Wednesday, October 31, 2007
“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.
Tuesday, October 30, 2007
You really have to know the Miller to get it, but I think it's fabulous.
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.)
Sunday, October 28, 2007
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.Dilution?
“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.’”
And the winner: Texaco to Exaco. The thing is, I can almost construct a parody defense, given the independent meaning of the "ex" prefix.
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.
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.
Thursday, October 25, 2007
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.
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.
Tuesday, October 23, 2007
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.
Monday, October 22, 2007
Saturday, October 20, 2007
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.
Thursday, October 18, 2007
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.
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.
Wednesday, October 17, 2007
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.
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.
Tuesday, October 16, 2007
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.
Monday, October 15, 2007
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?
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.
Sunday, October 14, 2007
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 20th 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.
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.
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.
Saturday, October 13, 2007
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.