Right of publicity trick or transformative treat?

Slate on celebrity Halloween masks. I do wonder whether celebrities with no shame, like Paris Hilton, could make a better false endorsement/right of publicity claim than Hillary Clinton or Rudy Guiliani.

False advertising in the global supply chain

This fascinating NYT story about Chinese chemical exports contains many gems, including this:

“We don’t have the resources and means to produce medicine,” said Gu Jinfeng, a salesman for Changzhou Watson Fine Chemical. “The bar for producing chemicals is pretty low.”

Even so, Watson Chemical advertises that it makes active pharmaceutical ingredients. But Mr. Gu said he would export them only to countries with lower standards than China, or if “we can earn really good profits.”

Less scary, but more to the point for this blog, was a statement by the managing director of Honor International Pharmtech, accused of various counterfeiting and customs violations:

He denied shipping counterfeit Viagra, but he acknowledged other indiscretions: making false advertising claims, using another company’s import-export license and creating a fake corporate name.

“We don’t really have a factory,” Mr. Nie said, even though he advertised that he did. Honor International is just a trading company, he said, adding, “As a trading company, saying you can manufacture attracts business. It was fake advertising.”

Claiming to be a manufacturer might seem at first to be a trivial statement, but here's an acknowledgement that it's material to key purchasers. As the Times goes on to point out, manufacturing matters especially with drugs because it goes to their provenance; obscuring origin is associated with serious safety risks.

Batman v. Batman

This series of images from the Adam West Batman, combined with captions from Frank Miller's version, works as commentary just by juxtaposition, with no original material added. Here's my favorite:
You really have to know the Miller to get it, but I think it's fabulous.

McCarthy on Using Someone Else's Trademark

Webcast of lecture at AU here. This was a student-oriented presentation offering an overview of permitted uses, which McCarthy argued should not all be shorthanded as "fair use."

The highlight for me was a trademark lawyer who spoke during the question period, referring with something between dismay and disdain to "this First Amendment business" and suggesting that discovery abuses were the only credible justification for a fee award for the defendant in Mattel v. Walking Mountain (the Food Chain Barbie case). We should, she suggested, be sympathetic to trademark owners sending cease & desist letters to artists etc., because they're just trying to protect the reputation of their marks -- you wouldn't want your daughter looking at Food Chain Barbie, would you? (Causing me to think, first, about the kinds of things my friends and I did to our Barbies -- Forsythe doesn't really rate on the Barbie abuse scale -- and, second, that defamation lawyers were just trying to protect the reputation of their clients, and "this First Amendment business" caught up with them too.)

Not Fooling Anybody

The title of the website to which this post refers suggests that standard confusion claims against the businesses that have set up shop in places formerly occupied by distinctive fast food chains could not succeed. But there's always initial interest confusion and dilution. For your consideration:

White Castle to Veggie Castle, Mister Donut to Master Donut, Dairy Queen to Dairy K, Pizza Hut to Chinese Hut.

Could the new occupier defend against trademark claims by saying there's no use of a distinctive building shape as a mark, just as someone might refill a discarded Coke bottle? This may be another puzzle of "use as a mark," where one user really is using a trade dress as a mark but another really isn't. Without getting into that debate, one could resolve the issue in favor of the new occupier by imposing on the trademark owner a duty to remove the distinctive features of its building before leaving, just as some cases impose on trademark owners the duty to remove marks before putting damaged goods on the market as salvage. Having let the goods out into the market, the owner cannot then impose on someone a noncontractual duty to alter them. It might be reasonable to say the same thing here -- or maybe not, especially given that these are all likely to be franchises, and the franchisor may not have control over the way in which the ex-franchisee disposes of the building.

For further consideration, there's KFC to Gilstrap Chiropractic, with the KFC bucket still on the sign. And a newspaper story in which the chiropractor is quoted:

Gilstrap said he decided to leave the bucket on the sign because it’s such a longtime fixture.

“That bucket has been there for somewhere around 30 years,” he said. “Everybody knows where the old KFC is, but they don’t know where my office is.”

They do now.

“I don’t go anywhere where somebody doesn’t say, “Hey, you’re that KFC chiropractor.’”

Dilution?

And the winner: Texaco to Exaco. The thing is, I can almost construct a parody defense, given the independent meaning of the "ex" prefix.

Avis tries harder...

but to do what is not entirely clear. As I picked up from the Trademark Blog, it appears that a lawyer representing Avis has told a legal blogger that he has no "right to use Avis' trademark as [he did] in this particular piece." The piece happens to be a report on a decision invalidating a federal law granting car rental companies immunity from negligence liability in certain circumstances, with which Avis is no doubt concerned. The blogger illustrated the report with the Hertz and Avis logos.

The blogger has asked for comment, and as he called me out by name, I will say something (though he is of course aware that I am not his lawyer!): even to analyze the ways in which an infringement or dilution claim must necessarily fail in these circustances is to give this -- charitably -- overzealous claim more respect than it deserves. Eric Goldman nicely points out in comments that Avis's move is dumb both legally and from a marketing standpoint; I'm in full agreement.

Pancreatic enzyme can't dissolve Lanham Act claims

Axcan Scandipharm Inc. v. Ethex Corp., 2007 WL 3095367 (D. Minn.)

Plaintiff makes the Ultrase line of pancreatic enzyme supplements. The supplements contain enzymes that some disease sufferers need to break down nutrients in food; Ultrase has three formulations, MT12, MT18, and MT20, which correspond to the amount of lipase (an enzyme) in each. Defendants sell “generics” for Ultrase called Pangestyme and Lipram. Plaintiff alleged that neither Pangestyme nor Lipram was truly a “generic equivalent” to Ultrase.

In addition to Ultrase, there are two other major-brand name lines – Creon (by Solvay) and Pancrease (by Ortho-McNeil) – which also come in different formulations, differing from Ultrase in the amounts of amylase and protease (other pancreatic enzymes) they contain.

In 1999, Lipram came on the market as a “generic equivalent,” in three formulations. In 2000, Pangestyme also came on the market in three formulations, UL12, UL18, and UL20. Plaintiff alleged that defendants advertise their drugs as “identical in formulation to Ultrase” even though they contain different amounts of lipase and other pancreatic enzymes from Ultrase. Separately, plaintiff alleged that the Defendants invite pharmacists and others to compare the labeled ingredients in their drugs with Ultrase, and thereby imply that those drugs are “generic equivalent substitute[s] for Ultrase,” when in fact they contain different formulations.

Solvay sued defendants over similar conduct in 2003, eventually culminating in a jury verdict for defendants. Solvay’s lead counsel represents plaintiff here.

Defendants argued that the FDA has exclusive jurisdiction over the claims at issue. Relying heavily on the Solvay reasoning, the court disagreed. This is a slightly unusual situation because none of the drugs at issue are FDA-approved; though in 1995 the FDA announced that NDA/ANDA approval would be required of all pancreatic enzyme drugs, it permitted them to remain on the market while fleshing out the approval process. (Comment: it’s been 12 years. How fleshy does the approval process have to be?)

So naturally defendants’ drugs haven’t been tested, approved, compared, or otherwise evaluated by the FDA, any more than plaintiff’s have been. Defendants argued that only the FDA can determine whether their drugs are “equivalent” to Ultrase, if “equivalent” means pharmaceutical and bioequivalence. (Comment: it’s interesting, though perhaps not particularly surprising, that the FDA hasn’t jumped in to claim preemption in Lanham Act cases the way it’s been doing in consumer class action cases, though logically one might expect the same arguments to apply.)

The court didn’t buy it. Plaintiff wasn’t claiming a false implication of equivalence “in the FDA sense --that is, bioequivalent and pharmaceutically equivalent to Ultrase.” Rather, plaintiff was arguing that defendants’ claims were false under “the proper market definition[s]” of “generic equivalents” and “substitutes.” (This doesn’t really get at the underlying issue – that the market, reasonably enough, defines these terms with reference to the FDA standards that usually govern – but I think it’s the right result anyway.) Plaintiff’s claims don’t require the court to make the FDA’s judgments for it, nor do they concern safety and efficacy (though presumably differences in the products would enter into the deceptiveness and public interest inquiries).

The court further noted that plaintiff could rely on the FDA’s definitions of bioequivalence and pharmaceutical equivalence in seeking to prove its claims, in order to establish the standard that defendants allegedly failed to meet.

On other matters, the court applied a six-year statute of limitations borrowed from state law to bar claims prior to June 1, 2007 based on the date plaintiff’s complaint was filed. It rejected plaintiff’s invocation of the continuing violation doctrine, holding that the conduct here was a series of repeated identical violations, each of which could have been separately challenged, rather than one incessant violation.

The court held off on the question of whether res judicata applies. Defendants argued that plaintiff was “virtually represented” by and in privity with Solvay. In assessing virtual representation, courts look at (1) identity of interests between the parties, (2) the closeness of the parties’ relationship, (3) participation in the prior litigation, (4) acquiescence in the prior litigation, (5) whether the present party “deliberately maneuvered” to avoid the effects of the first case, (6) “adequacy of representation” --whether the first litigant had a “strong incentive” to protect the current litigant’s interests, and (7) whether a public-law issue or a private-law issue is raised (if the former, the concern is that res judicata is necessary to prevent an endless stream of plaintiffs).

The problems here came especially in (6) – plaintiff competes with Solvay and thus their interests are not necessarily aligned; the same rationale creates uncertainties about (2). Use of the same counsel is not dispositive. And there are other factual uncertainties about other elements.

Likewise, the court deferred consideration of defendants’ laches argument. Though plaintiff did wait out the conclusion of litigation on a similar claim, it argued that it was attempting to convince defendants to stop their false advertising. Moreover, it will be difficult for defendants to demonstrate prejudice, a showing of which depends on the idea that they would have changed their conduct had they been sued earlier. Given that they continued making these claims throughout the Solvay litigation, there’s good reason to think that they can’t demonstrate any change in their position due to plaintiff’s delay.

Defendants argued that claims based on “compare to” and “alternative to” ads should be dismissed because such ads are acceptable comparative advertising as a matter of law. This didn’t work. The court discussed other cases that had allowed “compare to” false advertising cases to proceed; one case held that “compare” makes an implied establishment claim, suggesting that a product’s performance has been tested and verified. The idea of an implied establishment claim makes sense for drugs and supplements; with house brand shampoos, the implied claim is more likely just equivalence of the relevant active ingredients and a similar smell. Here, plaintiff alleges that inviting pharmacists and others to “compare” the drugs falsely suggests equivalence in efficacy or ingredients.

Likewise, “alternative to” ads may violate the Lanham Act if they falsely suggest that drugs have the same active ingredients in the same quantities – again, something that makes perfect sense in the drug context, whereas pear sauce might be a perfectly good alternative to apple sauce.

Finally, the court rejected defendants’ argument that plaintiffs had failed to plead with particularity under Rule 9(b). As the court pointed out, there is a split over whether the Rule even applies to Lanham Act claims. But assuming that it did apply, plaintiff’s allegations satisfied the heightened pleading requirement.

I Can't Believe It's Not Peat

Canadian Spaghnum Peat Moss Ass’n v. Organix, Inc., complaint filed Oct. 18, 2007, D. Or.

First worm poop, now cow poop. As green marketers mature and compete with existing advertisers, we are seeing interesting false advertising cases arising out of various and sundry superiority/equivalence claims that go beyond the standard “environmentally friendly.”

Plaintiffs sell peat moss for home gardening and allege that peat moss is widely recognized to have unique beneficial properties as a growth medium. Organix markets a “peat moss replacement” or “renewable peat moss substitute” made from dairy manure. This product will allegedly reduce the ecological burden of dairy waste -- for discussion, see here – and the costs of peat harvesting – see Organix’s page here (along with related claims, including the nationalist benefits of using American dairy waste instead of Canadian peat).

Peat producers are unhappy about this, and filed suit specifically challenging the trademark: RePeat (which Organix has filed an application to register). On its general product page, Organix does not “mention that RePeat contains no peat, but consists of dairy manure.” (As noted above, the product-specific page is pretty clear about this, and the general page labels RePeat “the renewable peat moss substitute.”)

The gravamen of the false advertising claim is that the trademark will make people think that the product contains peat or peat moss. At this point, plaintiffs do not appear to be focusing on the claim that dairy manure is an acceptable substitute for peat moss. (They do allege confusion as to affiliation or sponsorship in that consumers will be confused about Organix’s connection with actual peat moss producers, but that’s pretty clearly hostage to the idea that RePeat contains peat moss.) There is a claim that RePeat will “damage the image” of true peat moss because RePeat is largely untested and has not been proven to share peat moss’s unique qualities. But this is not quite a falsity claim – for which plaintiffs would have the burden of disproving equivalence.

My quick take: the mark does seem, at a minimum, deceptively misdescriptive – despite the cleverness of the name, I’d assume it contained some sort of reprocessed peat; “re” is not a transparent prefix the way “mock” or “faux” or “imitation” might be. And given the alleged market reputation of peat, the name would be deceptive in that it would likely influence purchasing decisions. So I’d say it’s unregistrable. But whether in context it constitutes false advertising is a much closer question; “replacement” and “substitute” do seem to indicate pretty clearly that the product is not in fact peat. Whether prominent placement of these terms next to the mark can counteract the impression given by the mark itself will have to be determined.

FDA preemption goes to the dogs

Putney, Inc. v. Pfizer, Inc., 2007 WL 3047159 (D. Me.) (magistrate judge)

Pfizer, the defendant, moved for a preliminary injunction on its false advertising claims against Putney based on Putney’s advertising of its cefpodoxime proxetil medicine to vets and others as being FDA-approved for animal use.

Pfizer sells cefpodoxime proxetil as Simplicef, used to treat canine skin infections, originally FDA-approved for humans under the name Vantin; in 2004 this approval was extended to dogs, and Pfizer got exclusive rights to market it to vets until July 22, 2009. In 2007, Putney began selling cefpodoxime proxetil to vets. It obtains the drug from Ranbaxy, which has FDA approval to make and sell the drug for human use because Ranbaxy established bioequivalence to Vantin in humans. Ranbaxy packages the drug with Putney’s name and label, selling it at a substantially lower price than the human-directed version.

Pfizer alleged that Putney falsely told vets that Putney has FDA authorization for cefpodoxime proxetil for use in animals, that its product had been FDA-approved as bioequivalent and thus is a generic for Simplicef, and that the FDA had approved Putney’s product for use in animals. Putney’s marketing brochure begins “PUTNEY[:] YOUR PARTNER FOR HIGH QUALITY FDA APPROVED GENERICS.” It continues: “For the first time there is a brand that stands for high quality, FDA approved drugs that are equivalent to brand name drugs at competitive prices, exclusively for veterinarians. … We are focused on the development of high quality, true generics that are FDA approved and bioequivalent to brand drugs and important therapies where choice and competition are limited. Our goal is to launch generic versions of drugs veterinarians have requested to enable veterinarians to make prescribing decisions based on pet patient needs…. Putney sells only FDA approved products ….” The brochure also contains a chart touting the rigorous FDA NDA review process.

But to market the drug legally under the FDCA as generic Simplicef, Putney would have had to file an Abbreviated New Animal Drug Application, and this it has not done; nor could it successfully do so during Pfizer’s market exclusivity for Simplicef.

The magistrate judge rejected Putney’s FDA preemption claim, accepting Pfizer’s argument that the issue is whether Putney’s product has been approved for use in animals, not whether it should be, and only the latter type of claim is preempted. This is not quite the same as, though related to, the question of whether representations of FDA approval have to be explicit in order to be actionable under the Lanham Act, since past cases have also suggested that the mere expectation of consumers that drugs are FDA-approved is not enough to make advertising of unapproved drugs violate the Lanham Act. Here, however, the brochure’s claims about FDA approval are “reasonably clear” and there is no need to leave the matter to the FDA. Thus, the counterclaim successfully alleged an affirmative misrepresentation.

In a footnote, the magistrate judge expressed the same dissatisfaction I have with prior precedent, and suggested that the Lanham Act does not require “explicit assertion[s] of FDA approval for both the drug at issue and the use of that drug at issue,” because that limitation would “open a hole” in the Lanham Act to careful advertisers.

Putney argued that there was no advertisement or promotion at issue. It’s a drug company, it sells drug products to vets, and it has a business brocure that “describes its company.” But, it said, there’s no ad! The magistrate judge made justifiably short shrift of this argument – the brochure was a means through which Putney disseminated information to a class of consumers. It was significant that Pfizer alleged that, at the relevant time, Putney had only one product on the market. (Though I think this argument should be laughed at regardless.)

The magistrate judge also rejected Putney’s contention that Lanham Act claims should be subject to a heightened pleading standard.

Putney did succeed in having the state-law consumer protection claims dismissed, since only consumers have standing.

And Putney ultimately avoided a recommended injunction because it had pulled the brochure from distribution and stated under oath that it wouldn’t use the brochure in the future (at least during Pfizer’s exclusivity period). Because the question of liability was a close one, Putney’s continued protestations of innocence did not lead the magistrate judge to conclude that Putney was likely to resume its offending conduct.

Hybrid vigor: Honda class action claims survive

True v. American Honda Motor Co., Inc., --- F.Supp.2d ----, 2007 WL 3054569 (C.D. Cal.)

Plaintiff sued for allegedly false and deceptive claims about the fuel efficiency and cost savings of the Honda Civic Hybrid automobile. Disclosure: I own and love a Civic hybrid, and think that we’d see major gas mileage improvements in non-hybrid cars if every car had the same MPG indicator as a hybrid does, just by virtue of people training themselves to drive more efficiently once MPG was more salient.

Anyway, plaintiff alleged that actual fuel efficiency was up to 53% less than advertised – plaintiff averaged 32 MPG in mixed highway and city driving over six months, compared to 49-50 advertised. A Consumer Reports article in Oct. 2005 reported only 26 MPG in the city. (My experience: 40 MPG pretty much on the nose, in mostly city/Beltway traffic.)

Plaintiff alleged that mileage claims were important to the putative class, and they were communicated to every member because federal law requires every new car, including the hybrid, to display at the point of sale a sticker showing fuel estimates based on EPA-mandated methods. Federal law also requires the inclusion of “Actual mileage will vary,” but Honda’s print and internet ads downplayed (using “may” instead of “will”) or omitted the disclaimer.

Honda argued that the state law claims were preempted due to conflict with the Energy Policy and Conservation Act, 49 U.S.C. § 32901 et seq. The court applied a presumption against preemption because of the state’s historic powers to protect consumers. EPCA requires the display of the stickers and requires dealers to make a booklet on fuel economy available to consumers. But nothing in the EPCA or its accompanying regulations purports to regulate fuel economy advertising beyond that. Preemption thus only extends to state regulation of the sticker or the booklet.

Honda argued that plaintiff was really challenging EPA testing guidelines, but the court didn't see that in the complaint. I am sympathetic to Honda’s point, however; the problem can be traced to the testing guidelines, which everyone knows overstate mileage. The difficulty is that with a new technology, the hybrid, consumers don’t have enough knowledge to tell whether the same discounting should apply to hybrid MPG claims. I know I hoped to get advertised MPG. I, like every other ordinary consumer, lacked the expertise to know whether EPA’s tests would be more accurate with respect to hybrids, but it’s reasonable to think they might be, because the basic selling point of the car was its better mileage. Nonetheless, because plaintiff was challenging non-federally-regulated ads, there was no preemption.

Honda also argued that plaintiff failed to state a claim because he didn’t allege reliance. California UCL/FAL plaintiffs may claim an inference of reliance when a misrepresentation is material. Plaintiff’s allegation that MPG was substantial/controlling in hybrid purchase decisions was sufficient to state a claim.

Finally, Honda argued that the complaint needed to plead fraud with particularity under Rule 9(b). The court, however, found the complaint sufficient to provide fair notice; at this point, plaintiff didn’t need to identify the particular ads that induced his purchase.

Recent press: Kevin Trudeau

The Chicago Tribune runs a story on Trudeau's continuing battle with the FTC, in which I'm quoted. Check out the Google ads on the second page; the comments say Trudeau's a scammer and people who buy his malarkey are just stupid, but Google's targeted ads say they're just like you and me.

WSJ columnist embraces net neutrality

... sort of. Doesn't quite manage to use the word, but it's progress, right? He blames the government for not requiring openness, rather than concluding that Americans, uniquely, want crippled devices.

Deceptively misdescriptive?

Students understandably struggle with the distinction between arbitrary, deceptively misdescriptive, and deceptive marks, and the examples in the casebook I use don't seem to help much. So here's a possibility closer to home: my sister's blog title is EveTushnet.com -- the URL of which is http://eve-tushnet.blogspot.com/.

If you actually go to evetushnet.com, which I do not recommend, it's some sort of squatter with lots of ad links; "Evetushnet.com favorites" are Russian Woman, Homeowner Insurance, Russian Women, Bible Studies, Web Hosting, and Research Papers. This site represents a business/branding problem for my sister, but let's look at her blog's name, since blog names can be trademarked (as some on my blogroll have done). It's certainly not arbitrary; as a personal name plus a top-level indicator, it's descriptive. Except that it fails to describe the actual blog, so it's misdescriptive -- and deceptively so, in that people would naturally assume that EveTushnet.com is where the blog is to be found. Enough people have apparently typed in that domain name seeking her blog that it's worthwhile for the squatter to maintain it, suggesting that actual deception about the location of the blog occurs. (By contrast, rebeccatushnet.com is not registered.)

But the site's actual domain name would not affect anyone's purchase decision, so her blog's name is not deceptive according to the accepted trademark test. Thus, it could be registered with proof of secondary meaning just as if she actually owned EveTushnet.com. (By contrast, the squatter couldn't register evetushnet.com without her consent, even with secondary meaning, because of the prohibition in sec. 2(c) on registering a living person's name without her written consent.)

None of this really helps answer the question why someone would want a deceptively misdescriptive mark. But maybe EveTushnet.com is a better example of the category than GLASS WAX polish, which is in the casebook I use; there's always at least one student who argues that the presence of wax would affect a purchase decision for car polish, and I'm in no position to dispute that.

Trademark registration monitoring software

An interesting application from the Oppedahl website:

Have you ever gone to the US Patent & Trademark Office's "TARR" web page to check the status of a trademark application? Have you tired of typing in the same serial number day after day on that web page to obtain the current status of a trademark application?

Then you may wish to try our free Feathers® software. It is now in beta-test and we look forward to finding out what you think of it. The Feathers software lets you build up a list of the US trademark applications and registrations which you would like to monitor. You can run the software to obtain the status of each application and registration. Later, you can run the software again, and it will tell you what changes there have been to the status of the applications and registrations.

The software can automatically send an email notification to one or more email addresses whenever the status of an application or registration changes. The software will also create a web (HTML) page which you may choose to place on an intranet web site for easy viewing and searching by persons within your organization. ….

Feathers lets you monitor the status of US trademark applications. We have also prepared free software called Goosefeathers which monitors Canadian trade-mark applications. We have also prepared free software called Partridge which may be used to monitor the status of US patent applications. We also have prepared free software called Raptor which monitors US Express Mail filings.

Lost market share isn't irreparable injury

IDT Telecom, Inc. v. CVT Prepaid Solutions, Inc., 2007 WL 2980181 (3rd Cir.)

Plaintiff-appellants sued for false advertising under the Lanham Act and various state consumer protection laws. The parties compete in the market for prepaid calling cards; plaintiffs allege that defendants falsely advertise the number of minutes available through their cards, causing plaintiffs a disadvantage because they deliver 100% of the promised minutes and defendants only average 60%, allowing them to promote apparently low-priced cards with misleadingly large numbers of minutes.

There was an issue, not resolved, of whether the voice prompts a consumer hears after buying a card are covered by the Lanham Act. The post-purchase messages probably aren’t “advertising or promotion.” In any event, the court didn’t need to decide the issue because plaintiffs also challenged the initial poster-based advertising, and it’s the interaction between the posters and the prompts – minutes claimed versus minutes allowed – that is at issue. If a sealed package says “6 toaster pastries” and you open it up and it only contains 4, there is false advertising – the inside of the packaging isn’t misleading you, but then it’s not what got you to make the purchase.

The district court denied the plaintiffs’ motion for a preliminary injunction, and the court of appeals affirmed. Plaintiffs failed to show they’d suffer any harm other than financial loss or loss of market share. Moreover, regardless of the type of loss, they failed to prove causation. And they may have had unclean hands by engaging in the same type of conduct. The court of appeals relied on the first reason – failure to show irreparable harm.

Comment: Denying relief on this ground is pretty unusual, absent delay in seeking relief.

The court agreed that loss of market share can be irreparable harm. Nonetheless, a preliminary injunction shouldn’t issue if the moving party can be made whole by monetary damages. At the hearing, plaintiffs “implicitly admitted” that their harm could be calculated: “After explaining that some loss of market share was caused by factors other than the Appellees’ alleged false advertising, counsel for the Appellants stated: ‘We’re going to have a real hard time. I'm not saying we won’t be [sic] able to put forward damage numbers, but our ability to fully capture the damages is going to be severely undermined by the fact that the [Appellees] are going to tell you there may be a number of other factors that may be causing this loss also.’” This, the court of appeals thought, was a concession that money damages would suffice to recoup the market losses (and also bolstered the district court’s finding that plaintiffs wouldn’t be likely to succeed on causation). So in other words, damned if you do have good damages numbers, damned if you don’t.

Loss or reputation or goodwill may also constitute irreparable harm, but that’s limited to “the special problem of confusion that exists in cases involving trademark infringement and unfair competition.” Acierno v. New Castle County, 40 F.3d 645, 653-54 (3d Cir.1994). The harm here is “not analogous” – though the court didn’t explain why, and I find it hard to see why; false advertising that creates loyalty to a direct competitor, as this well might, seems likely to impair an advertiser’s goodwill.

It's a dirty job, but there's competition to do it

Alexander Mill Servs., LLC v. Bearing Distributors, Inc., 2007 WL 2907174 (W.D. Pa.)

Plaintiff AMS entered into a contract with defendant BDI to de-liquefy industrial sludge at a job site in Ohio. Relying on BDI’s expert advice, AMS agreed to buy a centrifuge based on the understanding that it would be fit for AMS’s specific purpose, including minimal down time, stated contract price, and BDI’s ability to provide a complete solution to the de-liquifeying problem. The centrifuge did not perform as desired. Twice more, BDI proposed another solution; under financial pressure, AMS agreed, but the second and third centrifuges were no better, leaving AMS over $225,000 poorer than after the first was installed and out $371,000 total.

AMS alleged false advertising in BDI’s claims that they were experts in the field, offered complete solutions, and could perform the job properly. AMS also alleged that it planned to compete with BDI by taking the complete package, learning from it, improving it, and entering the market for de-liquefying material from foundries and steel mills, and that it still planned to do so regardless of the outcome of this lawsuit. AMS’s sister companies had used similar approaches to enter new markets for years.

The court rejected plaintiff’s theory that it had Lanham Act standing because it was poised to compete with defendant. The Third Circuit’s prudential standing test requires consideration of (1) whether the plaintiff’s injury was of the type Congress sought to redress in the Lanham Act; (2) the directness of the injury; (3) the proximity of the plaintiff to the injurious conduct; (4) the speculativeness of damages; and (5) the risk of duplicative damages or complex damage apportionment. The court found that plaintiff’s injury here was not from its inability to compete for customers, but from its status as a consumer. Regardless of plaintiff’s intent to “usurp defendants’ technology and expertise and pass it off as its own” (not, by the way, conduct that’s actionable passing off under Dastar unless they planned to pass off actual machines), it hadn’t yet entered the market and thus could have no business diverted from it. This meant all the factors tilted against it. In particular, damages were extremely speculative; plaintiff alleged that its share of the niche market could be estimated using various factors, but its lack of a proven track record meant that any damages would have to be extrapolated from defendants’ own data.

Likewise, plaintiff couldn’t maintain state-law deceptive trade practices claims. It wasn’t a consumer of the type protected by Pennsylvania laws – a purchaser primarily for “personal, family or household purposes.” It argued that Ohio law applied, but failed to explain why conflict of laws analysis produced that outcome; anyway, Ohio law is substantially similar to § 43(a), so plaintiff had no standing. In addition, plaintiff’s fraud and misrepresentation claims were barred by the “gist of the action” doctrine, since they were essentially reiterations of its contract claim.

Editing as critique

At Electronic Arts Intermix in New York, I saw some video art that made copying and editing into new expression, raising fascinating copyright questions. Alex Galloway & Radical Software Group’s RSG-Black-1 (Black Hawk Down) (2005) is a film, running time 22:04, comprised of the 144-minute 2001 film Black Hawk Down with all the white characters edited out. 22:04 is of course a big chunk of the movie, and yet that number – less than a sixth of the original – itself conveys a message about Hollywood and race that Tony Scott probably didn’t intend. Copying plus editing – and nothing more – has produced a social and political message.

Matters are complicated, as Zach Schrag pointed out to me, by the fact that Black Hawk Down is a story about how the white US soldiers never really interact with the Africans they’re supposedly there for, so that they confront a completely alien environment. One could therefore argue that the divide RSG-Black-1 highlights is obvious in the original. But Black Hawk Down tells the story of the soldiers; RSG-Black-1 is about the background, the people in the background, the stories that we only saw in patches and fragments in the original. I think it therefore necessarily comments on and critiques the original.

The FDA's wrong turn on preemption

My colleague David Vladeck has posted A Critical Examination of the FDA's Efforts to Preempt Failure-to-Warn Claims at SSRN. The increasing claims for preemption are part of a strategy by business defendants confident that their interests are better served in Washington than in the various states. The upcoming presidential election may well determine whether this strategy continues.

Drug ad fraud claims remanded to state court

Pennsylvania Employees Benefit Trust Fund v. Eli Lilly & Co., 2007 WL 2916195 (E.D. Pa.)

The Pennsylvania Employees Benefit Trust Fund operates a prescription benefit plan for state employees and dependents. The Fund alleges that the defendant drug companies promoted their respective drugs for non-medically necessary uses, causing beneficiaries to improperly submit reimbursement claims for unnecessary prescriptions and to seek Fund-paid treatment for side effects of/reactions to the unnecessary drugs. The Fund sued in the Philadelphia County Court of Common Pleas for violation of state consumer protection law and various common-law claims, including fraud. The defendants removed; the plaintiffs successfully moved for remand.

None of the Fund’s claims were brought under federal law. Defendants argued, however, that the claims implicated the FDCA. A case arises under federal law for purposes of removal jurisdiction if “a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal law.” But the mere presence of a federal issue in a state cause of action doesn’t confer federal question jurisdiction. The issue must be disputed and substantial, and jurisdiction must be consistent with the federal/state court balance, resolving doubts in favor of remand.

The court concluded that the federal issue here was not sufficiently substantial and disputed and that remand would better implement the federalist balance. The central question was whether the defendants’ advertising violated state tort law, not what is or is not a medically accepted indication or medically necessary use.

The defendants argued that the FDA’s extensive regulation of drugs meant that the plaintiffs’ claims would require interpretation of federal law, since even promotional material or ads must be consistent with approved labeling. But what the labeling allows doesn’t define the scope of permissible conduct under state law; a false or fraudulent claim could be submitted for a medically accepted indication. Moreover, the failure to warn claims aren’t based on federal labeling standards. And finally, the federal issues were affirmative defenses, which are insufficient to create subject matter jurisdiction. There is no complete preemption by the FDCA, because the FDCA doesn’t provide any private remedies, and if Congress intends both to preclude state jurisdiction and preclude federal remedies, it needs to make that unusual intention clear; otherwise the lack of a federal remedy is an indication that the issue isn’t sufficiently substantial to mandate federal jurisdiction.

The court also sustained the joinder of defendants destroying complete diversity. The case was thus remanded.

False advertising about advertising

Insignia Sys., Inc. v. News America Marketing In-Store, Inc., 2007 WL 2893374 (D. Minn.)

Insignia and News America (NAMI) compete in the in-store advertising market. Each buys advertising space from retailers, such as defendant Albertson’s Inc., and sells advertising services to product manufacturers. NAMI is the market leader, in part because of its exclusive contracts with many retailers. Insignia alleged that NAMI’s exclusive contracts with retailers violate antitrust laws; NAMI counterclaimed for wrongful inducement to breach contracts and for disparagement under the Lanham Act and state statutory and common law (libel and slander). Among the statements to which NAMI objected were statements in a quarterly results conference call that NAMI engages in illegal conduct and in a February 2006 letter to packaged good companies that NAMI “is on a mission to destroy competition,” “appears to be getting even more aggressive in its sales tactics,” and “continues to try to destroy in-store competition.”

Insignia argued that these were nonactionable statements of opinion. The court looked at four factors to distinguish fact from opinion: (a) precision and specificity, (b) verifiability (what I call falsifiability, which is the most important factor), (c) the social and literary context in which the statement was made, and (d) the public context. The court noted that cases dealing with statements about the legality of another party’s conduct have not been terrifically consistent. One important factor is whether the legality has already been decided or is “otherwise known” to the speaker. If the speaker is only opining on unsettled areas of the law, her statement is opinion. Given the standard on a motion to dismiss, the court determined that the statements could be factual.

Insignia then argued that it possessed relevant privileges and that the Noerr-Pennington doctrine protected its conduct. Absolute privilege is a defense to defamation; the court noted uncertainty about whether it applies to the Lanham Act, though it pointed to the Restatement (Second) of Torts § 635, cmt. A, which states that the privilege applies to the law of “commercial disparagement.” In any event, the privilege applies to statements made (1) preliminary to a proposed judicial proceeding, or as part of a judicial proceeding that (2) have “some relation” to the proceeding. The privilege encourages participation in judicial proceedings and furthers the search for truth. But these statements were not made to a judicial officer or to another party, but to the customers for whom the parties were competing; customers have only an indirect interest in the outcome of the case, insufficient for the privilege to apply. For much the same reason, the Noerr-Pennington doctrine, which covers activities incidental to petitioning the government or seeking legislation, did not apply.

Comment: when the 1988 amendments to the Lanham Act confirmed that §43(a)(1)(B) applied to statements about a competitor’s goods or services (and rejected a contrary rule adopted by some circuits), there was a flurry of law review commentary asking whether the traditional state-law disparagement tort would disappear, or whether its high fault/malice/damages standards would be imported into the Lanham Act. Precisely because the standards for business disparagement were already so high, they hadn’t been constitutionalized post-NYT v. Sullivan (which basically adopted for defamation of public officials the standards that already applied to business disparagement), so there was no real First Amendment discourse around them. Perhaps this made it easier for courts to apply Lanham Act strict liability to false advertising regardless of whether a statement was about the speaker’s own products or someone else’s. In any event, attempts to apply general First Amendment safeguards (of which Noerr-Pennington immunity is a species) to Lanham Act claims ordinarily fail; it is only when the free speech argument goes by way of the commercial speech doctrine that it seems to have any traction.

Back to the case at hand: Statements that NAMI’s contracts were unenforceable, that NAMI was violating antitrust law, and that NAMI didn’t meet its guaranteed level of service related to NAMI’s “commercial activities,” and also related to the quality and value of its services, so the Lanham Act/state law false advertising claims survived a motion to dismiss.

NAMI also alleged that Insignia persuaded retailers and packaged good companies that the exclusivity provisions in NAMI’s contracts were unenforceable, so that Insignia could place its products in stores simultaneously with NAM’s products. NAMI thus counterclaimed for deceptive acts and practice under New York and Massachusetts state law and other state torts.

Of interest: The court rejected Insignia’s arguments that, with respect to the New York claim, NAMI hadn’t identified the required consumer injury. On the latter, the counterclaim asserts that consumers suffered because Insignia’s conduct “resulted in fewer marketing choices and higher prices for goods.” I’m not sure this indirect consumer injury is what New York law requires – the allegedly actionable conduct was directed at sophisticated retailers, so the conduct itself doesn’t seem to have been consumer-oriented; couldn’t all deception of retailers be alleged to have bad ultimate effects on consumers?

Barron tribute: comparative perspectives

Panel IV: Rights of Reply in Comparative Law

Kyu Ho Youm, University of Oregon School of Journalism and Communication

Internationally, the press is governed differently than in the US. In 1996, ECHR recognized a reporter’s privilege to protect sources, and in 2002 the International Criminal Tribunal recognized a privilege for war reporters. The US, comparatively, is retrenching on journalistic freedom, whereas 12-13 nations recognize it as a constitutional right.

Barron said little about international/comparative law. Since 1967, more countries have recognized the right of reply in statutes and constitutions, conceived of as a human right. A nice reminder: the US Constitution is very very short, comparatively! So there’s less guidance than in other governing documents.

French law recognized a right of reply in 1822, which over time evolved into an idea of access to the press – now the right is conceived of in terms of how it affects public opinion, instead of just making sure that people could recover from reputational injuries.

Should the right expand to the internet? There are no time/space constraints on an internet right of reply.

France, Germany, Hungary, and South Korea (which adopted Germany’s right of reply law wholesale): they are rated as free countries by general standards; the right of reply doesn’t seem to have restricted the freedom of the press. And the right is thriving more in South Korea than in Germany. Is it a way for the government to dictate the agenda? No, not in practice. Constitutional court interpretations in Germany, Hungary, and South Korea are similar – they are focused on providing the public with broad access to information.

Pnina Lahav, Boston University School of Law

Coming from Israel in the late 1960s, she was barely aware of the idea of a right to dissent. Barron’s scholarship was completely different from her experience – drawing on social science rather than legal doctrine. It left the formalism in which she’d been trained behind. Her legal training looked to England, not the US, and there was no study of comparative law. The US was exceptional in the 60s and 70s, light years ahead of its democratic contemporaries (much less the Communists), and that exceptionalism was extremely influential.

Barron and Youm are both mindful of the wide gap between the right of access and the right of reply. Lahav discusses a 1950s convention on a national right of correction – the ability of a nation to correct false and damaging stories. But look at Mary Dudziak’s work on the effect of foreign criticism of racial segregation on attitudes and law in the US – should the US have had a right to protest foreign stories on that? What about Russia and stories about Russian governmental involvement in the death of journalists? Only a few countries signed this convention, including Nasser’s Egypt, Batista’s Cuba, France – really more about denial of access than access.

The right of reply is for individuals, not social groups; facts, not ideas; a bourgeois right for a bourgeois society, adopted at times when countries were far from democratic. She is skeptical of its effect on robust debate. We need an empirical study: who applies to use such a right? What are the effects on news producers? A retraction is not capable of producing social change; a right of access is more structural and proactive in shaping civil society.

Stephen A. Gardbaum, UCLA School of Law

In many countries, a right of reply is constitutionally required – German Constitutional Court, ECHR – either expressly, or because of a state’s constitutional duty to protect personality rights. The latter duty is normally fulfilled by enacting a statute, but it’s not a matter of legislative discretion; failing to have a statute would violate the individual’s right to protection from the government. Either path would be basically impossible in the US.

Other countries tend to have what would be here an unconstitutionally rigorous libel law; it is a supplement to right of reply, not an alternative. The UK has a rigorous libel law and no right of reply; he’s not aware of any case in which a right of reply offers an alternative to strict libel law.

The value national laws place on protecting the individual is what produces much of the difference between the US and other countries.

Barron pointed out that being ignored left a group remedyless; access rights should not be conditional on what a paper chooses to print. Several countries have tried something to implement access rights. France enacted laws restricting newspaper ownership to 15% of the market; the Constitutional Council struck down legislation to increase that percentage as violating the constitutional value of pluralism.

In these right of reply debates, there’s almost an obsession with distortion of political views by the mass media. Many other features of US society screen out political views before they get to the US media in the first place. The general role of the market: it’s generally accepted that market provision will be the rule, for example in health care (government-provided is off the table) or maternity leave (the idea that it would be paid is off the table), even though almost every other developed country has these things. The two-party system with majority rule also narrows the acceptable views, since politicians chase the average voter. Campaign finance also narrows the range of views since only certain ones get funded. Also, politics focuses on individuals, rather than party positions, different from almost every other political systems, in which parties develop agendas and long-term strategic thinking, and the candidate doesn’t determine the platform.

The media are overwhelmingly deferential to politicians – in interviews, at press conferences – there aren’t ways to hold political officials to account as there are in a parliamentary system. If the journalists aren’t deferential, politicians won’t do interviews. A parliamentary system forces officials to answer tough questions, and that’s better. This is a problem that goes deeper than access.

Barron tribute, panel 3: comments and questions

Comments: David Nimmer, UCLA School of Law

Barron wrote about how the Watts riots were the result of pent-up frustration not expressed in the media because the pressure to make profits led to bland reporting/lack of coverage of issues; protest built up because it had nowhere else to go. Today, instead of blandness, the sensational reigns. It’s still in the service of profit. Protest is not the result of exclusion, but of the desire to be covered – people fire guns for the sake of the cameras.

Spin is generated by the powerful and powerless alike. A right of reply might not have done anything to counter Reagan’s carefully scripted ability to make it seem like his administration cared about the poor/minorities.

Fox News & CNN are owned by 20^th Century and Time Warner; CBS/Viacom, NBC/Universal: the institutional press is also the recipient of entertainment dollars.

He wants to talk about press responsibility; no one has yet said “Valerie Plame.” What does it mean for the press to circle the wagons and deny responsibility for the crime? He mentioned an ongoing French scandal, in which France 2 showed footage said to be a Palestinian boy killed by Israeli bullets. A skeptic alleged otherwise; F2 sued him for defamation, and initially prevailed; the court of appeal ordered the outtakes (27 minutes) to be aired in open court; independent experts concluded that the one minute that aired was deceptive. How do we encourage this kind of fact-checking outside a lawsuit?

The economics of attention: AFP v. Google. If the goal is to have a marketplace of ideas, Google did a good thing. Netanel posits a detriment in that consumers don’t come in on the ground floor, as it were, but go straight to the department of interest. But if you put searchable pages up, you can’t complain if someone searches them. The press has to decide whether users have free access. (Nimmer mentioned the recent demise of TimesSelect.)

YouTube: to the extent that users desire to proclaim their identity by copying 4 minutes of the Daily Show, there is a First Amendment interest, but we’re more concerned with the marketplace of ideas; there is no further need to have the individual user make it available in competition with the Daily Show. Copyright owners aren’t filing takedowns with respect to new Batman stories, but for wholesale copying. (I said in response that this is factually untrue; though it may well be the case that user-generated videos are being caught up in automated takedown procedures, Fox is having fan videos removed, and those are far more than wholesale copying.)

Section 512 seemed like a sensible resolution at the time. It was painfully inadequate, as became evident a few months later with Napster, which fell within 512’s literal language. On YouTube, 150,000 out of millions of files may infringe; we could make copyright owners file 150,000 new notices each month, but if Google filters out porn and war footage, it would seem only rational to take out all Madonna videos.

Finally, Google Books: this calls out for congressional blessing. It is taking the power of the printing press and offering something the Library of Congress and the Library of Alexandria would have done if they could have. As long as it’s snippets only, copyright and First Amendment law should support it.

Netanel on YouTube: It was also true of cable: for the industry to get off the ground, it needed to distribute copyright-protected works. The Supreme Court protected cable. YouTube is in the same situation. The primary speech interest is in user generated content, not simply replicating existing content, but YouTube would not be available if Google had to root out all possible copyright infringement, which is a First Amendment reason to avoid that burden. Even 512 is insufficient and imposes an undue burden; we need a compulsory license.

Nimmer: LonelyGirl15 means there’s no need to piggyback on copyrighted content. (I don’t think this is responsive to Netanel’s “costs of rooting out” point, nor does it necessarily address the problem that the long tail only works for institutions that do not decapitate the content-animal.)

My comment on Netanel: There are new ways of increasing the relative positions of big copyright owners – what I’ve called informal formalities in the screening mechanisms adopted by YouTube and the like; the resources big companies can devote to customizing their noindex/nocache etc. settings versus what individuals are likely to do; the lower marginal costs for big publishers who opt out of Google Book Search versus individual authors who own one copyright. (Google informs me that I reinvented the term “informal formalities”; it was also used to make the same point by Zohar Efroni half a year before I did.) In the deal between UK’s PRO and YouTube, royalties are only counted on the top 5-10% of videos; the PRO’s spokesperson said explicitly that “the long tail is not worth measuring.” Small speakers will get audiences in this new regime, but they will find it very difficult to make those audiences pay.

Bob Brauneis: Netanel says new media are more benign. What about the bleed between sponsored and editorial content; product placement too (though that’s in old media)?

Netanel: It’s a serious problem, and should be regulated to require disclosure.

David Barron: Netanel’s presentation suggests that concentration of media is a problem again. That hasn’t been as big a theme in the other panels. Implication: access rights still matter?

Netanel: We don’t need a constitutional access right, but access remains a First Amendment value.

Barron, for me: Both the 1967 article and your presentation link libel law and access rights, suggesting that defamation actions might be a good thing, which is rare in First Amendment law.

Answer: I am concerned with nondiscrimination, and the gap between ISPs’ responsibility for defamatory harm (none) and their ability to shut down users who say things they don’t like (total). I have no inherent problem with tough standards for proving defamation.

Question: Is there a benchmark? A time when more people did have access? Or is this an ideal?

Jerome Barron: He did research the Founding. Printers put out weeklies, and were pretty vicious. There were lots of them, saying different things – a small circulation, but copies were passed around to many people. There were multiple independent voices; not exactly a golden age, but it had advantages, as if we had no other media but the unregulated internet.

Q: Why do we need the institutional press if the golden age is bloggers?

Netanel: Back then, all other industry was cottage industry too! You need an industry to check an industry – it’s back to the need for investigative reporting.

Barron tribute, panel 3: me

My presentation:

People these days often use the First Amendment to say something about copyright; I’m going to use copyright to say something about the First Amendment. Even in a world of user-generated content, intermediaries play a key role – American Idol has an ideology of amateurism, but is actually scripted, edited and influenced by the network and the advertisers; singers sing preexisting songs rather than using their own compositions. How does this relate to access to the media? Any access policy has to address the second thing people do when they get access to a new communication channel, which is to copy (the first being to create porn, and indeed the early internet cases often involved copying porn).

On the internet, there was a relatively early response, the DMCA, limiting intermediaries’ liability for monetary relief when users post infringing content and establishing a notice-and-takedown regime. This was important because the standard secondary liability doctrines did not have safe harbors, though in many ways the DMCA replicates traditional secondary liability. There are strong critiques of the way the DMCA enables copyright owners to suppress criticism and other content, but I will not dwell on them.

My interest in the DMCA is in what it’s not. No one, as far as I can tell, suggested that it was constitutionally required. When we talk about government neutrality in the marketplace of ideas, the legal treatment of intermediary liability reveals that to be an incoherent concept; the legislature has substantial freedom to shape speech by regulating intermediaries. Compare the DMCA (safe harbors, encouraging compliance with copyright owners’ complaints) with the CDA (no liability to people hurt by users’ content no matter what, plus immunity from claims by users whose content is suppressed by voluntary content policies) with current actions involving internet users convicted of sex crimes (MySpace and other social websites under investigation and threatened with new regulation because of concern they enable child predation). The legislature and executive are apparently free to act, as long as they don’t ban individual speech.

Here’s an alternative constitutional narrative, beginning, like much modern First Amendment law, with NYT v. Sullivan. Sullivan was a case about intermediaries and specifically about protecting the business model of the NYT, which was to publish others’ speech. Why wasn’t a negligence standard enough to protect the Times? The Times was too distant from the facts, and thus should have known it needed more verification. As a large organization, indeed, it had more resources to verify truth, including stories within its own files, a point the Alabama Supreme Court emphasized in its decision upholding the verdict. The NYT also had less incentive to host others’ words than its own, and as a profit-seeking entity was more likely to be deterred from speaking than an individual printer distributing speech he fervently believed to be true, who might overestimate his chances of avoiding a libel suit or judgment. A liability standard sufficient to prevent chill of a yeoman speaker would have too great a deterrent effect on an intermediary like a publisher or bookseller.

These considerations are all apparent in the Court’s opinion (a sharp contrast to the concurrences, which perhaps in response emphasize that they’d treat individuals and the press the same in barring all defamation claims by public officials), but they’ve been lost in the general understanding of Sullivan as an individual right. Concepts like clear and convincing evidence and actual malice are much more useful for intermediaries like the Times – which not incidentally have deep pockets are are more attractive to sue, as the Court pointed out – than for individual speakers, who are less chillable.

If you accept this version of Sullivan, some constitutional protection for online intermediaries might seem to follow. If Sullivan is not enough for AOL because it can’t even give its content the screening the Times can (a proposition strongly urged by ISPs and adopted by Congress in the CDA), and if AOL is a publisher entitled to First Amendment solicitude, then we need a super-Sullivan. (As Jack Balkin pointed out to me later, Google’s indexing policy defines reckless indifference for the purposes of the actual malice standard – Google just does not care whether the information in a webpage is true or false.)

But the DMCA and the CDA ended any moves in that theoretical direction. Imagine Napster or Grokster making the Sullivan argument that their business models couldn’t survive if they were liable for the content whose transmission they enabled.

From the intermediary side, the DMCA tells us that the legislature has a lot of leeway; Congress could constitutionally repeal the DMCA, despite the allegedly crushing effects that would have on internet intermediaries, or constitutionally legislate greater burdens on them to screen speech.

What we’re left with is intermediary power without much responsibility. Content screening is okay – and being embraced by big aggregators like YouTube – even though it’s not mandated. In the CDA, the liability/power gap is even greater, enabling huge amounts of private power over individual speech without responsibility – Section 230’s title is actually “protection for private blocking and screening of offensive material.” The recent Ripoffreport.com case is an example of the unchecked power this creates.

One reason to be concerned with intermediary power in copyright is that copied speech is often important to get others’ attention, as Netanel discussed, regardless of whether it comments on the original. But the broader points are theoretical – looking at intermediary liability makes clear the enormous power of the state to shape speech, favoring copyright owners and disfavoring victims of defamation, in our current version – and perhaps policy-oriented – we should think about a comprehensive intermediary liability standard, and about implementing nondiscrimination norms as a quid pro quo for immunity from liability based on user-provided speech.

Barron tribute, panel 3: Neil Netanel

Panel III: Intellectual Property and Access for Ideas

Neil W. Netanel, UCLA School of Law

Barron’s contextual approach asks us to assess First Amendment doctrine in light of actual conditions of free expression. Today is the era of cheap digital speech, for those on the north side of the digital divide. What is copyright’s role in shaping public discourse – does cheap speech obviate the need for ownership restrictions/access obligations?

Opponents of regulation say yes: all you need is the free market to take advantage of limitless opportunities to speak. But for effectiveness, information must be salient; relevant questions include whether you need to reach a mass audience, or those who disagree. Netanel is skeptical that the internet will destroy the dominance of traditional mass media. You still need to get attention, which is increasingly scarce. Established media are more adept at capturing individual attention. The internet audience is concentrated and largely colonized by corporate interests.

We should not aspire to a universe of yeoman speakers. Mass media/institutional press have a vital First Amendment function that can’t be replicated by bloggers: sustained investigation, fact-finding, checking, editing. Bloggers depend almost entirely on the mainstream media for fodder. Plus there’s a professional commitment to the ethics of journalism; journalistic careers can be ruined by gross inaccuracy, but not so peer reporters, who can even be on the payroll of corporations and politicians. A liberal democracy requires robust debate and encounters with competing views. The insitutional press generally does this better than blogs. Only the institutional press can represent public opinion before policymakers. It matters to policymakers what the NYT says. Stories percolate through the internet, but only have effect once the mass media steps in.

Copyright shapes public discourse in a variety of ways. It is an economic incentive to create and disseminate expression. It tends to favor those who already have vast copyright inventories – the mass media. It tends to burden those who want to borrow and build on copyrighted works. Because the mass media provide reference points, language that resonates with others often includes mass media text/images/sounds. Digital tech makes appropriating easier; peer speech is a remix culture. Broad, lengthy copyrights are an obstacle to this component of our system of free epxression.

Copyrights are used as vertical restraints to foreclose media entrants. New media like fanfiction.net, machinima, Google News, Google Book Search, etc. face copyright constraints. They are good because they loosen conglomerates’ hold over content distribution. The mainstream US news organizations dominate internet news use – only the BBC is in the top 20 news sites and not a mainstream US source. Google News is also dominated by mainstream US commercial media, but less so, including 2 British, 1 Chinese, and 1 European news blog. It’s the same with P2P file trading networks, which are dominated by commercial hits, but offer a chance for others to reach audiences.

But these all depend in one degree or another on copying, and the response has been a barrage of litigation against Google News, Free Republic, YouTube, ReplayTV, XM Radio, mp3.com, Cablevision, etc. Lost revenue is a legitimate fear, but these suits also represent efforts to stifle new media competition, as copyright has traditionally been used as a vertical restraint to control distribution. In the past, Congress/regulators have sometimes stepped in to impose compulsory licenses. Now, a number of new media – mp3.com, P2P, user-generated video sites – have been enjoined or driven out of business. It remains to be seen how the Google suits will play out, or whether Congress will step in to prevent copyright from being used as a veto.

Copyright is also a great way of underwriting a financially robust, commercial, independent media sector. Cheap speech threatens to erode financial support for relatively expensive good journalism, by siphoning ad revenue which goes to aggregators instead of journalists. This brings us back to Google News v. AFP, where AFP sued over Google’s copying of its headlines, story leads and thumbnails. Google settled with AFP and the British and Canadian news agencies. Netanel argues that the display of headlines etc. is not really the issue, but the ad revenue from homepage views. Google harms papers by appropriating reader loyalty to itself. 60% of US high school students get news from Google or Yahoo!, while much smaller percentages use local or national news sites.

What should we do? Diversity versus quality seems to be the conflict.

Some suggest content aggregators should have to pay for leads and headlines. A statutory license might work, though Netanel thinks this minimal content should be fair use. Certainly there should be no copyright veto over aggregators.

According search engines a limited privilege to copy and display deprives copyright holders of a veto, and helps preserve competition by barring Google from making exclusive deals with content providers. Many new media sites exhibit the same tendencies towards concentration as traditional media. This is more benign than traditional concentration, because it’s built on a different model than hub-and-spoke communication and provides platforms for user-generated speech. Nevertheless, every filtering mechanism/platform has biases (and must have them by definition). Media giants regularly impose constraints; YouTube bans war footage that’s intended to shock and disgust, along with porn. There are First Amendment interests in retaining multiple sources.

Barron tribute, panel 2

Panel II: Access and First Amendment Theory

Jeffrey Rosen, George Washington University Law School

Barron has been honored in theory, but less successful in practice. The judicial enthusiasm for access rights has waned over the past few decades. Why?

Frederick Schauer, Harvard University John F. Kennedy School of Government

Barron’s vision doesn’t represent current First Amendment doctrine. Schauer’s question here: Whether, how and when we should understand the 1A/free speech in light of Supreme Court cases, or legal doctrine more generally.

He’s skeptical that we should form our views about 1A/free speech based on court cases. Holmes, Brandeis, Warren, Harlan, Rehnquist, Frankfurter, Scalia, White etc. have of course been very important to our understanding of free speech – but note that not all of these would win any ACLU awards.

His concern is that we have exported legitimate institutional aspects of 1A doctrine to broader concepts of freedom of speech, to the latter’s detriment. Standing, mootness, justiciability, linedrawing problems etc. are filters that exclude things that broad theoretical and policy considerations of free speech would tell us are relevant.

Examples: state action doctrine. John Stuart Mill spent virtually as much time and space on “social intolerance” as he did on government actions. Private universities, schools, corporations have important consequences for free speech, and the concept of free speech need not relate inherently to the government. So too with the idea of positive rights. Rejection of positive rights of access is but a subset of a constitutional understanding in the US that is skeptical of positive rights, unlike (say) South Africa. Even cases about access to government, e.g. Pell v. Procunier, should be understood as of a piece with DeShaney and other broader constitutional canons about avoiding positive rights. There is no constitutional right to resources, even education, that make it easier for people to exercise their other constitutional rights.

Finally, the extent to which the 1A provides an exception for generally applicable laws. Branzburg v. Hayes, Clark v. CCNV, etc. are skeptical of the proposition that constitutional doctrine should grant 1A-based exemptions from laws of general application. (Thought: this analogy suggests that Congress could rearrange the background somewhat in the service of access rights, producing a situation more like the establishment/free exercise tension, which courts have allowed legislatures to resolve more readily than they’ve allowed the legislature to explicitly calibrate speech v. speech. Though the religious exemption cases aren’t exactly models of clarity, they may be better than what we’ve got now in speech v. speech.)

Questions from the broader free speech perspective: Should universities have institutional review boards for human subject research, and how aggressive should they be? Should the National Endowment for the Arts have a bigger budget? Should the US adopt a journalist’s privilege for investigations? Should newspapers publish letters from the subjects of stories complaining about the stories? Should political primaries be open or closed? These are questions about how much people should speak, who should speak, and what the free expression environment in the US is like.

Existing constitutional doctrine doesn’t help much; we shouldn’t let the case law overly influence us. When the question is whether a university should invite a controversial speaker to its campus, the debate is often converted to “this isn’t not censorship, the university gets to pick who can speak.” Shouldn’t the exercise of the university’s power to decide be informed by what we think free speech values mean?

The marketplace of ideas and the success of the best ideas in this market is a testable empirical proposition, not a philosophical one. Suppose it’s basically right. Mill says truth gets better tested by falsity. How much of the Millian value in challenging accepted ideas is served by prohibiting government censorship of falsity? Schauer’s tentative answer: some but not much. An anti-censorship rule is not sufficient. If we wanted maximum exposure of falsity, anti-censorship would be part of the array of techniques, but not primary. We can’t assume we get most of what we want for our background values merely by banning censorship.

Much the same can be said about the “checking value” of free speech, as developed by Blasi and others. If our concern is controlling abuse, avoiding government self-dealing, etc., we’d want a ban on censoring speech critical of government, but we’d also want to think in free speech and, especially, free press terms about whether government agencies should have inspectors general, internal affairs departments, devil’s advocates, mandatory press conferences, free-form town meetings for presidential candidates, more robust freedom of information laws, etc. To think of the checking value as essentially a reason for anti-censorship is to ignore the various ways in which that value might be served.

Most of these decisions will be made against a background of Type 1/Type 2 errors. When we check government abuse we also check government success. Designing 1A policy is a question of balancing these errors.

Rosen: There is another 1A tradition aside from marketplace – individual self-expression and autonomy. How does this affect your view?

Schauer: If he believed in this foundation for the 1A (which he does not), it would be another reason to endorse his larger view – other institutions than the state can affect autonomy. Institutions can provide forums for expression, education, etc.

Jack M. Balkin, Yale Law School

Recent story: political organizations use SMS/text messaging to get the word out. NARAL wanted to send messages to subscribers through Verizon; Verizon said no, that was controversial/unsavory. Verizon quickly backed down and said NARAL was welcome to send messages – but Verizon reiterated its right to block messages it thought were inappropriate.

Traditionally, plain vanilla voice services are common carriers and can’t discriminate. Cellphone text messaging isn’t treated like that even though it uses much of the same equipment. Much of today’s key infrastructure is free from common carrier obligations. Balkin reads Barron’s article as being essentially about private power. The major problem of private power is the power of conduits. Today, this problem is centered around the internet: Google, Facebook, Blogger, Digg, etc., as well as traditional mass media conduits that tightly connect the delivery of information from its production. The conduits of Barron’s day tightly controlled editorial function, but now conduits deliver messages from others, create applications allowing others to create content, and deliver their own content. These conduits thrive and depend on everyone’s access. User-generated content is a central feature of Web 2.0, as when you write a book review on Amazon, helping out Amazon. The irony is that the dead-tree NYT is superficially similar to nytimes.com, but the latter has blogs and lots of UGC.

The normative prescription in Barron’s piece is so modest, despite all the attention it got: not everyone gets to speak, but if you are a bona fide representative of a specific community, you can get a right of reply – if you convince a judge. If you think about how much actual speech that would allow, it’s tiny compared to today’s world. The proposal took for granted the existing media ecology and layered a tiny judicial remedy on top. What if we opened the question of media ecology design? Media ecology comes first, the 1A only layers on top.

We could say the 1A is underenforced, or talk about 1A values, or information/innovation policy. Free speech can start to merge with these other concerns. If we’re really interested in media access, think about requiring broadband carriers to open up the last mile to ISPs, increasing competition and diversifying applications. Some would prohibit users from uploading video; others wouldn’t. Or: network neutrality. We care about that because of NARAL, and because we want filmmakers to be able to upload video and compete with the big guys through the power of linking.

Barron is skeptical of NYT v. Sullivan, which does nothing to promote access to the media even if it helps the NYT. Now, it’s flipped: § 230 of the CDA is the most important protection for free speech on the internet. The CDA excludes IP, which is sad, but the DMCA is better than nothing. You wouldn’t have a website, and nytimes.com wouldn’t have UGC, were it not for § 230.

Barron owed much to Meiklejohn, and was limited by him, because M’s model was so deeply tied to the idea that not everyone can speak and that we therefore need a moderator. It’s elitist and ignores culture in favor of high politics. And it takes existing business models for granted. We’re all children of Meiklejohn, so this isn’t a criticism of Barron in himself. But with today’s freedom to imagine, think of possible proposals for 1967: convert some bandwidth to separate control of the bandwidth to control of the content. Get rid of the FCC policy prohibiting low-power FM/AM, allowing churches and civic organizations to reach small towns. Pour government money into developing spread-spectrum technologies and radios/TVs that could receive such signals.

Access could be understood in a Meiklejohnian way or in a culturally populist way; Balkin chooses the latter. Everybody should be able to speak and help control what makes us people, which is our culture.

Rosen: What about judicial doctrine? If the FCC refuses net neutrality, should judges impose it? What if they won’t?

Balkin: This isn’t about positive liberty. Judges aren’t good at tech policy. There are things they can do at the margins, but their job is to interpret statutes & regulations. Brand X was a mistake, for example, but judges can’t design internet backbones or mandate municipal Wi-Fi.

Vincent A. Blasi, Columbia Law School/University of Virginia School of Law

He’ll talk in instrumentalist terms, but wants to underline the importance of the question of whether the 1A protects something non-instrumentalist. He set forth various possible benefits of access suggested in Barron’s article – I liked his emphasis on Barron’s idea that there is a need for public opinion to be mobile, to overcome inertia.

Instrumentalist rationales are hostage to their empirical basis; do Barron’s arguments still apply? Gatekeepers have declined in importance in the ensuing decades, even if mass media play a legitimating role. But access could still be important, for example in talk radio. If talk radio were intellectually balanced, the last two elections would have come out differently. But if the left doesn’t have a comparable influence, whose fault is that? There are gatekeepers, and access policies could make a big difference. On the other side of the ideological divide, many conservatives think universities aren’t open enough to things like unapologetic nationalism, the importance of tradition, intelligent design, etc. Maybe opening them up would create a richer experience for students.

Barron’s worry about blandness doesn’t ring true today, where the problems seem to be antagonism and snapping partisanship. There are economic incentives for media to encourage divisive speech too. New, radical ideas have gained a lot of traction without access rights, from intelligent design to deconstruction in the academy to revisionist Vietnam history. So this also makes him skeptical of the need to avoid inertia, and the relationship between access rights in intertia – we’ve seen huge changes in public views of feminism, environmentalism, free-market economics, evangelical religion, etc.

What we might want to promote: a character ideal: someone capable of changing her mind, who doesn’t get all her news from one subculture. Arguments about character figure heavily in the classic defenses and discussions of free speech. This might be the strongest way to justify nonjudicial measures to promote access and subculture-crossing.

Rosen: Without gatekeepers, are remedies hopeless? How do we get someone to click on a news link instead of another episode of The Simpsons? Maybe we need to subsidize gatekeepers like national newspapers rather than worrying about access to them.

Blasi: He is ambivalent about remedies. He’s generally enthusiastic about judicial review. But these are things courts can’t do. Again, he wants to establish norms about how to run a university, or a talk show.

More generally, the question of the role of authority in a world where anyone can put out an opinion is an extremely difficult question. Without authority figures, it’s hard to change public opinion – the change of opinion about the Vietnam War, for example, was significantly propelled by Walter Cronkite. Or the drama of Joseph Welch confronting McCarthy at the hearings – imagine how that moment would have been dissipated on the talk shows the next day had the hearings occurred this year.

Schauer: Balkin seems to define the First Amendment, and then information/innovation/knowledge policy separately. Should they be unrooted from the history of free press/speech/thinking as he seems to present them? We could do worse than starting our thinking with Mill, Meiklejohn, and others. Participation in the public sphere can draw on traditions associated now with the First Amendment. This is more than terminology: the cultural significance of the First Amendment will be deployed, and the question is how its rhetorical power will be brought to bear.

Balkin’s skepticism about judges was not matched by a skepticism about lawyers doing the same things. Mill, Meiklejohn, Popper, etc. were not lawyers and maybe innovation policy shouldn’t be dominated by lawyers.

Blasi pointed out that newpapers were really, really worried before they won Tornillo, and newspaper lawyers encouraged them to invite outside views in, leading them to start running op-eds, to show their good faith and openness. Barron’s criticism of newspapers for their insularity thus had a nonjudicial effect of promoting a new kind of access. Many journalists thought that Tornillo shouldn’t have had to rely on a statutory right of reply, and should have been accorded it by the Herald itself.

Magarian: Public discourse failed us in the Iraq world, despite new forms of access. The very cultural gatekeepers – Washington Post, NYT – were strongly presenting the administration’s side at a time when debate might have made a difference. How should we think about that? Is public discourse hopeless when the government has such a strong message? If so, what’s public discourse for?

Blasi: Public opinion about the wisdom of the war changed rapidly. (I don’t think this is responsive to Magarian’s argument. It’s not how fast error was recognized, it was that error was not prevented despite the length of the lead-up to the war and the availability of contrary information.) The problem is larger than opportunity to persuade. Persuasion needs to change will, which hasn’t occurred yet with Iraq.

Balkin: The blogosphere didn’t really get going until this was well underway. The problem was a government that fetishized secrecy and manipulated the traditional media; because of mass media concentration, you only had to coopt a small number of people before the conduits of information dried up. This interacts with changes in how news is gathered; in some ways the media were much weaker in 2001 than in 1967 because of concentration and other forces.

Political operatives studied how to coopt and manipulate the press much more carefully in recent decades, honing manipulation to a degree unknown to the Johnson administration. Technologies create opportunities, but some people are slow out of the starting gate. The most powerful forces in society are the most likely to take advantage of change – that’s why the first out of the gate in the internet space were the IP maximalists. (What’s being described by Balkin, I think, is a variant of the problems created by tournaments: in a national, highly specialized economy, you get really good political operatives at the top of the heap, and the really good news reporters may not have the resources, power, or incentive to counteract them.)

Blasi: Not just open-mindedness, but independent-mindedness is a key First Amendment ideal. People who might have been opinion-shapers in the lead-up to the war disappointed us by not asking harder questions. That’s a problem in any age.

Schauer: Does independence correlate with correctness? He’s not sure.

Barron symposium, Panel 1

Access and the Regulatory State

C. Thomas Dienes, George Washington University Law School

Barron’s article: Private censorship was skewing the marketplace as much as government censorship could, undermining democracy. Barron argued for a (constitutional/statutory) right of access to raise important issues. The Fairness Doctrine began in the 1920s as a way to respond to “propaganda radio.” In 1949 the FCC formalized it. (1) Broadcast licensees are required to cover important, controversial issues of interest to the community and (2) required to offer contending views on those issues. No one got an individual right to talk – it’s a Meiklejohnian conception of letting all important things be said, not letting everyone say them. Later, the FCC added a right of reply to personal attacks. Red Lion upheld these rules on scarcity rationales, and also because the Court focused not on the First Amendment rights of editors and broadcasters but on the First Amendment rights of viewers and listeners.

But then the tide turned, and in Miami Herald v. Tornillo the Court struck down a newspaper right of reply statute on the ground that the cost to the papers would promote self-censorship, and that editors should be autonomous. And then in 1987 the FCC abolished the Fairness Doctrine, with the personal attack rules following thereafter. Scarcity, the FCC thought, was no longer a problem. Earlier this year, there were reports that Congress was interested in reviving the doctrine to counter conservative talk radio. The backlash overwhelmed the hints of an interest.

We’re here today to talk about the fairness doctrine for the 21^st century.

Gregory P. Magarian, Villanova University School of Law

Substantive media regulation formed only a part of Barron’s vision; the fairness doctrine just happened to overlap with many of his concerns, and he defended it only in a nuanced way. It’s far from a complete solution.

Descriptive disagreements: The justification for the fairness doctrine: the general public interest in exposure to matters of public importance. Defenders tended to look with favor on the FCC’s actions in practice, though there were criticisms of the FCC’s timidity. Opponents were skeptical of the idea of a public interest – and thus of regulatory regimes generally, of course – and they pointed to some significant examples of regulatory capture. The Red Lion case resulted from a complaint largely engineered by the Democratic Party, while Nixon also tried to use the FCC against critics.

Whose autonomy does the fairness doctrine constrain? Barron argued that the constraint was on the money – wealthy media concerns with ideological agendas would advance them and exclude/marginalize opposing ideas. Advertising in particular was of concern; the fairness doctrine stopped money pressures from skewing debate. Opponents said those who bore the brunt of the doctrine were editors and journalists, making decisions about what to say (or not). Opponents drew on the democratic traditions underlying the theory of the fairness doctrine – journalistic autonomy is essential for a functioning democracy. Journalists also have professional norms to do the work the fairness doctrine sets out to do.

The proponents always made modest claims: the fairness doctrine will do some good. But they had to deal with the bifurcation of media into regulated broadcast and unregulated print, which was the post-Tornillo situation. Bollinger attempted to deal with this, arguing that we don’t know whether regulation is helpful, but there’s no way to avoid the question of what’s best for democracy. So maybe it’s helpful to have two different approaches in action.

Opponents had three main objections to the claim that the doctrine was helpful. First, there are difficult line-drawing problems – what’s a public issue? What’s fair? – so it’s almost impossible for the FCC to enforce it coherently. Second, they argued that the doctrine chilled the discussion it was supposed to produce, since the FCC almost never enforced the coverage mandate. Since you wouldn’t be called to account for not covering events, but could for covering them unequally, you should stay far away from public events. Third, opponents attacked the scarcity rationale for bifurcating the regulatory regime.

There are ways to address these concerns, for example by restricting the ability of non-FCC government officials to start the enforcement process.

Descriptively, there is reason to have a fairness doctrine: In the 40 years since Barron’s article, the economic pressure on the media industry has grown so great that it’s fair to say that the money runs roughshod over journalistic methods. The internal self-regulatory mechanisms have been nearly eviscerated. One thought would be to give journalists and editors rights against economic pressure that compromises them – we could make that a reason, or even the only reason, for invoking the doctrine in enforcement actions.

Objectivity and balance are difficult, if not impossible, to achieve through regulation, and are likely to produce a bland center. Instead, renewing the fairness doctrine should focus on debate itself – don’t necessarily make Rush Limbaugh debate liberals, but make the social conservatives debate the economic conservatives, engaging them in the thought process of debate instead of received wisdom. Another possibility: try to use the broadcast media as a way of creating a centerpost counteracting the internet’s pluralizing tendencies.

The fairness doctrine did significantly more good than harm; we need to think about reconstructing that good, getting the mass media to serve the interests of the public.

C. Edwin Baker, University of Pennsylvania Law School

Barron got the crucial issue right. But a renewal of the fairness doctrine would be harmful, and efforts to do so would divert attention from better progressive reforms.

The fairness doctrine was ideologically biased; it deterred valuable speech; it lacked a theoretical standard, making enforcement arbitrary.

The ideology of inclusiveness and balance over partisanship is an ideology. And how do we know what is a controversial idea in need of fairness? Smoking ads became controversial when the Surgeon General issued his report, but they weren’t before. This orientation towards dominant views is central to the fairness doctrine. What is balance? E.g., a balanced debate about the Sandinistas in the 1980s: The Republicans said we should take them down by force, the Democrats said we should use peaceful means. This is balance?

Ellen P. Goodman, Rutgers School of Law

Media flows from the physical transmission layer (broadcast, cable) to the content layer (programming) to meaning/salience. For communication to count, it has to be marked as salient and received by the audience. In the broadcast era, controlling the physical transmission layer meant control of the rest of the cycle, because audience attention was concentrated on broadcast content.

Salience is scarce; today’s question is how bandwidth and content affect salience. Distribution is now unbundled; regulating one layer won’t allow you to control the layers above it. The “long tail” allows every audience to find appealing content. This allows everyone to dissent and get enormous amounts of content; you can even speak back to stories about you on Google News. Viewers are now free of content they don’t want, and content providers are free of the physical layer – the “broadband bypass.”

There are physical-layer constraints; cable and broadcasters still control content, and broadband ownership is highly concentrated. But the people who control transport only control a portion of the content. Regulatory interventions may be necessary to keep them from controlling it all, but that’s not the fairness doctrine.

Broadcast still occupies the head of the long tail, but it’s fluid: network news has lost millions of viewers over the past ten years. The composition of the head also has very little to do with the physical layer; Jon Stewart can have as much influence as a network anchor. (Is this true as a statement about viewership? I thought not.) And YouTube provides another, broadband source of salience. Salience now comes from search engines and social linking functions.

The new scarcity is in the production of strong investigative journalism. A revival of the fairness doctrine would deter such journalism; this is a market failure that needs correction.

Dienes: He’s a big fan of editorial autonomy, and fears that judicial supervision of FCC regulation would be insufficient to avoid discriminatory or arbitrary application of the doctrine. Editors and reporters exercise plenty of discretion now; there’s no need to intervene on their behalf.

Baker: A proposal that is logical, though politically unviable: Reporters are being laid off everywhere, and we are desperately in need of good investigative journalists, no matter how good the editors are. We are heading to a world in which people go around talking to themselves, fact-free. Investigative journalism also has enormous positive externalities, informing people and benefiting the community, even the members who don’t read the paper. What if journalists were cheaper? Media entities would be more willing to hire them – so how about a tax deduction for half the journalist’s salary? But until journalists accept principles of political economy, this won’t be a viable proposal.

Other possible reforms, more structural than substantive: broadcasters could be required to consult with the community about what the local important issues are, and then to use a percentage of time to deal with those issues. Or a percentage of ad revenue.

Baker, in comments, made the great point that media literacy education is in fact a government-sponsored program and reflects a government intervention into the “market” for speech. (As, of course, school in general does.)

Justice Breyer at George Washington

Access to the Media Symposium at George Washington Law School

Dean Frederick M. Lawrence, George Washington University Law School:

Jerome Barron’s Access to the Press is a pathbreaking article, the hallmark of which is that after reading it you say “I knew that,” even though you’d never seen the matter that way before.

Robert Brauneis, George Washington University Law School, introduction:

Breyer’s concept of active liberty fits well with Barron’s insight that the First Amendment right of free speech is effective only if there is access to the ability to speak: They are united in practicality.

The Honorable Stephen G. Breyer:

[NB: I have, unfortunately, extracted much of the wit of Justice Breyer’s snappy and self-deprecating presentation.]

There is room for legal scholarship that addresses what is really going on in the world and then theorizes it. Academia has the ability and the mission to synthesize law (constitutional, statutory, etc.) and make it helpful to judges. “Law and…” can be useful, but traditional work of rationalizing a field is worthy of celebration.

(1) Barron’s article has a practical perspective: what is really going on? Takes the traditional/romantic/free market view of the First Amendment, what Learned Hand called the “democratic wager,” and asks what the payoff is. The traditional view says “don’t regulate speech to get better speech.” Barron introduced realism – freedom of the press only works if you own one. The First Amendment is about promoting speech, not just prohibiting government action.

There is a risk that we turn to those who reinforce our prejudices and close ourselves off to new information that may shape our views. That’s not just an individual problem. When media monopolies arise, it is hard for others to break through and communicate different information to the public. This can be true even with the internet.

(2) Barron forces us to think about what we mean by democracy. It’s not just freedom from government compulsion. How is a community of equals to behave? By participating, sharing sovereignty among themselves. De Tocqueville spoke of the “clamor” that was the first thing he noticed about America, and it was a clamor about politics. It is good for us to fight about the PATRIOT Act and the bankruptcy act, in classrooms and in chat rooms, in committee hearings and in police chief meetings. We can then return to the First Amendment and read it in the light of our commitment to a democracy of equal participants.

(3) Barron’s argument helps with cases. Turner was not too hard a case for Breyer. Congress told cable to carry over-the-air broadcasters to avoid having them shut out. Cable said “we don’t want to carry cooking programs.” Four Justices would uphold the law for economic/antitrust reasons. Four Justices rejected the antitrust reasons and said they were rubbish, thus the law was unconstitutional. Breyer thought the antitrust reasons were rubbish too, but that didn’t bar Congress from acting. His reasoning was like Barron’s: the law adds more voices without shutting lots out or disfavoring ideas. Once you’ve said that, you’ve rejected the traditional claim that you can’t use speech regulation to get more speech.

Campaign finance regulation is the same problem, only more difficult. If you believe in access, then money enables speech and donations should be protected. But what is the rationale for regulation? That $25 million from one source shouldn’t drown others out; others should have the ability to get their messages out too. Once you see First Amendment interests on both sides, the analysis is quite complicated – is this the right type of speech-promoting regulation?

(4) Barron’s article doesn’t have an ending, just a suggestion. It encourages us to think of other solutions, whether in statutes, practices, or cases. Breyer emphasizes that he will say nothing about the constitutionality of particular proposals; these are things that we might consider if we’re brainstorming. E.g., television time for presidential candidates – the French did a debate where two candidates just ask each other questions for two hours, with no moderator. If you want to know your candidates, maybe that’s better than having newspapers ask them questions; newspapers might not have the right questions.

Australian Gold-digging: reseller of genuine goods receives mixed ruling

Eric Goldman and Matthew Sag on the latest keyword decision, from EDNY.

The holding that keyword buys don't give rise to trademark claims is not the most interesting part of the case, though notably the court extends the "no trademark use" finding to cases in which the ad triggered by the keyword actually includes the plaintiff's mark. I really don't think the doctrine can be stretched that far, since I don't see how ad text is any different from text appearing on a defendant's webpage in terms of "use" -- what this is about is a shortcut to saying the use is legitimate.

I agree with Goldman and Sag that the court stumbled on §113(c): the reseller of authentic products plainly had the right to take photos of lawfully made merchandise and use those photos without the manufacturer’s consent. Section 113’s “lawfully reproduced” requirement applies to the labels on the merchandise, not to the photos of the merchandise; this is necessary to avoid an infinite regress.

The fact that the court retreated to the fair use doctrine to reach the right answer is not that reassuring. Rather, it is an example of the trend to use fair use as a dumping ground for any limit on copyright owners’ rights, which both ignores large portions of the Copyright Act and increases the pressure on that already only partially coherent doctrine.

The false advertising bit: the manufacturer argued that, by putting the words “All Rights Reserved” on its photos of the manufacturer’s products, the reseller “falsely proclaimed that [it] is the creator of the images of [the manufacturer’s] Products and its copyrighted label artwork.” (The first part of this – that the reseller created the images – is true, so it's an odd allegation.) The reseller argued that it labeled the pictures to keep other resellers from knocking off its pictures (which might possibly have enough creativity to be copyrightable, but I wouldn’t hold my breath).

On the one hand, I am willing to accept that most consumers have no idea what “All Rights Reserved” means with respect to photos of a product. But “no idea” doesn’t mean “deceived”; it means that the term is meaningless. For a literal falsity claim, this shouldn’t suffice. And the court found no literal falsity – and further held that “All Rights Reserved” was not material. Without any evidence of consumer perception, any implicit falsity claim also failed. The one purported consumer complaint submitted by the manufacturer asked whether the reseller was an authorized distributor, not whether it was the products’ creator.

The only surprising thing about this conclusion is that the court didn’t invoke Dastar to get there.

Dilution: since the manufacturer was seeking money damages and the conduct began before the TDRA became law, the court applied the FTDA. Which meant, naturally, that it was curtains for the federal dilution claim. Because state dilution claims are routinely analyzed as echoes of federal dilution claims regardless of actual language, the New York dilution claims failed as well.

iTeach

The NYT ran a story on how schools are using iPods filled with popular music and books like Harry Potter to assist in bilingual education. Much of this conduct may be allowed by the face-to-face teaching provisions. However, filling iPods with content for out-of-class practice, while obviously smart pedagogically, seems to fall outside both of the face-to-face provisions and the TEACH Act, which (like so many technologically-specific fixes) did not anticipate new forms of digital learning and is geared towards transmissions. Moreover, the teacher who transcribes lyrics and removes the nouns, verbs, or adjectives may be creating a derivative work, though the purpose is definitely transformative.

Good teaching shouldn’t be unlawful. This is why initiatives like AU’s Program on Information Justice and Intellectual Property, documenting the effects of restrictive copyright interpretations on media literacy teaching, are so important, and why we need more education and best practices for teachers doing great work like that described in the story (which doesn’t have a mention of copyright).

Ragin' Cajun: court rules against Louisiana's seafood claim

Piazza’s Seafood World, LLC v. Odom, 2007 WL 2874436 (E.D. La.)

Piazza imports seafood and, using the brand names “Cajun Boy” and “Cajun Delight,” sells it mostly to large national distributors, who then sell it to wholesalers and restaurants; a small percentage of Piazza’s seafood is sold to retail customers. Piazza successfully sued to invalidate Louisiana’s Cajun law, which barred labeling food as “Cajun” unless the food was produced, processed, or manufactured in Louisiana, on the ground that the Cajun law violated the First Amendment. Louisiana’s counterclaim under the Lanham Act remained; in this opinion, the court granted judgment in Piazza’s favor.

The state sought to enjoin Piazza from using “Cajun” in trademarks or brand names to market seafood that wasn’t from Louisiana, because Louisiana owns a certification mark in CAJUN. Piazza, unsurprisingly, argued that Louisiana didn’t own the word “Cajun,” that the court’s prior ruling that its use of the term was nondeceptive barred Louisiana’s claim, and that, in any case, barring Piazza from using the term would be unconstitutional under the prior ruling.

The court assumed that Louisiana had a valid unregistered certification mark; for Piazza to use it would be infringing. But Piazza didn’t use the “Certified Cajun-Product of Louisiana” mark. Instead, the state was trying to “commandeer[]” the term “Cajun” to allow itself “exclusive control” over how the term is used. (Comment: Yes, just like Coca-Cola “commandeers” the term Coke such that the competing product Koke must be renamed.) The certification mark is more than the word “Cajun,” and the Lanham Act doesn’t protect that single term. (Paging multi-factor confusion analysis! You’re needed in the seafood aisle!)

It’s not quite clear whether this is a separate rationale, but the court further ruled that there was no deception because Piazza’s product labeling clearly disclosed the products’ true country of origin. (See Piazza’s website emphasizing both the New Orleans and the worldwide aspects of the business, and the Cajun Boy site.) In the picture, you can see “product of USA” in block type. Perhaps that counteracts the deceptive trademark when the country of origin is China; I’m not so sure. Puzzlingly, the court ruled that the fact that Cajun is not “exclusively associated” with seafood, though Louisiana is known for seafood, made this case distinguishable from cases involving certification marks for specific foods (cheese and orange juice).

Louisiana also argued that, even in the absence of infringement, the CAJUN trademarks constituted false designations of origin. The court rejected this claim, again, because the packaging clearly discloses the true origin. Piazza thus received judgment as a matter of law. It would not matter, apparently, were the state prepared to prove that the relevant consumers did not notice the country-of-origin marking.

My take: Piazza successfully used the First Amendment as an end-run around classic principles of trademark infringement – most obviously, that the infringer’s mark need not be identical to the infringed mark, especially if consumers will not encounter them side by side. As geographic indications get more play, and as more defendants realize that mainstream commercial speech doctrine is a lot better for them than the crippled version found in Lanham Act cases, expect more of these cases.

“An invitation to lie with impunity”

Rickert v. Pub. Disclosure Comm’n, -- P.3d --, 2007 WL 2891498 (Wash. Oct. 4, 2007)

The state statute at issue banned “political advertising or an electioneering communication that contains a false statement of material fact [made with with knowledge of falsity or with reckless disregard as to truth or falsity] about a candidate for public office,” excluding “statements made by a candidate or the candidate's agent about the candidate himself or herself.” It was applied to a candidate who falsely stated that her opponent “voted to close a facility for the developmentally challenged in his district.”

The Washington Supreme Court struck down the statute on the theory that, absent defamation, falsity in political speech simply could not be punished (or even, it appears, evaluated) by the state: “The notion that the government, rather than the people, may be the final arbiter of truth in political debate is fundamentally at odds with the First Amendment” (emphasis added).

The court found that “protecting candidates” is not a compelling government interest, because the government has no right to determine political truth and no ability to do so correctly and consistently; and in any event the law was not narrowly tailored, because it covered nondefamatory malicious falsehoods as well as defamatory ones. Absent reputational harm, the government has no interest in protecting political candidates from falsehoods about them (though the court conceded that nondefamatory, false, malicious speech about private individuals could be punished).

What about protecting voters from fraud? The court further concluded that protecting the integrity of elections was not a compelling interest and that the law was not narrowly tailored. This part of the opinion, even more than the previous one, is evidence that “compelling interest” does no work in the analysis. Of course protecting electoral integrity is a compelling interest. (The court dodges by saying that the legislature didn’t refer to this interest, and that there may be a compelling interest in preventing “direct harm” to elections, e.g. by protecting the poll area or limiting the number of candidates on a ballot to those with some support. I’m not sure how that differs in directness from lies about viable candidates. If the government can’t determine truth, how does it know that the poll area needs protection or which candidates are viable?) But because there’s no government interest in determining truth, the law doesn’t advance the interest in protecting the electoral process.

Regardless, assuming there were a compelling interest, the court held that the law was not narrowly tailored. It was underinclusive in exempting all statements made by a candidate or her supporters about herself. So self-promotional lies were allowed. But there’s no reason to think candidates are less likely to lie about themselves than others, or that self-promotional lies are less harmful to the electoral process. (Hmm, I can think of a few reasons; why is it that politicians use negative campaigning again?)

The dissent argued that the majority “advances the efforts of those who would turn political campaigns into contests of the best stratagems of lies and deceit, to the end that honest discourse and honest candidates are lost in the maelstrom. … It is little wonder that so many view political campaigns with distrust and cynicism.” In the dissent’s view, there is no blanket rule against regulating false political speech, since calculated falsehood serves no First Amendment value and isn’t constitutionally protected. The “known lie” is, instead, antithetical to the premises of democratic government. Falsity and actual malice proved by clear and convincing evidence, the dissent argued, are sufficient to allow speech to be banned, without the extra requirement of defamatory meaning. Nondefamatory false, malicious speech harms the democratic process, disillusioning voters and deterring qualified candidates from running.

My interest in this holding comes from its implications for commercial speech regulation. The greater the gap in the substantive standards applied to commercial and political speech, the more important – and difficult – it becomes to police the boundary between them.

Commentary from Frank Pasquale and Eugene Volokh. Also relevant: Ellen Goodman’s discussion of false statements that may not do immediate harm, but may damage the overall system of discourse by making it unreliable, and the First Amendment justifications for regulating speech on that epistemic ground.

Upcoming copyright event

I will be speaking on a panel on Copyright and Contemporary Art Practice at Electronic Arts Intermix in New York City at 6 pm on Oct. 16. More information here.

She's a brick and I'm diapering slowly

Huggies ads suggesting Pampers fit bricks better than babies can stay on the air; the court held there were real differences between the products and that the ad illustrated this truth in humorous fashion. See the ad here. The Ad Age article recounts that Pampers prevailed against earlier claims before the National Advertising Division of the Better Business Bureau; the classic weakness of NAD proceedings is revealed by the account of the Huggies spokesperson: "[Huggies] did end the original ads subject to the NAD ruling when they 'ran their course' at the end of May." Yes, they let the campaign end, then unveiled a new ad making the same objectionable claims -- a real victory for advertising self-regulation.

Personalized publicity

“I’m the Star” prints and CDs featuring “Your Name” as the star of your favorite sport. This has nothing to do with an expectation of authorization or consistent brand image (bin Laden could order one of these things, should he so desire); it’s about licensing in gross. It’s clear that the task of trademark scholarship in this generation is to articulate the proper limiting principles for the law, regardless of what the marketers are inventing and monetizing.

Santa Clara dilution conference: Comparative Analyses of Dilution

Mary LaFrance, William S. Boyd School of Law, University of Nevada, Las Vegas
Identical Cousins? Dilution by Blurring and the Right of Publicity

Both causes of action have evolved from more traditional roots, trademark infringement & right of privacy doctrines. Each has left its origins behind to some extent. Each is a sort of property right, without a confusion requirement. The right of publicity might be called dilution for people.

But publicity has developed under common law as well as statutes in the majority of states; internationally, sometimes publicity rights are statutory, but other times they grow out of privacy traditional torts or even a constitutional right to privacy. By contrast, dilution rights are everywhere statutory, not inferred from broader doctrines.

Both doctrines have proved controversial because of empirical doubts about the existence and magnitude of any injury, as well as normative questions of when it is appropriate to use law to restrain speech to protect merchants; or about whether celebrities should be awarded rights, and how broad those rights should be in covering identity, when in the view of many no such right is needed or deserved according to accomplishments. Also, for both, there’s been no international harmonization even though laws are proliferating worldwide.

And there may be some worldwide judicial reluctance to apply dilution laws. So the TDRA, for example, is a top-down attempt to push judges to do more. British courts are reluctant, even after dilution law from EU harmonization, to dispense with the likelihood of confusion requirement. Canada has had a dilution statute since 1953, but has seen very little use, other than a case finding dilution from truthful comparative advertising, and the courts have not been able to define “likelihood of depreciation.” In Continental Europe, there’s still confusion over the meaning of the terms in the Directive.

As a privacy-based doctrine, by contrast, the right of publicity has general acceptance, and is increasingly recognized as a property right even when it was traditionally privacy-based. Germany decided, without any legislative mandate, that it’s a property right, and descendible. In the UK, this bubbling-up process of stronger publicity rights is especially noticeable – the UK doesn’t recognize much in privacy rights, because of press freedom concerns, but a court went out of its way to find harm to Catherine Zeta-Jones in her wedding photos – a breach of confidence, even though it’s hard to imagine what confidence was shared. But the House of Lords found that the European Human Rights Directive gave Naomi Campbell a privacy right more important than the public’s right to see her leaving a drug treatment facility.

Kenneth L. Port, William Mitchell College of Law
Trademark Dilution in Japan

Dilution-like protection exists – it’s a civil law system, so statutes are required. Japan’s trademark law is silent on anything that might be called “dilution.” The Unfair Competition Prevention Act was amended in 1993 to arguably cover dilution, but it never uses that word; no statute uses the Japanese word for dilution.

The TM law only applies to registered marks, but the UCPA covers using appellations identical or similar to another person’s famous marks, and use of another’s well-known marks that causes confusion – a pretty broad law, but still doesn’t discuss dilution. Japanese courts can’t keep these separate provisions distinct, so some of the most famous “dilution” cases cite the latter “confusion” provision. Either the judges are not very competent or they are fighting the statute because of its apparent breadth.

There is a myth that Japanese don’t litigate; in trademark dilution, the myth is true. There are very few dilution cases.

Elements: (1) famous appellation; (2) same or similar. (1) is something they take seriously, more than well-known, sometimes called an “exacting standard.” But: 18.3% recognition of Levi’s pocket TM was considered famous. (Query whether this was actually suspicion of the survey, if the judge thought the TM was more famous than that.) More than regional fame is required, but Japan is small, narrow and long. Hokkaido is like Minnesota and Okinawa is like Hawai’i. So can a snowshoe manufacturer ever have a famous mark because it would never sell goods in Okinawa? He thinks Japanese courts would be willing to find fame in such circumstances. Commentators say fame requires high quality, uniqueness, abstract distinctiveness, etc.; they are imposing a higher standard than the courts actually do.

How is sameness/similarity determination? Commentators say that this gets extra scrutiny because there’s no confusion requirement. Lexis/Lexus analysis would probably apply in Japan.

Why so few cases? The statute and concept are vague, and courts get confused – in a civil law situation, the statutes are usually a lot more specific. Courts use multiple terms for dilution, including “free rider” and Japanese transliterations of English terms.

David Welkowitz, Whittier Law School
State Dilution Laws

Two waves of state laws, in the 1940s and 1989-96, when states add or change laws based on the Model Bill/failed federal initiative – INTA wanted everyone to have the same law. The new version of the Model Bill requires fame; many states required state registration. By 2003, 37 states had dilutions laws; Indiana added one in 2006. About 60% of those are the newer type. There are quirks, but basic consistencies.

There are some persistent state-law cases, beyond the Allied (NY) case which was a watershed: Sally Gee (1983) (extremely strong mark); Mead Data (multifactor test); Deere (tarnishment); LL Bean & Hormel (dilution has its limits) – notice that almost all are federal cases interpreting state law.

Sidelight: the Restatement of Unfair Competition, which no one has mentioned, which came out a year before the FTDA. It is in some ways more restrictive than many state laws; it seemingly rejects Deere by requiring either TM use or independent tort; surprisingly little influence on courts, except that the Florida Supreme Court adopted its test.

Post-FTDA, state claims are filed as supplemental to federal claims. Courts assume that all state laws use likelihood of dilution. 9^th Circuit even implied a fame requirement in California’s law, which doesn’t have one. Exception: the 2d Circuit, which didn’t impose an inherent distinctiveness requirement on NY’s state law, which had plenty of history not requiring inherent distinctiveness. But there wasn’t much action regardless.

Then Moseley made a huge mess. Most states now, by INTA strategy, have “causes dilution” language because they were all modeled on federal law, and even had language saying federal law was persuasive authority. The only states that looked good for TM owners were the ones that had retained the older law, like Texas and NY. But most courts just don’t care about the differences. E.g., the “Charbucks” case in the 2d Circuit, where the court refused to grant relief even under the laxer standard.

What about the TDRA? No state law has the two explicit blurring/tarnishment categories; no state law uses the new fame factors; no state law lists the blurring factors. This will create more problems (comment: or will continue to be ignored). Drafting problems are unsolvable without state legislative action; there are virtually no state court interpretations, so the state judiciary can’t engage in creative interpretation, and federal courts are going to use federal precedent anyway. There are going to be circuit splits on niche fame under state law, but the TDRA has done away with the federal split, so we’re stuck.

Three types of law: TDRA, newer state laws, and older state laws. TDRA and older state laws use “likelihood.” But we don’t know whether it means the same things for both. The federal courts are going to take the easy way out and say “yes.” The TDRA factors distill the wisdom and experience of the past 60 years, so it’s the same.

Remedies: Lanham Act limits damages remedies; state laws may allow punitive damages and attorneys’ fees.

Caveats: older state laws only allow injunctions; newer laws track federal law and limit damages; Congress’s considered judgment should be enough to preempt inconsistent state law remedies.

Proper role for state laws: respond to unique local conditions, but there’s no unique local condition for dilution. Fill in a real gap and push Congress to pass national law, but there’s no gaps worth filling. However, if the Punchgini decision spreads, a gap may be created in the famous marks doctrine, and we may need an exception to territoriality under TRIPs. So state law should go not to dilution but to extraterritoriality, pushing towards a federal law.

McKenna: Given that INTA has written all the recent state and federal laws, why don’t they write a preemption provision?

Welkowitz: Aside from the federalism politics (which are really notional), Copyright Act experience suggests that it is very hard to write a preemption provision that doesn’t do more than you want it to do. Is right of publicity preempted under such a provision? State claims are preempted against a federally registered mark, and that’s about all you can do.

Moderator: Margreth Barrett, University of California Hastings College of the Law: It’s clear that other countries are also uncertain about dilution, arising from uncertainty about justification or purpose. In other areas, differences in common law/civil law countries can lead to different views of property rights. Is the discussion about purpose/explanation of dilution similar to the discussion here, or is there a different set of arguments?

LaFrance: Other countries haven’t extensively discussed the rationale for civil-law protection. Her impression: EU members adopted the provision under the harmonization directive without much discussion and somewhat reluctantly, though it was optional. Thus it’s not surprising that judges are a little puzzled, not knowing the challenge the laws were designed to meet.

Barrett: So why adopt the laws?

Port: In Japan, it’s because America told them to.

LaFrance: Outside the EU, the countries with strong dilution laws are a mixed bag: Mexico, Peru, South Africa. Question for Welkowitz: The state statutes tend to lack the explicit exclusions of the federal law, and courts haven’t been particularly vigilant about examining possible First Amendment defenses, the LL Bean case notwithstanding. This raises concerns of using state statutes as an end run.

Welkowitz: That was more true before the FTDA. A majority of the new states adopted the 1996 version of the model bill, including exclusions. But one of the oddities is Nevada, which defines commercial use in the statute, but not as broadly as the noncommercial use exclusion under federal law. The reality is that it hasn’t mattered, since they get subsumed into the federal analysis.

Congratulations to Eric Goldman and Jasmine Pilgeram for a very well-run conference.

Santa Clara dilution conference: Dilution Regulation, Part 2 (Doctrinal Challenges)

Graeme B. Dinwoodie, Chicago-Kent College of Law
The Role of Theoretical Justification: Dilution and Unfair Competition Law

[missed the first part of the talk] By 1995, TM owners were able to claim that TRIPs required dilution protection. This rests on TRIPs art. 16(3), use on dissimilar goods. But 16(3) explicitly stated as an extension of art. 6bis of the Paris Convention, which just extends rights to confusing uses on noncompeting goods & services. Why did Congress make this mistake in assimilation? Because it helped TM owners, and because the word “famous” had been used in state cases supposedly implementing 6bis.

The lack of a real theoretical justification means that courts have no help from the statute when they need interpretive tools in ambiguous cases. Despite the worship of Schechter in legislative history and cases, his theory only accidentally overlaps with the law; Moseley veered in his direction when it suggested that dilution could perhaps be inferred from identicality of marks. But the TDRA added marks with acquired distinctiveness, which is anti-Schechter.

Search costs theories might help, but they jump over the question whether the benefits of such a remedy are worth the costs. Worse, search costs theories suggest that dilution is more harmful for less famous marks, while the TDRA excludes such marks and protects marks that, search cost-wise, really don’t seem to need it.

The lack of connection between statute and any theory makes it easy for courts to act on their normative impulses, whether anti-free-riding or hostile to speech regulation.

Where was §43(c) well received after 1995? Cases of dishonest commercial practices, where courts really wanted to grant relief. In cybersquatting, courts dispensed with hostility to dilution (and indeed with many statutory requirements) to find that cybersquatting was dilutive. A confusion-based rationale might not have caught those instances, but dilution did. The EU TM directive is more honest about this by identifying separate harms – either an adverse effect on distinctiveness, or on a “taking unfair advantage” of the distinctiveness of the mark. The ECJ has accepted that this second part is about free riding.

In the US, many lawyers are nervous about anti-free-riding rules as uncontrolled and uncontrollable; unfair competition’s defenders use the word “flexible” instead. The inartful “trademark use” requirement in the TDRA may hamper an anti-free-riding rule, but maybe not. The newer cases also have a certain “smell” to them – as when the defendant’s explanation of how he came up with NIKEPAL was really hard to believe. Or Cliff Ledge and Rustic Stone, where the other party used Rustic Ledge and Cliff Stone. That’s unfair competition.

But where are the limits of the cause of action? Unfair competition has no obvious limits in itself, though the enumerated exceptions can be applied – it’s easier to identify things we do find acceptable than things we don’t. (The obvious consequence is to suppress new forms of behavior that are actually acceptable, but unanticipated; it’s the Type 1/Type 2 error problem embedded in law.)

Mark Lemley, Stanford Law School
Trademark Use Requirement in Dilution

Primarily a descriptive argument: (1) We’ve had a form of TM use requirement in the dilution statute for the past 10 years; (2) it worked pretty well; (3) the requirement is strengthened in the TDRA. The commercial use in commerce requirement in the FTDA was a pretty significant limit, and Lemley suggested was constitutionally required. It has the effect of requiring trademark use – the defendant had to be using the term in a source-identifying way. (Question: why isn’t a song title a source identifier? It can be registered with secondary meaning.)

Some courts just ignored this requirement early on, particularly in cases where they were motivated by perceived bad actors, such as Planned Parenthood v. Bucci, where an anti-abortion activist created a confusing website at the domain name. But courts began to figure out that dilution didn’t apply to gripe sites, T-shirts, etc. because such uses weren’t branding of defendant’s product but uses to make some statement.

Now: statute requires defendant’s use “of a mark or trade name.” It must be use of its own mark or trade name; you can see this in, among other things, the provisions for injunctive relief. The defendant must have goods or services; merely using the mark in commentary isn’t use of a mark or trade name. Moreover, the use must be source identifying. This is a narrower TM use component than “commercial use in commerce” than “use on or in connection with” goods or services, as in infringement. INTA wrote this bill; AIPLA objected to proposed language “designation of source” in order to get TM use out of the statute. Congress didn’t go with AIPLA, but did change the language to counter AIPLA’s expressed objection, which was that the term was not sufficiently well known in TM law. INTA took the position that dilution only exists when a defendant uses the mark as a mark or trade name for its own goods or services.

The exclusions take a belt-and-suspenders approach, exempting “any fair use other than as a designation of source,” and any noncommercial use, adding to the initial use as a mark requirement.

This is admittedly a morass. One might try to create a world of three nonoverlapping sets (fair use, noncommercial use, use not as a mark), but that would be a mistake, since Congress was trying to make extra sure that various activities would be protected.

TM use is a more important requirement in dilution than infringement, because dilution’s boundaries are so much more unclear and because dilution potentially affects much more speech than infringement. Coupled with well-recognized difficulties in defining and proving dilution, the importance of exclusions is clear.

If anything, the TM use requirement in the statute is too restrictive. There is an admittedly amorphous line between things that ID source and things that don’t. A defendant’s conduct that suggests affiliation or sponsorship might not be dilution because that doesn’t identify source, about which the statute is specific. That buys us some clarity – it’s easier to identify what’s a mark than what identifies affiliation. But it means that dilution doesn’t cover some things that those who believe in the dilution project might want to cover.

Xuan-Thao Nguyen, SMU Dedman School of Law
Searching for Fame: The Challenge of Proving Property in Trademark Dilution Law

Outside the US, most countries require registration; art. 6bis was a major step forward for them in not requiring registration for a well-known foreign mark. How do you determine whether a mark is well-known? In Taiwan, they look at many of the same factors as the US does. The degree of recognition, the duration and extent of use, registration in other jurisdictions to record the rights in the mark, record of successful enforcement, value associated with the TM. China also looks at similar factors, including records of protection of the mark as a well-known mark. Brazil allows recordation of Well-Known marks, good for 5 years. Australian debates pointed out: There is inconsistency in how well-known status is determined and enforced worldwide. What is it that we’re trying to do with such protections? That question must be answered before we can achieve consistency.

The US isn’t all that clear on fame either. You can spend $130 million a year advertising (Advantage Rent-a-Car v. Enterprise Rent-a-Car) and still not be famous; the ultimate test is consumer recognition. It’s not about TM owner’s spending; the property is in the mind of the consumer. Best brands in Harris Poll 2006: Sony; Dell; Coca-Cola; etc. – GM & Microsoft dropped off the list. This is significant because of debates over whether we should have a registered list of famous marks; we shouldn’t because consumers change their minds over time.

Lisa P. Ramsey, University of San Diego School of Law
Increasing First Amendment Scrutiny of Trademark Law

This was an application of Ramsey’s First Amendment work to dilution, where she suggested recognizing an independent First Amendment defense over and above the exemptions in the law. Actionable uses of a mark are communicative acts – that’s why they blur, or do whatever it is that they do. Thus, even if regulation is constitutional, First Amendment analysis is at least required.

Dilution laws are content-based speech regulations; not all uses of terms lead to liability, such as noncommercial uses and commercial uses in comparative advertising. Dilution is designed to control the communicative impact of the mark: what words third parties can use when they talk about their marks. This is word-based discrimination, like bans on profanity, as well as speaker-based discrimination favoring TM owners. But regulating commercial speech is less problematic than regulating other types of speech, so that’s not necessarily fatal.

There might be a compelling government interest in protecting producers by banning dilution, but she doubts it. Some people suggest that dilution protection reduces consumer search costs. That might justify upholding the law, if it could be empirically established. But then there’s a tailoring requirement; Ramsey argues that the law is not properly tailored to survive heightened scrutiny. Marks with only acquired distinctiveness and unregistered marks, she argued, should not be protected.

Moderator:
Tyler Ochoa, Santa Clara University School of Law: does a well-known mark under the Paris Convention mean the same thing as a famous mark under TDRA?

Dinwoodie: No. Grupo Gigante thinks it’s somewhere between secondary meaning and federal fame, and, without committing to a fame standard, that makes sense to him. The basic purposes of the confusion-based 6bis right are implemented by protecting any mark with secondary meaning. But the problem with extrapolating to that logical conclusion is that territoriality is also an important consideration and there is value in having different rights in different countries. Give a tip of the hat to territoriality concerns by requiring secondary meaning-plus. Dinwoodie still doesn’t know why we have the fame standard, but it’s not motivated by the same concerns.

Nguyen: Federal fame is a much higher standard than “well-known” – in fact, maybe dilution protection doesn’t implement 6bis at all since it won’t protect most marks against uses on noncompeting goods.

Dinwoodie: Yes, for example, niche fame could be well-known.

McKenna: Not persuaded by Lemley (no surprise), but given the empirical work and the relatively little work dilution does above infringement, does it matter if the dilution standard is tougher?

Lemley: That’s part of the larger question of whether dilution matters. Maybe it’s not worth being here, and there’s some truth to that. But the verdict is still out, because nonrepresentative cases have been litigated in the past year. Also, even if it’s true infringement and dilution stand or fall together, they influence each other. So how often do courts distinguish between the two requirements? That’s a key question. Courts might take up the requirement from dilution and apply it to infringement. He’s not saying they should do that, but they might.

Q: Is the fair use section applicable to dilution, and does it address the First Amendment concerns?

Lemley: §1114 doesn’t by its terms apply to dilution, but the FTDA does have an exception for “any fair use,” including descriptive fair use, “other than as a designation of source.” He doesn’t know if there’s a universe of things that designate source that would otherwise fall within §1114.

Dinwoodie: INTA briefed this in Chewy Vuiton: INTA argues that the trademark use requirement constrains the parody defense, such that parodies aren’t allowed if they are uses as marks.

Ramsey: As Dinwoodie expects, she thinks the First Amendment requires more leeway for parody. That’s one of her concerns with the exceptions – use in a slogan or domain name has been held to be use as a mark. So an independent First Amendment defense would be advisable, though she thinks courts can work within the statute to achieve similarly limited results.

Bone: How much do we trust judges? If dilution is really unfair competition, and we don’t know what unfair competition is, we are relying on judges’ intuition, and the track record in trademark is bad (e.g., trade dress).

Dinwoodie: TDRA was inartful, as Lemley said, but it does include a TM use requirement (he thinks Lemley pulled the wool over INTA’s eyes). But he’s not too sure about source identification – if you read that in a 2006 sense instead of a 1947 sense, you get a much broader scope of source identification. Lemley says non-source ID uses are those that don’t increase search costs; how does that apply to dilution? South Africa has a case about showing a BMW in advertising, where the court said there is a TM use requirement for infringement, but dilution is not about source-identifying capacity and so there’s no such limitation, the reverse of the situation Lemley argues here.

Lemley: Bone’s question: I trust courts when we give them a coherent principle. There are lots of people who think “unfair competition” is a redundant phrase, and it’s far too easy for courts to agree with that. The more confidence you have in the coherence of unfair competition, the more tolerance you have for a general statement of principle v. statements of limitations. As to Dinwoodie’s question, Lemley believes dilution can be justified, if at all, only on the same search costs rationale that justifies TM infringement. Thus the TM use requirement should apply to all.

Santa Clara dilution conference: Dilution Regulation, Part 1 (A Look Back)

Barton Beebe, Cardozo School of Law

The TDRA Case Law After One Year: A “Whole New Ballgame”

Not so much to report, one year later: Courts are still applying the FTDA, which is pretty shocking.

How many opinions actually consider the TDRA? For copyright fair use, the ratio of articles to decisions is roughly 3:1. Are courts thinking about dilution, or is it just academics and C&D letters? So far, courts continue to apply the FTDA; not very many cases yet.

Where are the opinions coming from? Widespread, in fact, not just the SDNY. Summary judgment motions that make it to the opinion stage tend to be granted, though of course there are selection biases; both defendants and plaintiffs make them. Both bench trials found dilution.

What was the relationship between infringement and dilution? 32 district and 5 circuit opinions addressed both, and 34 of 37 had the same outcome, a correlation of .939. The outliers: infringer ceased conduct before TDRA; the American Blinds case (no fame); and a third case where the court didn’t seem to know dilution was being argued but dealt with it anyway. The word count of infringement v. dilution shows that courts devote 4 words on infringement to every 1 on dilution.

Robert Bone, Boston University School of Law
Schechter’s Ideas in Historical Context and Dilution’s Rocky Road

Schechter offered a general theory of TM law; we need to see him as a legal realist, arguing in a pragmatic and instrumental style. No one criticized his article on the merits, though no one adopted it either. It was received positively, which surprised Bone given how radical his thesis was. But Schechter was more of a scholar than an advocate, and there was already a good theory – goodwill as property, which had the benefit of uniting consumer harm and producer benefit as a justification for expanding trademark.

His first premise: The true function of a TM is to sell the goods. During the 1920s, psychological advertising was at peak popularity, and Schechter had the magnetic, drawing power of the mark in mind. He was deriving from actual practice. Second step: selling power depends on distinctiveness. If those things are true, then law should protect selling power, and the only rational basis for TM was the protection of distinctiveness.

Conventional account: Schechter was trying to bring TM theory in line with modern advertising, and the main doctrine he was trying to modify was the direct competition requirement. He failed because he never really offered a justification for dilution (as opposed to expanding infringement).

Bone says no. (1) He wasn’t targeting one particular doctrine but applying his new general theory. (2) He wasn’t impatient with the pace of doctrinal change. He knew the best way to get the courts to expand TM law to cover noncompeting goods was to push on confusion-based theories, and his contemporaries did just that. Rather, he thought he had the right theory. (3) He offered a functional justification: TM should serve the way marks actually function in the economy. (4) He was not a formalist; he didn’t think the label “property” did much help in figuring out what rights people should have.

So what was he doing? As a pragmatist, Schechter had to explain why the way the market worked in the 1920s was a good thing. He was looking at why the market was putting pressure on the competition requirement, and why courts were tempted to relax it, in order to expose the policies behind these changes and focus on the underlying policy issues rather than the formalist categories used to channel policies.

Shari Seidman Diamond, Northwestern University School of Law
Expansion and Contraction with the Trademark Dilution Revision Act?

Diamond is interested in comparing dilution to another change in the law whose practical effects were unclear: Daubert, when courts were told they’d have to become gatekeepers for scientific evidence. The Court wrote Daubert as if it were clarifying the FRE. But what really happened after? Diamond suggest results similar to Beebe’s: less going on in the courts than in the law reviews. She refers to Clarisa Long’s empirical analysis of dilution claims, including ones without reported opinions. Over time, opinions became less and less friendly to dilution claimants. Can the TDRA reverse this?

Some of the TDRA’s clarifications expanded dilution (express coverage of tarnishment, marks with acquired distinctiveness, likelihood of dilution), others contracted it (no niche fame, scope of the exclusions). (I’m not so confident that the scope of the exclusions is now broader, specifically with respect to titles of expressive works, which now may qualify as “use as a mark.”)

Why do we see so little change? Most dilution claims are tacked on to a laundry list of other claims, and generally turn on traditional infringement.

In the past 6 months, some marks have been found to be famous – including Nike, “for dummies,” but also possibly “Tempur-Pedic.” Not famous: Tyler Green, Air Cargo News, and Cosi’s (though the court there merged its fame and blurring analysis, holding that branches in 16 states & DC wasn’t enough to constitute fame).

It’s possible that it’s just too soon to see change, or that cases are settling and aren’t reported. Also, some circuits already applied these various limits, and few fact patterns actually need/fit a dilution action.

Shubha Ghosh, SMU Dedman School of Law
Competition Norms in the Law of Trademark Dilution: The Ascendancy of Misappropriation and the Descent of Competitive Entry?

Competition norms pervade IP generally. Competition arguments include: (1) first mover/misappropriation model, where we prevent competition through mere imitation or free riding; (2) controlled entry, where we control unnecessary duplication and excessive entry, often through licensing; (3) consumer welfare protection, in which competition protects consumer interests, sometimes recognizing competition between consumers and producers – fair use, experimental use, TM; (4) wealth maximization.

TM includes both (1) and (3), trying to reduce search costs.

Ghosh looked at 130 appelate cases on dilution. 49 contained a substantive ruling on dilution, and 22 involved claims against competitors. Of those, the TM owner won 9 and the alleged diluter won 13. Half of the victories for the alleged diluter were before Moseley. 5 out of the 9 TM owner victories were after the TDRA, while only 3 out of the 13 diluter victories were.

Dilution is often just redundant; should it ever be available against a competitor? Perhaps, when the infringer is duplicating the brand in order to reduce its own costs.

(My question: What would those costs be? Communicating what the brand is to consumers? But that’s very close to nominative fair use/comparative advertising. His answer: Ghosh suggests there are different types of search costs – (1) knowing where to find things on the shelf or (2) consumers have no idea what the product is like and the TM serves as a screening device; in the latter type of case there is a role for dilution. I’m very interested in the paper expanding on this concept, because I’m not sure I can see the difference. In a case I worked on, XALATAN v. TRAVATAN for two drugs competing in the market for glaucoma medications, there’s no classic or nominative fair use, but the allegedly dilutive use of ATAN can communicate something about the type of drug precisely because it borrows part of the allegedly unique and famous mark. Borrowing the TM helps doctors screen, but truthfully so. In any case between competitors, it seems to me that (1) is more likely to win out.)

Lisa Ramsey: What percentage of opinions are not reported? What effects on results?

Diamond: It’s a significant number. There are distortions; even PACER is incomplete.

Lemley: Touts coming Stanford IP Litigation Clearinghouse, to collect this type of data. TDRA has a damages reset: No damages unless the dilution began after Oct. 2006. That means that the subset of cases decided in the last year is likely to be skewed in interesting ways.

Graeme Dinwoodie for Bone: That contradicts conventional wisdom on the radical nature of Schechter’s theory. But didn’t he still have a concern over free riding?

Bone: He was certainly concerned about it in general, though he said little about it in Rational Basis. He looked for fair trade in trade practices, which was difficult but was the standard difficult problem for legal realism of finding the good in the extant.

My comment on Diamond: What’s notable about the list of TDRA changes to me is that the “expansions” are all reversals of things that outlier courts did contrary to pretty obvious congressional intent. We’re “expanding” our way to the situation immediately post-FTDA – which is not necessarily a small thing, given that courts at first applied the FTDA broadly. Congress sent a signal, but it is at least one the courts can choose to interpret as a rebuke only on specific doctrines rather than an instruction to apply dilution broadly. Compare the as-yet unenthusiastic judicial response to the TDRA to the enthusiastic embrace, and expansion, of Dastar. Hypothesis: Part of a general overall move to laissez-faire in civil cases that here affects outcomes of business-v.-business cases as well as the more obvious effects in consumer-v.-business cases?

Santa Clara dilution conference: Consumer Perceptions, Part 2

Laura R. Bradford, George Mason University School of Law
Trademarks and Emotion

Positive affect from famous marks stems largely from familiarity and to a large extent is independent of brand meaning. Regulating the emotive power of trademarks by giving TM owners control of follow-on uses may be harmful overall.

People have extended the search costs account of infringement to dilution: dilution causes consumers to think for a minute before connecting the mark to its goodwill, reducing its capacity in conveying information. This is an informational, not evaluative, account. We can see why people have been skeptical – does a few extra seconds in the grocery store matter?

Look at emotion: Ralph Brown’s initial account of brands being used to mesmerize consumers into paying more for identical equality. More recent scholarship is that the emotion is part of the benefit of the brand: if women think that floor wax will make their husbands love them more, they’re actually getting more of what they value. It’s paternalistic to argue otherwise. But under either account, consumers are posited to weigh costs and benefits based on associations and then make a rational decision.

Bradford focuses on a subset of emotion, affect: a primal feeling of like or dislike experienced in response to a stimulus. Emotions allow us to make decisions; people with certain brain damage can reason rationally and identify costs and benefits, but they can’t decide because they can’t classify stimuli as good or bad. Affect is especially important in low-involvement processing situations, when the decisions aren’t all that important to them or when people are pressed for time.

Familiarity is a great predictor of affect. People often misattribute appeal to the stimulus rather than to the ease of processing the stimulus, and they even concoct rational explanations for this. Brain imaging suggests that purchase decisions involving familiar brands involve more emotional areas of the brain, rather than memory-storage areas, compared to decisions involving unfamiliar brands.

Possible justifications for dilution: If we see things too often, we get bored with them, though it’s highly contextual. There is some evidence that promiscuous use may make a stimulus “unsafe” – we no longer know what it means. It’s possible that your pause to think may make you get angry at the brand and punish it for making you think, turning tarnishment into a subset of blurring. But now we’re talking just about the primal affect arising from familiarity, not the specific brand meanings trademark owners say they want to protect.

If we accept that dilution causes involuntary changes in preferences, and grant protection on that basis, we’re engaged in a funny kind of paternalism. It’s not protection of rational choices, nor even protection of positive emotional associations specific to the brand. We’re protecting convenience – familiarity -- in its bluntest sense, without adding to the value of information in the marketplace; the credence associated with familiarity isn’t associated with quality, value, or anything else. In other areas of the law we don’t grant rights to mental processes in this way. The information produced as a result of free riding may be better information, letting us know about other options or richer meaning.

Christine Haight Farley, American University Washington College of Law
Mental Associations and Evocations: the Slippery Slope of Dilution: AKA Frank Schechter was a man ahead of his time, but now he is dead

Harley Davidson sells motorcycles, but also cake decorations. TMs are being marketed for something much broader than source. Harley Davidson, according to the owners, represents “Americana” – a promise to represent customers and fulfill expectations. The language of “promise” is quite common. Corporate extension licensing is widespread: real examples include Oreo Fun Barbie, Chanel skis, and zillions of Virgin products. Compare to Buick shoes, Kodak pianos, etc. – Frank Schechter ’s examples of dilution.

These are not different in kind. The only difference is that in the real examples the use is authorized. Yet authorization wasn’t the ill Schechter sought to remedy. He spoke of damage to distinctiveness. Schechter wanted to preserve the association of the mark with goods, shuddering to think of Ritz-Carlton coffee not because of the problem of “which Ritz-Carlton”? but because he wanted Ritz-Carlton to mean just one thing. The problem is that TM owners no longer want that type of exclusive association.

Why? Brand owners say new brands are too risky and expensive; there’s too much noise in the market; it’s beneficial to the brand. Evian licensed its mark to J&J to produce a hydrating face cream, which helps Evian promote the brand attribute of hydration. Does this cause dilution? No, the core brand isn’t harmed. And if there isn’t inconsistency with the brand attributes, there’s no dilution from an extension. Dilution only occurs where the use is inconsistent with brand attributes and the inconsistency is salient to consumers. Virgin has a history of brand failures with positive effects on the mark; Virgin is a rebel/challenger even when it fails. A Harley Davidson toilet seat shouldn’t dilute the mark because it fits the brand attributes, nor should a cheaply made Harley Davidson leather vest. Harley Davidson pastry, however, may have a dilutive effect.

Judy Zaichkowsky, Faculty of Business Administration, Simon Fraser University
Explaining Dilution Through Balance Theory

People seek to balance cognitive and affective states – people avoid information inconsistent with their attitudes, etc. Companies want people to have positive attitudes towards goods & services, inducing positive behavior/purchase. The goal is to avoid tension (e.g., being enemies with my friend’s friend). A simple strategy: associate your product with one for which your audience already has positive feelings. Celebrity endorsement is a classic example; rap stars singing “Pass the Courvoisier” leads consumers who like the song to like the liquor.

An example of unlicensed use: posters with Girl Scouts used to associate them with unwed pregnancy. People who like Girl Scouts rarely like unwed mothers, so seeing the posters makes them tense and they need to resolve the tension by adjusting their favorable attitudes towards Girl Scouts down or unfavorable attitudes towards unwed mothers up. This is dilution.

More recently: clubs banning particular brands for association with gangs; these brands are expensive. If you wear the brand, you are labeled by association, and the association is negative; it may harm the brand value. UK pubs have banned young people wearing Burberry for association with “football hooliganism” (chavs). They hijacked the Burberry brand.

(Comment: How interesting that these examples are not things to which American dilution law could apply – nor even European law, at least in the club examples. This is my point about the TDRA targeting the mote in a TM owner’s eye while ignoring the beam right next to it.)

Marketing solutions: change look of brand, end production of branded baseball cap.

Moderator: Dorothy Glancy, Santa Clara University School of Law

Q: How is emotion connected to balance theory?

Zaichowsky: It fits right in, with all the products you use to make yourself feel better – chocolate, diamonds, etc., though people aren’t like that about toilet cleaner.

Bradford: Some research suggests you can be emotional about toilet cleaner in a primal sense; you don’t care at all in any overt way, but you react well to familiarity that provides a sense of safety.

Lemley: To what extent does blurring require some sort of misleading? There must be some way in which consumers are led astray in your model.

Bradford: It depends on how legitimate you think familiarity is in expressing a true preference of the consumer. It helps us conserve cognitive resources, so we feel positively towards the brand/trust it; a free rider jams that signal and makes us feel the brand is riskier. We could call that misleading, but we could also say that the jamming is as neutral as familiarity; both are disconnected from specific information about the brand. The dilutive use tells you that the brand is popular, interesting, etc. Louis Vuitton case: the fact that it’s used for a dog toy tells you that some people find the brand pretentious. Consumers might feel more negatively about the brand after exposure to the dog toy; an involuntary change of preferences, true, but Louis Vuitton’s fame was also causing involuntary change of preference.

Q: Is there any remedy for what happened to Burberry? The chavs weren’t using it as a brand.

Zaichowsky: Sure they were, they were using it as an identifier for … whatever.

Lemley: It’s the “whatever” that’s the issue.

Zaichowsky: I’m just a marketer, giving you examples. Burberry had no choice but to change away from the plaid.

Q: To what extent is this really an issue of counterfeiting? The chavs were using a bunch of counterfeit goods.

Zaichowsky: Balance theory doesn’t care whether it’s authentic Burberry or not. It’s the image that matters.

Q for Farley: So if Harley Davidson markets toilet paper, that’s not dilution, but marketing bidets would be?

Farley: Yes.

Q: Wouldn’t that make bidets into Americana?

Farley: They’d have an uphill battle on that one.

Mark McKenna: There is a bunch of evidence that brand extensions don’t have feedback effects, but Zaichowsky offers examples where there is negative feedback. But these are noncore, communicative uses; the ones that don’t matter are the core trademark uses. The statute only covers those, but the research tells us that those are the ones we don’t need to worry about.

Trademarks without Pity: What is a source identifying function?

Mark Lemley and Stacey Dogan have argued, quite persuasively on normative grounds, for a "trademark use" requirement before infringement can be found. Graeme Dinwoodie and Mark Janis have picked apart the statutory and historical support for such a requirement, but these days I'm leaning mostly towards Mark McKenna's primary argument (also made by Dinwoodie & Janis): as long as anything can serve a source-identifying function (remember Breyer's rejection of ontology in Qualitex), trademark use isn't a helpful limit.

Here's an interesting set of examples. Glarkware sells, among other things, merchandise associated with TelevisionWithoutPity, the TV recap/commentary/discussion site. This merchandise often refers to shows, though the references will be obscure to nonfans. So there are shirts for Smallville, Supernatural, Battlestar Galactica (on the first, the font is similar to the show font), Heroes (much more obscure in its reference than the T-shirt from a few weeks ago), The Daily Show, Lost (II), Jeopardy, Veronica Mars (the second particularly interesting because it initially appeared in the show as a shout-out to TWoP), House, 24, Star Trek, America's Next Top Model, Six Feet Under, Gilmore Girls, Alias (II) (III) (IV), Prison Break, Desperate Housewives, and many more, including ones I just didn't understand.

The copy is coy as well, winking to those in the know, which is either clever marketing or clever legal advice, possibly both. E.g., the second BSG shirt says: "A toaster is capable of a lot more than you might think at first glance. Even more than toasting your bread, actually. Treat it poorly, and it will find a way to collude with other toasters to overthrow humanity. But treat it well, and...well, you and that little old toaster might actually find love. It's not a love that either of your communities will sanction or even understand, but you know best: that seemingly simple appliance loves you from the coils of its heart."

So, assuming that the relevant consumers (TWoP-using fans) will understand the references -- which is why they buy the shirts in the first place, so it seems pretty likely -- are the images and words serving as indicators of source? Should trademark owners have the right to authorize such merchandise? I think not -- and I doubt that consumers regularly perceive references as indications of source or sponsorship, even if they've been successfully trained to expect authorization for ordinary repetitions of a primary mark on promotional goods like T-shirts. But I'm not sure trademark use can help in that analysis.

(The image at the top of the post appeared on a shirt with the words "Look upward," which were used in the opening voiceover on later seasons of Farscape, the brilliant SF show; the image is of the Farscape module against a wormhole. I wish I'd ordered that shirt when I had the chance.)

Santa Clara dilution conference: Consumer Perceptions, Part 1

Ronald R. Butters, Duke University, Department of English (emeritus)

A Linguistic Look at Dilution

Dilution is barely noticed within linguistics even among consulting experts. If dilution is Bigfoot, as McCarthy suggested, then linguistics is what my dog thinks about Bigfoot: If he sees it, he’ll bark, but he hasn’t seen it.

Courts have accepted forensic linguists as trademark experts, but not so much in dilution. There are possible applications for linguistics:

Fame: Applied linguistics/lexicography. Historically, lexicographers have needed to be able to define trademarks, as terms of art. Dictionary makers have needed to develop concepts akin to TM fame, since dictionaries must rank words according to lexicographic importance and choose which to include. But it’s not simple; special consideration is given to arcane words that might nonetheless be encountered – brand names of drugs – as well as to words everyone knows. So TMs should neither get extra or less consideration because they’re in the dictionary.

Dictionaries in fact contain few TMs; the American Heritage Dictionary online has only 300 of 70,000 entries as TMs. Some of these are famous/arguably generic: Band-Aid, Frisbee, Xerox. Some are unfamiliar: Pentothol, Bondo. Omissions include: Microsoft, Burger King, Apple, and transparent omissions like American Airlines. Still, one could construct an evaluative metric for degree of fame from usage studies. Lexicographic methodology involves surveying large samples of text, which could be adapted for fame.

Genericness: Cases in which linguistic evidence was used: Beanie/Beanie Babies v. Screenie Beanie; Steakburger claimed as a common law TM by Steak & Shake; kettle for potato chips; zinger for spicy chicken menu item by Florida Ale House. Widespread use of a term in generic fashion may be incorporated into dictionaries: the American Heritage online includes Band-aid, Frisbee, Mace, Xerox, and notes that the marks sometimes appear in lower case as nouns and are used figuratively. The AHD doesn’t use the term “generic” because it doesn’t want to draw a legal conclusion (read: a C&D letter) even though that’s what it means.

Identity/similarity: This is related to the likelihood of confusion inquiry. Butters recalled the Lexis/Lexus case in which the court of appeals majority relied on testimony by an English professor about the supposed linguistic differences in pronunciation. Every linguist he knows disagrees with that testimony, but it’s still an instance in which such testimony influenced the outcome.

Jacob Jacoby, New York University Leonard N. Stern School of Business
The Who, What, When, Where and How of Measuring Dilution

He was the plaintiff’s expert in the Lexis/Lexus case, by the way.

We need data to measure dilution.

Among who? The general consuming public. He’s not convinced niche fame is dead. General and consuming are the same; why the redundancy? Must mean consumers of the product, which might not be nationwide or might not be demographically divided, like MODERN MATURITY (older consumers), MONISTAT (women), ISOTONER (colder climes).

When? After the mark is famous, which means brand owners need benchmarks.

How? You can use surveys to measure fame, as in the Pebble Beach case, in which his survey asked golfers to name the “most famous” golf courses in the US. The question asks the respondent think about fame. It uses the product category, because marks are famous for something. It uses unaided recall, not aided recall or recognition – the toughest possible test. More than one answer is permitted. Out of 13,000+ regulation golf courses in the US, 87% of golfers named Pebble Beach, while 25% named Pinehurst, the other plaintiff.

Similarity: Though no one’s done this yet in litigation, we could measure similarity through multi-dimensional scaling/conjoint measurement.

Association that impairs distinctiveness: this has to do with uniqueness or particularity. Jacoby used Pebble Beach and a case between Intel and Intell Management. In both cases, he measured change over time by surveying in 2 waves. In Pebble Beach, 14 days apart: asked them, before you heard about Tour 18, did you think that a Pebble Beach hole could only be played at Pebble Beach? Before learning about Tour 18, 73% said no; after, 85% said yes. (There are some pretty significant issues with this question, notably whether the statement that one can play a “Pebble Beach” hole at Tour 18 is in fact true, which depends on what it means to have a “Pebble Beach” hole.)

In Intel, the case was against a developer of upscale retail, housing, etc. projects; Jacoby surveyed experienced market participants. In-person groups were exposed to Intell and modified Ibell promotional materials. Seven days later, there was a phone interview in which they were led to believe a different survey was being conducted (Jacoby being IRB-free in private practice). The number who associated “Intel” with both a chip manufacturer and a real estate company in the test cell was 11.4-12.0%, and in the control cell it was 0%. That’s low, but in terms of whittling away it’s quite a big slice (… of real estate professionals aware of Intell). Intell is now Extell.

In conclusion, Jacoby discussed tarnishment, in the form of Anheuser-Busch v. Balducci, where a “Michelob Oily” ad affected respondents’ perception of Anheuser Busch, such that 15% more of the test group than the control group which saw a regular ad said the ad made them less likely to buy Michelob.

Rebecca Tushnet, Georgetown University Law Center
Dilution & Cognitive Science

I gave my standard spiel. Despite the language of science with which dilution proponents clothe their explanations, intuition is the basis of the cause of action, and we should acknowledge that rather than scientizing our presumptions.

I contrasted the messiness of the real world, where marketers constantly bombard us with ads, competing not just with direct competitors but with everyone else for our attention, and the tidy models of “owning a place in the consumer’s mind.” In the model, interference with attention is a form of trespass – except that we recognize many legitimate types of interference, for example Pepsi’s interference with Coke’s mental space. Why be concerned about dilution-based interference anyway?

I discussed the argument promoted by Jerre Swann that cognitive psychology justifies dilution through evidence that high-frequency words with many associations are harder to remember than high-frequency words with few associations. For low-frequency words, more associations don’t hurt and may help, but the argument is that dilution moves a mark from the “few, controlled associations” category to the “many, hard-to-remember associations” category. There are a number of problems with this argument, but the main one is: famous marks – even Apple and Ford -- are low-frequency, like almost every other word. The definition of frequency used in the underlying research is not intuitive (and our heuristics make us think that famous marks are high-frequency, when really it’s words like “day” that are). So the theory offered by dilution’s proponents doesn’t match the underlying research.

What about practice? In the lab, it’s possible to produce delays and errors in recognizing brand category membership and linking brand with attributes (e.g., GODIVA is chocolate, GODIVA has rich taste) by showing people ads for dilutive products (e.g., DOGIVA dog biscuits). Over three tested brands (Godiva, Heineken, Hyatt) respondents in the test cell were about 6.4% less accurate than control respondents who saw an unrelated ad when asked whether the major brand was a member of its category (chocolate, beer, hotels). Interestingly, because Godiva was so much less well-recognized than the other two brands, merely reporting the mean of all three makes the dilutive ads’ effects on accuracy look much bigger – an example of how statistics can be manipulated. It’s also notable that 6.4% is below the usual threshold for granting relief in TM cases.

Likewise, dilutive ads in the lab produce a response delay averaging 23 milliseconds in correctly recognizing the brand as a category member. This number is distorted because Hyatt Legal Services improved the recognition speed for Hyatt just as much as an ad for Hyatt hotels did. Response delays of several hundred milliseconds may seem trivial, but it’s certainly reasonable to think they matter, since people make affective judgments quickly, and a delay in response may make it less likely that consumers will choose that brand over others. So Dogiva dog biscuits could theoretically worsen Godiva’s competitive position against Ghirardelli, even though they don’t compete. But the Hyatt result shows that, at most, we don’t know enough to tell when a “dilutive” use will help or hurt. (Interestingly, another study used Hyatt tattoo parlors as a test, and they improved respondents’ preferences for Hyatt.) The best analogy for our mental associational models may not be trees with branching paths of conceptual linkages, but a series of one-way streets.

Dilution is, as an empirical matter, not proven. The scientific explanations are facades over the real concept of unfairness, which is not an empirical issue. Everything dilutes – ad clutter, competition (since one of the main things people think of when prompted with Pepsi is “Coke”), commentary, etc. Why protect TM owners from this behavior in particular? I’m prepared to argue that it’s in fact unconstitutional – an irrational regulation of a subset of commercial speech. Truthful commercial speech can’t be regulated if the scope of the regulation has nothing to do with the posited harm. Because everything dilutes, the FTDA/TDRA are the equivalent of taking a thimbleful of water out of an overflowing bathtub, and current commercial speech doctrine says you can’t do that even if the thimbleful is not itself very valuable.

David Welkowitz: Jacoby says the results for Pinehurst, 25%, are obviously proof of fame. But that’s less than half!

Jacoby: People were asked what they thought were famous courses; Pinehurst was 4^th among golfers out of 13,000.

Welkowitz: But that just means it was #4 among golfers.

Jacoby: That’s up to you guys – it’s above my pay grade.

Q for Butters: Aren’t dictionary makers afraid of being sued, so the content isn’t exogenous to law?

Butters: Yes. The American Heritage is rather daring in showing pseudo-generic uses. Most dictionaries disclaim any legal statements. They get C&D letters all the time. Kitty Litter, it turns out, is a brand for greeting cards; one of his friends got harassing letters from the TM owner and took the term out completely. There’s also pressure from in-house lawyers even though there’s no cause of action against a dictionary. Art and Craft of Lexicography is a good book on this.

Mark Lemley for Jacoby: Your interpretation of “general consuming public” as only a limited public is flatly inconsistent with congressional intent, and is a strained reading besides. Many members of the public don’t make purchasing decisions – kids, people in nursing homes – the redundancy, if any, is to communicate the concept and Congress’s seriousness about it.

Jacoby: Maybe, but then why does Congress elaborate on geographical distribution in the factors?

Lemley: That’s consistent with the idea that fame can’t be geographically limited.

Jacoby: That’s above my pay grade (though kids are consumers and make decisions!).

My comment: “Above my pay grade” is an insufficient response. Jacoby is claiming that science provides answers which can then be translated into law. That’s not good enough, because we have an obligation to question the science, and because courts have historically responded to identifications of “harm” to expand the scope of TM law.

Question: Jacoby’s interpretation of general consuming public raises a larger point. Words have different meanings in context. Jacoby has techniques that measure things, then assigns legal names to them. What is the underlying theory that motivates the measurements? There must be a theory of relevance.

Jacoby: He’s done this in his 2001 Trademark Reporter article. There is widespread cognitive science agreeent about what goes on in the mind, confirmed with fMRIs. The associations we’ve talked about exist in the mind. His results reflect our best thinking right now, though science is always revisable. (Comment: of course his survey results are reflected in the mind; it would be surprising if they were not. The question is whether looking at an fMRI tells us anything about law.)

Comment: It’s important to emphasize, given the attention people are likely to pay to this specialized conference, that Jacoby’s interpretation of general consuming public is inconsistent with the legislative history, specifically the House Report on the TDRA. The president of INTA, which drafted the statute, testified that INTA rejected the concept of niche fame.

Question for Jacoby & me: Perhaps your conflict is not as severe as it seems. There are different things going on – Jacoby can measure indentations in skin, not the death of a thousand cuts. He’s identified something, but it’s de minimis, contrary to the assumptions of dilution doctrine.

My answer: Yes, plus there’s the anomaly of Hyatt – what we call dilution may sometimes help marks, and it’s a mistake to adopt a theory that uniformly posits harm.

Jacoby: The trademark owner wants the right to control the mark, even if the other use isn’t harmful.

Me: That’s a copyright theory – understandable why TM owners want the right to control, but dilution was sold on the premise that it was harmful. It’s “death by a thousand cuts,” not hugging by a thousand hugs.

Puffing Cheetos?

This entry on "Natural" Cheetos made me think:

Ad Crony #3: We could just make a "Natural" line of Cheetos. It'd be a total lie, obviously Cheetos don't grow on trees, or come from the ground. You'd have to be retarded to think otherwise. In fact, a cheeto is quite possibly the quintessence of artificiality ... but hey, everyone loves "natural" and "organic" these days.

Ad Boss: You're right! People are retarded! "Natural Cheetos" ... ha. Brilliant! Let's do it!

If people are thinking about the issue, it's obvious that Natural Cheetos are oxymoronic, meaning the term isn't deceptive. But then, what is it? The manufacturer obviously intends people to care about the term (and the natural-like ear of corn on the package), which implies that it's more than puffing.

Trademark dilution at Santa Clara

Santa Clara School of Law Symposium, Trademark Dilution: Theoretical and Empirical Inquiries

Introductory Keynote

J. Thomas McCarthy, University of San Francisco School of Law
A Confession: How I Became Disillusioned with Trademark Dilution

McCarthy discussed various cases, including a case many years ago by McDonald’s against Arch Computers who used a single golden arch as a logo. At trial, there were reams of consumer survey evidence, but barely a word about dilution; the trial brief contained only one page about likely dilution. The trial court found no likelihood of confusion, but a violation of the state’s dilution law and enjoined the color. The judge viscerally felt that the computer company was taking a free ride on McDonald’s, and her only legal avenue for granting relief was dilution.

He rejects the early cases under the FTDA that found that prevailing on a dilution claim was easy. Similarity to a famous mark alone shouldn’t be enough to win, but early courts were content to assume that dilution’s allegedly evil effects would occur, without any evidence. People with legitimate rights caved in to TM owners’ demands. Once the Supreme Court stepped in, no one was able to prove dilution of a famous mark, and a significant question is: why hasn’t anyone been able to prove that? (Could it be that there’s no there there?)

Now we’ve started all over again, with a clean slate. The challenge is to fill in the blank spaces. Antidilution law should be a unique, sparingly used tool. Too many TM owners viewed it as a hammer, and too many courts allowed this; thus McCarthy’s disillusionment. He’s so skeptical about the ability of the courts to cabin the scope of the right that he doesn’t like it at all, even though he is willing to concede that relief should be available if the mark is coined and truly famous and defendant’s trademark use actually is likely to cause a definite harm. But it’s so damned hard to explain what that harm is; you get blank stares or, worse, nods of understanding which mask total misunderstanding.

A conference on TM dilution is like a conference on Bigfoot: there’s a lot of speculation about its existence and contours, but no one has incontrovertible evidence. There’s just some blurry footage of a form in the forest. Maybe that’s why dilution is such a hot topic. No one is ever really wrong when talking about dilution.

Q from Intel lawyer: Why should the mark have to be coined?

A: That is what Schecter was talking about; the problem is that dilution started with Schecter and TM owners thought, “hey, that’s a good idea; I want that too.”

Eric Goldman: How do we fix it, then?

A: Academics have to do a better job explaining the limits of theory and the lack of evidence behind dilution to the judiciary (and to practicing lawyers). District court judges are overworked and a TM dilution case is an irritation; the attorneys don’t explain it very well, and it’s just something different from what they understand, which is confusion. They’re our primary audience; courts of appeals have more opportunity to sit back and think. This explains the back-and-forth of the past ten years, with courts of appeals largely reining in expansive district court interpretations. The TDRA offers us a fundamental opportunity for education.

Q: The new statute adds many more exceptions. Most courts had construed the exceptions to exclude anything that isn’t commercial speech. What are your views on this new language?

A: It will cause headaches because there’s a lot of overlap in the exceptions, because the creative community was rightfully concerned and didn’t want to have to raise First Amendment defenses all the time. If anything, the new exceptions are likely to be interpreted more expansively; most district judges are offended by some arguments made by TM owners, such as “you can’t mention Barbie in a funny song.”

Q: For TM selection, how do you advise clients? It seems so risky, and it’s easier just to avoid all famous marks.

A: True, it’s a wild card in TM clearance, which de facto creates this wide swath of protection. Hopefully the courts will be more precise in defining fame and require household word status, so that you can rely on your own recognition. It won’t help on the scope of protection, though, because we don’t know how courts will interpret that.

The basketball damages

Baden Sports, Inc. v. Kabushiki Kaisha Molten, 2007 WL 2790777 (W.D.Wash.)

The Seattle Trademark Lawyer covered this case, so I will try to be brief. (Previous entries here and here.) Baden sued Molten for infringing its patent on a cushioned game-quality basketball, and for falsely advertising that Molten’s own dual-cushion technology was “innovative.” The jury, finding willfullness on both counts, awarded Baden roughly $38,000 in patent damages and $8 million in Lanham Act damages.

I’m surprised that a false claim that products were “innovative” could produce such a large award. The term is at least close to puffing, unless there are more specific associated claims. I wonder if the jury wasn’t including compensation for patent infringement in there as well, despite the fact that logically the claims are independent; one could falsely advertise one’s basketballs as “innovative” merely by producing standard old basketballs.

The court applied eBay v. MercExchange to both the patent and false advertising aspects of the permanent injunction request, citing a 9^th Circuit case holding that eBay applies to trademark cases brought under the Lanham Act. See Reno Air Racing Ass'n v. McCord, 452 F.3d 1126, 1137-38 (9th Cir. 2006). Molten was enjoined from selling the infringing balls in the US and from advertising its dual-cushion basketball as innovative, but not from using the model numbers identified in Baden’s complaint or using the name “Giugiaro” for the design; the model numbers and names refer not to the infringing internal components but the ball type, size and cover material. Comment: This means Molten may retain some of the goodwill it acquired during the time it used the infringing design and false advertising.

Possibly of interest: Molten argued that irreparable injury was less likely because Baden was willing to license the patents at issue. But even so, the court held, Baden risked a loss of goodwill because Molten’s infringement and advertising “erode[d] consumers’ and retailers’ perception of Baden as an innovator” – which seems like a problem of false advertising, not patent infringement.

Despite the findings of willfullness, the court declined to award attorneys’ fees on either claim. This was not an exceptional case; Molten “reasonably disputed” the Lanham Act claim by arguing that “innovative” was puffing and that Dastar barred the claim.

Video for Cyberprofs

From my mailbag: "Picking up on the song's themes of ID cards and the erosion of civil liberties by the government, Pet Shop Boys have worked with new creative group the Rumpus Room to conceive and create a sinister mix of surveillance type footage and information technology as content for their new music video.

The video contains subliminal codes which will take you to various sites chosen by Pet Shop Boys.

See petshopboys.co.uk for more info and to play the full colour video, or stream the black and white version in WinMedia or RealPlayer."

Digital smackdown

Your satellite ad has been interrupted ... (reference): DirecTV Inc. v. Comcast of Illinois III, Inc, 2007 WL 2808235 (N.D.Ill.).

Previous DirecTV v. cable litigation discussed here and here.

DirecTV’s American Pie ad claimed that consumers preferred DirecTV’s picture quality to that of cable. And here’s an interesting point: the ad has been enjoined, but there it is on YouTube. DirecTV could, one presumes, send a DMCA notice, but has little incentive to do so. When will we see the first injunctive relief in TV ad cases requiring DMCA notices to YouTube and similar sites?

Comcast challenged the American Pie ad, which was based on a consumer survey, as well as ad claims based on a survey of home video installers. In the consumer survey, subjects watched TVs showing a DirecTV digital and asked to compare them to analog signals. They were not told that one was analog and the other digital. Unsurprisingly, the consumers thought the digital signal was better, because digital signals are better. As a result, to run an ad claiming superiority over cable (which includes digital cable) without disclosing the analog/digital difference was “obviously” misleading. Indeed, the court expressed its willingness to grant Comcast summary judgment on this point. The other factors thus also favored preliminary injunctive relief. (The transcript is quite interesting as a matter of case management: “I regard the likelihood of an appellate reversal of an injunction against running the American Pie type ad as close to zero as one gets in legal proceedings. It is so obviously unfair on its face that an appeal would seem likely to me to jeopardize the appellant in terms of raising a frivolous appellate issue.”)

The installer survey was more complicated. It was as problematic as the consumer survey in asking for a DirecTV/cable comparison without specifying digital cable. Some areas covered by the survey appear not to have digital cable available, so the installers there would necessarily be basing their opinions on analog cable. Instead of unfair questions, the court suggested that a proper survey question would have been, “based on your experience as an installer, do you have a preference as between the picture afforded by satellite digital or cable digital[?]”

Installers’ sophistication can’t mitigate the problems with the survey because there was no screening to make sure they’d had experience with both satellite and cable digital. It’s possible that some of the installers interpreted the question to be asking for a digital-digital comparison, but the court found that unlikely, because there was no evidence in the record that digital signals differ because of source. “The very fact that these people came up with four to one in favor of DirecTV speaks loudly for the proposition that they were responding on the basis of their experience with DirecTV’s digital signal versus analog cable.” (The court did reject Comcast’s argument that payments to the dealers who employed the surveyed installers amounted to bribes to choose DirecTV; there was no evidence the dealers passed on these relatively small sums to the installers.)

These claims were survey-based, rather than test-based, establishment claims; the key principle is that establishment claims can be falsified by showing the measurement device used did not establish the proposition for which it was cited. Here, Comcast showed that the installer survey was not sufficiently reliable to justify the conclusion that installers preferred DirecTV over a “truly comparable” product, digital cable. The court specifically found that DirecTV intended to imply that installers had compared apples to apples and found DirecTV’s apples shinier.

There was a disclaimer on the ad, but the court discounted it entirely. It was on the screen for four seconds, but “even if it were on the screen for 40 seconds, it wouldn’t be legible enough or conspicuous enough for anyone to see it and to read it and to understand it.”

Thus DirecTV was enjoined from running any ads based on these surveys.

Guide for the perplexed: seeking stories about restrictive copyright notices

I am passing on a message I received from students at the Glushko-Samuelson Intellectual Property Law Clinic at American University:

The Glushko-Samuelson Intellectual Property Law Clinic at American University is working with the Computer & Communications Industry Association (CCIA) on a FTC complaint against major content providers including the NFL, the MLB, Universal, DreamWorks, Harcourt Inc., and Penguin Group. The CCIA alleges that these corporations have engaged in a nationwide pattern of unfair and deceptive trade practices by misrepresenting consumer rights under copyright law by posting misleading and overreaching copyright warnings.

The Clinic is looking for anyone who has been injured or affected by these overreaching copyright warnings. That is people who chose not to use a particular work or modified their use of that work after reading the attached overreaching copyright warning. For example, a teacher who chose not to use a television, movie, or music clip in the classroom out of fear that his or her actions violated copyright law. If you have a story or any helpful information regarding this issue, please email Marlee Miller or Khalil Malouf at copyrightmisuse@gmail.com.

Dastar defeats stealth marketing claim

Wellnx Life Sciences Inc. v. Iovate Health Sciences Research Inc., 2007 WL 2789469 (S.D.N.Y.)

The parties compete in the market for dietary supplements. Canusa, another defendant, is a publisher that has about 40% of the market for bodybuilding periodicals that advertise supplements. Canusa solicits advertising from bodybuilding supplement makers, who use bodybuilding periodicals as a key method of marketing to this niche group. Wellnx alleged that since at least 2000, Iovate and Canusa have had an agreement: In addition to paying for ad space, Iovate pays Canusa 10% of its gross from direct purchases. As a result, Wellnx alleged, Iovate receives (a) preferential ad treatment; (b) prepublication review of competitors’ advertisements; (c) a right to reject competitors’ advertisements and the opportunity to disparage competing new products or beat them to the market with the same or similarly formulated products; and (d) a right to publish Iovate-written editorial content that falsely appears to be written by Canusa editors.

Wellnx further alleged that Canusa intentionally failed to disclose this arrangement to Iovate’s competitors when Canusa solicited ad sales, misleading ad customers into believing its space was sold on a “fair and equal basis,” and intentionally failed to disclose the arrangement to readers, misleading them about Canusa’s neutrality.

The court found that the complaint failed to state a claim that defendants made any false, misleading or confusing statements of fact; there was therefore no need to consider whether such statements were made in “commercial advertising or promotion” or whether Wellnx had standing.

Wellnx did not identify any Iovate-authored statements that were false or misleading. Though it’s conceivable that Iovate could author deceptive content, there were no facts alleged to provide sufficient notice of what Wellnx claimed to be false.

In addition, Dastar held “that the mere act of publishing a written work without proper attribution to its creative source is not actionable under the Lanham Act.” Wellnx was really alleging reverse passing off, not false advertising. “[T]he failure to properly name contributors to a written work does not provide a basis for liability under the Lanham Act.”

Comment: No, though the court is in the mainstream in refusing to take up Dastar’s suggestion that false advertising claims remain available for material misattributions made in commercial advertising and promotion. The copyright concerns underlying Dastar are just not applicable here. Consider a consumer lawsuit alleging that failure to disclose advertiser sponsorship – stealth marketing -- violated consumer protection laws, since whether an endorsement is independent or concocted by the seller is material to consumers. Copyright preemption would be a ludicrous defense in such a case. Nonetheless, this case is closer than some others to Dastar because the content here is at least apparently editorial – that’s the relevance of §43(a)(1)(B)’s commercial advertising and promotion limitation.

Separately, Wellnx alleged false advertising by defendants’ failure to disclose their arrangements to consumers of (1) Canusa’s publications, (2) bodybuilding supplements, and (3) ad space in bodybuilding publications. But omissions are not actionable unless relevant to an affirmative statement made false or misleading by the omission. For the first two categories, Wellnx didn’t identify any relevant statements to those groups. As to the third, Wellnx alleged that Canusa represented to advertisers that it had rates, publication schedules and ad specifications, and that this led advertisers to believe that space was available on a fair and equal basis. This is an implicit falsity claim. But the court found the complaint did not plead facts sufficient to support an implied falsity claim: “The mere act of truthfully communicating rates, schedules and specifications does not reasonably suggest any facts regarding the existence, vel non, of special access agreements with other advertisers or preferences between advertising consumers.” I’m not so sure – it seems to me that setting forth rates, schedules and specs implies – perhaps even necessarily – that the publication is an ordinary one, with ordinary rules for all its advertisers, and not the captive of a competitor.

The court also held that the complaint failed to state a Sherman Act claim because the alleged vertical restraints did not raise a plausible inference of harm to competition.

This charming lawsuit

Chamilia, LLC v. Pandora Jewelry, LLC, 2007 WL 2781246 (S.D.N.Y.)

The parties compete to design and make charm bracelets. Customers purchase a bracelet and then pick out charms that screw on to the bracelet to customize their own look; I have gleaned from various internet sites that the parties’ charms fit on each other’s bracelets, along with those of a third competitor, Biagi. Previously, Chamilia entered into a consent judgment with Pandora resolving Pandora’s claim of copyright infringement. Chamilia “bravely” sued Pandora for having “maliciously engaged ... in a smear campaign to destroy” Chamilia by accusing Chamilia of patent infringement. Chamilia alleged false advertising, false patent marking, and state law claims for slander of title, defamation, business and product disparagement, tortious interference, and unfair competition.

Pandora’s designs are protected by Danish copyright law. (And registered in the US, more to the point.) Pandora also filed a patent application for a method of constructing its jewelry and began putting “patent pending” on ads and promotional material. Pandora provided Chamilia notice of the application after it was published by the PTO. Pandora’s president spoke with Chamilia’s sales representative, accusing Chamilia of copyright infringement and allegedly saying that Pandora had a “worldwide patent” that would be used to shut Chamilia down, though this is disputed. This ultimately resulted in a consent decree in which Chamilia agreed to destroy its infringing inventory, and a later settlement of a case against a Chamilia retailer.

Pandora allegedly said a bunch of nasty things about its patent (or pending patent) rights and Chamilia’s behavior at trade shows and in repeated threatening phone calls to Chamilia customers. Pandora also sent letters to its reseller customers revising the terms and conditions of their relationship; specifically, it required each reseller to pledge not to sell any other similar brand of modifiable jewelry. About 450 resellers signed the letters. Pandora later sent letters to its resellers saying that “the Chamilia sales force has been trying to strong-arm some of our customers into buying their product” and reminding them they were obliged “to not carry the knock-off companies.” These acts allegedly had negative effects on Chamilia’s business.

Though the court found an issue of material fact as to falsity – the parties dispute whether Pandora claimed a “patent” (false) or “patent pending” (true) – it dismissed the claims anyway. Chamilia’s other claims based on Pandora’s disparaging use of “knock-off” failed because Chamilia did sign a consent decree on infringement. No reasonable juror could find that the “knock-off” description was false. Regardless, the court found that Pandora’s statements weren’t made in “commercial advertising or promotion.” Though statements at trade shows can suffice, in this case they weren’t sufficiently widespread – there was only admissible evidence of four allegedly disparaging statements, and two phone calls, in a market with hundreds or thousands of customers.

Separately, the court concluded that the letters to resellers were made in the context of existing exclusive business relationships, thus not advertising or promotion. “Because the … letters are designed to structure nascent or existing business relationships, but are in any case not a solicitation of new business, they do not meet the prong of the … test requiring ‘commercial advertising or promotion’ to be made ‘for the purpose of influencing consumers to buy defendant’s goods or services.’” This latter conclusion, I think, is pretty pernicious, especially when it includes “nascent” business relationships – at some point, resellers are going to have to decide whether to continue the relationship or switch to another retailer, and Pandora’s statements about Chamilia could influence that. Perhaps more persuasively, the court concluded, “[i]f communications between two parties with an exclusive sales agreement inherently constituted commercial advertising and promotion under the Lanham Act, the parties to the agreement could never communicate to each other their opinions on when a breach had occurred without fearing liability under the Act.” Still, I’m more persuaded by the court’s conclusion on lack of falsity; the advertising/promotion question is dicta.

Chamilia also alleged false patent marking. The statute, 35 U.S.C. § 292, requires (1) advertising or use of the word “patented” in connection with a device that is not patented; and (2) intent to deceive. Because Section 292 is (unlike the Lanham Act) a penal statute, it is strictly construed, and doesn’t apply to “promotion,” only advertising. Remarks at trade shows and in phone calls don’t qualify even under a broad definition of advertising because they were one-on-one conversations.

Chamilia’s slander of title claims also failed. Allegations of patent infringement can be slander of title if they are false, reasonably calculated to cause harm, and result in special damages. The court found insufficient evidence of malice to create a jury question. “Mere falsity, prior disputes between the parties, and ‘[s]uspicion, surmise and accusation’ are insufficient to raise an inference of malice.” There was no evidence that Pandora’s representatives knew their statements were false or had any doubts about their truth. Even the phone message saying “now our patent application that has been publicized and you are selling something that violates my patent and therefore I can sue you for your profits,” was not shown to be malicious. Though it reflects a misunderstanding of the law, there’s no evidence the nonlawyer who said it knew better.

Chamilia’s defamation and product disparagement claims fared no better. The common interests privilege protected the letters to resellers with whom Pandora had exclusive agreements, since they protected an existing business relationship against perceived unfair competition. This privilege is conditioned on lack of malice, but there was insufficient evidence of malice, as noted above. There was a material question about whether the phone calls were motivated by ill will. Pandora’s representatives “made frequent angry phone calls to and often left agitated voicemail messages with Plaintiff’s retailers,” showing sufficient hostility to justify a finding of malice. But Chamilia still lost, because it couldn’t show special damages – economic or pecuniary loss, as opposed to general reputational harm. Chamilia’s evidence was mostly inadmissible hearsay.

Third Circuit gives broad preemptive scope to FDCA

Pennsylvania Employees Benefit Trust Fund v. Zeneca Inc, -- F.3d --, 2007 WL 2376312 (3rd Cir.)

Plaintiffs sued Zeneca for false advertising of the prescription drug Nexium under the Delaware Consumer Fraud Act (DCFA), violations of all 50 states’ consumer protection statutes, and Delaware common-law claims based on unjust enrichment and negligent misrepresentation in Nexium ads. The basic claim is that it was false and misleading to advertise Nexium as an improvement on Prilosec, an earlier drug for treating acid reflux whose patent expired in 2001, which was, not coincidentally, when Zeneca obtained approval for Nexium. A clinical study showed that 40 mg of Nexium worked better than the approved 20 mg dose of Prilosec; the FDA approved both 20 and 40 mg doses of Nexium, and Zeneca promoted Nexium as superior to Prilosec. Plaintiffs alleged, however, that most patients don’t need 40 mg doses, and that Nexium was not superior at 20 mgs.

The first question was whether FDA approval of drug labels and ads brought these claims within the DCFA exemption of “any advertising or merchandising practice” that complies with FTC regulations. The district court ruled that all the ads plaintiffs cited in their complaint were consistent with the FDA-approved label and thus were not actionable. Plaintiffs argued that the exemption only applies to conduct expressly approved by the FTC, and that in any event Zeneca’s ads diverged from the approved label.

The court declined to find that express FTC approval was required, only compliance with FTC rules and regulations. But of what relevance is this FTC exception when the FDA is the relevant agency? The court of appeals ruled that the language of the exception simply could not apply when the FDA, not the FTC, had promulgated the relevant regulations, even though the agencies had worked to make their rules consistent.

The big problem wasn’t state-law statutory exclusions, but federal preemption. To the extent that the ads were consistent with statements used in the FDA-approved label, the FDA has determined that they are not false or misleading. The plaintiffs argued that Zeneca’s ads weren’t consistent with the labeling.

The court of appeals found implied conflict preemption. The question was whether state consumer fraud laws pose an obstacle to the FDA’s regulation of drug ads. By statute, drug ads must include the drug’s name, the ingredient list, and a brief summary of side effects, contraindications, and effectiveness. If an ad complies with this, it’s not subject to the Federal Trade Commission Act’s false advertising provisions. The FDA has promulgaged regulations for drug ads (prohibiting false or misleading claims, requiring a “fair balance” of positive and negative information, and requiring material disclosures), but the agency rarely pre-approves ads; its review is post hoc and voluntary.

The court concluded that the discretion “inherent in the regulations” showed that the FDA “envisioned itself occupying an ongoing and extensive role in the supervision of prescription drug advertising.” And federal regulations, no less than federal laws, can have preemptive effect. Though the plaintiffs here need not show violation of the FDCA to win, allowing their claims to proceed would “unnecessarily frustrate” the FDCA’s purpose and the FDA’s regulations. And the case for preemption was even stronger to the extent the challenged ads relied on the FDA-approved labeling; state consumer fraud laws can’t be used to “question the veracity of statements approved by the FDA.” Because Congress specifically intended that only the FDA should have the power to enforce the FDCA, “[t]he high level of specificity in federal law and regulations with respect to prescription drug advertising is irreconcilable with general state laws that purport to govern all types of advertising” and the claims are preempted.

Comment: this is much broader preemption than courts in Lanham Act cases – even in the Third Circuit – have applied. Pharmacos may applaud this result, but if it is applied consistently to business plaintiffs they will notice some costs as well. The majority, in a footnote, says the cases are different because prior Lanham Act precedent was about over-the-counter drugs, as to which the regulations are different – though it didn’t identify what relevant differences there are – and because the issue in those cases was what constituted falsity. As to that last, yes; but I would expect future Lanham Act cases to raise preemption arguments.

Judge Cowen dissented. The majority, he wrote, sought out conflicts where none clearly exist. Protecting consumers against falsehood, and protecting their health and safety, are matters of traditional state regulation, where there ought to be a presumption against preemption. The majority’s references to the comprehensive scope of federal regulation, he thought, were more relevant to field preemption, which was not argued. He saw no actual conflict in this case.

Specifically, he disagreed with the idea that Congress’s purpose of protecting consumers would be frustrated if these plaintiffs were allowed to challenge the truth of FDA-approved statements. In this case, defendants never contended that the FDA had approved the ads in question, and plaintiffs never challenged the FDA-approved labeling itself. The majority links ads and labeling, and it’s true that an ad consistent with the labeling would present a more difficult preemption question. But the allegations here were that Nexium ads contained a false and misleading comparison. Labeling doesn’t contain superiority claims, and thus the FDA has rendered no opinion on Nexium’s claim of superiority to Prilosec. So there’s no risk that a successful state-law claim would conflict with Nexium’s labeling.

Judge Cowen pointed out that the FDA’s ad regulations supported his interpretation. The FDA regulations say that an ad making a comparative safety or efficacy claim must be backed by “substantial evidence or substantial clinical experience,” which is not the same as requirements for labeling. The link between ads and FDA-approved labels, then, doesn’t require preemption for a state-law cause of action attacking an ad superiority claim.

Further, he pointed out that state-law standards track federal requirements. Parallel requirements alone do not support preemption; state-law damages remedies, for example, provide another reason for defendants to comply with the law. Given that there are limits to FDA oversight of drug ads – both FDA’s inability to require preapproval, and practical limitations – state-law remedies would aid the FDCA’s consumer protection objectives, not frustrate them. Judge Cowen found it difficult to believe that Congress meant to deprive persons injured by false and misleading ads of any remedy, reversing a longstanding history of consumer protection, without saying so explicitly.

In a footnote, Judge Cowen drew attention to plaintiffs’ claims based on false and misleading presentations and detailing to doctors, which he argued deserved separate attention because FDA regulations relating to advertising didn’t cover those kinds of promotional activities. Indeed, the Washington Legal Foundation has aggressively litigated to ensure that the FDA gives very little scrutiny to such activities, and the majority’s preemption analysis is a poor fit for those activities.

WIPIP, Panel 6

Matthew Sag, DePaul University College of Law
Fair Use on the Internet: Non-Expressive Uses and the Fairness of Opt-Outs
Abstract | Paper

Sag categorizes various theories of fair use and concludes they all ultimately depend on normative concepts of the good, even market failure (as evidenced by Wendy Gordon’s categorization of anti-dissemination motives as producing market failures). Someone needs to make decisions about how markets are going to be structured – spectrum auctions, the problem of anticommons in Russia, etc. Entitlements should encourage private ordering, facilitating individual autonomy, which should be a fundamental part of a copyright/property system.

He likes opt-out devices on the internet and for other mass aggregation projects for creating the advantages of property rights – people get to make their own decisions about who gets to enter or link to a site – but we don’t get enormous waste in transactions costs. He’d be fine with a blanket rule that scanning books is fair use, but if it’s conditioned on an easy opt-out we get to have the cake and eat it too. The people who really object get to opt out, but not ruin it for everyone or strategically hold systems for ransom in order to extract rents under the pretext of opposing something that, if they were honest, most authors would favor.

My Qs: Any international issues? Isn’t this just another word for formalities?

A: This exception would do fine at the WTO because it’s a limited exception covering only certain uses. And international fears shouldn’t be driving our policy decisions because it’s the right thing to do.

Formalities are bad; they benefit large corporations, and force you to make choices without knowing the future – I can modify robot exclusion headers as things change and exclude images both going forward and remove my images from the cache. That’s different from clumsy formalities. Private development of opt-outs is preferable to legislation.

My response: but robot exclusion headers also require knowledge and resources, and opt-outs inherently benefit large corporations that can send big lists of works to Google (and monitor new services as they develop). Robot exclusion headers are okay, but they really don’t help with scanned books. Though I agree with you on the merits, I don’t see that the critique of formalities differs from the critique of opt-outs.

A: There is a difference in the magnitude of the burden.

Julie Cohen: Wants to disentangle various issues – formalities are opt-in, but Sag advocates opt-out. Given that, it would be very helpful to discuss the literature on default rules generally and how to compare them. For example, Sag suggests no formalities for the beginning of protection, then opt-out later, which may have specific effects.

Michael Carroll, Villanova University School of Law
The Origins of Music Copyright in the United States
Abstract | Paper

Implicit in all our work are inchoate theories about how the law evolved; he wants to pay more attention to them because they can help direct our work, which is after all usually directed to shaping or at least understanding the law. Should we address courts? Legislatures? Something else? There are simplistic stories: e.g., legislatures just follow the money, so we should appeal to the judiciary and a conception of the law. We understate the importance of the legislative process and the importance of convincing individual legislators on some point.

We are not really living in a time of all-pervasive copyright where subject matter has expanded to everything. The fashion designers, for example, want a sort of auxiliary copyright (comment: I think that’s just an opening bid). And music is a counterexample to the theory that copyright expands with tech; we’ve been making music since we’ve been human, but copyright rights didn’t include music for a while. Why in 1831 were the words “musical composition” added to the Act? It was one legislator’s conviction that such rights were important that was key to its establishment in the US. He was not a musician, but was friends with artists.

Public choice theory is important, but it’s not the only explanation for how policy is made.

Sag: What would we learn by looking at instances in which people lobbied for extra rights and got rejected? We need to look at who rejected such calls as well as who accepted them.

Carroll: Good point, though here he’s found no evidence that anyone was even asking for new music rights at that time.

Dan Burk, University of Minnesota Law School
The Role of Intellectual Property in Codification
Abstract

By codification Burk means conversion of tacit knowledge into explicit knowledge. Codification can be costly; it requires language/code; recording/inscription; and reading/decoding. It’s the difference between a faculty member who knows all about how “we” do things and a faculty handbook known by and accessible to all of us that fully specifies things we care about (an impossible ideal, of course, just as it’s impossible for the faculty member to avoid injecting preferences of one kind or another). When knowledge is codified, that may tip the balance towards commodifying it – but there’s always tacit knowledge surrounding the code, at a minimum how to read it.

Patent encourages codification, which speeds commodification and may make it easer to do outside-the-firm deals. Internally, codification affects employee motivation and mobility (which is related to tacit knowledge and which firms attempt to control with trade secrecy and noncompete agreements). It has implications in open source, whose projects are usually organized more loosely than in firm structures, but the licenses are attempts to be rigorous in codifying rights.

Julie Cohen: Coded v. tacit – not quite clear on the distinctions. The formula for Coca-Cola is not tacit; it has precision, as does the code for CSS. Trade secrets are perhaps easier to protect legally when they’re written down. On the copyright side, scenes a faire is a doctrine about universally/culturally shared tacit knowledge (e.g. a scene in a German beer hall is a standard feature of a plot with Germans), mediating between what can be owned and not owned. Likewise with the PHOSITA, who has a lot of tacit knowledge.

A: There’s no such thing as entirely codified knowledge; there’s always a penumbra of tacit knowledge. Often in licensing a party wants not just the patent but the knowhow. Even in trade secret, there’s often a lot of codification, and even in patent, there’s a lot of penumbral knowhow.

My thoughts: codification can also be problematic by forcing the resolution of disputes, which is why laws so often punt, or refer to a topic while leaving much more undecided than decided. (You see this in Creative Commons licenses and debates over what counts as noncommercial use for CC purposes.) And I can see how that translates in patent into incentives to write claims broadly or hold back best methods of using the patent. Speculating wildly: GIs as a way of avoiding or refusing codification of what it is that’s special about a product, even as they codify certain production standards?

A: TM is a slightly different animal. TM reputation might be tacit knowledge; that’s more work for a later paper.

Comment: Many things are both codified and not: linguists codify grammar, but no one learns it that way.