbert has urged his legions of followers to download a replacement entry for their copies of Merriam-Webster's Collegiate Dictionary, allowing them to show the new entry "truthiness" in an alphabetically appropriate place, though requiring the sacrifice of the entry for "try."

Assuming, as is possible in this case, that a single dictionary entry shows enough creativity to be copyrightable, have dutiful Colbert nationals created infringing derivative works? Has Colbert induced them to do so under Grokster?

Buzz marketing's potential for deception

The FTC’s staff opinion letter on buzz marketing is here. Commercial Alert, whose request for investigation prompted the letter, has a moderately negative reaction here, calling it a giant Christmas present for word of mouth advertisers and Procter & Gamble in particular. As CA says, it does seem like P&G is ripe for an investigation on the FTC’s own announced standards – that failure to disclose can be deceptive if listeners are more likely to credit a source perceived as unconnected to the advertiser – because P&G’s network of what it says are approximately 250,000 teenagers are not required to disclose their promotional relationship with P&G as part of their brand-ambassadorial activities. Given the teenage market, which is profoundly affected by peer pressure, the potential for material deception seems quite high. This Washington Post story reports on a 2005 study reporting that “29 percent of participants age 20 to 34 and 41 percent of those age 35 to 49 said they would be unlikely to trust a recommendation again from a friend whom they later learned was compensated for making the suggestion.” I’m depressed that the percentage is that low, but it’s more than enough for materiality.

Milk: Primary jurisdiction does it good

Physicians Committee for Responsible Medicine v. General Mills, Inc., 2006 WL 3487651 (E.D. Va.)

Plaintiffs (either truthtellers or animal-rights crackpots, depending on one’s point of view; the district court’s is hinted at in the opinion) sued numerous dairy producers and marketing groups for violating Virginia consumer protection law. The court granted defendants’ motion to dismiss for failure to state a claim.

Plaintiffs targeted a campaign that began in 2003, urging consumers to drink milk as a healthy way to lose weight. E.g., “[i]ncluding 24 ounces of low fat or fat free milk every 24 hours in a reduced-calorie diet provides the calcium and protein to support healthy weight loss.” The cases were initially filed in state court, but removed and consolidated under the Class Action Fairness Act (in an indicator of CAFA’s importance, one was removed because, though it sought only injunctive relief, that relief would allegedly have cost defendants more than $5 million to implement).

Defendants made a number of arguments in support of their motion. The court found that injunctive relief is unavailable to private individuals under the relevant Virginia laws (a supportable conclusion, though the reference to a “‘longstanding cannon of statutory construction’” put an odd image in my head) and that the doctrine of primary jurisdiction requires dismissal to give the FTC and FDA a first shot at addressing plaintiffs’ complaints (a conclusion with which I strongly disagree).

Plaintiffs filed administrative petitions with the FTC and the FDA against the same defendants. To avoid the risk of inconsistent judgments, the defendants argued, the court should dismiss the civil actions in deference to the expertise and special competence of those agencies on issues such as “the probable economic impact on consumers” of the challenged ads and the scientific questions of the effects of dairy consumption on weight. The court agreed, even though a much more appropriate inquiry would have been a preemption analysis. Courts decide issues of false advertising all the time, including false advertising of health benefits; Lanham Act jurisprudence is largely about evaluating likely impacts on consumers. Where there is a true conflict between a judicial and administrative evaluation, preemption provides ways to resolve that conflict. Here, there are merely two paths to a result.

Also of note: The defendants also argued that the ads at issue are federal “government speech” and thus can’t be barred by any state law. The plaintiffs accepted the general proposition, but argued that there were factual issues about whether particular statements were government speech; the court agreed. This raises the fascinating point that, when federally supported speech is concerned, the First Amendment isn’t the only thing that can override state regulations of speech. The Supremacy Clause has a role as well.

Fraud on the FDA may disentitle a manufacturer from protection against state law claims

In re Medtronic, Inc., Implantable Defibrillators Litigation, 2006 WL 3420285 (D. Minn.)

This multidistrict litigation could have ended swiftly if the court had accepted defendant’s summary judgment motion arguing that plaintiffs’ state-law claims were preempted by the FDCA.

Medtronic makes implantable defibrillators for treating cardiac arrhythmia. As Class III medical devices, the defibrillators are intensely reviewed by the FDA, including a rigorous premarket approval process requiring the maker to demonstrate a “reasonable assurance” that the device is both safe and effective for the conditions set forth in its labeling. After approval, device manufacturers must self-report adverse events, defined as events that, if they recurred, would be likely to cause or contribute to a death or serious injury.

For summary judgment purposes, these are the facts: Medtronic’s defibrillators were approved in 1998, after which Medtronic systematically modified them. The modifications required supplemental applications to the FDA, which were reviewed less rigorously than the initial approval. In 2000, Medtronic sought and received approval for a new battery, which was a major change.

In 2003, as part of routine testing, Medtronic discovered a battery defect that caused the battery to short and discharge prematurely – batteries could lose their charge in days instead of years. Over the course of eight months, Medtronic continued to test and understand the shorting problem. Medtronic alleges that it didn’t notify the FDA, physicians, or patients during this period because it hadn’t received any field reports of actual failure, and assumed that the problem was limited to laboratory conditions. During this period, Medtronic sold thousands of devices with the potentially defective batteries.

Even without field reports of failure, Medtronic began to redesign its battery in spring 2003. Meanwhile, Medtronic sought and received approval for three additional models, each containing the old battery. Each supplemental application failed to inform the FDA about the shorting problem. In October 2003, Medtronic filed another supplemental application for three design changes to the battery, stating that the prior design had a “known failure mode” in which it shorted. The FDA approved the new battery that month. Even so, Medtronic didn’t notify doctors or patients about the old battery and continued to sell units with the old batteries.

In early 2004, Medtronic began to receive field reports of premature battery depletion, at which time it first reported adverse events to the FDA. By December 2004, there were nine field returns of prematurely depleted batteries. In February 2005, Medtronic first notified the public of the defective battery by sending out a “Dear Doctor” letter warning about the short. The next month, the FDA initiated a regulatory enforcement action against Medtronic, ordering a recall of 87,000 devices containing the old battery.

Against this background, plaintiffs seek damages for personal injuries under theories including negligence, strict liability, breach of warranty, misrepresentation, and violations of state unfair practices laws.

Plaintiffs provided the affidavit of Dr. Suzanne Parisian, a former FDA employee. She says that Medtronic omitted information essential to the FDA’s continued approval of the battery. “She points to specific post-marketing requirements, which she claims imposed upon Medtronic certain obligations which were not fulfilled, particularly concerning timely performance of post-marketing studies, timely submission of reports, and altering devices without prior FDA approval. The court assumed that these allegations were true for motion purposes.

The FDCA provides that states may not impose on medical devices any safety or effectiveness requirement “different from, or in addition to,” any applicable FDCA requirement. The key cases are Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), and the Eighth Circuit Court of Appeals' decision in Brooks v. Howmedica Inc., 273 F.3d 785 (2001) (en banc). The court made the most use of Justice Breyer’s partial concurrence in Lohr, which explained the majority rule about whether general state tort law can be preempted in these terms: “if a jury were to find negligence in the use of a wire longer than one inch in the manufacture of a hearing aid when the FDA had required a two inch wire, there would be federal preemption as surely as if a state regulation were to impose such a limitation.” In Lohr, however, defective design, manufacturing, and labeling claims survived preemption because there were no specific federal requirements with which such claims could conflict. In that case, the device at issue was approved under the less rigorous premarket notification process, and approval simply reflected the FDA’s conclusion that a new device was substantially equivalent to a pre-existing device.

Lohr sets forth a two-part rule: (1) Are there any device-specific federal requirements? (2) If so, would the state common-law claim impose a requirement different from, or in addition to, the federal requirements? The Eighth Circuit considered those principles in the case of a product that had been through the full approval process, and found that it did impose specific requirements; thus, the plaintiff’s failure to warn claims would interfere with federal labeling requirements and was preempted.

As with Brooks, the court here concluded that the full approval process involves device-specific federal requirements. Once a Class III device receives approval, its maker can’t make any changes affecting safety and effectiveness without a further FDA approval. Thus, the key issue was question (2). To prove preemption, Medtronic needed to show that plaintiffs’ state claims “would require it to design, manufacture, or label its devices in a manner inconsistent with its PMA specifications.”

The court rejected the argument that FDA approval shields Medtronic from any state law claims at all. Medtronic failed to show how plaintiffs’ state law claims would actually impose conflicting requirements on it. Plaintiffs claim Medtronic violated FDA regulations, and their state law claims are premised on those violations. (For example, they claim that Medtronic improperly manufactured the devices and failed to comply with FDA reporting requirements.) Plaintiffs’ claims, if successful, allow additional remedies, but do not differ from or add to federal requirements.

It seems that the court's holding was driven by evidence which, if believed, could show that Medtronic withheld critical information from the FDA while seeking supplemental approvals. Given that Congress decided to regulate medical devices strictly, manufacturers can’t claim the benefit of FDA approval when that approval was obtained through subterfuge.

The court’s specific analysis of the failure to warn, implied warranty, and express warranty claims found them non-preempted. Of most note for advertising law purposes: Plaintiffs’ express warranty claims, based on Medtronic’s promotional statements and product literature, challenge Medtronic’s claims that its defibrillators were safe and highly reliable. Medtronic argued that its labeling was FDA-mandated, so any allegations about incomplete information are preempted. Though the FDA approves the label, Medtronic hadn’t shown that the FDA imposes requirements for promotional statements (and I believe it would be difficult for Medtronic to do so with the specificity required by Lohr, given that the FDA does not engage in rigorous review of most ads). In any event, express warranties arise from the parties’ representations, and requirements imposed by the warranty are created by the warrantor, not imposed by state law, and thus not subject to preemption.

As for the consumer protection claims, they are also based on advertising and promotional materials. Thus, a jury verdict wouldn’t conflict with the specific FDA approval of the devices and their labeling. Moreover, FDA regulations also specifically exclude state unfair trade practices laws from preemption.

So much for express preemption. What about the idea that a jury should not be evaluating whether Medtronic complied with the FDA’s requirements, given that the FDA has never found or cited it for a regulatory violation? In a careful analysis, the court found no implied preemption. Medtronic relied on Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), which rejected independent enforcement of “fraud on the FDA” claims. Plaintiffs aren’t claiming fraud on the FDA as their cause of action. They claim to have been themselves deceived and injured by Medtronic’s misrepresentations and continued sales of defective devices. Plaintiffs can use evidence, if such exists, of Medtronic’s manipulation of the regulatory process in order to prove their tort claims, even though they can’t sue for fraud on the FDA. The states’ historic interest in regulating health and safety is further reason to reject implied preemption.

In a final section, the court raised the possibility that Medtronic’s actions might have placed it beyond the scope of FDA preemption entirely. Under the model set out by Congress, the manufacturer has the “highest duty” to make safe products. The FDA has only a limited ability to obtain the information it needs for approvals. Thus the manufacturer has a heightened duty to disclose relevant information. If plaintiffs are correct, Medtronic had an affirmative duty to disclose information about the battery flaw posthaste, but instead sought approval for more devices “bearing a medical Trojan horse.” That arguably placed it beyond federal preemption protection, given that failure to comply with a post-approval requirement such as adverse event reporting is a ground for revoking that approval. Returning to Justice Breyer’s one-inch wire/two-inch wire example, it is as if the manufacturer knew but failed to disclose that the FDA-required two-inch wire is “defective, corrosive and barbed” rather than safe and effective. At this point, Congress’s self-disclosure scheme has been subverted, and the protection it offers manufacturers is no longer justified.

Final NYU panel on dilution

Final discussion: James Whitman, Yale University: The comparativist’s perspective

Of course European law protects free expression, but it’s balanced against other constitutional values of reputation, honor, etc. It’s not the only constitutional value on the playing field. Whitman would have assumed that TM belonged to protection of personality, not property, which would make it easier to understand what’s going on here.

We talk about common versus civil law all the time but that offers very little help in dealing with the problems that arise with things like dilution. One possibly useful contrast: law oriented towards consumers versus law oriented towards producers. America had a broad consumer movement mid-20th century while Europe was consciously moving towards a producer orientation. There is of course no general or uniform consumer (or producer) interest. But producer-oriented law takes some producer interest as primary, and tends to asks questions about producer-producer conflicts, such as how to balance workers’ interests against capitalists’ interests.

An easy example of the contrast between producerist and consumerist interests is antitrust. The great shift in American antitrust law has been to focus on consumer interests – questions are resolved by asking about the economic interests of consumers, rather than of competitors. Until recently, European law was otherwise.

Ambiguity: one way of defining consumer interest is low prices and shopping convenience. But another way of defining it, often in conflict, is the consumer’s interest in being paternalistically protected.

People think that consumerism is triumphing worldwide. But in the European case, it’s not so clear that the consumer interest – understood as an economic interest – is triumphing.

It’s silly to imagine that there are two different classes; everyone is both a consumer and producer. It’s very difficult to figure out who’s winning in any given case. Rather it’s a conflict over identity politics: who ought to matter more in a modern economy.

So what’s going on in Europe (France and Germany)? These are comparative, relative claims, not absolute one: we see more consumerism in the US and more producerism in Europe. We do see a lot of talk in Europe about the consumer, but the law that’s being produced in response is overwhelmingly consumer protection law, not oriented towards consumer economic interest or shopping convenience. The law of retail, for example: Despite lots of change, there’s a lot more regulation of retail than in the US, much of which is intended, despite the entry of large retailers like Wal-Mart, to protect small shops.

This looks like classic producerist law. It’s defended on consumer protection grounds, though. The French & German statutes identify the small retailers’s interests and the consumer’s interest in being able to choose between types of goods. Consumers are also being protected against deceptive practices and against “incitement” – overly low pricing that incites people to buy inopportunely. This is key because there is extremely limited consumer credit in France. Consumer protection of this kind leaves lots of room for the old kinds of producer protections.

Can you analyze TM in these terms? He thinks so. To the extent that Europeans are more open to dilution, that’s easy to fit into the producerist/consumerist box. If you justify the law on consumer protection grounds, you’re making the European move of justifying producer protection as a benefit to consumers. Americans are generally less receptive to producerist legislation, so lingering resistance is understandable.

To the extent we’re trying to defend antidilution legislation on “status goods” grounds, it’s similar to the justification that there should be a variety of goods available, from cheap to expensive. Thus we should suppress competition even when it would lower prices. The French & German legislation is interested in artisanal goods specifically though, while status goods will not necessarily be artisanal.

He imagines that it’s awfully hard to pull off a consumerist explanation of producer protections such as Jacoby has undertaken. Understanding consumer interest as an interest in low prices makes it kind of hard to understand TM at all.

You can reconcile all this with consumer interests: It’s really all about identity politics. What is a consumer’s identity? Low prices are not the only possible objective for consumer interests.

Zimmerman: Dilution is about protection for corporate owners’ rights to locate themselves in sections of my brain and not be disturbed in their sovereignty – this just seems creepy to an American.

Whitman: We seem creepy to them too.

Carroll: TM law enables product differentiation so that products don’t become commodities. The consumer interest is then fully satisfied; why add dilution?

Whitman: Differentiations aren’t all the same. The claim is that the artisanal sector needs specific protection to avoid perishing. He has some sympathy for this. Artisanal goods are much better in Europe – you can’t get a good baguette in NYC, which tells you a lot.

Jacoby: Creepy as it may sound, the picture of an owned brain is not too far off from what MRIs now show about neural networks in the brain. We do see physical correspondence between brand recognition and neurons. (Comment: There is a big difference between ownership and occupation. Providing a legal right to prevent others from ousting the TM owner from consumers' neurons is a huge leap from identifying parts of the brain where brands are remembered and processed. I do not understand why MRIs showing that the name Coke triggers good memories provide a sounder basis for dilution law than previously existed; we already knew that trademarks were associated with brand value in the mind -- where did we think that came from if not some physical correlate in the brain? Knowing where that correlate is doesn't change any of the normative questions.)

Mühlendahl: The European justification for harmonized IP is a single-market-based approach to create equality across nations. There is no consumer protection justification; IP enhances consumer welfare in the broadest sense but isn’t directed at doing so. You do this on a property theory, as for patent and copyright, creating an ecology of competition across legal systems.

Congratulations to Rochelle Dreyfuss and NYU on an excellent conference.

Dilution and free speech: further comments

At Rochelle’s kind invitation, I talked about my work on cognitive psychological explanations of dilution, which are offered in support of the consumer protection/mental search costs theory. I referred to Diane Zimmerman’s point (2): First Amendment doctrine makes it very hard to regulate non-false speech, but easier to regulate false speech at least when the speech is also commercial. Dilution turns out to target the Achilles’ heel of the true/false divide. In what way is the name “Tiffany Strip Club” either false or true? In what way is it an opinion? It isn’t even, I think, an idea. So we have no real guidance on which side of the line to put it – no positive theory of why it deserves full First Amendment protection, but also no negative theory based in First Amendment law of what makes it harmful. Relatedly, we have no good theory for distinguishing speech that changes preferences from speech that is misleading in that it leads people to make decisions based on bad reasons, reasons that we think are incompatible with their objective best interests. An increase in meanings that makes people have to think harder about “diluted” brands, or makes them like them less in the case of tarnishment, can be characterized as interference with preferences or a change in preferences, and it’s probably more consistent with recent First Amendment commercial speech doctrine to call it the latter. In that case, we should be deeply skeptical of trademark owners’ claims that the stability of meaning is a neutral principle or one that can justify suppressing others’ nonfraudulent speech.

Jane Ginsburg: The exclusions in the current act should deal with many First Amendment issues, so what problems are left?

Zimmerman: What’s a commercial use? Parodic trademark uses: if someone calls a coffee shop Lowbucks, she thinks there’s a speech issue. (See the recent Chewy Vuitton case, which was decided under general blurring theory rather than the idea that the exceptions applied, which they may well not have done.) She hopes it will be a very broad range, which will reduce the risks, but it’s not clear what will happen. State statutes also remain troubling.

My response invoked Cincinnati v. Discovery Networks: you can’t regulate commercial speech and not noncommercial just because it’s easier to regulate commercial speech; there has to be some nexus between commerciality and harm. Dilution law doesn’t have that; the exceptions swallow the rule. I just don’t think the law is rational enough to survive First Amendment scrutiny unless commercial dilution can be conceived of as misleading commercial speech.

Dianne Cahill: Babewatch/Baywatch – what if it’s on T-shirts?

I think it would be obviously noncommercial speech for First Amendment purposes; hard to tell if it’s a trademark use; harder to tell which rule wins.

Zimmerman: Right of publicity cases have put a lot of pressure on this, considering T-shirts, buttons, etc. as commercial uses, though courts may be starting to recognize that this is problematic.

Halpern: Congress enacted the TDRA with full knowledge of Kozinski in the Barbie case; one therefore has to intepret “commercial” in the First Amendment sense – anything other than the offering of a commercial transaction is excluded. That doesn’t deal with concerns over trade names (and things like Chewy Vuitton), but it means the law is narrow. The courts have also bought into Rogers v. Grimaldi, protecting artistic works with a higher threshold for confusion. Limitations have also been applied even to state dilution statutes.

Dreyfuss: Our idea of rights in gross/non-stockpiling of marks has a First Amendment dimension; as we allow rights in gross and property-like concepts, we move inexorably towards less concern for free expression, especially in commercial contexts where defendants are trying to communicate with consumers. In Europe it may be different, and in fact property concepts may be moving towards greater recognition of human rights.

Dinwoodie: Would the Gay Olympics case be decided the same way today? Does the copyright jurisprudence (Eldred) have any indications for us, in its discussion of traditional contours?

(My answer: The USOC would lose, at least 7-2.)

Zimmerman: Her gut feeling is that the Court has tended to see IP cases as isolated little bits not affecting the overall environment. Eldred contributed to a growing public and judicial awareness that you can’t look at these little carveouts, like taking “Olympic” and giving it to the USOC, without considering the overall impact on speech. The Moseley Court would not write the Gay Olympics case; it would take a broader view.

Kur: Free speech works differently in Europe. We normally expect that legislation contains within it everything you need to decide a case. The fact that France, the civil law country par excellence, found it necessary to go beyond its TM law and appeal to its constitution, shows that the problems are difficult and that, though resources exist to deal with free speech concerns, the TM law is not properly configured to deal with them.

She thinks the outcome of cases under US and European law will be reasonably similar, with good and bad decisions.

Carroll: The First Amendment protects freedom of association. The famous brand owner doesn’t want to be associated with a parodist etc. – shouldn’t it have the right? The Ivory brand is part of people’s self-definition. So why not prohibit people from opening the Ivory Hotel?

My answer: Because the free play of meaning has value and doesn’t need independent justification. The burden is on the regulator, not the speaker, as Zimmerman said. (What is the difference between giving Ivory a right against tarnishment to prevent negative associations and giving P&G a right against picketers outside stores selling its products? First Amendment negative association rights are about not having to take people or ideas into one’s intimate circles, and occasionally not into one’s communal organizations; they do not provide a right to avoid all “associations,” however defined.)

Heins: We still need to worry about dilution claims that don’t get to court and don’t get decided by Judge Kozinski. Gatekeepers in the world of expression, including insurance companies that require filmmakers to certify that every last image has been licensed before they’ll issue insurance. This allows pervasive control of speech without any plaintiff ever winning a dilution case.

Bone: If we suppose that the noncommercial use exception is expanded to cover the dilution version of Saderup, T-shirts in general will be okay under dilution law. In that case, plaintiffs may just shift over to likelihood of confusion claims, as in the Mutant of Omaha case (this is enabled by the fact that the use as a mark requirement is less well settled in confusion cases).

Zimmerman: This is a real risk, and should make us think about the definition of harm that we’ll accept in confusion cases as well.

Mühlendahl: There’s a difference between criticism, comparative advertising, etc. and simply using a mark to sell a different product. Why deny protection in the one case merely because you deny it in others? Isn’t American local free speech doctrine simply out of step with international law? No constitutional court in Europe would find local free speech doctrines to allow the Ivory Hotel. (I should say that I agree that mine is a local/doctrinal conclusion; one could have a perfectly well-functioning system of free speech that allowed silly laws. It is my contention, however, that First Amendment doctrine, moving as it has towards a regime that severely limits the government’s ability to regulate markets by controlling the speech that takes place in those markets, logically must imperil dilution laws.)

Kur: European cases in which free speech defenses are raised are in nontraditional cases.

Dreyfuss: Isn’t the Arsenal case troubling?

Mühlendahl: Not at all. Selling unlicensed goods when someone else owns the TM interferes with that person’s livelihood.

Dreyfuss: For us the idea that a fan can’t display loyalty without paying Arsenal’s price is troubling.

Mühlendahl: You can have your mother make you a jersey; a third party just can’t sell you the merchandise. (Comment: Why can’t Arsenal proceed against Mom, or Mum? She is helping you avoid the customary price and interfering with Arsenal’s livelihood.)

Kur: America was first to protect sports marks licensing. But go back to Justice Laddie’s point: This is not a use that tells anyone about commercial origin or licensing.

Mühlendahl: Laddie lost that one.

Christine Haight Farley: Victoria’s Secret was in the news – an environmental group argued they were destroying Canadian forests by sending out a million catalogs a day. Elizabethtown, KY where Victor’s Little Secret was, has a population of 15,000 and receives 39,000 VS catalogs. So the environmental group ran an ad with a lingerie-clad woman in angel wings with a chainsaw, surrounded by bags with the VS logo, “Victoria’s Dirty Secret.” VS didn’t sue for infringement or dilution, but instead agreed to change their practices. Why not sue? Is VS worried because of the new act’s exclusions (noncommercial use; nominative use)? Does VS think it didn’t benefit from the publicity of the last suit? It matters a lot whether you think of this as a TM case or a speech case. To a dilution true believer, this is a dilution case. You don’t need to harm VS to make a general point about catalogs. So it matters a lot what the presumptions and categories are. For true believers, strong marks are seen as simultaneously delicate. We should say that TM law just doesn’t have a place for such claims unless the defendant is using the mark as a designation of source for its own goods and services.

Ginsburg: There are many optimistic things to say about the TDRA exclusions. Unlike copyright’s fair use, they are specific and allow you to tell someone who sends a C&D letter to go to hell. They also have a potential to drive growth in TM, by referring to “any fair use, including nominative or descriptive use,” other than as a designation of source. These are all judge-made concepts for dealing with confusion law, now statutorily blessed. Also this raises the question of how broadly to read “as a designation of source.” If you want to use Lowbucks as your café name, you have a problem under this statute (raising the question of a constitutional right to free ride; this is where the US/EU breakdown occurs), but that’s a very narrow range. The spillover effects on confusion will be interesting to see.

Rochelle Dreyfuss on dilution

Rochelle Dreyfuss, NYU School of Law: Her general doubts about extensions of TM law including initial interest confusion, post sale confusion, and dilution, have been mentioned by many people. V’s Secret was good because it said “If you believe in dilution, show it to me – prove there’s a harm that needs to be alleviated.” The need for limits on TM is especially clear on the internet, where people are trying to attract audiences. In real space, people are sometimes allowed to “free ride” on others’ territory to reach audiences.

Other reasons for skepticism about dilution: TMs are capable of generating goodwill, but Schechter never asked whether people would buy Dupont shoes. The more dominant you make your mark, the less likely it is to be subject to free riding in distant markets.

The ultimate question about dilution is its effect on customers, which Jacoby addressed. Consumers’ rationality is bounded. Consumers may satisfice and not look further after a moment of recognition. That’s part of what TM holders are trying to capture: the ability to be able to present consumers with a product they’ll buy automatically. But the moment taken for the consumer to search through her own mind is when she considers other products and asks whether there’s a better product – when the unseen hand of the market rummages through her brain. So depriving consumers of that moment may not be efficient overall even if it helps the TM owner. If consumers aren’t going to compare products, there’s no need for goodwill, only a need for advertising/branding.

She questions the entire quest: the idea that we can get rid of overlapping usages and create a marketplace without confusion or dilution. Interjurisdictional cases, for example, will always be problematic. Different products start to converge, as with Apple Music/Apple Computers. Geographic indications overlap with TMs. Add to that all the exceptions that already exist allowing a mark to be reproduced by those who don’t own it: newsworthiness, political uses, fair uses, comparative ads, noncommercial uses. Consumers will always have to devote effort to deciphering marks. Is the thrust of dilution entirely wrong? Shouldn’t we be trying to figure out how to help consumers resolve ambiguity rather than quixotically trying to suppress it?

European perspectives on due cause and free speech

Brief discursion: Recent Court of London decision on comparative advertising. The claimant had static images that were registered marks using bubbles. There was strong secondary meaning for bubble imagery both static and moving. The defendant wanted to enter the claimant’s mobile telephony market and engaged in aggressive comparative advertising. It used different bubble imagery in its ads to compare itself to claimant. Comparative advertising in the EC must comply with a large number of conditions – it must objectively compare material features, avoid confusion, avoid discrediting or denigrating the competitor’s trademarks, and avoid taking unfair advantage of the competitor’s marks. The comparative ads used bubble imagery to suggest that the claimant’s services were much more expensive than the defendant’s. (There were three other ads comparing the services to other competitors’, also evoking their marks, but those competitors didn’t sue.)

This ad ran for 10 days and has turned into a legal WWIII. The London court approved the ad, but it will take another few years for it to make it all the way through the EC courts.

Annette Kur, Max Planck Institute, Germany: Famous EU case: Greenpeace did a “Stop E$$O ad.” A free speech interest obviously there conflicts with Esso’s TM right.

Ask the opposite question first: When does TM protection not interfere with other interests? (1) Where the supply of new signs is unlimited in principle; (2) where protection is necessary to secure truthful consumer information as to the commercial origin of goods or services. It follows that where the supply is limited (3-D forms, descriptive terms) and where there’s no concern for truth (as when there’s no confusion) there are reasons to be concerned.

Specifically, when the use is referential – indicating the source of what you’re talking about, but not the source of your talk – there are special concerns for speech.

EC law only directly addresses the dissimilar-products situation, but those cases aren’t particularly burdensome for countervailing interests, and so Kur isn’t going to talk much about them.

Extended protection for strong marks is also granted with respect to similar goods. This can be a problem for things like color and shape because the supply of those signs is more limited, and thus extended protection/broad definitions of likely confusion can hamper free competition. For example, the Nike swoosh case (D’Nickers) discussed earlier seems to give protection to a design element. A German case gives protection to the color violet for chocolate and found unfair competition/likely confusion when another party used violet for cookies. The protection here really went to an extreme.

Free speech interests: There are concerns involving parodic marks, such as Babewatch for videograms with sexually explicit content. Is that a use made “without due cause”? There is opportunity to argue in favor of parody, at least when the goods are dissimilar and extended protection is sought. When the marks are used for similar goods, however, difficulties arise because European law doesn’t have a specific parody exception or doctrine that incorporates due cause into the likelihood of confusion analysis.

The most prominent problems arise where “use as a mark” is doubtful, as in the Greenpeace campaign in which Greenpeace wasn’t using E$$O to sell goods. The meaning of “use as a mark” under EC law is unclear; the French court in the Greenpeace case didn’t even see it as a requirement. The ECJ has suggested we need use as a mark when infringement is an issue, and in the new “bubbles” case one issue will be whether the ad is using the bubbles as a mark. The general tendency is to assume that as soon as a mark is identifiable as someone’s mark then there is sufficient use as a mark. Once that is taken as established, there are only a few exceptions to liability. In the E$$O case there was a need to take speech interests into account, but no easy way to do so, so the court had to reach out to the French Constitution to dismiss the case.

Example from German case law: violet-colored post card with a poem on it, attributed to “Rainer Maria Milka” (Milka being the chocolate company with the violet wrapper). The German court had to refer to German constitutional principles of freedom of art to dismiss the case, rather than finding an internal TM perspective. This causes fragmentation because each country has its own free speech principles, and when it comes to community TMs there is no European Constitution in place to help out. The European Declaration of Human Rights is a possibility, but its applicability is unclear.

Once you’ve acknowledged constitutional rights play a role, they need to be taken seriously. You can’t just say we can ban the speech when we don’t like the form, or when the person who’s the target of the speech is offended. In German law, one decision pointed this out very clearly: the mere fact of commercial use is not a per se reason to be stricter with regard to the standards applied to the allowable language. Of course when consumers are misled or there’s serious harm to a competitor, that’s different, but just objection to the language isn’t sufficent.

One example from earlier German law: the BMW TM was converted into a name that suggested becoming more sexually active, used on a sticker. It ended up in the chamber of the court that dealt with free speech, and the court said that the use didn’t target BMW’s performance in the commercial sector and thus couldn’t be prohibited. (Comment: note here how the cognitive/psychological theory breaks that distinction down – unrelated uses can affect evaluations of the TM owner.) People at the time were sure that if the case had gone to the commercial chamber it would have come out the other way; this is an example of how free speech concerns change the calculus a lot.

Nominative/referential use isn’t obviously a use made with “due cause,” but may be treated as a per se infringement as a use of an identical mark for identical goods. Comparative advertising, as with the cellphone service ad, raises similar problems.

Because there are no clear free-speech exceptions, we are left with many problems, such as: Is it admissible to sell scarves saying “I am an Arsenal fan” with truthful indications of source? That is, the seller goes beyond printing the logo and incorporates it into a truthful statement of fandom. What about using the logo on a book about the club? Selling paintings of players in their uniforms? Using the logo in an ad comparing Arsenal’s performance with that of its Chelsea rival?

NYU dilution confernence: Diane Zimmerman

Session 3: Countervailing considerations. Due cause, free speech and effective competition.

Diane Zimmerman, NYU School of Law: Zimmerman doesn’t do TMs, but has a longstanding interest in free speech. From that perspective, dilution looks odd, which may help explain American hostility to dilution. TMs are communicative goods. Thus they are potentially First Amendment subjects, and courts have begun to realize this when, for example, an artist incorporates a Barbie doll into a photograph.

The cases fall into a broader pattern: an upsurge of so-called food disparagement laws, which made Oprah Winfrey go to the Fifth Circuit to get off the hook for saying that she was off hamburger for life after learning about mad cow. Creeping into the cases is some discussion of how a use of a TM can be justified, which is similar to discussions of fair use in copyright. But note the posture: The reason you get a chance to use the mark is justification; absent that justification, you have no right to another’s property. From a First Amendment perspective, Zimmerman asks how a TM comes to be property in the first place. The Constitution recognizes copyright and patent, but not TM.

The Supreme Court treated TM like property in the Gay Olympics case, but that was decided at an unusual time, the nadir of protection for commercial speech. There was also still a failure to see that there was a relationship between things called “speech” and things called “property.” Since that time, awareness of the potential risks to speech posed by IP law has increased. She sometimes wonders whether V’s Secret was really a nascent First Amendment opinion as much as it was a statutory interpretation opinion.

What are the relevant First Amendment principles? (½) The First Amendment doesn’t like injunctions. (1) Individuals and entities are presumptively free to speak; one is not required first to offer a justification or a need to speak. The burden is on the regulator. (2) The burden of supporting the regulation will virtually never be successful when the speech is not false – if it is opinion, idea, or factually accurate. With commercial speech (advertising, which does not include all the things TM law assumes are “commercial”), it may be easier than regulating noncommercial speech, but it still requires more than a rational basis – a substantial interest backed by proof that the regulation both works and is limited in scope to the need identified. (3) Speech that is false or misleading has less claim to constitutional protection. There needs to be something more than falsity/misleadingness for regulation to kick in – where the falsity has led to some sort of palpable harm. Proof of falsity is a burden borne by plaintiff.

Thinking about dilution in this framework: The best analogy is one to dignitary torts such as defamation. Dilution looks different from even the pre-First Amendment common law tort of product disparagement, which was very hard to prove, requiring proof of falsity, damage, and intent. Constitutionalization of defamation law has not improved things from the commercial plaintiff’s perspective, because it requires proof of knowledge or recklessness and often proof of damage.

So, dilution may not have a legal leg to stand on. It is out of sync with comparable laws. No one has had any problem striking down “veggie libel” laws, even though we know that the 60 Minutes Alar program cost apple growers a lot of money. We know that there’s harm in such cases, but protections for free speech carry the day nonetheless. The trajectory of the Court’s commercial speech cases is that more and more is being asked of the state to justify regulations on commercial speech.

This may help us understand why dilution has generated so much tension in the courts. It’s not just that it’s a law looking for a justification – in other words, not just a policy concern. Rather, as we increasingly connect IP with free speech, dilution seems odder and odder. Zimmerman was amazed that courts aren’t raising free speech issues on their own, without prodding by lawyers, according to Long. It’s odd to have these little pockets of law that are unconnected to broader free speech doctrines.

Barton Beebe and discussion on dilution

Barton Beebe gave a brief presentation on his empirical study of TM confusion cases and how the multifactor test for confusion plays out there, in contrast to Long’s paper on dilution. He only looked at reported cases, though.

Which factors are important? Which irrelevant? Do they tend in practice to stampede, that is, to be treated by judges as all pointing the same way? How are surveys used? What’s the role of inherent distinctiveness? The answers may be relevant to predicting results under the TDRA.

Highlights: 2d Circuit dominates, accounting for 33% of TM opinions, and the 9^th Circuit was second with 16%. Impressive circuit variation – district courts preliminarily enjoined defendants 41% of the time in the 2d Circuit, but 69% of the time in the 9^th Circuit. Of 331 district court opinions, 65 addressed survey evidence, 10% crediting that evidence and 7% ruling in the direction suggested by the survey. But in the big cases, survey evidence is presented; surveys are not evenly distributed. Only 6 cases drew an adverse inference from failure to present survey evidence. (I have direct experience with these last two statements, having worked on a huge case between enormous drug companies in which plaintiff had a dilution survey, defendant had a confusion survey, and the judge drew a negative inference from plaintiff's failure to conduct a confusion survey.)

Beebe found a curious result on inherent distinctiveness: judges use the Abercrombie spectrum about half the time, but are fairly wary of it. Actual strength v. inherent strength: Some cases found divergences between actual and inherent strength (one strong, the other weak), and in almost all of these cases, the commercial strength judgment trumped the inherent strength judgment. Beebe thinks this is a good thing. It goes to the TDRA’s fame factors, which include one empirical factor (actual strength) and a bunch of formal factors (inherent strength), which is sort of weird. Likewise with the blurring factors, one is empirical and the others are formal.

Key factors in confusion cases: Similarity is dispositive; defendant’s intent is almost dispositive. Then follows proximity of goods, actual confusion, and strength. Courts tend to stampede the factors in the direction of their decisions.

Kur: Is there any empirical data from the EU similar to Long’s work on US courts?

With respect to the Intell case, if consumers think (correctly) there are two companies with that name, so what? What harm does that do? Likewise, with the Wal-Mart case, is it surprising or troubling that consumers thinking about Wal-Mart said that the Wal*ocaust shirt made them less likely to shop there, given that they may have read the shirt as a criticism of Wal-Mart’s practices?

Hobbs: He isn’t aware of any statistics from the EC, but he’s particularly interested in the effect of disparity between goods and services. His intuition: the further apart the goods and services are, the harder it is to convince the tribunal that there’s any harm to the plaintiff or benefit to the defendant from a similar use. EC TM law won’t work as an algorithm; we have to treat it as identifying a series of factors to be weighed in any given case.

In CTM registration decisions, he detects a clear trend in favor of claimants who are seeking extended protection. But he cautions that the law in Europe doesn’t seem to be the same concept as the American idea of dilution: we are divided by a common language.

Long: Product similarity: She didn’t specifically measure that, but subjectively her sense is that people were much more likely to sue when the products were in similar or closely related markets. She’s not sure how that affected likelihood of success, though she can think of more injunctions granted in related fields than in unrelated ones. Also, courts are concerned about granting injunctions that would affect speech, as with Wal*ocaust. Courts were sensitive to that issue, but only to the extent to which the parties brought it up; free speech defenses depended on good lawyering, since courts weren’t willing to go out on a limb without support from the defendant.

Jane Ginsburg: Picking up on the Hobbs remarks, we don’t know what we mean by dilution. The Intel survey point is spot-on: knowing that two entities share the same name doesn’t show a link between them, nor does it show impaired distinctiveness unless we think that “more than one” counts as impaired distinctiveness, which is a completely circular definition.

Inherent distinctiveness is or should be relevant even though actual distinctiveness is the trump. If your mark consists of a descriptive term, you should get less protection even if it’s well-known, because the costs of extending protection to a descriptive mark are greater (even if the benefits are the same).

What fascinates her about Beebe’s study is the significance of intent, which she thinks should be irrelevant if we take consumer perception seriously. There’s always been the cute shortcut of assuming that that the defendant succeeded in its intent, but she thinks that’s facile. If intent is key, then we’re closer to Dinwoodie’s unfair competition regime perhaps than we pretend.

Jacoby: Distinctiveness is like pregnancy: either you are or you aren’t. (I’ve got to say, I wonder if the people who say there’s no such thing as being a little bit pregnant have actually been pregnant. There is a big difference between not pregnant and pregnant, but also a huge difference – medically, experientially, and legally -- between one month pregnant and nine. And while roughly 2/3rds of pregnancies will come to term in the absence of intervention, one dilutive use is not naturally going to progress to use on a zillion products.) If there’s a second Intel, then there’s a third and a fourth and you’re no longer distinct.

As for the “so what” objection: With respect to tarnishment, there is a dramatic impact from things like Wal*ocaust – as with the Anheuser-Busch “Michelob Oily” case, where people said they were much less likely to drink Michelob after seeing the parody ad. On a national level, the impact on customer patronage can be great. (Comment: No one followed up with the survey respondents and see how often they’d drunk Michelob/shopped at Wal-Mart three months after seeing the ads. Their unconsidered statements of future intent are terrible evidence of actual purchasing behavior.)

Michael Carroll: Given that dilution is always paired with confusion, is it the case that dilution works to bolster weak confusion claims – that is, is there judicial acceptance of or hostility to dilution when the plaintiff’s confusion case is weak?

Long: Courts are not necessarily hostile to dilution per se, because they don’t know what the heck dilution is. So courts are responding to particular plaintiff presentations. Early on, courts tolerated more TM owner behavior than they did later. Consistently, courts don’t like TM owners using dilution as a property-like theory. They’re also hostile to use of dilution to get a market advantage against a competitor. In the early days, there wasn’t as close a relation between the strength of confusion and dilution claims: you could have strong confusion claims and win on dilution anyway or weak confusion claims and win on dilution anyway. By the end, you get injunctions where the confusion claim is very strong or the confusion claim is very weak; you don’t get injunctions in the middle of the spectrum.

Mühlendahl: EU law seems to be developing in the direction of multifactor tests for similarity and for likely confusion. Intent isn’t a big part of the analysis because of the relative absence of discovery (not to mention the fact that rights are often assessed without use). So EU adjudicators end up relying heavily on inherent and acquired distinctiveness and abstract assessments of similarity.

Dreyfuss: Asked Jacoby to comment on the effects of changing the number of milliseconds it takes for a consumer to recognize a mark. A few nanograms of polonium just killed someone, so it’s not crazy to think milliseconds matter.

Jacoby: In consumer research, the first brand someone mentions is the one they’re most likely to buy. Anything that diminishes the speed of retrieval and makes a brand less likely to come to top of mind in a product category will correlate with decreased purchase likelihood. Consumers spend almost no time in front of a frequently purchased good – 4 seconds. Information provision does not equate to information impact; consumers don’t spend much time extracting information unless it’s a nonfrequently purchased good or service. Thus lookalikes may be enough to get purchases. It’s not the milliseconds but their ultimate correlates that are the issue, and research on that is ongoing.

Marjorie Heins: The Michelob case got her interested in IP. It seems so clearly a critique of Michelob, and TM was used to circumvent defamation law. She thinks the Wal*ocaust website had a similar purpose. It’s worth pointing out that market harm resulting from criticism should not be the kind of market harm cognizable under IP law, just as we distinguish between kinds of market harm in copyright’s fair use analysis.

Sheldon Halpern: The Michelob court said that 20% of the respondents were confused and thought that Michelob was selling Michelob Oily – we are so much more comfortable talking about likely confusion. It’s with dissimilar goods that we get very uncomfortable. (Comment: Not sure who’s the “we” here.) In the “death of a thousand cuts” theory, any other use is going to constitute dilution; it’s standardless. So what would the EU do with a book called “Just Think About It”? That’s close to Nike’s mark.

Hobbs: To win, I would have to show theft of an advertising benefit, that the trigger function of Nike's TM gives the book selling power it wouldn’t otherwise have. There is authority that merely calling another’s mark to mind – a mere mnemonic effect – is not enough to trigger liability. But we have no idea, then, where the line is to be drawn.

Bone: To Long: what about possible settlement effects? (E.g., effect in the Intell case.) Especially with the initial success spike in cases, lawyers can use the changed legal rights to get different settlements.

Long: She controlled for that by including filed but settled cases.

Bone: Unless you have a really strong view of consumer autonomy, you don’t really care about confusion but about confusion’s harms. Confusion as to affiliation is just unlikely to do harm. Factors that are probative of harm, such as mark strength and defendant's intent, might be the most important.

Hobbs: Intent isn’t necessary to liability because the consequences are the same whether intended or not, but it’s a one-way proposition. Intent can be inculpatory – who knows better than a trader the mysteries of his own trade? One asks, could this have happened by accident? If not, why was it done? That line of inquiry leads you toward particular outcomes.

Herbert Schwartz: Judges make up their mind first and then evaluate the factors and the surveys later, and TM cases are much more that way than other IP cases. Judges feel very competent to decide TM cases based on their gut reactions. Brief comment on the Hershey case, with which he was involved: That was an unusual situation, both because it was a use on similar goods and because it involved the M&M mark which was itself so strong that it dominated when added to the trade dress.

Jacob Jacoby on dilution

Jacob Jacoby, NYU Stern Business School: His topic was the use of dilution research in court, and its potential applications to the new federal law.

Things that can be measured: fame, dilution by blurring, dilution by tarnishment, and (the opposite of blurring) free riding, possibly. He’s included free riding in his measures after Posner’s explanation in Ty v. Perryman.

Surveys can measure fame: “In your opinion, what are the most famous golf courses located within the US?” Used to establish fame in the Pebble Beach case, which was about both dilution and confusion. The question specifies fame and mentions the product category, but not the brand name. It relies on unaided recall and permits several answers.

With 13,000 regulation 18-hole golf courses, 87% of respondents mentioned Pebble Beach (1^st most mentioned), 25% mentioned Pinehurst (4^th most mentioned).

TM owners need to benchmark fame before dilution starts, since the statute says fame needs to preexist the diluter's actions.

Measuring blurring: Intel Corp. v. Intell Management & Investment Co. (2004; settled out of court). Defendant is developing major high-rises in NYC right now and does development nationwide. Intel has a very high brand value; Business Week ranked it as the 5^th most valuable brand in the world.

Universes to test: real estate brokers/agents, tenants and prospective tenants of Class A commercial properties.

A typical survey approach uses one interview to expose respondents to the mark then measure dilution. His objective: better simulate real-world events. First part: expose the Intell name as universe members would come across it in promotional materials, showing respondents 3 sets of materials about developers, in person, for a study ostensibly about developers. Intell was changed to Ibell in the control group.

4-7 days later, a different firm called the respondents for an ostensibly different telephone survey. Initial questions used “Chevrolet” to ask whether consumers knew whether only one company used the mark “Chevrolet.” Then they were asked about the name “Allied” and whether it was associated with only one company. Then they were asked about “Intel.”

If exposed to Intell, 11.4% said that they knew of two companies, whereas the Ibell respondents were unanimous that they knew of only one company. That seems like evidence of blurring.

Now, Intell operates under the name Extell pursuant to settlement.

Wal-Mart case: a guy who sells promotional goods like T-shirts and has a website using the term “WAL*OCAUST,” with a blue background. The shirts were enjoined, and the guy is now using WAL*QAEDA. One Wal*ocaust shirt uses the term above a German eagle with its talons on a smiley face like Wal-Mart uses. Test shirt: Zal*ocaust with eagle over yellow ball.

So how does this fare under the new statute? Blurring allows the court to consider “actual association between the mark or trade name and the famous mark,” or the mental/associative link in psychological terms.

Question Jacoby asked in the survey: If anything, what does this shirt make you think of? What it is about the shirt that makes you think that?

93.2% thought of Wal-Mart (based on the Wal- and the star)

21.5% shown the control, which was a pretty minimal change, thought of Wal-Mart

71.7% net association

What about tarnishment? Actual harm or economic injury need not be shown. So, in this survey, respondents were asked whether the shirt made them more/less likely to shop at Wal-Mart (and given multiple options including neither more nor less likely, and options were rotated). 20.5% (test) v. 2.5% (control) said they were less likely to shop at Wal-Mart as a result of seeing the shirt.

What not to do: Hershey v. Mars trade dress case. The case required two surveys, first for secondary meaning of Reese’s trade dress, and second for blurring. Test protocols for the first used just the colors and layout, not any actual words. 94% of respondents associated the trade dress with Reese’s even without words (and without font!). Only 2% thought that the altered trade dress of the Peanut M&M’s was M&M’s, while 49% thought it was Reese’s. The court rejected this survey even though it accepted that the trade dress has secondary meaning, reasoning that no one goes out to buy the altered products without the word marks. He should have tested the product as it was sold in the marketplace.

Conclusion: The foundations of TM law are essentially psychological in nature. He’s written extensively about this.

Geoffrey Hobbs on dilution

Geoffrey Hobbs, QC, The Inner Temple, and Appointed Person, UK Patent Office (hearing appeals from the Registrar of Trade Marks): If you have 20 TM lawyers, you will get 35 theories of what dilution is – it’s essentially incapable of definition.

EU legislation appears to create 3 bases for liability: (1) Identity of sign & goods = presumption of existence of confusion. (2) The marks are different in one dimension or another, but there’s still a likelihood of confusion, which concept has received expansive definition in the ECJ. (3) Extended protection, which was optional but was adopted by all member states, for cases in which the marks are similar but the goods/services aren’t.

You could conceive of this as a core of protection (presumption) with a penumbra (likelihood) and then a second penumbra. The second penumbra would involve nonconfusion, but still implicate the harms which confusion can bring, justifying a remedy. There are generally two types of harm: the defendant can attract business by using the mark (how does this harm the plaintiff if the plaintiff is a noncompetitor?), and the defendant can generate aversion to the mark by mishandling the product/service. These things can happen without confusion.

That penumbral theory turned out to be too simple – the ECJ deleted the word “not” from the provision for extended protection covering situations where the goods/services are “not similar.” Now any mark with a qualifying reputation is entitled to the remedy of extended protection no matter what the accused goods/services are. If you have a reputation, you win if you have confusion and you win if you don’t have confusion.

People persistently allege confusion and fall back on extended protection, but this is gradually changing to a default to an extended protection claim. Significant is the low level of reputation required – it doesn’t require the mark to be “well-known” under the Paris Convention. You just need enough reputation to have a customer base/secondary meaning. It becomes circular: if you have enough of a reputation to be injured by the defendant, you have a claim. It’s a self-fulfilling prophecy.

Next question: how close is too close? It’s conventional to say that identity/virtual identity is the strongest claim, and differences between the marks make the claim harder. But there can be a lot of differences and still a successful claim: the D’Nickers sign was unregistrable because of the Nike swoosh, even though there was not enough similarity to give rise to a likelihood of confusion.

(Comment: to an American, this sounds crazy -- we think of dilution as requiring more similarity than confusion, precisely because the right is broader.) Hobbs suggested that a lower standard of similarity in extended protection cases is the inexorable requirement of the absence of a confusion requirement. Unless the superior courts put a brake on this, extended protection will continue to proceed in this fashion.

Extended protection is very useful. It gets rid of overtechnical assessments of similarity for infringement purposes. Now, you don’t have to get so worked up about comparing the marks and just find general similarity. If someone sells Genuine Fake Rolex watches, there’s no coherent claim of confusion, and it’s a relief not to have to try to prove confusion.

Next battleground: Whether Moseley will spill over to the EU. Dilution liability is ultimately incapable of proof. A court opposed to liability can always raise difficulties of proof. The crucial word from the case law, infuriatingly vague, is “link” – is there a “link” between the two marks? With translation issues, perhaps the right thing to do is speak of a “connection” in the mind of the consumer. The Adidas court picked up on both of these, speaking of situations in which similarities lead the public to “make[] a connection between the sign and the mark, that is to say, establishes a link between them.” Nobody knows what that means, but it is circular: courts treat the link as existing if consumers’ mindset changes in a way that produces the consequences we don’t like (free riding or damage to reputation). (My comment: Of course free riding or damage to reputation are generally not proved with evidence but presumed, so the idea that there is something real underneath is kind of delusional.)

The assessment is essentially psychological – what impact will the sign have on peoples’ minds? When we find confusion, we’re again making a psychological assessment. The problem: we know too much. By the time we ask the question, we know there’s a question, but other people may not, and we somehow have to try to put ourselves in a position of ignorance, which is difficult. Courts simply don’t like the concept of a psychological assessment, and that’s why they recoil from extended protection. Calling for straight-up unfair competition analysis is a response, but it wouldn’t solve this ultimate problem: what is going on in a particular case?

Mechanisms of proof: He described a German colleague’s belief that dilution was essentially a matter of law. One uses the hypothetical “average consumer” for the purposes of testing whether a defendant has gone too far. He doesn’t like this imaginary “average consumer.” We’re looking for people whose real-world thoughts we can take into account. This will come to a head in the EU, because English courts are analyzing the matter differently from German and others.

Surveys: We must learn to live with and love them. But they substitute the causation of the questionnaire for the causation of the defendant’s use in the marketplace. There is no survey that can’t be destroyed by analysis. There’s another reason surveys fail: Judicial self-preservation. The judge wants to be the one to rule on liability, not have the survey do so for him/her. Thus, the judge will always do an independent analysis and find “support” for it in the survey.

Experts: Practical experience on brand extension work is key. Anyone who works on brand extension can tell you that it can be done right or wrong – if done right, the defendant will steal value; if done wrong, the defendant will harm the plaintiff’s reputation.

Clarisa Long on dilution

Session 2 of the NYU conference on dilution: Protection in practice: Legal and evidentiary tools for defining the scope of dilution law.

Clarisa Long, Columbia University School of Law: What we see with dilution is push and pushback between Congress and the courts of roughly equal magnitude, and relatively quickly; we don’t see this in patents (where courts have been dominant) or copyright (where Congress has been dominant). In TM, courts have been actively shaping the law and Congress has responded.

Long has done empirical work on enforcement of the FTDA over its first 9½ years, looking at reported cases, set forth in greater detail in her excellent article on the subject. Except for willful dilution, the only remedy in a dilution case is an injunction, which makes a nice empirical on-off measure of success. There’s a sharp and steady decline in willingness to grant injunctions for dilution. It starts at about 54% just after enactment, going down to 12% by 2005. She also sampled 742 unreported dilution cases from 10 district courts around the country with the largest TM dockets. In unreported cases, the same pattern repeated: almost 50% at the beginning, down to 14% by 2005.

She took out domain name cases to see if cybersquatting was the cause, but the same general result persisted and in fact became more pronounced.

Questions: What kind of doctrinal moves are courts making? And why are TM owners bothering to bring cases? If the enforcement is dropping that fast, the parties should internalize that and the quality of claims that are brought should improve.

For the first few years, courts say: "we don’t like the result in this case, but we’re following the terms of the statute." From 1999-2001, you start to see more rhetoric saying that Congress can’t have intended this result, refusing to grant an injunction but not really explaining why. After that, judicial creativity starts to reveal itself and courts add flourishes: no protection for non-inherently distinctive marks; no protection for trade dress; no protection without actual dilution; etc. Courts also steadily raise the ground level by raising fame requirements.

Why are parties continuing to bring dilution claims if they know or should know the deck is stacked against them? Purely subjective sense: The quality of the claims did rise a little, but not enough to offset the downward slope of judges’ unwillingness to grant injunction. Nobody pleads dilution as a standalone claim. It’s with at least one other thing, usually confusion, along with state unfair competition/tort claims. The marginal cost of pleading it is just very low. The cases are moves to maintain market positions; plaintiffs are using dilution law as a form of competition law.

Without exception, by the end of her studied period, the only time courts would grant injunctions was when there was some sort of counterfeiting/consumer protection issue.

In the TDRA, Congress pushed back – not all the way back to 1996, but strengthening the statute in some ways and internalizing other limitations adopted by courts (such as the bar on niche market fame). One thing that’s received less discussion is that Congress specifically provided for protection of trade dress, rejecting the First Circuit’s rule against same. Free riding is now out as a theory on which courts can base protection. Of course there’s still room for courts to interpret and push the statute around. Use in commerce will create many future opportunities for interpretation.

Predictions: Surveys are going to be back in. This statute is more likely to be stable than the FTDA. Courts have less ground on which to push against the statute, but at the same time it gives them interpretive leeway (on what counts as blurring), so courts may not feel the need to carve out some territory for themselves by just making up new requirements.

Specific issues: the weight of inherent distinctiveness; clever theories of what constitutes blurring and tarnishment, which may allow courts to expand or contract protection; use in commerce.

What concerns her the most: how courts will interpret and apply the exceptions for speech/expression.

My thought: The three-part story of mechanical application giving way to creative judicial invention of new requirements is a bit like the story of DMCA anticircumvention law.

McDonald's brief and reply in 11th Circuit appeal

Prior posts here and here. Again courtesy of appellants' lawyers, I have put the McDonald's brief and the appellants' reply here. Among other issues, the parties debate whether I am an extremist pundit or a respected academic. Probably more important is McDonald's argument that intervening cause, in this case fraud by the agency McDonald's employed to administer its prize scheme, can absolve McDonald's from liability for its ads that stated (falsely, because of the fraud) that anyone had the chance to win large sums. Unsurprisingly, I am sympathetic to appellants' reply that fraud by McDonald's own agent is not the type of intervening cause that can excuse liability, even assuming that the Lanham Act recognizes an exception from its strict liability scheme for "intervening causes."

There isn't much case law on point. There may be an analogy to various rules on comparative advertising. For example, the FTC requires that comparative price advertising be based on truthful comparisons to prices that are actually being used by competitors in the area. A comparison of an electronic store's current prices for flatscreen TVs to its competitor's prices of 6 months ago, for example, is likely to be deceptive because of the substantial drop in prices over that period. This is a case where the ad is false because of an independent cause -- the change in the competitor's pricing -- and courts should have no problem holding that such an "intervening cause" cannot excuse the advertiser's liability. Cf. LensCrafters, Inc. v. Vision World, Inc., 943 F. Supp. 1481, 1491-92 (D. Minn. 1996) (defendant’s comparative “This Week’s Eyewear Price Check” using its competitor’s prices from weeks, and even months, before could be literally false, even with a small print listing of the actual survey dates).

Graeme Dinwoodie and discussion on dilution law

Graeme Dinwoodie, Chicago-Kent School of Law: His comments focus on the 1995 US law, which contained an inappropriate interpretation/assimilation of international law, specifically the Paris Convention's article 6bis. This partially explains what happened in 1995. The law was enacted with no theory of dilution.

There are product-based limits on TM rights and geographic limits (rights are national in nature). Both sets of limits have been loosened in recent years and discussion about them has converged, though the EU has kept them more separate.

National rights reflect the political realities of sovereignity, trumping the real geographic borders of consumer understanding. Article 6bis creates an exception to territoriality by requiring protection for well-known marks if a junior use would create confusion as to similar goods. This was more important in registration-based systems than in the US, which recognized common-law marks.

Product-based limits on TM have been dissolved by the expansion of actionable types of confusion as well as by the rise of dilution. Dinwoodie has argued that TM law should proactively work to shape consumer expectations and refuse to recognize certain types of confusion, but it’s plain that TM confusion law has expanded according to concepts of consumer understanding. 1995’s dilution law, by contrast, was not generated by a change in consumer concepts but a change in the volume of brand value.

TM owners claimed, and Congress wrongly accepted, that dilution protection was required by articles in the 1994 TRIPs agreement, which require protection against uses of well-known marks on “dissimilar goods.” But these articles are explicitly stated to be extensions of 6bis – they are not dilution provisions, but an extension of protection to new types of confusion – confusion regarding services (6bis covers only goods) and confusion regarding dissimilar goods.

Why did Congress make this mistake? Strategically, it helped TM owners get what they wanted. And the language was slippery, letting “well-known” be confused with “famous.” This sort of adding by interpreting is common: 6bis doesn’t require protection of well-known marks without regard to use, whereas WIPO’s interpretation of 6bis says that use is irrelevant. And the US has put similar requirements into a bunch of trade agreements, making it a new part of actual law.

Advocates of dilution have simply piggybacked on a doctrine with similar terminology but a standard confusion rationale. Thus they didn’t have to offer a rationale for dilution protection, just an argument that we should fulfill our international obligations. There was no need for a theoretical construct of dilution. And in 2005 again, all we were doing is trying to interpret Congress’s intent in 1995 rather than creating a coherent intellectual defense of dilution. There still is no connection between the theory of dilution and the statute we now have.

One consequence: in the absence of a theory, courts will still be able to show hostility to dilution. Scholars have offered theories of dilution, but the law is only barely congruent with, e.g., Schechter’s theory. For example, Schechter’s theory of uniqueness would only protect fanciful or coined marks, but the TDRA takes the law in the opposite direction.

Or, if you buy the search costs theory (which he doesn’t, since the theory skips over the question of whether the benefits outweigh the costs), it’s not clear that famous marks are extra vulnerable to interference with search costs. In fact, they may be less vulnerable than medium-strong marks. In the EU, the threshold is “reputation,” which is a much lower hurdle than famousness or 6bis “well-known”ness, and that’s more consistent with a search costs theory. But the TDRA takes the law in the opposite direction again, restricting protection to famous marks.

Likewise, the search costs theory can explain blurring, but not tarnishment, which is now enshrined in the statute.

This incoherence will allow courts to narrow the law to avoid creating rights in gross. V’s Secret offered some easy tools to do so, but others remain.

There are some cases where dilution has worked, revealing its true character – dilution law is a protection against unfair competition and dishonest commercial practices. Dilution worked really well as a substitute for ACPA until that law was enacted, prohibiting cybersquatting. The Paris Convention’s Article 10bis, on unfair competition, is a better source for an international obligation. “Taking unfair advantage of the distinctive character or repute of a mark,” as the EU version goes, is more honest. We should do something like that rather than put a grab-bag of actions within the trademark system, which inevitably distorts what is actually unfair competition. (For example, it creates weird problems of what counts as “use” as a mark for dilution purposes, which has spillovers into confusion analysis.)

But yet again the TDRA goes in the opposite direction by shutting off new forms of dilution, such as an independent cause of action against free riding.

A cautionary note: the US system of regulating competition less heavily may make unfair competition-based dilution less appropriate than it is in the EU, where free riding generally is more disfavored.

In sum: whatever good the TDRA does still leaves it open to a very uncertain future.

Rochelle Dreyfuss: What is the political economy of dilution? Why aren’t TM owners more resistant, given that dilution can be used against them?

Dinwoodie: There is a strategic calculation that mostly the big companies are going to win, and can buy off small companies. The 2006 amendment preempts state and federal dilution actions against federally registered marks, which also helps big TM owners. (Though note that INTA opposed any preemption at all.)

Mühlendahl: TM owners have been supportive of the EU approach, because unfair competition law isn’t harmonized as TM law is. The academic community was also supportive.

Dreyfuss: Was that for harmonization/unification reasons or a normative assessment of the merits?

Mühlendahl: The German influence was very high. And all countries voluntarily adopted the dilution provision, which was optional.

Bone: He’s dubious about letting judges rove around figuring out what’s unfair. By eliminating the TDRA, it might have value, but unfair competition begs the normative question of what’s unfair, and judges tend to think they know it when they see it. But judges don’t always agree. Judgments of unfair competition are often primitive kneejerk intuitions rather than well-thought-out – and the question becomes one of institutional competence; should judges be figuring this out piecemeal? Public choice problems with legislation mean that we’re choosing between two evils, but he’s still skeptical of judges.

Barton Beebe: What is Dinwoodie’s idea of unfair competition? We don’t have the “unfair advantage” language, meaning that judges are limited to dilution and tarnishment, or perhaps even to §43(a).

Dinwoodie: He agrees that descriptively unfair competition is unavailable under the TDRA. It shouldn’t be, though. Judges are better than legislatures because they make fact-specific interpretations that don’t turn into broad property rights. Even with bad decisions like PETA, which took eight years to dissipate, you don’t get the same stare decisis effect that legislation inevitably has.

Sheldon Halpern: It’s Kafkaesque to try to make an irrational statute rational. He doubts that the drafters intended to limit the scope of dilution to prevent a tertium quid like free riding, but that’s what happened when they were trying to define blurring and tarnishment. The task is to find ways to prevent this emerging right in gross from being unfairly applied. Halpern trusts judges more to prevent egregious results, especially since Congress isn’t about to repeal §43(c).

Bone: Initial interest confusion was created by judges, not Congress. Post-sale confusion was created by judges, not Congress. He can go on. The most egregious forms of unfairness are ones to which Congress will respond, as with ACPA. Would we live with cybersquatting until Congress acts? He thinks that’s a reasonable price, especially since Congress might act faster if courts say they can’t. Clearly there are areas in which one must give discretion to judges, but a broad unfair competition action risks substantial costs, not because judges are bad but because the problems are difficult and specific rules have broad and unintended consequences. Thus, though he likes judges, he doesn’t like a general unfair competition right.

Dreyfuss: A court at least has to look at the facts of a particular case, which Congress doesn’t.

Annette Kur: Americans wonder more about the rationale for dilution than Europeans, perhaps in part because of the pressure on Europeans to harmonize. Schechter was of course citing a German decision, so we started from similar places. We’ve both moved away from uniqueness to fame/reputation. Also, Schechter emphasized that protection must be granted against use on dissimilar goods and in the absence of confusion, but these are two different things. In Europe we’ve always been extremely concerned about the dissimilar goods part, whereas in America the nonconfusion part has been more problematic. It’s easier to grant protection against dissimilar goods because it’s easier to identify harm in some circumstances. Another difference: Europe is more ready to protect against a pure taking advantage of the mark even in the absence of damage. In the Rolls Royce case, for example, Rolls Royce didn’t suffer harm from being used as a symbol of luxury, but it was an unfair free ride anyway.

David Bruce Wolf: Before the Lanham Act, there was a national law of unfair competition. Section 44 of the Act does talk about unfair competition (and Dinwoodie says was to some extent inspired by the Paris Convention), but for some reason all our energy has gone into §43.

Dinwoodie: If that sleeping giant awoke, it could change things a lot.

Tony Reese: We’re selling federal judges short if we think statutory definitions of blurring and tarnishment are going to stop them from adding new things – judges were happy to use the old definition against cybersquatting and free riding. Since we don’t have a good theory of what blurring or “impairing distinctiveness” is, we can shovel a lot of things into blurring that might otherwise have been called tertium quid/free riding.

Dinwoodie: Read textually, it seems that courts can ignore the statutory blurring factors. Courts can surely do this, though it’s likely to create an apparatus of multiple factors.

Mühlendahl: German law is full of general clauses given content by courts, such as businesses having an obligation to conduct business in “good faith.” But it depends on the experience of the judges, which differs across jurisdictions. Given these differences, it’s a good idea to spell out the rights in the European context and have the ECJ around to resolve persistent conflicts.

Rights in gross: This has never been a problem in Europe, where many countries don’t care about a use requirement, much less assignment in gross. There’s no international exhaustion, allowing an infringement action against an unfaithful licensee where there is no confusion.

Geoffrey Hobbs: Avoiding rights in gross was part of English law, and getting rid of the doctrine was a big deal. But the idea that there are no rights in TMs as such is a quirk of history having to do with long-ago theories of court jurisdiction. Sooner or later it will disappear in the US too.

Alexander V. Mühlendahl on dilution law

Alexander V. Mühlendahl, Vice-President (retired) of the Office for Harmonization in the Internal Market (OHIM); Bardehle, Pagenberg, Munich, Germany: German and Benelux cases are the most prominent examples of non-confusion-based TM protection.

The types of cases: (1) use or registration of a protected mark for dissimilar goods or services in the absence of confusion: ODOL (the German Listerine) [the example used by Schechter in 1927 where use was rejected as a mark for metal goods], DIMPLE, KODAK (refused protection for bathtubs). (2) Detriment to reputation – tarnishment-type cases, MAC Dog/MAC Cat for pet food; Claeryn v. Klarein (gin v. washing detergent, and the similar sound is going to harm the gin on the “rat poison” theory that you don’t want the name to sound like a bad-tasting/dangerous substance). (3) Use of a protected mark as a vehicle for the promotion of goods or services, as when you show a Rolls Royce in an ad for your own products to give them luxury cachet. (4) Use in nontraditional circumstances, such as on the Internet – metatags, etc. (5) Comparative advertising. (6) Noncommercial settings such as criticism.

The first legislation in Europe was confusion based and initially protected only against use on identical or similar goods. Early German case law began in the 1920s, and applied unfair competition law in cases of noncompeting goods (which is conceptually difficult!) and also applied the tort concept of intentionally causing harm to someone else. Eventually people recognized that unfair competition was not the right theory and used theories of interference with names (a right granted by the Civil Code) and interference with existing business (likewise). In recent times, the courts have come back to unfair competition. Even though the goods don’t compete, the user of a famous mark is putting itself in a competitive relationship with the owner and is thus unfairly competing. These rights initially required uniqueness/singularity of the mark – no longer true under the new theory, as long as the mark is well-known to the public.

Benelux law: 1970 law created general tort claim for using the TM in a way which damages the interests of the TM proprietor; no confusion required. Courts held that fame/high reputation was not required either.

The Paris Convention provides for relief when there is a “connection” between goods and services that is detrimental to the TM owner, which has been read as a dilution provision even though connection implies confusion.

EU: The 1988 TM directive and 1993 Community TM Regulation: rights are granted to marks with a “reputation” against use of an identical/similar mark where the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character of the the TM. This is a property theory, and quite a broad one.

Elements of the offense: (1) the earlier mark must have a reputation; (2) the later mark must be identical/similar; (3) the use must be unfair and without due cause; (4) the use must be detrimental to the earlier mark’s reputation, detrimental to its distinctiveness, take advantage of its reputation, or take advantage of its distinctiveness.

ECJ cases: Chevy for detergents – what is the definition of “reputation” and its territorial scope? Answer: some sort of quantitative requirement, but we can’t say how much – a significant proportion of the public to whom the mark is addressed. Geographically: It’s enough if the reputation exists in one part of Benelux, even less than the whole country.

Davidoff and Adidas cases: Can dilution protection be applied to competing goods? Yes, you can still apply a reputation theory even in the absence of confusion. Otherwise TM owner would get broader protection against noncompeting goods than against competing goods, which is senseless. The similarity much be such that the public creates in its mind a link between one mark and the other. He would have thought that the test should be more objective.

The issues still to be decided: What is protected: These days, registered TMs and all other business identifiers. What are “detriment” and “taking advantage”? What is “due cause”?

Robert Bone on dilution law

Anti-Dilution: The Theory and the Reality of Extended Trade Mark Protection in the US and EU, NYU Law, Dec. 8, 2006

First session: Beyond confusion: The evolution and establishment of a recognised right to protection.

Robert Bone, Boston University School of Law: Various courts and commentators have asked what dilution is, finding it hard to define. A second issue is the questionable social benefits of a right against dilution – is it worthwhile to protect against dilution’s harms, whatever they may be? The question is urgent because of the costs of giving trademark owners such control, particularly costs in expression and costs when dilution is applied to trade dress and thus may threaten competition.

In the late 19th century, TM law focused on consumer deception, protecting against distortions in information received by consumers. At first TM was limited to direct competition and harms to sellers that were diversion of customers and loss of trade. The goodwill being protected was the goodwill attached to the particular brand of a specific product, rather than the goodwill of the firm as a whole. In the early 20th century, nationalized markets and advertising supported horizontal integration, raising the issue of using TM against noncompeting goods. In the 1920s, the question was how far the law should go in such cases, moving beyond brand goodwill to firm goodwill. The chief concern was that the seller wasn’t losing any customers with noncompeting goods, and relatedly that the defendant’s goods might not be low-quality and thus might not cause any real harm. Frank Schechter proposed in 1927 that TM should protect the “distinctiveness” of strong (in his argument, inherently distinctive) marks. At the time, the dominant theory of goodwill was a property theory – the property was that which the firm now possesses. Schechter argued that marks were most valuable for generating new goodwill and that their capacity to do so should receive legal protection.

Courts that were eager to expand TM law seized on Schechter’s article and cited his theory in support of expansions, but didn’t rely simply on a dilution theory (loss of distinctiveness) alone or on free riding. Mostly they combined those arguments along with confusion-based harms – lost future sales from potential entry into the market, etc. Courts and commentators were rather skittish about adopting dilution theory wholesale. After the Lanham Act was adopted in 1946 without a dilution provision, states began to enact anti-dilution provisions. Judges continued to resist pure dilution theory, reading confusion requirements into the statutes, until the 1980s. At that point, courts read the statutes more aggressively, but it was still rocky, until 1995, when the FTDA gave dilution a better name.

Schechter wrote at a time when psychological advertising was increasing rapidly – a time of psychological theories about how marks can affect consumer choice. It was natural for him to focus on how TMs can be “magnetic” and to appeal for legal protection. Why should we protect magnetism? What is magnetism, exactly? If it’s gripping the consumer, do we want consumers to be gripped? If it’s irrational brand loyalty, as people worried in the 1940s, then we have some problems. Why would the law protect the ability of sellers to generate and exploit irrationality? But if consumers are making rational choices based on emotional factors, the emotion is just another component of the product and perhaps we should protect it.

Big problem: dilution appears to protect sellers and not consumers. So people have thought very hard about how to explain dilution as a protection for consumers, now conceived of as a protection against mental search costs. Identical nonconfusing marks still force consumers to take time to figure out which product is being referenced, and thus cause consumer harm. There are multiple problems with this theory – the amount of time it takes for consumers to sort out uncertainty is a few hundred milliseconds, and it’s not clear that really matters. But we do have some empirical research on the subject.

A separate issue: status goods/Veblen goods, which are diminished by copying. But that theory is also troubling and doesn’t look like TM law.

What about free riding theory? What is the goodwill we’re trying to protect? It’s not brand goodwill or even firm goodwill, if there’s no confusion. It’s really goodwill as part of the product itself – there are emotional attributes to a product, and some are transferable to other products.

If they are transferable, why is that bad? If consumers can have a good experience drinking Rolls Royce beer, then it’s hard to see why that increase in consumer surplus is a bad thing. We don’t generally condemn free riding.

Final observation: much goodwill is generated by advertising itself. Most of the value of perfume (he says, though he says he doesn’t use it) is not the scent but the experience you have when you’re wearing it, lots of which is generated by the ads with beautiful people running towards one another. (Why not use cars as an example? The emotional value of a car is a big component of its overall worth, and it’s a value felt strongly by men as well as women.)

Where's the pork?

Vienna Beef has been sued for making certain of its “all-beef” hot dogs with pork casings. Though Vienna Beef says the hot dogs aren’t kosher, it says the reason is that they’re not made with kosher beef. Vienna Beef never mentions pork, and at one point on the website specifically says the hot dogs aren’t made with pork. The most telling exhibits are probably the last two, (1) the ingredient list available to consumers from the website, and (2) the ingredient list on the wholesale case, which are identical except for the very last ingredient on the latter: pork casings.

The complaint, filed on behalf of a nationwide class, is aggressive. It alleges violations of express warranty and the UCC as well as state consumer protection laws, and adds common-law fraud. Aside from the request for punitive damages under the UCC (can you do that?), I don’t see any of those claims as reaches. As a vegetarian since age 14, I have a lot of sympathy for this lawsuit. I remember the distress and betrayal I felt when I learned that McDonald’s fries weren’t vegetarian (how is an ordinary consumer supposed to know that beef extract was added?), meaning that in fact I’d eaten beef a number of times unknowingly. If Vienna Beef wishes to avoid the negative connotations of pork, not to mention the religious prohibitions, then – here’s a thought – perhaps it shouldn’t make its all-beef hot dogs with pork.

Tile and style

Walker & Zanger, Inc. v. Paragon Industries, Inc, 2006 WL 3490975 (N.D.Cal.)

Prof. Patry discusses the copyright aspects of this case of copying in the tile industry here.

The problem that defeated plaintiff’s trade dress claims was that it simply failed to specify, in words, the elements of its trade dress in its lines of decorative tiles, using instead generic terms like “rustic look,” which identify a style over which no one producer can be allowed a monopoly. Perhaps the most damning moments came from the deposition of plaintiff’s Rule 30(b)(6) witness, produced to testify about the elements of the trade dress. When asked to describe the trade dress of one set of tile, plaintiff's witness replied: “What it is about their tile … is the fact that this tiles is a part of a collection that is recognized to be plaintiff's product,” and this response was apparently typical. Such vagueness cannot support a trade dress claim given the concerns for free competition and noninterference with patent/copyright law that have guided courts post-Wal-Mart.

That being said, and despite the court’s fairly harsh condemnation of plaintiff’s evidence on summary judgment, the court still gave plaintiff another bite at the apple by separately considering whether plaintiff had established actual secondary meaning in its designs. Had the court been fully serious about its determination that plaintiff’s supposed dress was generic, it wouldn’t have engaged in a secondary meaning inquiry, since de facto secondary meaning will not defeat genericness. Essentially, the court gave plaintiff a chance to show that the market recognized a more specific description of its tiles, even if plaintiff itself had tried to claim ownership of the entire style.

In the end, plaintiff failed to show secondary meaning in the actual tile design. Its own survey, which did not survey the full range of consumers, showed only limited recognition of particular tiles as coming from a specific company; its circumstantial evidence of secondary meaning from years of advertising was insufficient because, with trade dress, there must be evidence that the advertising called attention to the dress as an indication of source, and there was none.

Other allegations also failed: Plaintiff asserted separate false advertising claims, but the court found that occasional alleged statements by defendant’s representatives to a handful of consumers that the parties’ tiles are the same and/or are made in China were not sufficiently disseminated to count as commercial advertising or promotion. More generally, plaintiff alleged that copying its trade dress constituted false advertising, which is technically correct – trademark infringement is a subset of false advertising – but doctrinally messy. Not to mention that framing the claim as false advertising creates a lot of extra work for the trademark plaintiff; trademark cases don’t require any showing of materiality, as false advertising cases do. In any event, the court rejected plaintiff’s attempt to treat copying trade dress as an implicitly false ad: “Plaintiff has not identified, and the court has not found, a case in which the truthful promotion of a product whose design violates another's trade dress has given rise to a false advertising claim."

The survival of some of plaintiff's copyright claims, at least past the summary judgment stage, is a reminder that overlapping IP protection is still of use, despite greater concern on courts' part for separating the protection available under each law.

The politics of celebrity T-shirts

A very interesting interview here about wearing Cassius Clay's name on a T-shirt and selling Cassius Clay's name on a T-shirt, including excellent discussion of the right of publicity and T-shirts as political expression.

Seen at the pet store

Chicken Soup for the Dog Lover's Soul brand pet food, and Bark Bars.

I'm surprised the pet food company thought it was worth a licensing fee from an unrelated business -- inspirational books -- except that, obviously, the product caught my attention, so maybe it was worth it.

As for the Bark Bars, are any of these close enough to protected trade dresses to dilute? I am certainly reminded of specific candy bars, but even under a likely dilution standard "reminding" probably isn't enough.

Georgia's CD labeling law upheld

Briggs v. State, --- S.E.2d ----, 2006 WL 3422972 (Ga.)

A number of states have anticounterfeiting laws that prohibit, as Georgia’s law does, distribution of media containing sounds or images without putting the actual name and address of the transferor prominently on the package containing the media.

Briggs, the defendant, had 52 CDs allegedly containing unauthorized reproductions of “recorded material” (does anyone pirate lectures, or can we assume this is music?), and was indicted under Georgia law. Though Briggs’s conduct would probably also trigger federal criminal law, it is unlikely that a federal prosecutor would bother with criminal copyright infringement charges for 52 CDs; thus state punishment is the only realistic criminal risk Briggs faced.

The Georgia Supreme Court rejected his vagueness/overbreadth challenges, as well as a claim of federal copyright preemption.

Briggs argued that the phrase “transferor of the sounds or visual images” is unconstitutionally vague. The court had little trouble with this argument, reasoning that the transferor is the individual or entity who transferred the sounds to the article, which is clear enough for due process purposes.

Are my CDs properly marked under Georgia law? I always see the record label prominently displayed, but I rather doubt that they all own the pressing plants that actually produced the CDs – in fact, with the independent labels, I’m reasonably confident that the plants are independently owned and operated, and thus the transferor’s name and address have been left off my CDs, in violation of Georgia law. To get this right, you’d have to interpret “transferor” to include “entity that authorized the transfer,” which is possible, but the court didn’t do it. Of course, this will never be applied to non-pirated CDs unless some enterprising prosecutor wants to attack an offensive CD and uses this statute as a pretext to do so.

Briggs also raised an overbreadth challenge. The statute regulates pure speech, and isn’t narrowly tailored because an artist or transferor may wish to keep his/its identity private. The court held that “the statute does not impinge upon pure speech. At most, the statute regulates a combination of commercial conduct and speech.” Despite its citation of a 9^th Circuit case reaching the same result, the court’s reasoning is flawed, even if the ultimate result is acceptable. Disclosure of a name is forced speech; there are good reasons to require disclosure, especially in commercial contexts, but good reasons don’t turn speech into conduct. (As a side note, I predict that this provision would be unconstitutional as applied to anonymous political speech, even if the political speech was sold for a price. The majority didn’t address the possibility of an as-applied challenge.)

Because of its mistaken identification of disclosure as conduct, the court then applied United States v. O'Brien, 391 U.S. 367 (1968), allowing regulation of expressive conduct if the regulation furthers a substantial governmental interest that is unrelated to the suppression of free expression; and the incidental restriction on First Amendment freedom is no greater than necessary to further the governmental interest. Anti-piracy justifications, of course, suffice to satisfy O’Brien. The court also suggested that, based on its understanding of the entertainment industry, “very few legitimate artists or producers would actually want anonymity.” True but unhelpful; very few political speakers want anonymity either, and they get it when they want it.

The labeling provision, much like the tax laws that require reporting of unlawfully earned income, is a way to criminalize conduct that naturally surrounds the core unlawful conduct, here piracy. I don’t think the First Amendment protects Briggs here, but I do think that a better First Amendment analysis would have been advisable.

Preemption: State law rights equivalent to federal copyright rights are preempted by 17 U.S.C. § 301. The question here is whether state law applies an extra element distinguishing it from a right that could be violated simply by infringing. The majority thought that omission of the transferor’s name and address was an extra element, because copyright infringement alone isn’t criminalized. This finesses what an “extra element” can be; it’s well-settled that intent to copy isn’t an extra element, because that merely narrows the number of infringements that fall within the state law. Calling an omission an extra element seems very similar to using intent that way. What if the state law, as it might, penalized failure to label an unauthorized copy as an unauthorized copy? Then it would be even clearer that the supposedly extra element is simply a natural concomitant of infringement or, as here, commercial piracy. Given that the statute is concededly supposed to remedy the harms of piracy, thus serving no purpose distinct from that of federal law, the case for preemption is strong. (I note also that there’s no fair use defense, which is especially important for other parts of the law that prohibit transferring any sounds or images without the consent of the owner of the master recording from which the sounds/images are transferred – that means that Outfoxed is criminal in Georgia regardless of its fair use of Fox News clips. That flaw is really conflict preemption rather than express preemption, but the fact that the problem comes up is further evidence that the Georgia law is a mini-copyright law, exactly what § 301 targets.)

A special concurrence by two justices argued that the statute was facially overbroad, but that it could be given a narrowing construction such that it only applied to media that had been “stolen or ‘pirated.’” (This must mean pirated, since stolen legitimate CDs would presumably be properly marked.) Because the concurrence read the majority to be implicitly applying this limit, the justices did not dissent.

A dissent by two other justices would have found for Briggs on his overbreadth claim. The law on its face prohibits “a substantial amount of constitutionally-protected speech, including anonymous political speech.” As the dissent pointed out, the state law criminalizes distribution or circulation, even without a commercial motive. Anonymous speech has important political implications, however, and the statute appears to ban it when in audio or visual form. Though the dissent doesn’t pick up on this, illustrated books or pamphlets would seem to count as media containing images, directly implicating Supreme Court precedent on anonymous political speech. (The dissent argues that the only difference between the pamphlet cases is that pamphlets are written and the speech here is recorded, which is not a relevant First Amendment difference. But a natural reading of the law here is that an illustrated pamphlet is an “article” on which “images” are “recorded,” though one could try some fancy footwork distinguishing the recording of plats from the recording of movies.)

As the dissent pointed out, the Georgia law would subject political speech to criminal penalties. “[A]n amateur film maker concerned about the deforestation of his or her neighborhood could not anonymously distribute a videotape or DVD chronicling this concern to members of his neighborhood and his elected officials.” The dissent was convinced that this problem could not be fixed by a narrowing judicial construction; if the legislature wanted to limit the law to recordings made without the consent of the owner of the master recording, it could do so (and had done so in other provisions), but the court couldn’t do so on its own.