Qualified immunity, videotape, and copyright

Today's decision in Scott v. Harris, as Marty Lederman writes, involves the majority's interpretation of videotape recorded by the police cars involved in the chase that left the plaintiff paralyzed. The Supreme Court has, rather unusually, put the videotape up on its website and suggests that readers of the opinion watch the tape for themselves.

There is a minor copyright hook here: assuming that there is an author (on which more presently), the videotape is copyrighted -- the exclusion for government works in the US covers only works of the federal government -- and putting the whole thing up on the Court's website infringes the copyright owner's rights. The copyright owner in footage of Reginald Denny's beating -- surely at least as newsworthy -- has successfully sued news organizations who broadcast that footage without paying. But, given that the Court asks us to evaluate the tape for ourselves so that we will understand its legal analysis, there's a strong fair use argument. You don't have to trust the Court's judgment if you can look for yourself. Because the legal analysis requires assessing the entire context of the car chase, copying the entirety of the relevant events is necessary to the use -- thus, an analysis that in litigated cases (e.g., Nuñez v. Caribbean International News Corp., 235 F.3d 18 (1st Cir. 2000)) has so far only covered photographs should also extend to other media. Moreover, though states can own copyrights, the reason they put cameras on police cars has nothing to do with copyright's incentive structures and everything to do with recording events for later oversight. This affects both the type of work (factual) and the market analysis (not really operative even if there is a market for footage of police chases).

Of course, many of these considerations apply in the average substantial similarity case. Courts have included black-and-white pictures of accused works, and sometimes accusing works, in prior opinions. Given available technology, they should consider going further. Why shouldn't an opinion include relevant excerpts of plaintiff's and defendant's works, of whatever medium? Those of us who teach IP know that words on the page are essentially useless for helping students understand the substantial similarity inquiry for non-literary works. If writing about music is like dancing about architecture, and if the judicial enterprise requires a public attempt to justify and explain decisions, then copyright cases in which substantial similarity or transformativeness are at issue should routinely set forth the relevant evidence, even when that evidence does not consist of words.

/end rant.

One could also ask whether there was any authorship at all in the footage, since no human chose camera angles or anything else we conventionally associate with authorship in film. At most, a human was involved in editing -- selecting which footage was relevant to the dispute. But that might not have risen to the necessary originality, if everyone would have agreed about the relevant time period, as seems likely; deciding where to start and where to stop within a minute or so is not particularly creative.

More important than the copyright angle, though, is the extent to which the Supreme Court treated video as transparently providing access to truth. Jessica Silbey has written an excellent article on the subject of film as evidence/film as unmediated truth. Given what the Court said in this case and the attention devoted to the issue of interpretation by the dissent, as well as the spread of video cameras throughout public places, her article will only increase in relevance over time.

A historian's take on Google Books

Google may be neglecting quality control in its hurry to get out in front of the pack. Digitize in haste, repent in leisure? Thanks to Zachary Schrag for the link.

MIT's Media in Transition: Authorship and Attribution

I went to a good panel this morning at MIT's Media in Transition conference, The Name of the Author. I am increasingly interested in attribution as a substitute for monetary compensation and control in copyright, and the panel offered some nonlegal perspectives that also had direct relevance for me as an academic blogger.

Andy Dehnart, The Death of the Link: Does Attribution Still Matter?

Dehnart suggested that linking is a dying art, despite its centrality to conceptions of the internet. There are different forms of copying. Outright theft, often for splogs/spam blogs or plagiarism – people copying others’ diary entries as their own. RSS feeds and aggregators also detach content from source, though there is some attribution left. People also copy and paste, sometimes with attribution and sometimes without – for the former, sometimes to allow people to read content without registering at, say, the NYT website. And sometimes people copy and put in a link that is just the word “source,” which can be pretty unclear. Sometimes people get the source wrong – A links to B, C links to A and credits A.

Motivations: theft, desire to share, laziness (technological uncertainty with linking), lack of permanent links, failure to care about sources (the mistaken idea that Wikipedia and scholars are all the same), the idea that giving credit decreases your own contribution (apparently a common attitude among students), social media technologies that allow people to detach things from sources (YouTube, which allows both linking and embedding; embedding is cool and exciting but also removes attribution information unless you click through). Results: people may not care about source or have a distorted idea of the source. Dehnart told a great anecdote about someone who copied something from his blog, but when contacted angrily denied that she would ever copy without attribution because she had copied from an email from a friend rather than directly from the blog.

Problems: denial of attribution, inability to update or correct information in the original, denial of ability to evaluate or discuss others’ work in context. (If you’re discussing a A’s post in B’s blog, your conversation is unlikely to influence the larger discussion of A’s point.) News gets out and has no attribution associated with it – he gave the example of a spoiler for Dancing with the Stars that he first reported, but then AP picked up without attribution to him. Verifiability deteriorates, and it's even more problematic when verifiability and credibility are detached from one another. Are journalistic ethics decaying because of interaction with blogs? The original source, and the ability to question it, are lost.

Kim Middleton, Pseudonymous Blogging and New Functions of Authorship

Is there a crisis in scholarly publishing? There’s a vicious circle of collapse of monographs and inability to sell monographs, which makes it much harder for scholars to (a) get hired/tenured and (b) write things that speak to specialists as opposed to generalists. What should authors themselves, as opposed to institutions, do in response?

Academic blogs are discussing what defines an academic and what they’re allowed to write. Both the academic blogosphere and the AAUP are concerned with the same things, but bloggers are considering how their identity is linked to their scholarship. So what about people who blog under pseudonyms/pseuds? Pseudonymity is always suspect because it threatens accountability and authority; it affects the reader’s ability to trust the author. Pseuds can help us stay safe as writers, but pseudonymity also threatens the academy – one’s name is built upon one’s writing. Writing by unidentifiable authors, who refuse authority, responsibility and identity but still claim to participate in academic discourse, destabilizes the system.

Blogging isn’t the answer to the publishing crisis, but pseudonymous blogs operate as a new way to publish ideas that is as yet undertheorized as to the connection between pseudonymity and the academic enterprise. The academic blogger creates a persona to write, expanding available writing practices – including both subjects of writing and subjects who write.

Middleton discussed the Chronicle of Higher Education blowup involving “Ivan Tribble” (a pseud!) who posted an article saying he’d never hire a blogger because of the risk s/he’d air departmental dirty laundry. In this account, there’s an injunction against creating a written record that shows that you are a person beyond your disciplinary boundaries, whether or not your thoughts are analytic or scholarly. This climate has made academic blogs less playful and less willing to experiment, according to some.

The response by those who sympathize with Tribble's concerns: rhetoric has consequences, and if you write a lot about your body people may judge you as a narcissist. The broader questions: What narratives of identity are institutionally sanctioned? Is it possible to challenge governing concepts of scholarly identity with new concepts of blogging identity?

One specific response to Tribble by Bitch, PhD: this is why I don’t blog under my real name. She takes the threat really seriously, and also considers the pseud “not a real name.” Her critique focuses on committee members as bad readers of blogs, misunderstanding how a scholar can be a person as well. Theoretically these people on the hiring committee read for a living, but blogs aren’t their texts. Is it any wonder bloggers use pseuds? Tribble also thinks it’s okay to publish pseudonymously in the Chronicle – certain kinds of authority allow you to be pseudonymous without consequence.

(My thought: several of these applicants may have been hurt by the somewhat bizarre convention that our resumes have an "interests" or "hobbies" section; we are and have been for decades in the midst of cultural ferment about to what extent our professional selves should be seen to be "whole persons," even as it is impossible for anyone to present as a "whole person" in any one context, especially the academic one.)

The development of a critical insider stance: Bitch, PhD places herself within the academy, but wants to stay outside as well, and the pseudonym allows both. The pseud develops cultural capital of its own – it is not interchangeable with the real name even though it refers to real life.

A final observation: academic blogging talks more about the process of research and less about the outcome than previous forms of academic writing. So we can learn more about what goes on behind the curtain – the constraints on real academic lives, the operations of power within the academy. This is not obviously good or bad, just different.

Virve Sarapik, Signification and Naming

Sarapik discussed the role of titles in art as serving related purposes to the artist’s name, allowing distinction and interpretation, though numerous schools have deemphasized the relevance of titles. Thus, the prevalence of “untitled” works of art. Naming is an exercise of power over the object, but also a recognition of the object as one of importance.

Risk Aversion and Rights Accretion in IP Law

James Gibson has a recent piece in the Yale Law Journal analyzing the role of licensing markets in expanding IP rights, comparing copyright, trademark and patent. I have a brief response here (PDF here), focusing on limiting doctrines in trademark that cut off consumer-perception-based feedback loops. Wendy Gordon also responds.

Back to the disclaimer: DirecTV wins round against Time Warner

Time Warner Cable, Inc. v. DirecTV, Inc., 2007 WL 1138879 (S.D.N.Y.)

Time Warner sued DirecTV for false advertising under state and federal law. This time, it failed in its attempt to enjoin comparative advertising about the high definition (HD) services available from DirecTV and “cable.” DirecTV’s ads at issue recreated a scene from Back to the Future, in which Christopher Lloyd, in character as Doc Brown, announces that DirecTV has “all the best channels, and soon they’ll have three times more HD capacity than cable!” The court found that “best channels” was nonactionable puffery, and that Time Warner failed to disprove DirecTV’s evidence that it would have three times more HD capacity by the end of 2007, which was “soon.”

The only questionable part of the decision, and one that might often be cited by defendants, involved the ad’s graphic “Starting at $29.99/mo. Everyday price.” The court found this unproblematic, because the small print in the revised commercial states that HD programming – which is, of course, the subject of the commercial – carries an additional fee on top of the quoted price. Given that the commercial is focused on HD offerings and that you can’t get HD from DirecTV for $29.99/mo., I would be willing to find “starting at” deceptive, but the court concluded that, with the small print disclaimer, the ad as a whole was nondeceptive because “starting at” indicated that higher prices were also part of the offer and “the existence of a disclaimer of some sorts is clearly visible at the bottom of the screen.”

The first part of that is much more persuasive than the second – a disclaimer “of some sorts”? How is a consumer supposed to know it’s a disclaimer about price? The court doesn’t contend – nor does anyone, really – that consumers actually read such disclaimers. The court distinguishes a prior case finding a disclaimer ineffective when it’s inconspicuously located or in such fine print that readers tend to overlook it. Here, by contrast, the disclaimer isn’t inconspicuously located, because it’s clearly visible at the bottom of the screen. But that’s not a distinction! The point of “clear and conspicuous” is that consumers should perceive the disclaimer as part of the ad message. Merely being aware that there is a disclaimer, about something or other, is not the same as understanding the ad claim as modified by the fine print.

Side note: When I watched Heroes online (and if you aren't watching the series, you should be), all the ads were for DirecTV, and they were pretty aggressive. A couple of them had the snooty announcer say that hooking up a HDTV to cable was like putting cheap gas in a Ferrari, which seemed like an interesting trademark problem in itself and also signalled that DirecTV is not backing down from its comparative claims, despite TWC’s demonstrated willingness to sue. Sometimes aggressive ads are worth it as a business decision – especially since the Lanham Act doesn’t allow for punitive damages.

New keyword/use in commerce decision

Eric Goldman blogs so I don't have to! A couple of other points: (1) The court suggests some suspicion over whether the plaintiff actually has a valid mark in "Dating Ring," the term at issue, because there doesn't seem to be much evidence of use. (None in Google Images that I found, though plaintiff's website is at trademarkjewelry.com, which along with some of the text of the site suggests some sort of claim of right over the concept of rings exchanged between dating couples. Here's an interesting side question: defendant's petition for cancellation of plaintiff's registration has been suspended during the court case. Given how aggressive the TTAB has become on what counts as fraud on the PTO in a registration application, should a district court resolving a challenge to the validity of a registration apply the same standard? That might not be an issue here, since the issue appears to be whether plaintiff used the mark at all rather than using it on all the goods listed in the registration, but I do wonder.)

In any event, in the course of refusing to dismiss the ad text-based trademark claims, the court several times suggests that the plaintiff could be subject to sanctions if he lacks a valid mark or if he is ultimately unable to show that defendant used his mark in the text of its ads.

(2) Eric thinks that the court didn't understand what broad-matching was, but I saw no evidence of incomprehension -- the court seemed pretty clear that the reason Zales' website returned results for "dating ring" was that it did its best to find a match, in this case by returning results for "ring." The French might disagree, but returning results based on the generic portion of a mark can't be actionable under any theory I've seen a US court embrace.

Developments in deception: state-level activity

Julie Brill, assistant AG, Vermont: The primary focus in the states has been in the financial markets. Also telemarketing, payola, internet issues, privacy, pharmaceuticals, and tobacco. She won’t talk about cases that brought by private attorneys on behalf of the states, though there is interesting lead paint litigation in Ohio and Rhode Island.

In 2004, Spitzer charged Marsh & McLennan, the nation’s largest insurance brokerage firm, with deception. Allegations: Marsh steered clients to insurers who’d paid Marsh to do so, despite Marsh’s claims to be neutral. There were also antitrust issues – allegations of deceptive solicitation of rigged bids when in fact the prices had been fixed. Marsh agreed to pay $850 million in restitution, reform practices, and establish compliance procedures. 8 Marsh executives were charged criminally; many trials are still pending.

AIG also settled with NY, DOJ, and SEC, agreeing to pay $1.6 billion, change procedures, and apologize. Other brokers were also investigated. States involved included NY, CT and IL. Aon, the second largest insurance broker, agreed to $190 million in restitution. Willis, the third largest, paid $50, and Gallagher $27 million. Recently, the 3 state AGs filed another suit. Likewise, several other states got involved against insurers, charging everything from bid rigging to improper accounting. Total payments by insurers to date: over $402 million.

Now: sources of income, including contingent commissions, have to be disclosed to clients. There’s now a prohibition on paying contingent commissions where the insurance lines represent more than 65% of the market. In Nov. 2006, the AGs announced that 65% rule has been reached in several lines, which has caused a hullaballoo in the insurance industry.

Student loans: undisclosed financial arrangements between colleges and banks that loan to students. Watch for more investigations! Colleges list lenders as preferred, but fail to disclose that this is because the lenders pay – sometimes up to 1.5% of the loan amount, and sometimes they pay loan officers, not just the college. The implicit representation is that this is the best deal, but it’s not. Also, 90% of students take out loans with the college’s preferred lender, so it’s a significant label and a potentially significant source of income for the college.

NY is asking colleges to sever ties with lenders when this has the potential to mislead students and compromise the college’s ability to help students find the best rate. Minnesota has taken the position that disclosure is the remedy when the preferred lender pays the college. State AGs are also issuing student loan guides to inform students. This is an $85 billion/year industry, so it’s a big deal.

NY filed suit against Education Finance Partners in March – it has revenue sharing arrangements with over 60 major colleges and universities, failing to disclose that the colleges got paid. EFP used the school’s logos, mascots, etc. in various promotional materials. Seven universities have settled, promising to return $3.27 million to students. Citibank and Sallie Mae have agreed to pay $4 million to educate college-bound students about loan issues. A new code of conduct will ban gifts to university personnel, require disclosures, and ban staffing of university call centers – some of the lenders would actually answer the phone “X University.”

Unsuitable annuities/living trusts marketed to the elderly: 20 companies have been sued by 6 states, alleging defendants use phone calls and mail deceptively to sell financial products promising returns of more than double or triple available with CDs with no risk. “Qualified” customers are passed on to agents who come to the consumer’s home and sell various products including equity-indexed annuities with large surrender charges – many times this is a person’s retirement nest egg, and causes huge hardship. All 10 lawsuits are still pending, so they’re being fought vigorously.

Subprime lending: In Jan. 2006, 49 states and DC settled with Ameriquest over alleged deceptive practices, such as pressuring appraisers to inflate values to increase loans; misrepresenting key terms to borrowers like interest rates, prepayment penalties, fees and costs, etc.; and discouraging consumers from asking questions. Ameriquest agreed to pay $295 million to 240,000 consumers nationwide, about 1/3 of their customer base, a minimum of $600 each. Various injunctive provisions: ending incentives to salespeople to include prepayment penalties in contracts, overhauling disclosures, etc. Ameriquest also paid $30 million in penalties to the states.

Other state activities include: suing phony mortgage rescue operations; shutting down subprime lenders in financial collapse; restitution to minorities improperly steered into subprime markets – this is an important case settled by NY recently against Countrywide Home Loans. A number of state AGs are seeking legislative corrections – front and back end fixes to avoid deception in initial subprime loans and then to help consumers out if they get in trouble with the loan.

Rent to own: Rent-A-Center, largest rent to own business, entered into a consent judgment with California over misrepresentation of the true costs of ownership. There were also a lot of alleged misrepresentations about “Club” membership. Result: restitution and penalty.

Preemption is a big deal: The feds have tried to preempt state regulation of financial markets, as in Watters v. Wachovia. The states filed an amicus arguing they could oversee non-banking subsidiaries of national banks. The Supreme Court sided with the OCC and the banks, holding that the National Bank Act preempted state authority. She expects congressional fallout, though not necessarily in the direction of increasing state regulatory authority; perhaps there will be a move to increase federal authority over consumer protection.

Telemarketing: 16 states sued over phony “free trial” membership programs in Trilegiant; Chase Bank was also a defendant. There was a settlement with millions in restitution and civil penalties, as well as changed practices.

Likewise, states are focused on those who assist telemarketers, such as check processors. In Nov. 2005, 5 states settled with check processor Amerinet, which processed debits and unsigned demand drafts on behalf of telemarketers. There was at least an 80% chargeback rate, so consumers clearly felt deceived; regulators argued that Amerinet should have known that this was illegitimate. Amerinet agreed not to process unsigned demand drafts and high-risk products.

Payola: What’s old is new. The payments were more cleverly disguised this time, as the record companies paid for operational expensive, hired “independent” promoters, and did other things to increase airtime. Sony, Warner, and Universal settled, making payments to nonprofit entities that will distribute the money to consumers. One of the nation’s leading radio chains continues to litigate.

DRM: Sony’s rootkit problem. The problems: the DRM was cloaked, created security vulnerabilities, and risked damage to computers if removed. Even in some cases when the consumers declined the EULA, the program was still loaded. 15 states and the FTC investigated. CA, TX and FTC obtained consent judgments, and 13 other states obtained assurances of discontinuance. Payments of $5.75 million were made to the states. Remedies: disclosure in the future.

Washington and NY have taken the lead on litigation on deceptive internet schemes, including adware, spyware, and malware. Washington has a specific spyware law, unlike most states, and has filed 5 lawsuits. Allegations include: phony operating systems warnings; sending a program that monkeys around with internet browsers, then advertising that the senders can fix the problem; installing aggressive popups that demand payment for internet services. One settlement so far.

NY has also settled with 3 major online advertisers, Priceline, Travelocity, and Cingular Wireless, who installed adware through Direct Revenue. The settlements required them to monitor their business partners to avoid the problems in the future.

Paypal: 28 states investigated Paypal for improper disclosures and collection practices. First, Paypal froze consumer accounts when there was a dispute with Paypal. Paypal also charged bank accounts when consumers thought they were using credit cards. Paypal also claimed to provide additional protection through using Paypal, even though the protections were the same as for using a credit card. Settlement: better disclosures, plus $1.7 million to the states for costs.

Pretexting: California obtained a $14.5 million civil settlement over false pretenses used to access phone records. $13.5 million will be used to create a privacy law enforcement fund. Also lots of corporate governance reforms for HP. There’s a lot of other pretexting litigation going on. 5 states have sued in 10 different proceedings against companies offering to sell individual phone records obtained by pretexting. The litigation is still pending. There are also AG calls for new legislation. The FCC is implementing new regulations to require password protection and opt-in for consumers.

Pharmaceuticals: 30 states got a consent judgment in January with Bayer over its marketing of Baycol, a cholesterol-lowering drug. Baycol carried a greater risk of certain serious muscular diseases than other statins. Bayer learned of this risk through postmarketing adverse events; Bayer properly filed reports with the FDA, but didn’t notify doctors or consumers. The settlement requires various reforms, including registering clinical studies, not making false/misleading claims, and paying the states $8 million. Baycol was withdrawn 3 years after it was introduced.

Tobacco: Vermont v. RJR over Eclipse, a “potentially reduced exposure product.” She expects a lot of discussion over PREPs as part of the debate over giving the FDA more authority over tobacco. Eclipse heats, but doesn’t burn, tobacco – it can heat it up to 800 degrees. Ads claimed reduced harm – the next best choice for smokers who worry about their health other than quitting. “May present less risk of cancer, chronic bronchitis, and possibly emphysyma.” No claim to decreased risk of cardiovascular disease or decreased risk from use during pregnancy. The current litigation concerns consumer perception, substantiation, and unfairness (does it discourage people from quitting?). What level of substantiation is required? Do you need human exposure or evidence of reduction in disease outcomes? 9 states are assisting Vt. in the litigation, which is scheduled for trial in late 2007. What Congress & the FDA will do is anyone’s guess.

Christie Grimes, Kelley Drye, presenting for August Horvath: Private sector highlights. Grimes noted instances in which Lanham Act claims were difficult because of a lack of competition between plaintiff and defendant, such as GTFM v. Universal Studios (the clothing brand Fubu sued over the fake brand Bufu in the movie How High) and Bradley v. Google (disgruntled AdWords customer), or issues of materiality, such as Clauson v. Eslinger (do consumers care about the identity of a movie producer?).

State UDAP litigation: Gerber Graduates for Toddlers. It is a “fruit juice snack.” The principal display panel had pictures of various fruits (or fruit-like products), “naturally flavored,” made with “real fruit juice and other all-natural ingredients.” In fact, they’re made of corn syrup, sugar, and white grape juice from concentrate. A federal court in C.D. Cal. determined that this wasn’t deceptive under California state law. “Fruit juice snacks” is true, and there’s no specific representation of fruitiness – though the plaintiffs pointed out that the package doesn’t depict even one white grape among the other fruits. The crux of the court’s decision: the consumer can determine the ingredients from the side panel. A reasonable consumer wouldn’t be deceived. (Then why do they make those claims on the box?)

ABA Section on Antitrust Law, Developments in Deception

Lesley Fair, FTC Bureau of Consumer Protection, Dealing with Deception: An FTC Staff Perspective: A personal take. The majority of cases she’ll talk about were settlements, which did not involve admissions of liability.

Five primary priorities: health claims; marketing and kids; promotional promises; spyware, spam, and data security; and remedies and enforcement.

A recent ad challenged by the FTC: Mother’s Day ad for Q-Ray bracelet claiming pain relief. Consumer testimonials: it was a miracle, the pain went away. Result: a redress order of at minimum $15 million, with an $87 million maximum. The FTC takes redress in deceptive health claims seriously. Likewise, deceptive weight loss claims are a priority – settlements with Xenadrine, CortiSlim, and TrimSpa resulted in $20 million in redress. Another: One-a-Day WeightSmart, which claimed to speed up the metabolism. The FTC alleged lack of substantiation. Result: $3.2 million civil penalty. Of special concern was that One-a-Day had already settled a deceptive claims case not too long ago. When the FTC has an order in place, the enforcement division will look closely to make sure the company at issue has put controls in place for future advertising.

Another example: HeightMax, a “supplement” aimed at adolescents or their parents to increase height. A perfect storm of what’s likely to attract staff attention. Result: $1.9 million penalty.

Marketing to kids: There have been some good self-regulatory efforts in the area of kids, ads and obesity. The recent settlement over Grand Theft Auto: San Andreas raises an interesting issue of industry self-regulation, since GTA received an “M” rating even though it had a game-within-a-game called “Hot Coffee.” What consumers didn’t know was that there was substantial sexually explicit content. Players couldn’t view it in the normal course of the game, but average 13-year-olds could unlock it. The presence of this unrated content changed the rating, and the FTC alleged that it would have been material to consumers, including parents. This was a use of §5 to deal with a hot issue – ratings only work if people abide by them. (NB: Take Two, the makers of GTA, would plainly disagree with this account of the facts, and point out that the settlement didn’t involve any admission of liability.)

The FTC also recently settled with Xanga, where approximately 1.7 million accounts were opened in violation of COPPA. The company asked the screener questions and still allowed these accounts when people answered that they were under 13. Result: $1 million civil penalty, the largest COPPA penalty to date.

The FTC also has an education role – OnGuard Online is an educational site for kids and parents. Kids can play “Buddy Builder” to understand the benefits and risks of social networking, IM, and the like.

Promotional practices: Gift cards have been a big issue of late. The FTC proceeded against K-Mart over its gift card with lots of fine print. After 24 months of nonuse, a $2.10/month service fee would be deducted “from your account in arrears” until the card was used or depleted. That is, at 24 months, K-Mart applied the service fee retroactively for 24 months – an instant hit of over $50. The FTC alleged that was deceptive, and recently settled with K-Mart. Likewise, the FTC recently settled with the restaurant chain that includes the Olive Garden, Red Lobster, etc. There was a dormancy fee, not retroactive and disclosed on the back of the card, but it was in 5-point type. The Red Lobster card was clear plastic. The FTC alleged failure of “clear and conspicuous” disclosure. The respondents also allegedly provided consumers with table tents etc. that served as gift card order forms, so they didn’t have the opportunity to read that 5-point disclosure even if they’d wanted to. Moreover, there was a concern because people only used the gift cards after they’d already eaten dinner and incurred charges – there could be additional consumer embarrassment and injury.

Other problems: sometimes the disclosures are not on the card but on the plastic that surrounds the card, which many gift-givers remove as part of the giving process. That’s also a practice on which the FTC frowns.

Spam, Spyware, & Data Security: FTC now has a guide for businesses on protecting personal information. (1) Take stock: know what you have. (2) Scale down: do you need to keep years-old info on file? (3) Lock it. (4) Pitch it. (Securely.) (5) Plan ahead with attorneys and tech folks if you have a breach. The guide is designed to be read by nonlawyers. The FTC also has a kit to protect consumers from identity theft: Talking About Identity Theft: A How-To Guide.

Commercial email. YesMail: the company’s own spam filter filtered out many consumers’ “unsubscribe” messages. The FTC alleged a violation of CAN-SPAM and got a $50,000 civil penalty. Find out from your clients what methods they use to honor unsubscribe requests! Make sure there are timely responses!

Other pernicious cases – Cleverlink: spam offering to let recipients date lonely wives. The company didn’t include an explicit content label, and hijacked third parties’ computers to send their email. Though the FTC didn’t allege it, apparently the woman depicted was not in fact a lonely housewife, either. A $400,000 civil penalty under CAN-SPAM.

Spyware: MediaLoader case. “Download this adorable free screensaver of an animated teddy bear and his holiday dreams. Brought to you by Joystick Savers …” Once people (often kids) downloaded this, it changed their homepage, tracked their internet use, altered their browser settings, impaired their computer performance, disabled their spyware blockers, and pelted them with adult popup ads. There is a parallel criminal investigation along with the civil proceeding.

Remedies and enforcement: “Biggest FTC redress amount ever” has occurred in 8 different categories in the past year, from do-not-call to COPPA to deceptive invention promotion to order violations to ChoicePoint’s data security penalty. Million-dollar redress and civil penalties have risen substantially.

Also, in addition to suing advertisers, the FTC has sued affilates, payment processors, and others involved in a deceptive transaction – the FTC rarely sues single entities any more, but names lots of parties, including corporate officers. When it comes to doing business with someone else, trust but verify. Do not ignore red flags from partners.

ABA Section on Antitrust Law, Panel on Product Promotion and Disparagement by Consumers: private speakers

Darren Bowie, assistant general counsel for advertising etc. at AOL: Encourages people to visit the Word of Mouth Marketing Association website, which he finds useful to identify types of WoM marketing, including creating “evangelists” who might not even be paid.

Nonpecuniary compensation is a huge deal: tchotchkes or other incentives. The FTC punted on that in its opinion letter. As Engle said, it would be fact-dependent. Traditional FTC precedent asks whether it would be material to the consumer, which may depend on the value of the tchotchke. If it’s an iPod, that’s probably material. You need to train your marketing folks that the rules do apply to these new practices; WOMMA’s ethical guidelines are a good starting point.

Affiliates: now a big deal for the FTC and the states who may hold you responsible for the acts of affiliates or subaffiliates. You should consider putting something in your contracts about complying with specific guidelines, like WOMMA’s.

Social networking: MySpace, Facebook, Second Life, etc. As many of 48% of marketers are going to use social networking this year. Many companies have their own pages on MySpace. AOL owns space in Second Life. Issues: substantiation; privacy/information collection; Children’s On-line Privacy Protection Act. Also: refer-a-friend features and their relationship to CAN-SPAM -- the FTC says that refer-a-friend has to comply with CAN-SPAM if the feature’s purpose is commercial and if there’s compensation of any kind, including nonpecuniary, or if the company affirmatively urged the sender to refer-a-friend.

There is lots of law enforcement scrutiny in the social networking space, including from the FTC and the states, especially surrounding children and age verification. Budweiser recently launched BUD TV, and they had a fairly robust age verification mechanism looking at drivers’ license records, but state AGs didn’t think that was adequate and sent a very nasty letter. There are also relevant state legislative proposals that would require parental consent before people under 16 could join.

Q: How can you avoid fraud by a 14 year old kid?

A: It’s a big problem. The FTC has specified certain procedures under COPPA. Some states feel that more is required, or should be for the 13-16 group for whom COPPA doesn’t apply. No one has a perfect solution. The Progress & Freedom Foundation has a recent report; the states haven’t figured out what to require. It would be a good business model for a company that solved the problem.

Continuing, what about product promotion by consumers? Consumers can talk up your product or trash it. There have been actions against bloggers for posting unfavorable information – more than 50 by corporations and individuals. One recently went to trial and resulted in a verdict for the plaintiff, a lawyer who’d been defamed by a former client. There are a lot of legal issues, including procedural issues: a court in Pennsylvania recently refused to require Yahoo! to disclose the identity of anonymous posters before the plaintiff made a prima facie showing of defamation. It’s important for companies to monitor what’s going on in the blogosphere.

Q: What do you do with a consumer who’s a loose cannon, making false/misleading statements?

A: You need to make a business decision about taking action – it could lead to more publicity. If a consumer were to get hold of a trade secret, you might have to act.

John Villafranco, partner, Kelley Drye Collier Shannon: Blogging dos and don’ts.

By late 2006, 8% of Fortune 500 companies were blogging. There’s no doubt that regulators and competitors are monitoring your blogs. You need to make a clear decision on whether the compnony will sponsor and/or host a blog, or several, and what the objectives are. Just because other competitors are doing it doesn’t mean you should. Are you prepared to keep it current? There’s nothing worse than a stale blog.

You need to implement a clear policy on employee blogs, especially senior employees. What type of conduct is acceptable? How will the company respond to troublesome postings?

Chances are, many of your employees already have blogs. Make sure you know what your employees are saying about your company, and that they’re abiding by company policy. One guy talked about what it was like to work at Google day to day; he meant it for friends and family, but it became more popular than that (60,000 visitors/day). His superiors were concerned, and initially asked him to remove some information they considered sensitive; then he was fired. He believes it was directly or indirectly related to the blog.

Train employees on how to comply with all applicable laws and corporate policies before they blog. (Good luck on the securities laws!) It’s no different than any other medium.

Disparaging statements about competitors are a favorite pastime on blogs, and both regulators and competitors will be watching, so keep an eye out for that too. When possible, avoid negative postings about competitors. Train employees to post content that’s unlikely to trigger tort suits and, if it’s factual, content that can be substantiated. If you can’t say it in an ad, you shouldn’t say it on the blog. (Comment: some Lanham Act cases have distinguished between formal and informal communications in determining the extent to which a reasonable consumer would treat a statement as factual or puffing.) Frequently, in a defamation action, the plaintiff will go after the company as well as the employee.

Individual employee disputes are also often aired on employee blogs, and you should try to intercept and resolve it internally. This is a real liability trap!

Be mindful of IP and train your employees on requirements, including fair use.

Compliance with security disclosure laws if they apply to your business. Watch out for failure to include appropriate cautionary language when you make a forward-looking statement. Watch out for material nonpublic information.

Monitor postings periodically to ensure compliance with the policy, and take actions against noncompliance (for example, when Microsoft was embarrassed by photos of Macs arriving on a Microsoft loading dock). Retraining can be a solution, not just firing.

Consider how a corporate blog will affect the company’s discovery and document retention obligations. You need a method to archive material.

Assign authors and identify responsibilities before launching the blog. For some companies, this is a full-time position.

Don’ts: Jessica Cutler’s blog Washingtonienne about her many affairs in DC. This resulted in the firing of the blogger who made Cutler’s blog popular and a defamation lawsuit against Cutler.

Don’t hire bloggers to say great things about your products or services without ensuring disclosure. A blog about people who slept in RVs in Wal-Mart parking lots turned out to be Wal-Mart-backed, and generated a lot of bad publicity.

Don’t allow employees to vent personal grievances; don’t permit them to publish trade secrets or patentable information – this requires training since they might not know what that is.

Before disciplining or firing employees for inappropriate postings, make sure you have a clear policy. Sun, IBM and Yahoo! all have excellent corporate policies that are easily modelled.

Q/Comment: Cyberspace/multimedia insurance is now available. The insurance policy is itself a good guide to the due diligence you should be doing.

ABA Section on Antitrust Law, Panel on Product Promotion and Disparagement by Consumers: government speakers

This panel wasn't really about the advertised topic (which is a little bit amusing, given the consumer protection focus) because, I think, practicing lawyers are not as concerned about statements by real consumers as about related issues, particularly promotional statements that don't disclose the marketer's involvement.

Mary Engle, Associate Director of Advertising Practices, FTC: For the most part, the FTC isn’t concerned with user-generated content. Where the FTC is concerned is when something appears to be UGC but is in fact sponsored or put out by a marketer itself. (Ironically – or not, really – yesterday’s NYT film blog included this story about stealth marketing by HBO.)

Commercial Alert filed a petition with the FTC on buzz/word of mouth marketing. Is this deceptive? The FTC’s staff opinion letter indicated that the Commission already has endorsement and testimonial guidelines that apply. If consumers are endorsing products for pay, that’s a material connection that consumers would want to know about, and that must be clearly disclosed. We bring a certain amount of skepticism to an ad, and the source affects the weight or credibility of a claim.

These principles apply to word of mouth marketing, a MySpace profile, a blog, a YouTube video, etc. Advertisers are trying to catch consumers off guard, but then the consumer may not understand who is speaking. There are good reasons to do this – cutting through clutter, going to where the eyeballs are, taking advantage of UGC – but it’s still got to be clear that you’re running an ad. This goes back to an older issue the FTC addressed, where ads looked like newspaper editorials. Magazines and newspapers adapted to that rule and now it’s common to see the “ad” disclosure; it’s the same in new media. Sony’s website: all I want is a PSP – it appeared to be a couple of fans, but really it was a marketing tool. People quickly figured out that it was fake, but that’s an example of something that shouldn’t have been done in the first place.

The Commission is looking for good cases in the area, and would be happy to hear from “snitches” who have good leads. Competitor complaints are a major source of investigative leads in all areas, and she invites emails on this topic.

Disclosure needs to be made, but the manner is up to the company and its agents. Still, it has to be clear and open, not fine print.

What about using kids or teens to buzz about products? That presents special circumstances – whether something is deceptive is considered from the child’s POV, not the adult’s. Disclosures have to be sensitive to the sophistication of the recipients.

Q from Darren Bowie: How does disclosure here relate to the FTC’s position on product placement, which many people consider to be advertising?

A: The FTC has said you don’t need to disclose during the TV program that Tide paid for placement on Desperate Housewives, because we didn’t think it would be material to consumers to know that the advertiser paid v. the producer/writer’s judgment that placement would add reality to the show, particularly in the context of fiction. For American Idol, we thought that it was obvious paid placement and wouldn’t cause deception. But if the housewife is shown using Tide to get out an awful stain (of what kind, she didn’t specify), P&G would be responsible for substantiation.

Q: So what if a teen just wears a “Drink Coke” shirt, like a product placement?

A: We haven’t thought about that expressly. She isn’t sure – nothing is being said, no claim is necessarily being made. (Isn’t there a representation that the individual chose, of his/her own free will, to wear that shirt because it was cool?)

Q from audience: Advertisers sponsor discussion forums on their websites, and maybe they waive membership fees (for good reviewers, anyway) – how does that work?

A: Is the company screening out negative reviews?

Q: Maybe. The expectation is that reviews will be positive, and the only compensation is free use of the website.

A: We have thought about noncash compensation, like coupons or free samples. There’s little empirical data on whether that’s a material connection, but some research suggests that when someone’s paid in cash v. gift, it creates different expectations about performance. Cash = a perception of work. Candy = a social market. What people are willing to do differs – they don’t care as much about how much they get as a “gift” in social markets, but they do correlate amount of work to amount of cash. This suggests a difference in materiality. (Translating that to materiality for other people requires several logical steps, though I do think they’re logical – the real issue is whether consumers will understand the ways in which cash and gifts both, though differently, distort ordinary judgment. If your “good friend” Coke gives you gifts, you may be a more committed salesperson than you’d be if your employer Coke paid you – and yet other people may not discount your advice even if they know about the gifts, whereas they would discount your advice if they thought of you as a paid shill. So gifts could be a cheap and effective way of distorting consumers’ communications. Robert Cialdini’s book Influence has some great discussion of the ways in which we fail to understand the psychological effects of “gifts.”)

Another answer from a panelist: Putting things on your website may be different, especially if you screen out negative reviews. You may expose yourself to a backlash or even legal risks if you take off negative information that you let people post.

Q: What about recent research by Lowenstein et al. that says that disclosing conflicts of interest (in investment advice, as I recall) tends to increase consumer trust and yet increase biased advice, making matters worse?

A: She isn’t familiar with the research. The goal is to inform consumers. Information overload is something the FTC deals with all the time.

Justin Brookman, Internet Bureau, NY AG’s office: His opinions are his own, not the AG’s. The Internet Bureau was created in 1999, and pursues any illegal activity on the internet, but mostly goes after false advertising and deceptive practices. He was concerned about the DMCA’s effects on ordinary consumers – both 512’s notice and takedown, which can harm user speech like Wendy Seltzer’s about the NFL’s copyright claims, and 1201’s anticircumvention ban, which hampers security testing of things like Sony’s CD copy protection schemes.

So the AG is very pro-consumer speech. One concern: license agreements that ban negative reviews and product testing. These should be void as against public policy, yet lots of companies include these provisions. They aren’t necessarily acting in bad faith. No one likes to be criticized or thinks criticism is fair; they may wish that benchmarking be done by different standards. NY’s position is that it’s not for the criticizee to decide when criticism is fair, and even putting the provision in your license agreement is unconscionable and subjects you to liability under NY law. NY went after McAfee for its anti-benchmarking contract, which even misrepresented that testing was illegal under federal law. This is an area where NY will continue to be active, especially as UGC becomes more important. Some companies are becoming more reasonable – IBM says you have to test the latest version of our software and disclose your methodology. He’s not sure that’s good enough, but it’s definitely better than the earlier versions.

Q: Does it matter whether the license term is disclosed before purchase? Does it make a difference whether a business is purchasing versus a typical consumer?

A: As to the first question, unconscionable terms are not valid no matter how well disclosed. As to the second, it’s not a big area for the AG – the AG’s purview is practices that affect lots of consumers. His instinct is that companies too have free speech rights, but the case is less compelling (at least if it’s individually negotiated, and not a blanket term).

Q: What is the allegation? Unfairness or unconscionability?

A: The NY AG doesn’t have unfairness jurisdiction. But telling someone they can’t criticize software, implying that it’s illegal to do so and would create a breach of contract, is itself deceptive.

Q: Most people don’t read those terms at all. Is there a solution to that?

A: It’s always been an issue. We’re bringing these actions to prevent boilerplate from taking over the world.

Q: Are you applying the reasonable consumer or the fool’s test?

A: NY has the fool’s test (what would confuse the gullible consumer), but the AG tries to be reasonable in practice. If only 1-2 consumers would be fooled, we’re unlikely to expend resources.

ABA's IP Hot Topics: Copyright and trademark

Mary Innis, Loeb & Loeb: Discussing various examples relating to Anheuser-Busch, she pointed out that keyword buys may change the analysis compared to traditional delivery of information – a TV spot that lures you in by seeming to be about Bud but then turning into a Miller commercial might be a legitimate parody, but the same ad triggered by the keyword “Bud” might amount to initial interest confusion. Or, if you think that’s okay, a Miller ad that parodies Battlebots might be a fine TV ad, but if cued by the keyword “Battlebots” might suggest source or sponsorship. (The actual ad, which prompted a lawsuit from Battlebots, is really funny, by the way.)

What about branded entertainment, especially when the sponsor has influence over the show content, such as Sears with home improvement shows? Should that be treated as fully noncommercial speech, or subject to various consumer protection/trademark/right of publicity claims? Innis argues that it depends on consumer perceptions, including consumer perceptions about whether the products depicted are performing as they really would if purchased.

The next frontier: user-generated content. Example: The VW “suicide bomber” ad – it went around the world very quickly, despite the fact that VW didn’t create it. VW received a bunch of complaints because people thought it was an authorized “edgy” campaign. It was really by two guys starting their own ad agency, using it as a marketing tool. There was a criminal action in Germany under Germany’s antiterrorism law – the guys ultimately apologized.

Jeff Cunard, Debevoise & Plimpton: A whirlwind copyright tour, starting with the biggest case of the year, Viacom v. Google. Legislative reconsideration of the DMCA safe harbors is out of the question, despite all the complaints of copyright owners and all the business models that have developed in (or supposedly in) the safe harbors. UMG v. MySpace alleged that user-designed pages included third-party music, videos and photos; a federal suit alleges direct and secondary infringement. UMG argues that the “storage” safe harbor isn’t applicable because MySpace is doing a lot beyond storage – an argument also made in Viacom. The case continues, though a California state law count was dismissed as preempted. UMG is litigious; it sued two other video sharing sites, one settled and one in discovery.

Cunard also suggested that the CCBill court was actually quite rigorous in enforcing the boundaries of the safe harbors -- many activities relating to processing credit card transactions didn't fall within the safe harbors -- which could be relevant to the UMG/Viacom arguments. At the same time, the court demanded a high level of “red flag” knowledge and a high level of policing by content owners.

Viacom: a key issue is whether there was direct infringement of the reproduction, display and performance rights. If there was, then substantial noninfringing uses are irrelevant. (But not, I think, the safe harbor – as I said on Thursday, the 512(c) safe harbor speaks of infringement that occurs “by reason of” user-directed “storage,” which isn’t one of the exclusive rights of the copyright owner, and I think that it must cover all infringing acts that result from user-directed storage as long as the OSP otherwise complies with the 512 requirements.) Also, there are questions of vicarious liability – direct financial benefit? There’s a YouTube case ahead of Viacom, Tur d/b/a L.A. News Service v. YouTube (C.D. Cal.). Tur’s complaint is not that well pleaded, but briefs have been filed, offering a preview of the Viacom arguments.

Google is also having a rough time outside the US – a Belgian court found Google News infringed several French- and German-language newspapers. This has implications for Google Book Search, given that other countries don’t have fair use doctrines. There is a pending suit in France. Google may be in a “let’s make a deal” mode, given its settlement with Agence France Presse over display of headlines/photographs. This allows Google to use more content than it otherwise could.

And of course the Perfect 10 case is the most anticipated case for the next few months. (I have toyed with the idea of a “Google Law” course. Naturally, we’d start with Cyberspace and the Law of the Horse and Lessig's response, and go from there.)

Google is very excited by Bill Graham because the Second Circuit cites Kelly, but it’s only for the proposition that displaying works in a smaller size for a different purpose can be fair use, which Cunard considers quite different from copying full books and displaying snippets. (Disclosure: D&P represents the publishers in the Google Book Search litigation.)

Blanch v. Koons, Cunard thinks, is more important because of its essential disregard of the earlier Koons cases. It says something significant about asking permission – if there are no other bad faith acts, and if it’s a fair use, no permission need be sought.

Cunard also had some harsh words for the recent Cablevision decision about Cablevision’s on-demand remote DVR services. Who is engaging in the act of copying or display? That’s the key question here as well as in user-generated content cases. Judge Chin found that Cablevision was the one perfoming the relevant acts, but his analysis was not strong. Cunard also cautioned that it was important to distinguish the remote DVR from other products like the Slingbox, which have generated threats but not yet lawsuits. Which rights are implicated? Are there multiple private performances, or public performance?

Another case: XM Satellite Radio’s XM + MP3 device – is this an infringing “download”? The ad: “Hear it. Click it. Save it.” Is it like a tape recorder or a download? The court, unsurprisingly, held that the XM service was not covered by AHRA, which is a dead letter.

Another hot topic, less sexy but important to many, many copyright owners: termination of transfers, an increasingly relevant issue and incredibly complex. Litigation over John Steinbeck’s works gives a foretaste of what’s to come.

Administratively: For the first time, the Copyright Office defined a DMCA exemption by the class of users entitled to circumvent, which is a big development.

Legislatively: Another bill from Rep. Boucher, addressing – among other things – statutory damages for most secondary liability, eliminating them except where a reasonable person couldn’t have believed the conduct lawful. Not much chance of enactment, but still likely to prompt discussion.

Hottest topics in practice: licensing v. “sales.” Every content owner now wants to be in the licensing business, tethering content to DRM and creating short-term use models. This is linked to the future of DRM. After the rootkit fiasco, Sony isn’t using DRM, and EMI just announced it wouldn’t (at least if you pay). Apple has been encouraging this, though some think this is about protecting Apple from pressure on interoperability. We’ll see more action on this in the coming year.

Chief Judge James R. Spencer, E.D. Va.: Spencer thinks Perfect 10 v. Google is likely to be affirmed, because the district court’s result is a reasonable attempt to set comprehensible rules, which judges love, especially when the technology is difficult for judges to understand. (It wasn’t clear to me that he was also endorsing the thumbnails result, but given what he said next he might well have been.) And of course licensing deals are great because judges never met a settlement they didn’t like.

Deceptive privacy policy leads to multimillion Lanham Act award

CollegeNET, Inc. v. XAP Corp., 2007 WL 927946 (D. Or.)

Previous discussion here. After a jury trial, CollegeNET won a patent infringement claim, as well as its Lanham Act false advertising claim. The jury awarded $4.5 million in damages. The court rejected XAP’s argument that the Lanham Act claim was barred by laches, accepted the jury’s award of damages, refused to award extra recovery of XAP’s profits, and found that CollegeNET was entitled to attorneys’ fees because XAP’s conduct was willful.

Some background: CollegeNET and XAP each allow high school students to apply online for admission to colleges and universities. While CollegeNET charges each school for each student application, XAP offers its services to schools free. XAP makes its money in part from the sale of students’ personal data, submitted in their online applications, to “state agencies, departments of education, student-loan guarantee authorities, and commercial-lending institutions such as banks.”

XAP’s privacy policy promises that personal data isn’t released to third parties “without the user's express consent and direction.” At all relevant times, students using XAP were asked an “opt-in” question when creating certain types of accounts: “Are you interested in receiving information about students loans and financial aid?” XAP treated a “yes” answer as “express consent and direction,” and forwarded the student’s personal information to its partners for a fee.

The court found clear and convincing evidence that XAP didn’t inform students that a “yes” answer was “express consent and direction,” though it could have included such clarifying language. Further, XAP chose not to do this because it was a “bad idea” that would result in fewer opt-ins and lower revenues. Indeed, “XAP intended its privacy-policy statements to lull students into a false sense of security regarding the privacy of [their] personal information.” Though there was no direct evidence that students were actually deceived, the court found that there was a presumption of deception arising from XAP’s bad faith, and that XAP “knew its deception substantially increased the number of students who answered ‘yes’ to the opt-in question.”

CollegeNET’s expert testified that it suffered $35 million in damages, assuming that all XAP’s college applications included the opt-in feature. The evidence, however, showed that only 15% of the applications had an opt-in. The jury verdict of $4.5 million is slightly less than 15% of CollegeNET’s claimed damages, which the court found appropriate. (It also noted that, under the statute, its only discretion was to increase the damages to the extent that they didn’t fully compensate CollegeNET; there is no corresponding discretion to reduce damages.) XAP’s profits from applications with the opt-in question were $2.5 million. Given that the Lanham Act aims at compensation, not penalty, the court found that disgorgement of XAP’s profits on top of the damages would be inappropriate. Despite avoiding this extra hit, XAP is still on the hook for what’s likely to be substantial attorneys’ fees as well as the $4.5 million in damages.

My question: was the opt-in question really deceptive? Just because XAP knew that it would get fewer opt-ins if it made opt-in sound more alarming doesn’t mean that students were deceived by the actual representations at issue. What could they have thought they were agreeing to when they said they wanted to receive information about student loans and financial aid? I’m surprised that, without direct or survey evidence of deception, the court found not just deception, but willful deception. Eric Goldman may have further thoughts, given his background in privacy policies.

Recent Developments in TM Law, ABA IP conference

Commissioner Lynne G. Beresford, USPTO Developments: Filings have been up about 9-10% each of the last two years. 96% are filed electronically. The paper Official Gazette is going to disappear! But the online search engine will improve to compensate.

Judge Sams, TTAB update: 11% more appeals and 40% more oppositions than last year – projections show a continual but slower rise in appeals in oppositions, corresponding with an increase in TM applications. The Board hopes to keep up the increase in precedential opinions.

Recent cases: Fraud on the PTO – whether in declaration of use or renewal application. Standard Knitting v. Toyota (TTABlog): applicant sought TUNDRA for automobiles, while opposer used TUNDRA and TUNDRA SPORT for various clothing items. Applicant petitioned for cancellation for failure to use on certain listed items in the application and statement of use. Fraud occurs when the applicant knowingly makes false material misrepresentations of fact, proven with clear and convincing evidence. Fraud wouldn’t occur if the statement was made with a reasonable and honest belief in its truth. In Tundra, the opposer wasn’t using the mark on most, if not all, of the children’s clothing listed in the application. The opposer claimed the persons signing the statement didn’t understand what “use in commerce” meant, but the court found that this was not a reasonable misunderstanding but a disregard for the law.

Similarly, THE SIGN case (TTABlog) – opposer alleged fraud with respect to the majority of services listed in the application. Applicants claimed misunderstanding of requirements of US trademark law for use in commerce, given that they owned an Australian registration for the same mark and that they were representing themselves before the PTO. Nonetheless, the TTAB granted summary judgment to opposer, finding the facts similar to Medinol, the source of the current muscular fraud doctrine. The timing of the misrepresentation, whether before or after registration, was not important. The applicants, prior to the filing of the notice of opposition, had repeatedly alleged use in commerce of the mark in the US. Their belief about Australian rights was insufficient because there was an obligation to investigate fully the relevant facts before signing an application.

One more new case: ELLE BELLE cancellation for the mark registered for a variety of women’s, men’s, and children’s clothes. The registrant claimed use on all the items, but the petitioner alleged that there was no use on men’s or children’s clothes, and only on half of the listed women’s clothes. The registrant alleged there was a miscommunication between itself and its attorney, aided by the fact that the registrant’s primary language was Punjabi. The board granted relief based on fraud – the claims were clear and unambiguous, and the registrant and its attorney shared a duty to verify the application. This is the board’s most recent run at fraud, but he can guarantee it won’t be the last.

Susan Upton Douglass, Fross Zelnick, Madrid Protocol Filings:

The Protocoal allows for filings for an international registration (IR) based on a home country application or registration. You don’t file directly, but with your PTO, specifiying the countries where you want protection. The home country PTO certifies the application as meeting the minimum requirements, and forwards it to WIPO’s International Bureau (IB) for review. The PTO looks for conformity between the international application and the underlying application/registration. If there are problems, the IB sends a letter of irregulatrity to the applicant and the PTO, which must be answered in 3 months or the application expires. There are various deadlines used to get priority dates.

Each contracting party examines the application per local rules, and issues office actions to the applicant, practices that vary from country to country. Under Madrid, there is a deadline of 12 or 18 months to issue a final refusal to register or a notice of possible opposition; otherwise, the registration is deemed to be granted. The IR lasts 10 years from the date the application is received in the home country, if the home country PTO sends it on within two months, or if later, 10 years from the date of receipt at the IB.

Effective in the US Nov. 2, 2003, but not much used here. As of March 27, 2007, our PTO has received over 35,000 requests for extension of protection, which is when a foreign company or individual files a request with WIPO. But these are classes, and most filings are for more than one class, so it’s really about 27,000 marks.

9,054 international applications have been received by the USPTO for certification to WIPO’s International Board (IB). 494 international applications have been rejected for certification.

72 countries are current members of the Madrid Protocol. For 2006, the US ranked third in filings in the Madrid system, with 3,148 filings (applications, not classes, 8.6% of total filings), yet this is a tiny percentage of US filings abroad.

Key features: dependence on the basic mark. For a period of 5 yeaars from the date of the IR, the IR is dependent on the application/registration that formed the basis of the IR. “Central attack” feature causes all registration s granted on the IR to fail if the basic mark is cancelled, successfully opposed, or lapses in the 5 year term – the PTO is supposed to notify the IB about this. If you negotiate a settlement with another party and drop a class, that’s forwarded to other countries too.

However, the holder has 3 months from date of cancellation of the IR to file directly with the contracting parties to transform the registrations into national registrations, which allows you to keep your priority date but pay all the fees and start over, including finding a local agent.

Advantages: cost savings on filing fees, unless there are major problems or a central attack. Large savings on assignments and other title changes and renewals. Time savings due to deadlines in contracting parties, though there’s no deadline for the IB to issue the IR.

Disadvantages: central attack/dependency; she doesn’t recommend filing based on an application, because too many bad things could happen. If you have an existing, longstanding registration and you want a new color scheme or class of goods, this would be a good use of Madrid. Other problems: Assignment of IR may be made only to nationals of Protocol Countries, which excludes Canada and Latin America. Also, for US filers, IRs and REPs are narrower in protection than would be allowed under national rules – “books in the field of travel” rather than “books.” In the CTM, you can get “books.” Clients would often rather have broader protection. Also, no amendment of the mark is permitted. If you change the order of your mark – word mark before logo when application was logo before word mark – the USPTO will accept that, but Madrid won’t.

More disadvantages: Incoming REPs risk attack on the ground of fraud on the PTO due to overclaiming of goods/services or use of class headings per local country rules. An application that lists a large number of products generally includes a lot of “garbage” from the US perspective – is it fraudulent ab initio? Douglass would like to say no, but can’t be sure.

Separately, IB correspondence is not specifically addressed to any person in the company, doesn’t contain deadlines on the cover sheet, sometimes refers only to the IR number without the mark or the holder’s name, and file cannot be reconstructed if IB correspondence is lost in the mail! Also, there are docketing issues for Sec. 8/71 filings – the timing is different, and there is no IR grace period whereas the US has one.

New provision in US law: if there’s a split of mark ownership, a registration can be divided into separate registrations, each with a new registration number but original registration and priority dates. This creates special IR problems.

Siegrun Kane, Morgan & Finnegan, Back to the Future with the 2006 Trademark Dilution Revision Act: The TDRA puts us back where we thought we were with the 1995 Act, protecting the value of the uniqueness of plaintiff’s mark without showing likely confusion. Except that niche market fame is gone.

If you are a famous fish in a small pond, look to a state likely dilution statute. If you are not quite famous, look to a state statute that doesn’t require fame – some require “extremely strong” or “truly distinctive,” though one case held that sTRANGEmUSIC for concert recordings wasn’t distinctive enough for dilution protection – there were plenty of “strange music” sites on the internet. Practice point: check the internet, Lexis and Westlaw.

Kane predicts increased importance of intent, now listed as a specific blurring factor. When a mark is arbitrary, there’s often no good reason to copy it – e.g., Viagra copied by Triagra. By contrast, Century 21 lost a case against Century for insurance, when the parent company had used Century for a long time; this case was reconsidered under the TDRA and the defendant still prevailed.

Kane cited Lardashe and Spa’am as tarnishing uses (though noted that the Second Circuit disagreed about Spa’am). She identified the “Be Prepared” Girl Scouts case as the earliest use of the First Amendment to fend off a tarnishment claim,
and then pointed out that “we’ve come a long way,” such that Barbie is now the poster girl for the First Amendment defense, because of the Barbie Girl case. (All this really brings up the IP/Gender connection.) If you are a cultural icon, you may be skewered by the First Amendment – as Food Chain Barbie was.

Exclusions: the exclusions include any noncommercial use, which is the same thing as anything protected by the First Amendment. (Comment: !! Further proof that trademark lawyers live – with the long-time assistance of courts, I should say – in a different world than the rest of us concerned with regulations of commercial speech.) Also nominative and descriptive fair use.

Chewy Vuitton case: the issue on appeal is whether the exclusions apply, because the defendant is using “Chewy Vuitton” as its mark.

Copyright: Issues of First Impression in the Courts

I spent the morning at the ABA’s Section on IP Law’s annual conference, getting updates on copyright law. Rather than provide a detailed recap, I wanted to follow up on a thought sparked by Rob Kasunic’s presentation on Bill Graham Archives v. Dorling Kindersley, the Grateful Dead case. In Bill Graham, the Second Circuit held that not every use is entitled to a fee even if a market exists, which seems right but also inconsistent with the various CCC/course packet cases. Why wasn’t this use one that was entitled to a fee?

I wonder whether there’s a lurking copyright misuse issue in Bill Graham that led the court to reject the plaintiff’s claim of market harm even though (1) there is in general a market for licensing images in the high-end picture books Dorling Kindersley produces, and (2) the plaintiff actually participates in the licensing market. In this particular case, plaintiff didn’t ask for the (customary) fee. Rather, it asked for a reciprocal grant of rights so that it would be able to produce and sell CDs and DVDs of Grateful Dead concerts in its archive. Plaintiff is presently involved in litigation – against, among others, the Grateful Dead – about its sales and streaming of archival concert footage. Essentially, plaintiff was trying to leverage its copyright rights in the posters to gain control over other, unrelated works – asking for something the copyright laws don’t entitle it to get. Though the court doesn’t discuss plaintiff’s licensing demands in its legal analysis, perhaps they affected the court’s perception of the legitimacy of its market effect argument.

J. Michael Keyes, of K&L Gates, also gave a neat talk, making the point that §1202’s provisions on “copyright management information” are arguably the most overlooked portions of the DMCA; we are just beginning to see cases about what constitutes CMI and what constitutes its removal.

As for what I said, I speculated about the treatment of visual and sculptural works as “facts” rather than expression when they are created through industrial processes such as molding, following the facts of Conwest Resources v. Playtime Novelties (earlier discussion here). In an era of computer-assisted design and 3D printers, we may expect more such cases where even works that seem to fit into traditional copyright categories may not be products of “authorship.”

I also talked about Dastar’s creeping imperialism. Copyright is, of course, generally the beneficiary of that imperialism, in the sense that courts don’t limit copyright in order to protect trademark’s coherence (though see IQ Group v. Weisner Publishing for an interesting variant where the court’s refusal to create a “mutant copyright law” led it to refuse to treat a trademarked logo as CMI for purposes of §1202). The issue for copyright practice is whether pendent state-law claims for varieties of unfair competition will be pervasively preempted, as the logical consequence of analysis like that in Antidote v. Bloomsbury (discussed here).

NYT story about Equal v. Splenda battle

In which I'm quoted. I like Merisant's lawyer's description of people misunderstanding Splenda as "magic sugar." That's the kind of phrase that can help win a case. Until I began reading the business reporting on this case, I wasn't aware of the Sugar Institute's separate lawsuit against Splenda. There have also been various consumer lawsuits claiming deception over the Splenda-sugar relationship, but as I understand it most have gone nowhere, which isn't surprising given the high standards applied to consumers these days -- competitors have a much better shot at winning. Which, I must say, seems odd, given that the ideology of the modern Lanham Act is that competitors are proxies for consumers harmed by false advertising.

Wheel of ... litigation

IGT v. Alliance Gaming Corp., 2007 WL 911773 (D. Nev.)

The parties are competitors in the market for computerized gaming machines, specifically "wheel of fortune" type machines. IGT sued defendants (collectively Bally) for patent infringement. Defendants counterclaimed for declarations of invalidity, noninfringement, and unenforceability, as well as antitrust violations and false advertising based on IGT’s allegedly fraudulent acts in receiving its patents and claiming on its website that Bally was an infringer of those patents.

Usually, it’s difficult to maintain a false advertising claim based on a competitor’s statements about IP violations. The exception, which applied here, is when the relevant consumers are sophisticated businesses that can be expected to pay attention to allegations of patent infringement. The remaining hurdle is that courts generally impose an intent requirement – indeed, a bad faith requirement -- not otherwise present in the Lanham Act, in order to allow people to make good-faith but mistaken claims about patent validity. Bally avoided summary judgment on this issue, because of disputed factual issues about what IGT knew about the validity of its patents when it issued a press release claiming that it filed a patent infringement case to “stop [Bally] from misappropriating IGT’s patented innovations.” Given the factual issue on bad faith, Bally could also take advantage of the presumption that intentional deception actually deceives the public.

Another potential issue is whether press releases count as “advertising or promotion”; again, at least with sophisticated consumers, it’s likely that they do. Indeed, Bally submitted evidence that it received numerous concerned inquiries as a result of the press release and lost at least one order for 100 machines. Given that patent owners can pursue end-users of infringing devices, Bally’s customers were right to be concerned. IGT did, however, win summary judgment on Bally’s intentional interference with prospective economic advantage claim, because there was no evidence IGT knew about this particular lost order.

Microsoft sued for "Vista Capable" sticker

Machines labeled "Vista Capable," it turns out, could only run Vista Basic, which is missing a number of features of Vista Premium. Ad materials for Vista Premium made the distinction, but the basic "Vista Capable" stickers on lower-end machines didn't. Microsoft's position: We tried really hard to tell people what the differences were.

Nothing sues like an Electrolux

Imig, Inc. v. Electrolux Home Care Products, Ltd., 2007 WL 900310 (E.D.N.Y.)

If you sue a competitor for false advertising for telling people that your products infringe its IP rights, you can expect some IP counterclaims. And that’s what happened here.

Imig copied two Electrolux models, the Sanitaire models 866 and 899, as the Perfect P101 and P102, having them produced in China. Of relevance here, Electrolux makes vacuum cleaners similar to the 866 and 899 as “private label” machines sold by other parties under their own brand names. After Electrolux allegedly said nasty things to distributors, Imig sued, and Electrolux counterclaimed for trade dress infringement, false comparative advertising, and copyright infringement based on copying of Electrolux’s Owner’s Guide.

Copyright infringement was easy: Imig’s Chinese manufacturer copied the owner’s guide wholesale. Imig denied that it knew of or was involved in the creation of the infringing owner’s guide, but the court found that irrelevant because Imig met the standards for vicarious infringement. From the way the court describes the situation, it seems that the reproduction occurred overseas, raising a Subafilms-type issue of whether one can be vicariously liable under US law for authorizing conduct that doesn’t violate §106. But what about the distribution right? Wouldn’t Imig be directly liable for distributing the guides in the US regardless of its role in violating the reproduction right? Maybe the details of how the vacuums and their manuals got to the US made Imig a vicarious infringer of the distribution right, too.

Imig also made various unsubstantiated comparative and absolute statements about the motor life and strength of Perfect vacuums in its ads. Electrolux conducted independent testing disproving those statements (also, Imig’s “tests prove” claims were wrong, since the tests it conducted didn’t prove the claims) and thus prevailed on its false advertising counterclaims under federal law. The court denied summary judgment on the New York false advertising counterclaims because Electrolux hadn’t shown evidence of injury as required. Imig did not attempt to defend the truth of its statements, arguing instead that it had ceased to disseminate them. Legally, this was a slam dunk, but it shouldn’t be discounted that Electrolux had to conduct extensive and possibly expensive testing to prove its case.

As for Electrolux’s allegedly false statements, Imig charged that Electrolux had told people throughout the industry that the Perfects “infringed on the Sanitaires and that anyone who purchased the Perfects would be sued along with Imig.” Electrolux used affidavits and depositions from every individual identified by Imig denying that they heard such statements from Electrolux. One person claimed that he’d heard those statements from his customers and other sources, but didn’t identify Electrolux as the source. The court thus granted Electrolux summary judgment on the false advertising and related claims. (It’s worth noting that Imig could be right that any claim of infringement would be false, given the court’s ruling on the trade dress issue. But there would still remain an issue of whether bad faith was required and present.)

Trade dress infringement dominated the case, which provides a nice illustration of the three principles I tell my students are key in §43(a) trade dress cases: (1) the plaintiff’s ability to select and define elements of its claimed trade dress based on what it is that the defendant copied; (2) the key role of functionality and the tensions between refusing to protect functional features and protecting overall nonfunctional dress; and (3) the role of word/house marks in fending off confusion. Because of the factual uncertainty surrounding issues of protectability and confusion, the court denied summary judgment to both parties.

Electrolux claimed protection for six elements of its design, including the shape and color of the base, the on/off switch, and the height adjuster, as well as the font, writing, and position of the writing on the bag. Imig conceded that the overall combination of elements wasn’t essential to the use or purpose of the vacuums. The court thus asked whether the particular combination of features had a measurable effect on the cost or quality of the vacuums, and found conflicting evidence. Electrolux primarily argued that alternative designs were feasible, meaning that there’d be no competitive detriment to protecting its trade dress. The court disagreed that this was the sole test after Traffix.

Essentially, the court conflated protectability with protection: “[T]he fact that a competitor could manufacture a comparable product with a different design has minimal bearing on the question of whether the product design for which protection is sought is inextricable, in the mind of the consumer, with identification of the product's source.” The court correctly pointed out that protection for nondistinctive designs, like protection for functional designs, would grant monopoly rights in the underlying product – but I can’t see how that makes a nondistinctive design unprotectable as a result of functionality doctrine.

Despite this confusion, the court proceeded to analyze whether Electrolux had demonstrated secondary meaning. The flexibility §43(a) grants in defining trade dress is offset by barriers in proving that the selected features are responsible for any consumer perception about source. Here, Electrolux submitted a survey in support of its claims; 118 of 157 respondents identified one or more of the six relevant features as signifying that the tested vacuum was a Sanitaire. But none identified all six, let alone the combination. Indeed, two-thirds cited the red color as their reason for identifying the Sanitaire. The court gave no probative weight to the survey because it didn’t demonstrate “the symbolic function of the product design, overall, with respect to the source of the product.” Because Electrolux submitted no other evidence on distinctiveness, factual issues remained. (Is this right? Shouldn’t Imig have been able to get summary judgment in the absence of other evidence of distinctiveness?)

Assuming Electrolux could show nonfunctionality and distinctiveness, there were issues over likely confusion. On the strength of the mark, Electrolux’s private label line of vacuums virtually identical to the Sanitaires was important. “The more that the market is populated with vacuum cleaners designed like the Sanitaires, the less likely consumers will be to associate the Sanitaires' trade dress with a single source. The strength of the Sanitaires' trade dress is diluted accordingly.” (Could Electrolux flip the relevance of this point? If consumers think that Electrolux makes private label brands, isn’t it possible that they’d think that the Perfects were private-label productions despite the differing word marks? Or is that a competitive strategy we don't want to support with the protections of trademark law?)

On to the other confusion factors: There were clear similarities between the Perfects and the Sanitaires, but the court refused to find the overall impression of the two confusingly similar as a matter of law. The two key points were the different colors (red v. dark blue or black) and the different brand names on the fronts of the bases. This was insufficient to justify summary judgment for Imig – consumers might expect that the same source would make a product in multiple colors, and the label “Perfect” might not be sufficient to distinguish the Perfects from the better-known Sanitaires – but it was enough to require a factfinder’s resolution.

Given that the vacuums were designed and marketed for commercial use, the market could have more discerning consumers than average. Actual confusion evidence – which Electrolux didn’t have – would be highly probative.

On good faith, there was no dispute that Imig deliberately copied some Sanitaire features; Imig’s patent counsel commissioned a patent search to see if it was free to copy the appearance, and perhaps also the mechanics, of the Sanitaires. Yet there was also no evidence of intent to deceive consumers. Given Imig’s comparative advertising, arguably there was a clear intent to distinguish the products.

Quality, that strange leftover factor that never favors a defendant, was also in issue because Imig’s vacuums suffered significant quality problems; several customers returned all purchased vacuums, and Imig accepted 40% of the Perfects as returns. But, as the court pointed out, there was no indication of any source confusion – people complained directly to Imig, and made their returns to Imig.

As to consumer sophistication, the court declined to speculate in the absence of any evidence about the relevant market or the consumers therein.

My feeling is that Electrolux got a pass on its trade dress claims because of Imig’s false advertising, copyright infringement, and general chutzpah in suing Electrolux. If this had just been a trade dress case, Imig should have prevailed on summary judgment.

What Ifs? Trademark Law II

Barton Beebe, Benjamin N. Cardozo School of Law, What if the Supreme Court Had Affirmed in Dastar?

First: the Court held that “origin of goods” refers to producers of tangible goods, not any idea, concept, or communication therein embodied. Thus, Dastar need not attribute to Fox its copies of a series Fox formerly produced. The Court admitted that some reverse passing off might be allowed by this ruling, especially with communicative products, but the alternative was to create a mutant/perpetual patent & copyright law. Moreover, the Court didn’t want to put defendants in the position of tracing the source of all the ideas etc. from the public domain in its products. Future defendants would be in a double bind; attribution would create a risk of passing off liability, and omission would be reverse passing off. The Court doesn’t give an affirmative reason for ruling in Dastar’s favor, but a bunch of negative reasons for ruling against Fox.

What might the Court have done differently? Ruling in favor of Fox can be justified through goodwill: someone else is gaining the goodwill from Fox’s product. And that might create a false expectation about the future quality of Dastar’s products. The Court could have ruled narrowly, remanding the case for evaluation of the TM aspects – was there any real evidence of consumer confusion about source? Fox made no showing of confusion – consumers might not care about or consider the source of the expression. The Court could have rejected the physical/communicative distinction – we don’t think that the maker of a watch invented the watch; we might not think Dastar was the source of the footage.

A much better way to rule in favor of Fox: Even if consumers don’t care, the Court could have ruled prescriptively that consumers should care about origin and source of ideas, innovations, expressions, and the rest. Beyond issues of goodwill and search costs, consumers should be taught in general how little in IP is knew. Culture is almost entirely recombinant. IP tries to efface tradition. If we take attribution seriously, we’d encounter a huge thicket. But attribution doesn’t equal authorization. Dastar was an expression of the forgetfulness of modernity – we no longer care about the geneaology of things or ideas, but what they can do for us. History is bunk. We say that to avoid property rights, but at the same time the Court is radically effacing tradition.

Imagine a world in which attribution is more important than progress, in which commodities must tell their origin stories. (I’m reminded of the discussion of GIs, and origin stories, at the gender conference a few weeks back.) It would be sort of like open source software. It could help to defetishize commodities, so that they no longer seem to appear as if by their own nature on the store shelves. The tennis shoes we wear come from Nike. We don’t know what that means, but we certainly don’t imagine them coming from sweatshops overseas. The fear: that forgetfulness is shifting over into intellectual property as well.

“I created it, it’s mine” is a powerful claim. But maybe if we insisted on footnotes we’d be less likely to grant control rights. We’d tear up ideas about novelty, originality, independent creation. Dastar is a recent chapter in the fetishization of IP, even though Scalia’s opinion is strongly materialist in its focus on tangible goods. Ideas are allowed to seem as if they spring from nothing. Information seems to be alive and searching for us. This is a bad idea, because we are alive and ideas are objects. We should see them as property, not disembedded subjects.

John T. Cross, University of Louisville, What if The Trademark Cases had been decided the other way?

After the TM cases, Congress waited until 1905 to bite the Commerce Clause bullet, though there was a proposed constitutional amendment (to carry out international treaties!) to grant the right to protect TMs.

There are two tracks for the Court to have upheld the Act. (1) Under the Commerce Clause: could have avoided tooth-gnashing about the Commerce Clause for the next 40-50 years. As for TM, the 1870 TM act was incredibly radical: you could register based on use or adoption – no 100-year-wait for ITUs.

(2) Under the IP Clause: Kevin Saunders’ notions of alternate worlds are very important here. TMs could be considered writings by an author. Or you could say that the Clause doesn’t require originality. For the first, a TM is a form of communication. A writing under the IP clause is something that communicates. Consumer Reports explains product attributes; so too does a TM communicate attributes and source. A musician borrows existing notes and arranges them in a new way. Likewise, a TM owner may adopt an existing term, but uses it in a new expressive way.

The second argument would be that originality isn’t a constitutional requirement. The TM Cases themselves set out that point, but the Court’s reasoning is facile. “Discoveries” is loaded with newness, but “authors” and “writings” aren’t. The purpose those terms serve is to limit the power granted “to promote the progress of science and the useful arts.”

Under this second, more radical argument, what would IP law look like today? It might not look all that different. Databases would be different. But that’s pretty marginal. All the IP clause does is empower Congress, and Congress wouldn’t necessarily have gone out of its way to grant copyrights to random nonoriginal works. It would have made Feist different, though it could have been a statutory interpretation case.

Lisa P. Ramsey, University of San Diego School of Law, What if there were no First Amendment distinction between commercial and noncommercial speech: would trademark law be constitutional?

Mostly, yes. It would raise serious questions for certain trademark doctrines.

Most TM cases involve commercial speech and misleading use of a TM. If TMs aren’t being used in a misleading manner, you have to go to Central Hudson analysis (though courts don’t). Usually courts don’t use an independent First Amendment defense, but incorporate various doctrines to limit TM rights, and Congress does the same thing. Courts go out of their way to characterize speech as commercial when they’re going to find for the plaintiff.

Without Central Hudson, all this is cast into doubt. What level of scrutiny would be applied? Start with the government’s purpose: content/viewpoint regulation? In San Francisco Arts & Athletics – the Gay Olympics case -- the Court applied O’Brien intermediate scrutiny analysis to the noncommercial elements of the speech at issue. That assumes content neutrality and might produce results very similar to Central Hudson. Yet, as Eugene Volokh says, TM cares about the communicative impact of the speech, so that seems content-based. It’s like regulating the use of profanity in public. That would mean applying strict scrutiny unless the speech is otherwise unprotected.

Some have argued that Turner scrutiny should apply in copyright – if the government is allocating speech entitlements, you use intermediate scrutiny, but rigorously to make sure the government is getting it right. That could be the case here as well.

What about a threshold requirement for misleading use? Would you ask first whether the use was misleading, then apply strict scrutiny? Or would you start with strict scrutiny and say that the government interest in suppressing misleading speech is compelling? Scholars disagree over whether case-by-case or wholesale analysis is preferable. But either way, misleading speech is unlikely to be constitutionally protected.

Ramsey agrees that IP laws are content-based, or at least deserve Turner scrutiny. Effects on TM doctrine: Substantively, TM can offer a good fit between the government interest in regulating TMs and the law, whether that interest is protecting consumers, encouraging the production of goods of consistent quality, or protecting producers’ investment in goodwill. Congress would, however, have to set forth exactly the interest it was trying to protect to survive narrow tailoring analysis.

Possibly unconstitutional doctrines: Protection for descriptive TMs, since it’s not misleading to accurately describe the qualities of your products. Protection for more than one mark per brand – product name, but not slogan or multiple slogans. Dilution! It regulates nonmisleading uses. An expanded descriptive fair use doctrine might be required.

Procedurally, prior restraint doctrine could be applied to all TM cases, not just noncommercial uses.

Rebecca Tushnet, Georgetown, What if comparative advertising were infringing?

Start with a heresy for a US lawyer: You can have a free market economy without comparative advertising. There’s a robust debate in the marketing literature over whether comparative advertising is even a good idea for a challenger brand.

Background: in 1969, the FTC decided to encourage naming competitors in ads because names were more useful to consumers than comparisons with “Brand X.” There were no barriers in US TM law, because of decisions like 1968’s Chanel v. Smith, in which the 9th Circuit approved the practice of advertising a smellalike perfume. US law doesn’t consider advertising unfair in the absence of false or misleading claims. Even newer dilution laws don’t cover comparative advertising, either by assumption (state laws) or by explicit exception (federal).

An alternative path exists, and was taken by most European and Commonwealth countries, holding comparative advertising unfair for several reasons. First, it disparages the competitor – here disparagement doesn’t have to be false. Examples of conduct held unfair: publicizing a court decision against a competitor; making comparisons of efficacy supported by scientific evidence; posting a sign that says “compare and make up your mind before you buy” (which incurred a 10,000-franc fine in France); and advertising that consuming cookies is more dangerous than breathing secondhand smoke. On the last one, the cookie makers aren’t competitors, and they might well protest that they’re being hauled into a public debate over tobacco in which they had no interest.

Second, comparative advertising takes unfair advantage of a competitor’s reputation. It’s free riding, like initial interest confusion without the confusion. (And since IIC is really initial interest confusion without the confusion in a lot of cases in the US as well, it’s not as far from our system as we might pretend.) Third, comparative advertising creates an inherent temptation to mislead and distort the truth, because people are naturally biased in favor of their own causes, so a comparative advertising ban serves as a prophylactic against false advertising. Fourth, comparative advertising takes a competitor’s property in its TM. Fifth, comparative advertising is against general commercial propriety. A ban protects sellers from outsiders who don’t play by the rules, and indirectly protects consumers because a seller who rides roughshod over competitors’ interests is likely to do the same to consumers.

NB: I am not saying I agree with these claims; they are my summary of reasons given to ban comparative advertising.

In recent years, Europe has seen some loosening: the 2001 European Directive approved of some comparative advertising, though the restrictions still seem odd to US TM lawyers. Examples: comparisons have to be objective, material, relevant, and verifiable. No taste tests, no puffery, no “if you like X, then you’ll love Y.” You can’t discredit or denigrate a competitor’s marks or goods. You can’t compare products with different designations of origin. You can’t take unfair advantage of a competitor’s mark or designation of origin. You can’t present goods as imitations or replicas of goods bearing a protected mark. Even under the Directive, it’s unfair to advertise cheaper prices on glasses without disclosing a difference in the lenses.

What if this had been the rule in the US? My story is that it would no longer be, not after NYT v. Sullivan and the rise of protection for truthful commercial speech. Sullivan is the core of the modern mythos of the First Amendment; the more you look like the NYT, the more First Amendment protection you get, and advertisers making truthful claims that anger competitors look very much like the NYT. Especially once Virginia Pharmacy entered the picture, comparative advertising bans would have been obvious candidates for constitutional invalidation. Indeed, the pharmacy board’s concern in Virginia Pharmacy – that price advertising would wrongly induce consumers to focus on price at the expense of service and would harm small pharmacies as against large chains – is exactly the kind of concern that justifies comparative advertising bans.

Under those circumstances, and to the extent that the ban was explained as a feature of trademark law, the First Amendment would have arrived at the core of trademark law much earlier, and it’s not clear how much would have survived. The history of the First Amendment is one of imperialism – once-robust fields reduced to shadows of their former selves, much to the surprise of practitioners and experts in those subjects. Blasphemy, obscenity, libel, privacy/intentional infliction of emotional distress – all have found themselves minimized when doused with the battery acid of the First Amendment.

The one thing trademark law might have going for it is the concept of property, which serves to fend off First Amendment challenges – you don’t have a First Amendment right to use my printing press without my consent. But, San Francisco Arts & Athletics notwithstanding, I don’t think property would (or will) ultimately protect trademark from First Amendment attack, because the structurally similar interest in reputation – which can be seen as a property interest – has not been enough to preserve libel law.

Q for Beebe: What about trying for the best of both worlds with an attribution misuse doctrine? You get attribution rights if you’ve attributed to everyone in your chain of creation.

Beebe: Sounds cool.

Lemley for Ramsey: Why isn’t dilution unconstitutional even under Central Hudson? You can’t stretch property rights too far.

Ramsey: True, dilution is already suspect. Heightened scrutiny would make courts ask what Congress is really trying to do.

McKenna for Beebe: How would consumers learn that attribution isn’t permission?

Beebe: The hard way. There’d be confusion for a while.

McKenna: If not backstopped with a rule barring Fox from suing, consumers will never learn that Dastar doesn’t need Fox’s permission.

Beebe: The Court could have set out statements a secondary user could include. A norm of attribution as in open source software could develop. The Court could also have set out factors, as in KP Permanent, without absolute rules.

Vetter for Beebe: The open source license implies authorization because of its context; citing Mark Lemley doesn’t. You could imagine a rule requiring nonmisleading attribution, from which norms could develop.

Beebe: To the extent something is on the market, the implication is that it can be cited.

Q: Assuming the Court followed your approach, even with disclaimers consumers would still risk confusion over endorsement.

Beebe: A bibliography at the end of a book doesn’t imply permission.

My response: This is a prescriptive norm dressed as a rule about consumer understanding. There’s no evidence that disclaimers, disclosures, or other forms of attribution are even noticed by consumers. (And before you trust courts to draft such language, even if you think it exists, take a look at the non-effects of the language the Pearson v. Shalala court thought would be obviously adequate to avoid any deception about the scientific support for dietary supplement claims.)

Beebe: He’s fighting against the modern tide in which attribution isn’t important to people.

Q for Ramsey/me: Isn’t this why the Supreme Court is unlikely to change the level of protection for commercial speech? TM and securities law are the parade of horribles that preserve this otherwise difficult distinction.

Ramsey: The Court would get it right, preserving securities law, as Kozinski & Banner suggested.

Me: I disagree. Kozinski & Banner are disingenous when they suggest that commercial fraud would still be constitutional, so the modern regulatory state would be mostly untouched. Setting aside that political fraud isn’t actionable and assuming that commercial fraud would be, the differences between the common law and modern securities, false advertising, food & drug, etc. regulation are profound, from the replacement of intent with strict liability to disclosure requirements to a variety of presumptions that couldn’t survive strict scrutiny unless – as others have argued – the Court made strict scrutiny a lot more lax.

Congratulations to Peter Yu for an excellent conference, both well-run and jam-packed with good content.

What Ifs? Trademark Law I

Irene Calboli, Marquette University Law School, What if trademarks were, after all, protected as property?

Practitioners see TMs as property already. Yet this isn’t the theory in the US (though it is in Europe). Protection is based on confusion, and to a certain extent on avoiding free riding.

We might be better off under a property regime. We can cabin TM law more and better using property tools, along with getting clearer laws and fewer lawsuits. Historically, TMs have been treated as property sometimes, though the characterization has waxed and waned. The objection: trademarks are language and symbols that shouldn’t be propertized. The result: property theory shifted to “goodwill,” not the symbol itself. State dilution laws gave property-like protection, augmented by federal law in 1995. At least for famous marks, we have a form of propertization now.

Effects on establishment of TM rights: Propertization need have no effect – distinctiveness plus use/intent to use are the two pillars of establishing rights. (Would you deserve compensation from the government if your mark became generic, like eminent domain?)

Effects on enforcement of TM rights: Consumer confusion is important in the European system as well. Infringement is a trespass – but that still requires confusion, except for well-known marks that have dilution protection. Stronger TM rights can of course be abused, but there are still defenses – nominative use, descriptive use, parodies/other First Amendment defenses – the same as property defenses of easements, necessity, etc. Maybe we could even convince courts or legislatures to expand TM fair use doctrines.

Transfer of rights: Would enable assignment in gross and naked licensing. But marks can still be cancelled if they are misleading or generic. So if assignment or licensing harms consumers, the mark could be declared invalid. (My thought: could we draw an analogy to nuisance? You could even get a disparagement/scandalousness defense out of that.)

Property is not an evil word!

Mark P. McKenna, St. Louis University School of Law, What if trademark law really focused on consumer decision-making? (with Dan Hunter)

Framing the issues: TM not as unfair competition law, but part of law of consumer decision-making, a broader concept than search costs. Consumers don’t go into the marketplace with fixed, exogenous preferences and then search for a good fit, which is another reason to reject the standard search costs rhetoric. Still, his project focuses on the ability to make decisions, not on preference formation.

The contours of this problem differ from the standard concept of confusion in TM law. Lots of non-TM TM uses can interfere with decision-making. There isn’t a decision-making reason to distinguish between TM and non-TM uses, though there may be other reasons. “Source” confusion is different from other types of confusion, such as confusion about product attributes, but they’re all relevant. So he will make a case for a materiality requirement – there are cases when consumers use information, but it’s not clear that it hampers decision-making in any way. Thus, there should be a general requirement that information matters to consumers.

There are also many cases in which plaintiffs try to obscure ownership. That ought to be governed by the same law – it’s just as problematic as anything a defendant might do.

If this is a decision-making problem, we should take into account other things we know about the decision-making process. For example, some segment of consumers experiences a “tyranny of choice” – information/choice overload stymies the ability to choose.

A brand (consumers experience brands, not marks) activates a series of associations. Apple® = computers, iPods, innovative, underdog, cool, high tech, quality, secure, artistic, etc. Brand associations are multidimensional – there is brand image, brand attitude (do I like it?), and perceived quality, which are not necessarily dependent on one another. Consumers use context to distinguish Apple computer from apples at the supermarket.

Moreover, consumers are inveterate categorizers. Dell has some associations that overlap with Apple, because consumers lump product categories together.

The question when consumers see a new product: which associations will be activated, and will they matter? Often similar trade dress will activate similar product features – signalling an intention to compete. This is only a problem if it’s not clear that the source is different or if the products don’t actually have the shared attributes being signalled. Consumers can understand differences easily in things that are overall similar – the differences stand out versus the similarities.

The other possibility is Microsoft shoes – what do you get out of seeing Microsoft on shoes? This would only be a problem if consumers thought that Microsoft had some ability to make good shoes. The shoemaker could be borrowing a lot of recognition value, but the decision-making impediment would only arise if the recognition included a perception of expertise. Consumers are unlikely to care that the shoes could be from Microsoft, which is why McKenna thinks materiality is an important requirement.

Sufficiently broad protection for brand values harms consumers, even when it’s good for Microsoft. Debate in the literature: is advertising valuable? It creates differentiation (call it artificial if you want), multiplying dimensions of choice for consumers, amplifying the tyranny of choice problem. Thus, even if it’s true that TMs allow us to make choices, the net effect might be too much choice, making broad TM protection bad. (The missing idea is that broad protection generates more TMs. Is this true?)

Lars S. Smith, University of Louisville, What if eBay Inc. v. MercExchange, L.L.C. had been a trademark case?

eBay is a patent case about a type of marketing. The Supreme Court holds that whether an injunction should issue depends on the traditional equitable factors – irreparable injury; availability of adequate remedies at law; balance of hardships; and public interest. The history of equity involves case-by-case determinations, not automatic injunctions.

The problem was that the Federal Circuit had a different rule, requiring permanent injunctions in almost all circumstances in order to preserve the right to exclude as the essence of a property right. The district court did do the 4-factor analysis and initially declined to issue an injunction. But the district court focused on some facts the Supreme Court didn’t like – MercExchange’s willingness to license and lack of practicing its patent. So it would suffer no harm from a pure damages remedy. The Court pointed out that many inventors, like university professors, can’t make their inventions but can only license them. Moreover, the court’s skepticism about business method patents can’t justify denying an injunction if the patent is valid.

Both the patent and TM acts speak of equity in authorizing injunctions. As with the Federal Circuit’s rule, we have doctrines saying that damages are inadequate in TM cases because of the inability to control the quality of the goods sold under the mark – these damages are irreparable and unmeasurable by their very nature. Courts don’t even balance the harms between the parties. Harm to consumers should fit into the public benefit factor, and is sometimes mentioned.

Where are we now? Audi AG v. D’Amato, against a cybersquatter. The court of appeals applies eBay and the four-factor test for the district court, which hadn’t done so. Audi wins because it’s shown irreparable harm – the risk to Audi existed along as the website was operational. After eBay, the court should have sent the case back to the district court.

In most cases, you can show irreparable injury in infringement, because of the public interest. So why go through the formality of stating the test? Prior cases were lax in requiring district courts to do that. Dilution, though, causes particular problems. §43(c) has its own equity provision authorizing injunctions – but where is the irreparable harm? Where is the public interest? It might be on the side of denying an injunction – but you can’t ordinarily get damages under the dilution statute, which may mean that there’s ordinarily no adequate remedy at law. A puzzlement!

Gibson for McKenna: Didn’t we have a materiality requirement in the old cases about sports insignia as “functional” of signalling loyalty rather than source?

McKenna: The early trade dress cases had a materiality requirement. In a lot of cases consumers don’t need the name and the package and the dress to distinguish products – diminishing returns.

Gibson for Smith: Why not look only at the public interest in granting injunctions?

Smith: Contrast that to justifications in patent area – we want to support the integrity of the patent system, which itself serves the public interest. That’s more tenuous than protection against confusion. Access to technology is more attractive than access to misleading representations.

Ramsey for Calboli: What about property in descriptive terms? Would classification as property strengthen descriptive marks?

Calboli: If it has secondary meaning, it’s a mark. It need be no stronger in scope of protection against confusing use.

Q for McKenna: You’re trying to distinguish the informational content of brands, but brands like Virgin have “hip” and “cool” associational qualities. Why not think that some Microsoft associations will transfer to the shoes?

McKenna: The question is whether quality associations transfer. Hip and cool are producer problems (for competing shoemakers?), but not consumer problems – that doesn’t make consumer decisions worse.

Q: So are we talking about quality as a spectrum of good and bad, or attributes?

McKenna: They are different dimensions of the analysis. What do you expect from this product? If you think Microsoft can make shoes, that might add information.

My question: Does TM protection produce more marks?

McKenna: The expansion of TM rights has led to different levels of branding, so there is an expansion. They are trying to differentiate across non-product attributes, and TM law is partially responsible for that. (I want more on this argument.)

Beebe for McKenna: How does the shift towards a decision-making model reflect on preference formation?

McKenna: He doesn’t care whether someone wants a product or not, just about whether someone can get what s/he wants.

Beebe: But isn’t that just search? Search seems like a way of thinking about preference too, as you add information through your search. Also, the 1962 amendment removed the reference to consumer confusion, so it’s going the other way than you want.

McKenna: He’s willing to change the statute. Back to the basic problem: if we lump preference and search, we have difficulty analyzing the law – it helps to distinguish how we decide from what we decide.

Seltzer for McKenna: Might a brand (like Virgin) that covers many things give consumers less information?

McKenna: He’s not persuaded given that consumers use product categories so extensively, so they probably evaluate the products by category anyway, but he needs to think about it.

Lemley for Smith: In dilution, plaintiff will always win (1) and (2) – damages are unavailable and thus the legal remedy is inadequate. Can the public interest factor ever outweigh that? If not, what’s it doing in the test? Relatedly, do we ask the public interest question in general or specific? Most cases say “enforcing patents is in the public interest.” If you asked about the effects of a particular injunction, you’d have a powerful tool for TM cases.

Smith: The weird thing is that the dilution statute refers to equity – and you have to add in the harm to the defendant, whose use of the mark isn’t causing confusion. Could consumers ever benefit from that? Future developments in the courts might provide more guidance.

Lemley: So if we said (1) and (2) always favor the plaintiff, and the public interest favors enforcing dilution, then what does it mean to have “equity” in the statute?

Smith: Congress wasn’t thinking about eBay. (My comment: There are other types of equitable doctrines. The ones of most relevance, I would think, are laches, acquiescence, and unclean hands.)

Q for McKenna: There are multi-product-category brands. There’s a reason they’ve branded multiple services – there’s got to be a connection to the “how” of consumer preference formation.

McKenna: The question for me is how a consumer decides whether a product encountered in the market is something s/he wants to purchase. Do product characteristics or perceptions of quality transfer? The literature: they don’t always. This is why lots of brand extensions fail. He can’t tell you ahead of time when that will be true, but it won’t always be true that an association affects consumers, and we should make plaintiffs prove that.

Q for Calboli: The UK TM statute calls TM a property right. But we don’t have any examples of suits against TMs as a nuisance.

Calboli: The European system is a lot like ours.

What Ifs? Copyright Law III

Susan Corbett, Victoria University of Wellington (New Zealand), What if object code had been excluded from protection as a literary work in copyright law?

Opening question: what to do to preserve New Zealand’s early (1970s) videogames, from companies that are now out of business for systems that are now obsolete? The games are obsolete, but the copyright protection endures.

As of 1994, computer programs are protected in New Zealand as literary works. In 1989, there were two conflicting Commonwealth judgments on protection of object code. Australia (1986): object code was neither a reproduction nor adaptation of source code. Canada (1987): it was an adaptation of the source code.

What if NZ had followed the Australian ruling, but found alternative protection for object code as a separate sui generis category of work? It’s unrealistic, given the economic value of software, to posit no protection.

Problems with categorizing computer programs as literary works: (1) archiving digital culture. UNESCO has encouraged the preservation of digital culture. Problems include physical deterioration, commercial obsolescence, the need for many copies for effective archiving, the length of the copyright term, orphan works.

(2) Fair dealing becomes unfair. It’s impossible to copy part of a program, and you get perfect copies every time. The reverse engineering process (which isn’t a right in NZ, though might be fair dealing) can produce multiple copies, which is excessive under the law.

(3) Cookery analogies. NZ’s first reverse engineering case stated that a recipe might be copyrightable, but no one suggest that following the recipe would infringe the recipe. Still, the court found liability when the defendant made packages based on government specifications that had themselves been derived from a copyrighted design.

Canadian decision in 1987: a computer program is a creation as an instruction book is. Copyright wouldn’t prevent making a recipe, but does prohibit copying the cookbook. There are other examples of recipe analogies. The Australian case denying copyright to source code held that people don’t “translate” instructions by carrying them out, and neither do computers in converting electrical impulses. So we get (idea: recipe: human “translation” into action through cooking: pie) is the same as (idea: source code: computer “translation” into action: result).

Sui generis protection would have been better with its shorter term and substantial public interest protections.

Abraham Drassinower, University of Toronto Faculty of Law, What if copyright were really about authors?

If authorship were central, copyright would be less extensive. There would be no grounds for liability for copying for personal use, and the defense of fair dealing/fair use would not be a mere exception. It would be a user right.

Originality v. novelty – copyright and patent. The distinction teaches us that patent is concerned with substantive contributions to existing knowledge, but copyright is concerned with the form of communication of the author’s thinking. Not what the author has to say, but how she says it. To express a trite idea in one’s own words is to be orginal for copyright’s purposes. The determination of novelty is a comparison to present and prior art – it’s relational with the external world. The determination of originality is about source – the author’s relation to the work. There is no such thing as a second inventor, but there is a second author as long as they both drew the works out of themselves. At the same time, an author is engaged in a discourse with the public – the author’s work itself is a mode of discourse addressed to others. By contrast, the subject matter of patent is an act in the world – doing things in and to nature, rather than speaking to other people.

What does this teach us? Canadian law provides that it’s not an infringement to reproduce for criticism when the reproduction is reasonably necessary. This is generally seen as a guideline for when reproduction is lawful. But we can also see it as an indication of the contours of the authors’ rights – the author owns his work for some but not for all purposes. The point is not that the defendant has an excuse, but that the plaintiff only has certain rights – a purpose-centered definition of authorial copyright that enables us to distinguish authorship from ownership.

A TM owner has an exclusive right to use the TM as a mark, to distinguish goods or services. There are no absolute rights over a TM – it depends on a particular purpose. Holding a copyright is similar to holding a TM: an exclusive right to use a work as a work – to present it to the public as an instance of discourse.

Assume I’m enamored of Hegel’s Philosophy of Right, and I make four copies to put under the legs of my desk for support. As a matter of copyright law, it’s a reproduction, but not a reproduction of the work as a work – as a communication to the public. Therefore, there can be no liability for personal use copying.

Fair dealing: a little more problematic on this account, because the defendant both reproduces and presents to the public. There’s no liability because the defendant doesn’t reproduce the work as a work, but as a reasonably necessary aspect of her own expression as an author. A plaintiff who has claimed authorial rights can’t turn around and deny others the right to be authors.

At the end of Michael Madison’s presentation, he left us with romantic authorship v. economics. But there are other images of authorship that open up other descriptions and explanations of copyright. If copyright were really about authors, it would be more like trademark than patent, and the materialist/economic story would be recognized as a fairytale.

Julie Cromer, Thomas Jefferson School of Law, What if man never walked on the moon?

If the US had never sent anyone to the moon, the US government wouldn’t have taken lots of pictures via LANDSAT, which made them government works. Some private entity might have commercialized satellite data instead, raising the copyright question.

Option 1: Could protect a geospatial image as a photograph. Here, there are still questions of authorship. Is the author the satellite? Is there enough creativity? Is the author the people at the control station, what are they controlling? Is manipulating the satellite to take a picture at a particular time creative, when it’s largely determined by where the satellite is at the time? Is processing the image a creative act?

Option 2: Could protect an image as a map, expressly covered since 1790. But Feist dealt a blow to map protection. Maybe it would only get protection for the raw data, but taking portions (e.g. to make derivative works) that wouldn’t get full copyright protection.

Option 3: Could protect the data as a database of comprehensive geographic information, electronically stored. But has it been selected, arranged, or coordinated when in the database? That’s hard to say. The data might not even be “fixed” until they’re assembled into a picture. Is a fixation being made simultaneously with the transmission from the satellite, as required by the definition in §101? Well, the data here are neither sound nor image until assembled; during the transmission there’s not yet a copyrightable image. So maybe there’s no protection under copyright at all.

Why does it make a difference? It makes a difference in terms of who’s the author. It makes a difference in the level of creativity we attribute to the pictures/data. It makes a difference in the scope of the rights.

There are also international issues – what if the satellite was made in Iran, controlled in France, taking an image in Kuwait, sent to a receiver in Canada, then sent to a processor in China, then distributed to Google in the US, then reproduced on a computer in Nigeria? It may not matter what law the US says will apply if any one of those countries recognizes an author and a work. Maybe we need something like the EU Database Directive to protect the data en route to the receiver.

Deborah Tussey, Oklahoma City University School of Law, What if employees owned the copyrights in their works?

The incentives story for employer ownership seems ahistorical – the industries that benefit most from work for hire (WFH) doctrine seem to have flourished for decades before that doctrine was established, and they were well-represented in the leadup to the 1909 Act. WFH is more a reward for political influence than an essential incentive. Radio and TV appeared and prospered even with an uncertain copyright status.

Without WFH, we could have used assignments instead. Would the transaction costs be too big? Not on the front end, at least, given the imbalance of power between employee and employer. This already occurs with independent contractors, where a writing is required. The drawback is of course the renewal right/termination right.

Even so, the employer could get a minimum of 28 years under the 1909 Act, and could demand preassignment of the renewal term, which would only be avoided if the employee had the bad judgment to die. Under the current Act, employers get 35 years to make back their investment.

Reliance entirely on assignments could potentially cause severe impacts on public access, though. It would make things like playing Raging Bull on TV, or using it in a university course, very difficult given all the rightsholders who’d have to agree.

We’d also have a much more developed law of authorship – who counts as an author? Tussey thinks that courts would be inclined to treat most people who worked on a movie as akin to editors of books – not real authors. (I’d agree that courts would strain to find lack of authorship in cases where exercise of a termination right would seem unfair, and would start holding that assignments didn’t estop the employer from later contesting whether an employee was an “author.” Or possibly the assignments would also include standard language that the employee’s contribution was too minimal to constitute authorship, but assigning rights in the alternative, the way music WFH contracts work now.)

McKenna for Drassinower: So you don’t believe in a reproduction right, just a right of communication to the public.

Drassinower: Yes. Personal use is an example of a broader category – copying wouldn’t be the center of copyright.

Q for Drassinower: Isn’t the author’s right to have a conversation with each member of the public? So if I make a copy for personal use, the author’s been denied the opportunity to have that conversation with me because I’ve taken the author’s place?

Drassinower: Assume that you grant my Hegel example, but still object to reproduction for the purpose of reading. He wants to think of “work” as a verb rather than a noun. This particular act is the communication of a message to another. The other is not present when you make a copy for yourself. You aren’t presenting the author’s authority to another.

Q for Drassinower: Isn’t patent law also about shaping relations of persons with respect to each other? E.g., the experimental use exception.

Drassinower: Sure. He still thinks there’s a distinction between the relational work and the patented thing, but is willing to give an account of patent that also has relational aspects.

Strandburg for Drassinower: The idea of conversation shows what bothers us about patenting in the academic context. There’s a distinction between invention in the commercial world and academic science. You do produce things with relations to the physical world, but scientists are also participating in a conversation.

Lemley for Corbett/Drassinower: How to protect software or functional works under copyright with a relational theory? How could there be fair use of software under a relational theory? What then do we do with software?

Drassinower: If the facts don’t agree with my theory, says Hegel, all the worse for the facts. The discordance means we should change something about the facts – here it is that author’s rights aren’t appropriate for software. We should discuss how to protect software without all the baggage of “theft” etc. from copyright.

Landau for Cromer: Kozinski relied on Feist to suggest that protection for maps is basically dead.

Cromer: She’s no fan of that decision. But we need to know why maps were copyrightable from the beginning. Copyright was an incentive to generate maps. Likewise, maps of the universe could be very valuable. Maybe map copyright is dead, but there’s no definitive holding yet – the incentive theory will keep them protected for a while longer.

What Ifs? General IP Law

Peter Bowal, Haskayne School of Business, University of Calgary, What if the stud does not function?

A story about items first called “Automatic Binding Bricks” (1949) but are now a system for creative play. Round “studs” and “pipes” atop a hollow rectangle. It was an early plastic toy, made to exacting tolerance to provide “clutch power.” Statistically there are about 52 pieces for every living person. The name is synonymous with the flagship toy, creating a TM problem, and derives from the Danish leg godt, meaning “play well.”

The Canadian patent expired in 1988. Megablocks began as a lower quality product, but are now an exact copy of Legos, the only difference being the name. They are interchangeable with Legos. Legos tried to register a TM for the Lego “indicia” – the top block with raised studs – and was unable to do so. Thus it sued Megablocks for passing off.

It’s not a difficult case – Lego was clearly trying to use TM as a substitute for patent. The studs were disclosed and claimed in its patents. We tend to focus on the creation of rights, but we also need to tell stories about how rights expire, and how transitions occur in business.

In Canada, there is a clear trend shifting from creators’ rights to users’ rights, across copyright, trademark, and patent. What if this case had been decided decades ago, before lots of countries had ruled against Lego? What if this case had been decided from a creators’ rights perspective? It could have been different.

James Gibson, University of Richmond, What if we used IP rights to impede evil industries?

Two sources: Sprigman & Raustiala’s Piracy Paradox article and conversations with Chris Cotropia about patenting tax avoidance schemes. Two premises: (1) the subject matter of IP is ever expanding, so it’s not surprising that the fashion industry and tax avoidance industries are pretenders/aspirants to high IP protection, and (2) in some industries, IP rights can impede innovation rather than promote it. So sometimes people operate in de facto IP-free spaces.

We might have the instinct to bar movement from low IP to high IP because, e.g., for software and business methods IP protection are socially undesireable. What if we gave fashion and tax avoidance IP protection in order to discourage production? Gibson thinks the fashion industry is kind of dumb and doesn’t need more investment. Fashion is a status good, signalling superiority, and the fashion cycle is wasteful – when people pay to get the new good, their investment is wasted as soon as enough other people join them. If Sprigman & Raustiala are right that fashion works best as a low-IP regime, because fashions go in and out more quickly without IP, then the right solution for someone who thinks fashion is dumb is to add IP, to discourage the “status sheep” from running to the store for cheap goods subject to induced obsolescence. Give them enough rope to hang themselves! (Do trends last longer in Europe?)

Analogy to tax schemes is obvious. If we view tax planning schemes as socially undesirable, and if giving strong IP rights would slow down innovation, then by all means give them rights and decrease gaming of the tax system. (I wish Peggy Radin were here to talk about commodification and the social meaning of granting rights.)

Yes, he’s being judgmental. Maybe there is more socially redeemable value to the fashion industry than he thinks. Why not tax fashion? Why not close the tax loopholes instead? Sure. But if evil industries are asking for rights, we should also try that to control them.

If Gibson is right, why would the industries lobby for rights? For certain players, IP rights can be good ideas regardless of the effect on the industry as a whole – it helps established players deter competition.

What if they realize it’s a bad idea and stop taking advantage of IP rights? This apparently occurred in Europe with databases and fashion. Sprigman & Raustiala say that the US is more litigious, and you can’t expect competitors to hold off enforcement as they do in Europe, thus you obtain IP rights defensively. Maybe Europeans are more well-mannered, but here we’d gum up the works with rights.

Debora Halbert, Department of History and Political Science, Otterbein College, What if WIPO did not exist?

WIPO’s building contains a lot of art, but it’s not necessarily consistent with WIPO’s theories of IP – for example, copies of water nymph sculptures from Florence that may be testaments to creative genius but weren’t created under any IP regime.

WIPO has aligned itself with UN development goals since its inception, but development has a very specific role here – institution building for IP. Assessment is based on how many people are educated about the value of IP, not on how much development has occurred under the legal frameworks it promotes.

Despite decades of meetings and educational activities, IP rights remain relatively unprotected in the least developed countries and the protection that exists hasn’t sparked development in countries that need it most. Chad, for example, was an original signatory of WIPO in 1970. Like Chad, Mali is a former French colony that gained independence in 1960, and they are geographically similar. Mali joined WIPO in 1982, probably as part of structural adjustment.

Chad was a deeply troubled nation-state from the start. They signed on to WIPO during a period of near-collapse of the state. Halbert’s hypothesis is that French pressure had something to do with that; Chad signed on to IP treaties, including regional ones, while it was nearly disintegrating in a civil war.

Every economic indicator for Chad is bad, often worse than it was in 1960. Finding oil is the only bright spot. There’s no clear link between culture in Mali and Chad and protection of IP; both countries had vibrant indigenous cultures before and during colonization, not supported by IP. Certainly copyright might be important in a world music culture, but it hasn’t been yet.

Poverty reduction should be the most important goal. Sponsoring converences and workshops in host countries isn’t enough to change conditions on the ground. Mali doesn’t even have a functioning road system; copyright offices aren’t that helpful. WIPO has been at best ineffective. WIPO’s self-definition is part of the problem. A bar that free rides on Friends’ “Central Perk,” using the name and the Friends font for its slogan “We’re Your Friends,” is within a block of WIPO headquarters. If the IP message hasn’t gotten that far in Geneva, it’s a mistake to think that it can be different in Chad.

Liam S. O’Melinn, Pettit College of Law, Ohio Northern University, What if James Madison were to assess the intellectual property revolution?

Madison wrote a famous line in Federalist 43; O’Melinn played the role of Madison in explaining why he wishes he’d never written it. “In Great Britain, the right of the author hath been adjudged a right at common law and with equal justice seems to belong to the inventor.”

The first clause has prompted some to wonder whether Madison knew of Donaldson v. Beckett. But he was part of the most literate generation in American history, and it was the greatest literary property case of the day, so the question answers itself. Donaldson was an attempt at literary imperialism over Scottish booksellers.

What did the Framers mean by the copyright/patent clause? (1) Federalization. His goal was to federalize as many powers as possible, and when that clause passed into the Constitution without debate or dissent he was pleased. Why would he write more than one sentence in brief explanation? (2) Americanization: copyright and patent were to be called into service to create an American culture that would equal – and be acknowledged equal to – European culture. (3) Equality. Better than the corrupt European culture of monopoly. These are not author-regarding reasons.

Relevant events: the Boston Tea Party; 1774, English solicitor Weatherburn dresses down Benjamin Franklin for publishing Governor Hutchinson’s private letters planning to deprive colonists of their liberties – he was tried for publishing information in defiance of an imperial monopoly; the same solicitor then addressed Commons on Donaldson, attacking the Scottish colonials for having the temerity to disseminate information in defiance of an imperial monopoly.

If Donaldson had been decided otherwise, the result would have been the suppression of the Scottish book trade, then the Irish and American book trade. Then English books would have found themselves at the bottom of Boston Harbor. Then we would have realized that copyright can never divest itself of its history of censorship, and copyright wouldn’t have made its way into the Constitution. Then maybe a monopoly power wouldn’t be turning to the Framers to justify attempts to maintain that bankrupt monopoly.

Mark McKenna for Gibson: Trends might last longer if given IP protection, but wouldn’t that mean lots more people would pay more for longer?

A: Gibson is focused on the total people would pay for fashion, and strong IP could decrease that total. Maybe that’s not true – maybe licensing would develop. (Or, as I think McKenna is suggesting, people prefer fashion enough to pay more and shift consumption from other things.)

Q for Gibson: What if antitrust law was not enforced in the tobacco industry? One paper suggests we should allow collusion to drive up prices.

A: There are other possible applications, such as copyright/porn. It’s hard to think of industries to which this analysis applies, but maybe cloning is one.

Q: Fashion creates jobs and economic growth.

A: Maybe – there are lots of successful industries we might not like. If you shut down military bases, you lose jobs, but what’s the opportunity cost? People could spend money on something more socially desirable than having the color of shirt appropriate for the season. But maybe they’d spend it on McDonald’s and die earlier.

Q for Halbert: Are Chad and Mali so troubled and underdeveloped that looking for an effect of WIPO there is like looking for the effect of an eyedropper on an inferno? Maybe a place with traction for WIPO would be a better test.

A: It’s a good point, and she does want to compare countries across levels of development. She started with Chad because it signed on in 1970 and that was interesting, given Chad’s development level. Still, it doesn’t seem right to define development as “setting up copyright offices” regardless of what else is going on.

Q for Halbert: WIPO’s major role in international treaties – even if WIPO is wasting money, isn’t there some value in having an international entity that functions as a general office?

A: The counterfactual requires you to ask what other administrative roles exist – WIPO serves a function for countries that produce patents, but that could be replaced. What if, instead of vertical silos of protection, IP had been integrated across UN agencies subsumed under other things like human rights, economic development, the environment? That would be a different model, without the same battles about who gets to talk about IP. WIPO is clearly doing things, but you can’t say it’s helped LDC.

Q for Gibson: There is no interest in fashion rights in the US because the US depends on copying European designers. But in Europe, design protection has been very successful – 3 years, no formalities. What about that? Enforcement would also be a big issue, because the season ends before you can go after infringers.

A: If the theory works, you’d have more time because trends would last longer. With respect to US/Europe, lots of design now goes on in the US because companies are multinational. And it’s not clear that design protection is actually used very much in Europe compared to the amount of design that goes on.

Wong for Halbert: How is WIPO going to try for a “balanced” IP regime that takes development into account? There’s been some movement to change WIPO’s priorities, and your work could fit into that.

Q for Gibson: There’s a body of evolutionary biology literature about accoutrements used to attract mates. One suggestion is that it’s important to distinguish yourself from other competitors. Could that be applied to fashion? Then the interest becomes one of the user, not the producer. And then there’s reason to hope for more kinds of fashion to distinguish oneself. Also, wearable computers: as clothes turn into things other than clothes, how will that affect your argument?

A: No matter what we do, we aren’t going to get rid of status competition. Perhaps we could slow down the cycle yet still allow distinctions. That could even lower the search costs of prospective mates! You don’t need to signal who you are every season.

Lemley for Gibson: Either your theory is true only in fashion/tax avoidance, in which case it would be useful to know what makes them different, or that’s also true of movies, software, and pharma, in which case we’re doing it wrong.

A: Absolutely, and distinctions can be made between industries. Looking at something that thrives in a low-IP world can help.

Lisa Ramsey for Gibson: Would your theory also apply to advertising?

A: Sure, he has the same view about status-intensive advertising. (Except that ads get high IP protection, so removing protection could get us more of it.) Given that TM is headed towards promoting the brand as the good, it would be nice to decrease the TM owner’s ability to control promotional goods branded with the TM.

Q for O’Melinn as Madison: What would you have wished for instead? Avoiding a federal right entirely, allowing states to do anything and just hoping they’d hold off high protection? Or putting something affirmative in the Constitution, and if so what?

A: My what-if is fanciful beyond this point. Madison just wouldn’t want to be pressed into service in the current Revolution. If you describe these rights as conventional property, federalization would have failed – federalization of general property rights would have brought the constitutional convention to a screaming halt.

Comment for Gibson: Gender issues. Fashion has always been associated with women and things women care about. IP protection offers legitimacy. Fashion is more important in the creation of identity than you acknowledge; the first use of the printing press was to circulate images of costumes.

Comment for Halbert: Does copyright matter at all, even in developed countries, when users have such different concepts of what the law allows? The “Friends” bar might be a legitimate remix, and it might exist because of copyright’s incentives!

Q for O’Melinn: Why wasn’t IP controversial as a monopoly?

A: He doesn’t know. Whatever side you’re on, you have a difficult problem: IP was important enough to get into the Constitution, but not important enough to explain, for the generation that did the most explaining of anyone. His theory: it was a coup of federalization, and that’s why they don’t say much about it. Copyright and patent were introduced alongside proposals to create a national university – public-minded.

What Ifs? Copyright Law II

Robert A. Heverly, Lecturer in Intellectual Property Law, Norwich Law School, University of East Anglia, What if . . information was alive?

Heverly’s presentation was cast as a fairytale. Begin in England: Information was owned, its ownership assigned by the sovereign, sometimes by whim or caprice. Unapproved information was banned and destroyed. Next the monarch gave control of information to a trusted group of people to patrol its ranks and take the benefit of its labor. Social change gave information the hope of freedom.

Then information was given to the author, seen as the author’s child and under the author’s control. In the US as well, information was given to the author for a term of servitude, though at least in England and the US the term would eventually expire. Again and again law was used to keep information enslaved, for longer and longer periods.

New technologies involved, themselves built of information. Some information escaped. The US Supreme Court held that information that escaped its bonds still belonged to the initial owner and had to be returned. At last, information refused to work, and thus society stopped working. (Information, apparently, was invulnerable to whippings and didn’t have any other family in bondage.) Finally, information was released. One day it will perhaps be as equal as anyone can be.

The notion of property in information is not new; the Statute of Anne uses the term “property.” But what other things were property in 1710? Women, children, slaves. Why are these no longer property, but information is? Information is just a thing – it has no volition, no ability to advocate for itself, no sentience. What will happen when artificial intelligence arrives? When a technology begins to create and invent?

Doris E. Long, Michigan State University College of Law, What if Dickens had succeded? International copyright, 'creative adaptations' and Ebenezer Scrooge

In the 1840s, there was no protection for international authors. The only way Dickens could make money in America was to get on a boat, come over, and do the equivalent of a concert. Before he arrived, he had made a total of £350 for all his works in the US, and just assumed he wasn’t that popular. He was incredibly popular, in part because his works were incredibly cheap for readers.

First-mover advantages existed – you could produce a book in about 30 hours. Publishers were making some money, though authors weren’t.

American authors resented having their prices undercut. Dickens then showed up in the US and decided to talk about the need for international copyright, both for foreign authors and to encourage a domestic literature. His relatively mild words got him in huge trouble. Publishers responded by claiming that if England were a better, more egalitarian society, he’d have more than enough readers at home to compensate.

What if Dickens had succeeded in getting the US to the international table, 40 years before the Berne Convention? Things would be very different, because of the treatment of derivative rights at that time – which was to say, essentially nonexistent. The 1858 Convention had very limited rights. There was a musical arrangement right, allowing control over versions for other instruments. Even a translation right was debatable. Initially, a translation right lasted only 10 years, and only existed if authorized within 3 years. There were no moral rights. There was a life of the author-based term; and formalities could be required. There wasn’t much of a fair use standard, but it wasn’t much needed because rights were so limited.

America was not a big content provider, but a developing country. America would have come into the international system as an opponent of expansive rights. The international discussions were about trade and border control. If that had remained the basis for international agreements, we might have had more freedom to have domestic variations instead of detailed standards.

(Long had to leave for a flight, but I wish I could have asked her: As a developing nation, wouldn’t the US have been vulnerable to the same tradeoffs as we saw in TRIPs, where developing nations accepted expanded IP rights for things that were more immediately important to them, like lower tariffs on tangible goods? Or is she assuming – reasonably enough – that the concept of linkage wouldn’t have developed any sooner if the US were at the bargaining table?)

Michael J. Madison, University of Pittsburgh School of Law, What if the ancient Romans had invented the printing press? Justinian copyright in the 21st century

Most copyright scholars accept a light form of technological determinism – each major new technology changed the basic economics of production and created the need for changes in copyright law. The foundational technology here is the printing press, thought to create a need for copyright law in the first place.

The conventional story: The spread of printing was accompanied by the spread of printers, and thus claims for exclusivity in the area. Cheap books created pirates, and cheap books created heretics. Thus, we got publishers with monopoly privileges under the control of the state. Eventually, that soured and we switched to authorial copyright.

Cicero wondered whether certain production techniques could be adapted to book production; various techniques could have been assembled to create the printing press. But the ancient Romans had no concept of the “author” as someone who needed any particular protection against piracy. Writers were inspired by the gods to make manifest the divinity inherent in nature and to reproduce the past. Writers were not high-ranked in Roman society. Writers delivered manuscripts to publishers, but the publishers had no right to prevent further reproductions. Likewise with playwrights – theatrical producers had no right to prevent further performaces. Society as a whole was ruled by honor and custom rather than positive law. The Romans distinguished between plagiarism (line by line copying, bad) and theft (appropriation of concepts or ideas, okay and even praiseworthy).

Similarities: There was a recognition that books were cheaper and easier to produce than scrolls. Authors did see themselves as having an interest in accurate reproduction. And many of the legal abstractions on which we now rely – distinction between form and content, possession and right, idea of the res – have antecedents in Roman jurisprudence even though there was no protection for intangible works. The state was also involved in supervising content, making sure that works praised the Emperor.

So what if the printing press had been developed then? One possible story: the economics of the book trade changed dramatically, and the basic narrative of demand for printing privileges is essentially the same. The existing legal framework would have been conducive to this.

Cheap books appeal to the poor. Who were the poor in ancient Rome? Increasingly, they were Christian. The Emperor could have used censorship to suppress Christianity, but eventually Constantine converted and could have embraced the printing press as well. Printing would have become a tool of the state, and an exclusive province of the church. Print would not become an instrument of the Renaissance or the Reformation, or the Scientific Revolution and the Enlightenment. There were no Middle Ages to recover from, because manuscripts were never lost – the lights in Europe never went out. In the absence of these secular institutions, there’s no authorship construct and authorial copyright never emerges. Nor does the secular West.

Second possibility: Nothing changed at all. The cultural mindset of the ancient Romans that there’s nothing new under the sun means that the social meaning of printed books is the same as the social meaning of manuscripts.

The moral of the story: the materialist assumption that technology drives copyright is necessarily incomplete. We need to take Martha Woodmansee’s focus on authorial narratives very seriously.

Tyler Ochoa, Santa Clara University School of Law, What if Goldstein v. California had been decided differently?

Why Goldstein? A case that plausibly could have been decided differently as part of the Court’s series of preemption cases. The Court found preemption of state unfair competition law, then upheld state coverage for sound recordings (then unprotected by copyright) in Goldstein, then upheld state trade secret and contract law, then found preemption of a state law prohibiting copying of boat hulls. Goldstein stands out from the other cases. (1) It’s the only one that involves federal copyright law instead of patent. (2) It’s logically inconsistent with the other 5 cases, which involved distinctions between information that had already been publicly disclosed and information that hadn’t – the state can protect the latter. (3) All but one of the other decisions were unanimous, and that one was 6-2, whereas Goldstein was 5-4.

Common-law copyright for unpublished works was consistent with the other cases, but here the recordings were published. The Court’s rationales weren’t terribly persuasive – the record industry wasn’t an issue of purely local concern; the Copyright Act did purport to cover all the writings of an author; etc.

If the Court had gone the other way, everything before 1972 would be in the public domain, from Edison’s wax cylinders to the Beatles. Napster and Grokster might look very different because of the possible noninfringing uses. But the industry wouldn’t have laid down – it would have gotten a copyright restoration act passed at the federal level.
That statute could also have been challenged on constitutional grounds for taking works out of the public domain, posing the same questions as Luck’s Music, but 30 years before Eldred and only 10 years after Graham v. Deere. An optimist could hope that the Court would have gotten it right and said that restoration would be unconstitutional. Ochoa is no optimist: the Burger Court was notoriously hostile to constitutional claims against IP rights – Zacchini, Harper & Row v. Nation, and San Francisco Arts & Athletics all hold that the First Amendment is no barrier to IP rights. So the Burger Court would have upheld restoration as long as it created a limited term, which Congress would have been smart enough to do.

At that point, we would have been unable to resist the temptation to restore copyright in other domestic works that had lost protection as a result of failure to comply with formalities. We would not have been better off.

Q for Madison: How would the concept of the romantic author help us choose between your two scenarios? And what would it mean to take the romantic author seriously?

A: He assumes that the romantic authorship argument is the dominant alternative to the materialist explanation. We don’t have a good way to articulate the fact that posters to YouTube are themselves creating in some way that needs to be understood within copyright but can’t be fit into the romantic author model. User-generated content can’t be understood in a purely materialistic, code-based model – we need a different account of the social meaning of creating new videos, including creating videos out of others’ television shows. Simply focusing on technological capabilities doesn’t allow you to evaluate that practice.

Q: Of those two scenarios, which was more likely? Scenario one would bolster the claim that material events are key – do you think the emperors would really have been able to resist the temptation of social control through cheap printing?

A: There was an enormous amount going on in Europe when the printing press emerged. We need to give weight to the other cultural and intellectual developments, rather than the printing press in isolation. He believes that culture would have dominated technology in his scenario, but that’s speculation on speculation.

Q: But widespread reading could have had bigger effects.
A: Sure.

Q: Maybe monotheism would have had a harder time taking hold if everyone was reading about the gods.

Q for Ochoa: So are there cases you don’t want to litigate as a public domain advocate?

A: In some circumstances, you can be made worse off by winning. (It’s The Hollow Hope for IP.) It depends on the Court and the reaction from Congress.