Kamut responds on genericness

I received a very interesting letter from the makers of Kamut, a major component of the cereal I blogged about a few weeks back. I suggested (and still believe) that the Heritage O’s box uses the term KAMUT in generic fashion, leaving consumers with the clear impression that KAMUT is a term like “oats” and that there isn’t a different generic name for the variety. Kamut, the company, has now shared its views with me:

In 1977 the Quinn family began growing[] Khorasan, an ancient variety of grain, on their farm in Montana. Bob Quinn, the company founder and organic farmer, decided to sell the grain under the brand name “KAMUT” to protect the integrity of the variety in its original form. This word “Kamut” was taken from a hieroglyphic dictionary of the ancient Egyptian language.

Our goal is not to hide from people the true name of the variety, but to promote the grain under our branded program. On our website www.kamut.com and in most marketing information we clearly identify the common variety name as Khorasan. However, today, due to many contributing factors, the grain variety is grown almost exclusively under our branded program and known as Kamut® brand grain. We are continually making efforts to educate consumers about our program, but as you have pointed out, many misconceptions still occur.

Misconceptions, however, become reality when it comes to genericity. If consumers won’t accept two terms, then they have chosen one as the generic, just as occurred with “aspirin.” It’s perhaps unfortunate for the original producer that no one can remember “acetylsalicylic acid,” but genericness doctrine prefers communication over private property where the two collide. Moreover, courts weigh generic uses by the trademark claimant pretty heavily; I would think that Kamut would want to have a discussion with its licensee Heritage Os about this use.

Regardless, I congratulate Kamut on its conduct: a temperate and reasoned explanation, rather than the bluster engaged in by too many trademark owners who should know better.

Music videos as victim impact evidence

SCOTUSblog has a preview of a death penalty petition raising a fascinating issue about victim impact statements. The defendant was convicted of killing Sarah Weir; at the sentencing stage, the prosecution introduced a video of Weir as part of the victim impact evidence. “Prepared and narrated by the victim’s adoptive mother, the film contained roughly ninety photos of the victim from infancy through high school graduation. Interspersed among the photos were a dozen video clips, some lasting a few minutes, showing the victim engaged in various childhood activities, such as playing with friends in a pool, readying her Halloween costume, and singing in a school choral group. In the background plays music by Enya – one of the victim’s favorite artists – an Irish musician known for layering recordings of her singing in different languages.”

SCOTUSblog is also hosting the video itself.

Though the death penalty issue is obviously more weighty, I think it’s actually entwined with the copyright issue. The video used the Enya song to make the narrative of the victim’s life more powerful. As SCOTUSblog notes:

The petition also contends the inclusion of background music serves no purpose beyond heightening the emotional experience of the viewer. Kelly’s attorney cites a 1940 essay in the New York Times in which composer Aaron Copland discussed his score for the movie, Of Mice and Men. “The quickest way to a person’s brain is through his eye,” Copland wrote, “but even in the movies the quickest way to his heart and feelings is still through the ear.” The petition argues that just as background music could not be played during in-court testimony, nor should it be allowed to accompany evidence on videotape.

Prior cases about copying in the service of court cases concerned materials more towards the heart of the case—a manuscript about the conduct of one of the parties to the case, for example, or allegedly infringed webpages, or the videotape in Scott v. Harris. Enya’s music, in itself, was not evidence. Was the use of Enya’s music to make an argument, in this case an emotional argument, fair use? If Copland was correct, as I think he was, then music is a different way of making a claim than narration or other rhetorical moves; using music to make an argument is different than using music for its standard entertainment value. Thus, I would deem the original in-court use a noncommercial, transformative one.

Regardless of whether the original was fair use, it seems to me indisputable that SCOTUSblog’s re-use is fair use. Having actually been considered by the jury in this case, the video is now at the heart of the legal issue. And the legal issue turns on whether the editing techniques and music employed in the video are too likely to have an improper emotional effect on the jury. (One can argue that emotion is perfectly proper in death penalty determinations, but even so, debate over how emotions can constitutionally be evoked is appropriate.) Examples of how music is actually used in victim impact statements allow citizens to assess the merits of the argument. Whether judges should rely on their own evaluations of the video is a separate issue—on this, see Kahan et al., discussed here—which is complicated because the question is not how the video makes a reasonable jury see the victim, but whether the rhetorical power of the video comes from impermissible sources. But informed public debate over the case will be vastly improved by access to the video, and therefore its use is fair use.

Comic tattoos

Talk about having skin in the game: are these tattoos infringing derivative works? Or does their inarguable personal significance to the wearer help make them fair use? Note that if the tattoo artist infringed, then the person wearing the tattoo does not have a lawfully made copy to display in public, so it's hard to separate the (almost certainly commercial) activity of the tattoo artist from the noncommercial activity of the wearer. For more: a law review note, an article, and a PowerPoint presentation about tattoos and copyright.

Jewelers mostly successful against replica site

Yurman Studio, Inc. v. Castaneda, 2008 WL 3861219 (S.D.N.Y.)

A number of high-end jewelers asserted claims against defendant, who offers cheap replicas of their designs at overstockjeweler.com. Copyright, design patent, and trademark claims were all involved, along with false advertising and consumer fraud.

Plaintiffs succeeded on some copyright claims, while others were held inappropriate for summary resolution; likewise, they succeeded on a few of the trademark counterfeiting claims, while the rest of the trademark issues, including whether “Cartier-esque” and similar terms constituted nominative fair use, required resolution at trial. (The court suggested that the third prong of the nominative fair use test, whether defendants did anything else to suggest source or sponsorship, might require a full-scale confusion analysis. While there are certainly cases that suggest this, they ought to be rejected, given that after a full-scale confusion analysis there is nowhere else to go, and that nominative fair use was aimed at preventing precisely this kind of expensive and risky inquiry in order to preserve competition and free speech. Also, why would anyone believe that “-esque” indicates source or sponsorship? It indicates precisely the contrary: a replica, an imitation, not the real thing.) Also, the design patent claims survived summary judgment.

On false advertising, the court took another step in the seemingly inexorable expansion of standing as a bar to suit: though the parties both sell jewelry, the price points are so different that defendants don’t compete with plaintiffs. Two of the high-end jewelers testified that they didn’t regard plaintiffs as competitors, which was snobbish and, in this instance, counterproductive. As someone who’s spent $500 on a piece of jewelry and also $5, I am dubious about this holding, but maybe people who spend $50,000 on jewelry don’t slum.

Plaintiffs’ New York consumer fraud claims also failed for lack of consumer injury or harm to the public interest, since no one’s health or safety was at risk.

Fish story on ice

The NYT on high schoolers' experiments showing that an extremely high proportion of a sample of fish sold in NYC was mislabeled. Though this is false advertising whether intentional or not, perhaps the most troubling legal angle is that the students, their parents, and their "academic mentor" all declined to reveal the sources from which the mislabeled fish were purchased "citing fear of lawsuits." Talk about a chilling effect. (I have a little more sympathy with the idea that it's not fair to name vendors when mislabeling can occur at any point in the process, but is it more fair to consumers to tell them they're eating one fish when they're actually eating another, with possibly a different safety profile and possibly endangered?)

"Bottled at the source" is not an indicator of source

CG Roxane LLC v. Fiji Water Co. LLC; -- F. Supp. 2d --, 2008 WL 2782745 (N.D. Cal.)

CG sells Crystal Geyser bottled water, prominently featuring the phrase “Bottled at the Source” since 1990. CG applied to register “Bottled at the Source” in 2002, which was initially refused registration as merely descriptive. CG responded by averring “substantially exclusive and continuous use” and providing evidence of marketing efforts and sales success, and the mark was ultimately registered in 2003.

Fiji uses “Bottled at Source” on its water bottles, beginning in 1997 on the front label and, since 2005, on the back label. You can sort of see it in the picture above, in white text on blue.

CG sued in 2006 for a variety of torts; Fiji counterclaimed for cancellation based on genericity and lack of distinctiveness.

The registration was prima facie evidence of validity, which could be overcome by a preponderance of the evidence. Generic adjectives are as unprotectable as generic nouns, for the same pro-competitive reason. The basic question is whether the primary significance of a term is the product itself or the source. The court noted that, on its face, “bottled at the source” appears to be a generic term: it describes a type of water that is bottled at the source as opposed to bottled from a tap or a municipal source.

Use by the media and by other competitors is important evidence. The more products consumers see using a term, the less likely they are to see it as an indicator of source. Fiji provided almost two dozen competitors’ bottles using the alleged mark. Fifty other bottled water companies use the phrase “bottled at the source” to describe their products to consumers on websites, in ads, and in other marketing materials, though not all sold water in the US. The court noted that in other cases, use by ten and even four competitors using the alleged mark had been sufficient to show genericity; Fiji outpaced that by an order of magnitude.

And this use is unsurprising: Like “kettle chips” for potato chips and “brick oven” for pizza, which describe or at least promise distinct characteristics, “bottled at the source” is a factual statement about the manufacturing process, and many companies—including Fiji and CG—use that process.

Media use also weighed in favor of genericity. Thirty-seven articles referring to “kettle chips” generically was strong evidence of genericity in a prior case. Here, Fiji offered about 50 popular press articles using “bottled at the source” generically. Further, CG’s own use of “bottled at the source” was inconsistent with its trademark claim. On CG’s own bottle and in its ads, the term was used to describe the product, e.g. “always bottled at the source to maintain the quality and freshness of our natural spring water” and “our spring water is bottled at the source.”

Thus, Fiji overcame the presumption of validity created by the registration and proved the phrase generic.

Fiji asserted several other defenses/counterclaims, all of which would also have worked. Given the high descriptiveness of the phrase, Fiji contended that it lacked secondary meaning. CG’s evidence of distinctiveness was basically that it had used the phrase for a while and spent a bunch of money on ads. But the evidence showed that CG’s use had been far from exclusive, and the ads didn’t direct consumers’ attention to the phrase or encourage them to use it as a mark, rather than as a descriptive phrase, and so the court found a failure to show secondary meaning as well. Moreover, the court agreed with Fiji that CG would have needed to show distinctiveness as of 1997, when Fiji’s use began, in order to prevail; there was no presumption of distinctiveness as of that date, because CG’s alleged mark was then unregistered. Fiji’s evidence, some dating back to 1985, established that the alleged mark lacked secondary meaning and was invalid.

CG vainly argued that a likelihood of confusion could show secondary meaning, but the court found no such likelihood, despite the similarity of the marks, the direct competition in goods, the use of the same marketing channels, and the relatively low care exercised by consumers. The bottles look very different and the primary marks are different; the totality of the impression given is strikingly different. The court pointed out that failure to comply with CG’s C&D letter didn’t show bad faith, given the genericity of the phrase and Fiji’s long history of use of the same phrase. No secondary meaning; no likelihood of confusion.

And then—illustrating the complaint that descriptive fair use as it exists now is not very helpful to defendants, who can only take advantage of it once they win lack of confusion—the court went on to assess, and accept, a descriptive fair use defense. Even were the phrase a valid mark, Fiji’s use is descriptive. Fiji doesn’t use the phrase as a trademark, but as a factual statement: in fact, its water is bottled at a source in Fiji. Putting a commonly used phrase in small font on the back of the bottle is a good-faith use. CG argued that the use was “as a mark” since the phrase was used alone and not as part of a sentence. But the descriptive phrase “bottled at source” “can naturally be placed alone to convey information to a consumer without it being considered a trademark.” Summary judgment for defendant on this as well.

Finally, CG’s related state and federal claims (including injury to business reputation, conversion (!), false advertising, and negligent/intentional misrepresentation) collapsed with the invalidity of its claimed mark. CG had no protectable interest at stake.

Comment: Hard to understand why CG litigated this fairly obvious loser. Perhaps having invested so much effort in getting the PTO to roll over on this generic term, it was overly confident of its ability to force a competitor to back down. But what harm was Fiji’s use doing, in any rational assessment? I’d use this case as a good example of the anticompetitive strike suit that Justice Scalia, in Wal-Mart, worried about with the expansion of trademark protection.

Terminations of transfer (and Dastar)

Classic Media, Inc. v. Mewborn, 532 F.3d 978 (9^th Cir. 2008)

This case is most notable for creating an apparent circuit split between the 9^th and the 2^nd, the other key circuit for the publishing industry, about the effect of a post-1978 agreement purporting to affect termination rights under §304(c) when the agreement is executed before the termination window opens. The Ninth Circuit ruled that the agreement was an invalid “agreement to the contrary.” (Filewrapper offers a bit more summary.) The court relied in part on the analysis in the recently reversed SDNY case Steinbeck v. McIntosh & Otis, Inc., 433 F. Supp. 2d 395 (S.D.N.Y. 2006). (The facts there are complicated; at the time of the post-1978 agreement, Steinbeck’s widow—the person who made and benefited from the agreement--at least arguably held more than half the termination interest/expectancy and definitely held half, while at the time the termination windows opened, she had passed away and the remaining heirs, with whom she’d been in dispute, wanted their share.)

It’s not a big circuit split, but it’s an economically significant one, and the New York/Hollywood divide may create forum-shopping opportunities. I wonder if anyone’s considering a cert petition.

Of less general interest, the district court denied the rights owner’s motion for attorneys’ fees under the Lanham Act; the heir had brought a misattribution claim, which she lost. The court of appeals agreed that the district court didn’t abuse its discretion in refusing to find an “exceptional case” under the Lanham Act, a requirement the Ninth Circuit has construed narrowly. The heir’s claim involved “close questions in an unsettled area of the law,” because Dastar left open the possibility of attribution-based false advertising claims. Thus, the heir’s Lanham Act claim was “not so obviously foreclosed” by Dastar that her claim was groundless or unreasonable, and a fee award against her was inappropriate. (Contrast to cases like Antidote, from SDNY, rejecting such claims outright.)

Even I think this is a mistake

I don't believe that "generic" uses of famous marks run any risk of genericide; people can easily understand that kleenex is tissue and Kleenex is a brand of tissue. But that depends on ready knowledge of what else to call the thing at issue. Without a common descriptive name (and especially when the mark at issue isn't famous), generic use can make a term generic. For example, this picture of the back of a box of cereal we bought should be used to counsel clients on what not to do:
Kamut, for all that appears, is a type of grain, just like oats and barley. An Ancient grain, no less. Marking it with a registration symbol and a dagger that says the term is used under license won't help if people have nothing else to call the stuff. (ETA: I should clarify that I think the mistake is in claiming "kamut" as a mark; there doesn't appear to be a good generic term for the type of grain, so what they need is some sort of mark like KamWonderful.)

Reading list: rBST

Christina Cusimano, RBST, It Does a Body Good?: RBST Labeling and the Federal Denial of Consumers’ Right To Know, 48 Santa Clara L. Rev. 1095 (2008) (unavailable free online: Eric Goldman, what is up with that?)

The current labeling structure of milk and milk products derived from rBST treated cows is inadequate and misleading. The FDA has ignored evidence of health risks associated with the use of this synthetic growth hormone and consumers are unknowingly forced to do the same. For a decade, mandatory labeling has been prohibited because Monsanto's scientific reports, which did not include long-term testing, indicated no substantial difference between milk from treated and untreated cows. Like many FDA approved drugs, studies show serious risks associated with the use of rBST. Short of recalling the drug altogether, the Federal Government should amend the FDCA to mandate labeling of rBST milk, to protect the health and safety of our nation.

The note, because it takes the position that there are in fact human safety issues with rBST, doesn't spend much time on the argument that truthfully informing consumers about the use of rBST will cause them to draw mistaken conclusions about the harms of rBST, which are more persuasively established with respect to cows than to humans.

Design, Dastar, (registration) dates and the DMCA

XPEL Technologies Corp. v. American Filter Film Distributors, 2008 WL 3540345 (W.D. Tex.)

The parties compete in producing designs for window film and paint and headlamp protection products for cars. XPEL sued two competitors for copying product images and distibuting them to other businesses and auto dealers. It alled breach of contract, violation of the Digital Millennium Copyright Act, copyright infringement, and the usual slew of business torts, including false advertising.

As XPEL tells the story, some of XPEL’s designs are delivered through the internet, accessed by the end user’s computer. A EULA is required before a user may access its products; XPEL contends that charging for access is essential to its business model. XPEL registered the copyright in its Design Access Program in early 2005 and applied for copyright protection for its Kit Designs in August 2007. (Applied for, hunh? That suggests a lack of subject matter jurisdiction until the registration issues, but for some reason the defendant argued instead that no claims could be considered based on conduct before the Copyright Office received the application. This is bizarrely wrong, and the court stated it was awaiting further facts on the copyright claim.)

XPEL alleges that, since November 2002, defendants have intermittently provided XPEL Kit Designs to dealers and customers. They accepted the EULA, but kept “Capture” software to copy an XPEL Kit Design on their computers. (More details would be nice—if, as Remeirdes would have it, pointing a video camera at a computer screen to capture DVD output is not circumvention barred by the DMCA, then it really seems like taking a screenshot with capture software would also not be circumvention, since neither interfere with access controls.) At times, defendants responded to a customer request for an XPEL Kit Design by using a copied pattern without paying, and they sold copies or derivative works to car dealerships, which exceeded the scope of their license.

XPEL argued that defendants’ kit designs constituted a false designation of origin because they were created by modifying XPEL’s designs and defendants didn’t disclose that to customers. Under Dastar, that’s a plain loser, despite XPEL’s halting attempts to distinguish Dastar as a case about public domain works. XPEL argued that it was actually pleading a false advertising claim, as contemplated by Dastar. The court invited further briefing on the matter. I assume this can be pled correctly, but good luck showing matieriality, even if one could determine that it was false for defendants to fail to disclose the source of the designs they modified; the current cases suggest that whenever a party has some involvement in the ultimate product it provides—for example, modifying the design—it’s not false to identify that party as the source of the product.

Likewise, XPEL’s state-law conversion claim was dismissed because Texas doesn’t recognize a claim for conversion of intangibles. Defendants’ copying didn’t in any way interfere with XPEL’s own possession of its designs, only its economic interests.

Defendants’ arguments that most of the state claims were preempted were premature, in the absence of further factual development. However, the court noted that trade secret misappropriation could be found qualitatively different from copyright infringement. And the court was confident that contract claims weren’t preempted, even if some of the promises contained in the EULA simply track copyright rights. “Given the length and complexity of the EULA, it is impractical to go line by line through it to determine how each provision corresponds to the rights protected by the Copyright Act. Rather, the Court believes the more prudent inquiry to be whether the contract as a whole includes elements that are qualitatively different than those involved in a copyright infringement claim. Under such analysis, it is clear that additional elements are present.”

Defendants moved to dismiss the claims for statutory damages and attorneys’ fees because XPEL has yet to receive a registration. XPEL argued that its registration for its Design Access Program predated some of the infringement, and that its Kit Design registrations will be retroactive to the application date. (Note that copying the kit designs apparently doesn’t copy the design access program; it is only if breach of the EULA makes defendants infringers of the Design Access Program, rather than mere contract-breachers, that the registration for the Design Access Program matters.)

As defendants pointed out, however, if infringement begins before registration, statutory damages and attorneys’ fees are unavailable. But with multiple defendants, some of whom may have acted before the registration date and some after, the facts were as yet unclear. (Again, one thing that’s not unclear: XPEL has no currently viable claim for infringement of the Kit Designs, since the court will lack subject matter unless and until the registrations for the Kit Designs issue.)

Final note: Keep an eye on this DMCA issue. Though the court's discussion suggests that it's the violation of the EULA that allegedly violates the DMCA, a EULA is not a technical measure controlling access to a protected work. Moreover, we need to be clear about which work is allegedly accessed by circumvention here. At most, the design access program is itself a technical measure controlling access to the designs, but defendants didn't circumvent the design access program, they just allegedly used it as it was supposed to be used. A lie is not an act of circumvention. But if a court were to accept this kind of bootstrapping, then every internet infringement will quickly convert to a DMCA violation. This is part of the reason that it can be so important to separate copyright in a program from copyright in the content delivered by the program; see also the different registration statuses of the program and the Kit Designs here.

Eroded logic: keyword claim wins in soil erosion case

Soilworks, LLC v. Midwest Industrial Supply, Inc., 2008 WL 3286975 (D. Ariz.)

The parties compete in the market for soil erosion and dust control products. Soilworks makes Durasoil and Soiltac, while Midwest makes EK35, EnviroKleen, and Soil-Sement. In 2006, Midwest received two patents for EK35 and EnviroKleen. A month before the patents issued, Midwest sent Soilworks a letter about the pending patent applications, expresing concern that Durasoil infringed. Soilworks replied that it did not see any reason to fear infringement. After the patent issued, Midwest sent letters to a Soilworks customer regarding possible infringement, and also issued a press release.

Soilworks sued for false advertising, a declaratory judgment of patent invalidity and noninfringement, and the usual state-law claims; Midwest counterclaimed for patent and trademark infringement, false advertising, and the usual state-law claims.

On the Soilworks false advertising claim against Midwest: given that the allegedly false claims involve patent rights, Soilworks needed to show bad faith. This rule balances patent rights against the right to fair competition. The letters sent to Soilworks’ client said that a patent had issued, that Midwest had “invented the category of synthetic organic dust control agents” [comment: synthetic organic?], that no competitors could have the same formulation or method, and that the patent allowed Midwest to pursue anyone who sold “knock-off or imitators” of EK35 or EnviroKleen. Moreover, Midwest’s press release alegedly represented that competitors couldn’t design around the patent, making Midwest the exclusive source of synthetic organic dust control products.

Midwest argued that, as a matter of law, the letters couldn’t support a finding of bad faith, simply a legally accurate summary of Midwest’s rights. Case law establishes that bad faith allegations of patent infringement and of competitors’ inability to desing around a patent can be false advertising. In fact, the latter “exclusive source” statements are “inherently suspect,” both because most patents can be designed around and because such statements are nearly impossible to confirm before the fact.

The court agreed that the press release reasonably could be construed as making exclusive source statements; it stated that Midwest had gained “exclusive control” over the products and methods that define the synthetic organic dust control category, giving it the “exclusive rights” to sell such products. It further suggested an inability to desing around: “Midwest’s competitors may claim to offer synthetic organic dust control technology, but only Midwest can offer the products and methods that define this technology. Those competitors are either not supplying synthetic organic dust control technology ... or they are infringing Midwest’s patents.” This made bad faith inappropriate for resolution on summary judgment. While pre-litigation statements to a competitor may only be bad faith if they were objectively baseless, statements to the relevant consuming public are judged under a less defendant-favorable standard.

The statements were also sufficiently alleged to be false or misleading; case law establishes that false exclusive source claims can violate the Lanham Act. Moreover, the press release was disseminated sufficiently to the relevant purchasing public to constitute commercial advertisement.

Midwest, however, prevailed on a portion of its counterclaim for trademark infringement based on Soilworks’ use of Midwest’s trademarked term Soil-Sement in keyword ads on search engines and in metatags on its site. Under Ninth Circuit precedent, the court felt compelled to rule that the mere presence of the trademarks in keyword buys and metatags was infringing, because “Soilworks thus capitalizes on Midwest’s ‘Soil-Sement’ trademark to attract clients to its websites,” creating initial interest confusion. Though Ninth Circuit panels, shockingly, have been inconsistent in their use of IIC, it’s generally not in a defendant’s favor. The three “key” internet factors under one of the main cases, GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000)—similarity of marks, relatedness of the goods, and the use of the internet as a marketing channel—will condemn any competitive use of a trademark.

Here, Soilworks uses “soil sement” to buy ads on Google; uses “sement soil” in metatags for one of its site; and uses “sement” and “soil” “in close proximity” in a metatag for another site. “When used in Internet searches as metatags, they clearly are designed to divert persons interested in Midwest’s mark to Soilworks’ websites.” According to the three key factors, Soilworks’ use of metatags and keyword ads “has the effect of connecting web customers familiar with Midwest’s Soil-Sement mark to Soilworks’ websites.” Thus, though there’s no hint of source confusion, there’s initial interest “diver[sion]”—not even confusion—and therefore Lanham Act liability, though the court deferred any consideration of remedies.

The court rejected Soilworks’ argument that Lanham Act liability ought to require—get this—deception:

[T]he wrong in a metatag initial interest confusion case is not that the consumer is deceived into believing that he is purchasing the plaintiff’s products when in fact he is purchasing defendant’s, but instead is the diversion of the consumer’s initial attention to the defendant’s website using the plaintiff’s trademark and goodwill. When accomplished through the use of key words or metatags on the Internet, this wrongful conduct may involve no deception of the consumer. The consumer is simply led to the defendant’s website through the unseen keywords and metatags the defendant has purchased [sic] on the web….

To the extent that the doctrine adopted in Brookfield requires a showing of initial confusion-- that the consumer’s initial attention was diverted to the defendant’s website through confusion--the Court concludes that it has been established here. A person typing “soil sement” into a search engine presumably would be somewhat familiar with Midwest’s product and would be looking for the product or its maker, and yet would be directed by the keywords and metatags to Soilworks’ websites. The confusion--thinking one would be connected to Midwest when in fact Soilworks’ websites also appear in the search results--would entirely be caused by Soilworks’ use of Midwest’s mark. (emphasis added to the key words that make this doctrine crazy, without even getting into the factless presumptions about the consumer’s intent)

The court distinguished Designer Skin, from the same district, because that case involved metatags that informed searchers where they could find Designer Skin products (from an unauthorized source). Fine, but if there is a word in the above-quoted paragraphs that doesn’t apply to straight-up comparative advertising, I didn’t see it.

You know, I am just as depressed as Eric Goldman about this. The premise of the rest of the lawsuit—which, let us not forget, is proceeding—is that the parties’ goods are comparable. It’s not wrong to let consumers compare them. As Mark Lemley says, “unfair competition” is not redundant. Given these terrible cases, why don’t businesses put the indisputably legal “compare to X” statement in their metatags? (For keyword-triggered ads, the answer is: Google won’t let you use that as your ad text. This is an understandable rule from Google’s perspective, but it makes bad law worse from a competitive perspective.)

Separately, Midwest argued that Soilworks had engaged in false advertising by claiming that it’s the “innovator” and “manufacturer” of Durasoil; that Durasoil is “synthetic” and “oil-sheen free”; and that Durasoil is made from “proprietary ingredients” and represents “revolutionary state-of-the-art innovation.”

The court concluded that the “innovator,” “proprietary ingredients,” and “revolutionary state-of-the-art innovation” statements were mere puffery, too general, vague and unspecified to trigger a reasonable consumer’s reliance. The “manufacturer” claim was specific enough to be falsified; the testimony on whether it was true was conflicting. However, there was no evidence of materiality, and no particular reason (such as a deliberately false comparative claim, or the expenditure of substantial funds to promote the claim) to think that consumers cared about whether Soilworks was the manufacturer of Durasoil. Nonetheless, while barring Midwest from recovering damages on the claim because it failed to show causation and injury, the court allowed its injunctive relief request to proceed.

Materiality was not a problem for the “synthetic” claim; the evidence showed that this was important to consumers. Midwest didn’t produce a general definition of “synthetic” for the industry. Instead, it relied on one Soilworks principal’s testimony that he didn’t know whether Durasoil was synthetic and the fact that one of Soilworks’ suppliers wouldn’t consider it synthetic. That witness defined synthetic as something that isn’t “natural or naturally occurring,” and testified that, according to that definition, Durasoil was synthetic, because it contains a refined, non-natural product. The court thought this was more support for truth than falsity. With no triable issue of fact, the court granted summary judgment to Soilworks.

Soilworks also called Durasoil “oil-sheen free,” meaning it doesn’t leave a film on the surface of water. Midwest argued that Soilworks’ failure to test this attribute renders the claim false. But there was no evidence that consumers had been deceived, and no affirmative evidence that Durasoil left a sheen. (Also, this gets to the divide between “tests prove” and other claims; unless there’s evidence that consumers presume that tests stand behind a factual claim, in general an advertiser is free to make non-test-supported claims.) Summary judgment for Soilworks on this claim.

"Tax-free cigarettes" case continues

Gristede's Foods, Inc. v. Unkechauge Nation, 2008 WL 3334032 (E.D.N.Y.)

Previous discussion here. Gristede’s sued the Unkechauge for falsely advertising its cigarettes as “tax-free,” when purchasers were supposed to pay the tax to the state.

First, the Unkechauge defendants argued that the Lanham Act claim was time-barred. The Lanham Act has no limitations period of its own, and borrows from coordinate state claims. The defendants argued that plaintiff’s claim was a statutorily created penalty, and thus subject to NY’s three-year statute of limitations for general penalties imposed by statute. Gristede’s contended that NY’s six-year statute of limitations for fraud was more appropriate. Since the Second Circuit has already held that the six-year fraud period is the most analogous statute of limitations, Gristede’s had the better of the argument. This was true even of Gristede’s claim for damages, which the defendants argued should be treated separately than the injunctive relief claim.

Next, defendants argued that the claim accrued in 2000, when Gristede’s became aware of a competitive injury. Under federal law, a claim accrues when a plaintiff discovers, or should have discovered, its injury. Though the complaint alleged that defendants have been falsely advertising “tax-free” cigarettes since 2000, a time bar doesn’t appear on the face of the complaint. Gristede’s filed in March 2006, so even assuming awareness as of 2000, there’s not necessarily a time bar.

The defendants then argued that, because N.Y. Tax Law § 471-a does not require payment of an excise tax for purchases of less than 400 cigarettes, “tax-free” isn’t false where no quantity term appears in the ads. The court found the complaint stated a Lanham Act claim. It specifically alleged that the ads induce non-tribe members to purchase “large quantities,” which may be more than 400 cigarettes (2 cartons). The defendants argued that, when an ad does’t contain a quantity term, no such term may be inferred to show falsity; the court saw no reason to apply such a rule.

Defendants then creatively attempted to turn the doctrine of falsity by necessary implication into a shield rather than a sword, arguing that “tax-free” must be evaluated in context and was not false, given that there was a debate in NY about the taxation of cigarette sales by reservation retailers to non-tribe members. In addition, defendants argued that they did not intend to convey a message of total tax exemption.

The court rejected these arguments. The “context” in which a particular claim must be evaluated is the ad itself, not the “larger political and social context.” And, if the larger context or intent were relevant, it would not be at the motion to dismiss stage.

Finally, defendants argued that the ads weren’t false, given that NY has a “policy of forbearance on the collection of taxes on cigarette sales made to Native American retailers for re-sale to the public.” The court had rejected this argument in its earlier opinion, holding that the law was clear that non-tribal consumers are in fact liable for the tax; it is a criminal misdemeanor to wilfully fail to pay it or attempt to evade it.

Recent reading

Dan M. Kahan, David A. Hoffman, & Donald Braman, Whose Eyes are You Going to Believe? Scott v. Harris and the Perils of Cognitive Illiberalism:

This paper, which includes a great survey of perceptions of the reasonableness of a high-speed police chase based on watching video of the chase, really made me think. Not only does the paper have a lot to say about the use of evidence that “speaks for itself,” it challenges the fact/value divide in a way that I find quite useful, given how false advertising law constantly slips between the two while maintaining the fiction that it’s all about facts:

What’s not nearly so well understood [as the problem of competing values] is the threat that competing understandings of fact pose to a liberal society. Indeed, forms of advocacy that feature seemingly neutral factual claims about how to promote societal welfare (“optimal deterrence,” “cost-benefit analysis,” “contingent valuation” and the like) are thought to be among the practices that dissipate illiberal conflict by avoiding reference to more contentious judgments of value. It might seem natural to see judicial idioms that focus on “facts” as conflict avoiding for the same reason. But because we inevitably recur to our cultural values to evaluate empirical claims about what conditions threaten our welfare and what policies promote it, a policy idiom of facts can polarize us every bit as much as one that deals with differences of value in a transparent way.

This discussion is obviously relevant to David McGowan’s claims that copyright should have more factual tests.

The footnotes discuss puffery as one relevant doctrine for deciding when facts (or non-facts) are so obvious that no reasonable person could disagree, though the authors are relatively sanguine about judicial use of the puffery doctrine to avoid jury resolution of factual disputes. With respect to advertising, however, I think conclusions about what counts as a material, factual claim are likely to vary with people’s individualist/communitarian and hierarchical/egalitarian orientations, which is the kind of variance that elsewhere the authors suggest should be of particular concern to judges inclined to rule that “no reasonable jury” could find other than how the judge does.

For earlier discussion of Scott v. Harris, see here.

Yes We Can ... sue?

Jones Soda is running Campaign Cola, offering people the ability to purchase Yes We Can Cola, Ron Paul Revolution Cola, Pure McCain Cola, and Capitol Hillary Cola (in order of popularity). Let’s assume they have copyright permission for the photos used on the labels. Right of publicity violation? Clinton in particular might be able to use the licensing fees.

NB: Jones Soda gave me one of my favorite trademark exam problems ever.

Efforts to destroy competition end with damages award

Pedinol Pharmacal, Inc. v. Rising Pharmaceuticals, Inc., --- F.Supp.2d ----, 2008 WL 3287932 (E.D.N.Y.)

A jury heard Pedinol’s and Rising’s Lanham Act claims against each other and found that both sides engaged in false advertising. The jury awarded only $1 in nominal damages against Rising. Rising’s damages claims against Pedinol were reserved to the court. The court quickly disposed of both parties’ Rule 50 motions, praising counsel on both sides for their presentation of the evidence.

Under the Lanham Act, a successful plaintiff is entitled, subject to equitable principles, to recover (1) defendant’s profits, (2) plaintiff’s damages, and (3) costs. Rising sought an award based on Pedinol’s profits. The plaintiff must prove defendant’s sales, and defendant must prove deductions. If the court finds that profit-based recovery is either inadequate or excessive, it may enter a judgment for a just amount, subject to the principle that recovery must be compensatory and not a penalty.

Willfulness is not mentioned as a prerequisite for recovery, in contrast to the recent addition to the Lanham Act of trademark dilution remedies, which do explicitly require a willful violation before damages may be awarded. However, before the dilution amendment, the Second Circuit required willfulness before awarding lost profits. Courts in the Second Circuit have split on whether this rule remains good law. This court agreed that it did. The dilution amendment evinced no congressional intent to change the law governing the other damages provisions.

The court thus turned to willfulness, and found ample evidence of intentional deception. The facts involved Pedinol’s Lactinol 10% lactic acid product, which competed with Rising’s non-name brand lactic acid product. Rising’s version sold at a fraction of the price. Pedinol spent several years attempting to destroy Rising’s ability to compete, using the “aptly named” “Sinking Rising” campaign. Pedinol sent a series of false and deceptive letters to Rising’s customers. Pedinol’s management knew that Lactinol was not a “single source” product as understood by the relevant customers, but nonetheless sent thousands of letters, to everyone from small neighborhood pharmacists and large chain stores, falsely claiming that Lactinol was “single source,” which precluded any generic substitution.

These letters weren’t just false. They were threatening. The letters warned that substituting a generic for Lactinol “violates laws that govern the substitution of prescription pharmaceuticals,” and that failure to halt substitution would lead to “corrective action such as notifying the Office of Professional Discipline [and] New York State Medicaid....” Evidence at trial showed that these were empty threats, but it required no “leap of faith” to find that pharmacists were likely to rely on them. Pedinol’s knowing use of pharmacists’ fear of losing a license or being charged with Medicaid fraud established willfulness.

A court may award defendant’s profits using three different rationales: (1) unjust enrichment; (2) damages to the plaintiff; (3) deterring willful wrongdoing. The Second Circuit has emphasized that awarding defendant’s profits may be an inappropriate measure of the harm to the plaintiff; a windfall is not to be awarded. Relevant factors include: (1) the degree of certainty that the defendant benefitted from the unlawful conduct; (2) availability and adequacy of other remedies; (3) the role of a particular defendant in effectuating the wrongful conduct; (4) plaintiff's laches; and (5) plaintiff's unclean hands.

The court found that Pedinol was unjustly enriched by its false statements. Pedinol’s own records listed 21 large retailers that had left off substitution as a result of Pedinol’s threats, while 5 continued to do so, and CVS was mixed. Moreover, Rising’s evidence showed that Pedinol’s false statements were directly responsible for shutting Rising out of CVS. A CVS buyer who received the letter and was visited by Pedinol management refused to carry Rising’s product, costing $400,000 in sales; this evidence also showed damage to Rising’s reputation.

Rising argued that Pedinol’s unclean hands should enhance the award, while Pedinol argued that Rising’s unclean hands barred recovery of profits. The burden of showing unclean hands is on the party asserting the defense, who must show “truly unconscionable and brazen behavior.” A court may weigh the magnitude of the parties’ misdeeds against each other.

Here, Rising’s false advertising was insufficient to justify finding unclean hands. “Even the jury that found against Rising was unimpressed with the magnitude of its behavior, deciding to award Pedinol only nominal damages of $1.” At worst, Rising wrongly stated that the brand name of its product was Lactinol, which may have led to some confusion. This “pales” in comparison to Pedinol’s “barrage of false letters.”

Thus, the court awarded Pedinol’s profits during the three-year period in which the false statements were disseminated. Unsurprisingly, the parties disagreed on that amount, by an order of magnitude. Rising used a variant of the model Pedinol used at trial, at which point Pedinol was seeking Rising’s profits. When Pedinol sought an award of profits it claimed a profit rate of 66%; Rising cut that in half in its request; but at this point Pedinol claimed 8.5% profit. The court agreed that Rising’s showing was reasonable based on the trial evidence. However, there were various deductions, and awarding Rising all of Pedinol’s profits from every sale of Lactinol during that period would result in a windfall. Thus, the court awarded roughly $775,000 in lost profits.

Pedinol also sought an injunction barring Rising from advertising that its products are

“generic drugs, therapeutic alternatives, the pharmaceutical equivalent, of, or ‘bioequivalent’ of Lactinol,” and from stating that its product contains 10% lactic acid or that it can be compared to Lactinol. The court declined. First, Pedinol’s unclean hands, meaning its conduct aimed at destroying Rising’s ability to compete, barred relief. But more importantly, the evidence at trial didn’t justify such an order. There wasn’t sufficient evidence to disprove Rising’s 10% lactic acid claim. And the evidence was that “therapeutic equivalent,” “pharmaceutical equivalent” and “bioequivalence” were ambiguous; it was not clear how particular audiences would interpret “generic.” The proposed order was too broad and non-specific, which would create compliance and monitoring difficulties. Moreover, the court refused to bar nonmisleading comparative advertising.

Rising also sought injunctive relief barring Pedinol from stating that Lactinol is a “single source” product or is otherwise an FDA-approved drug, and from claiming that dispensing Rising’s product violates state or federal law or is not reimbursable by Medicaid. The court declined, ruling that the statements had been discontinued and that there was no reason to believe Pedinol would resume them, given that Rising has been compensated by the lost profits award.

Epistemology of the diaper

Procter & Gamble Co. v. Kimberly-Clark Corp., -- F. Supp. 2d --, 2008 WL 3103758 (E.D. Wis.)

Kimberly-Clark makes Huggies Natural Fit diapers, with sides contoured towards the center. Huggies’ global brand director testified that consumers would view this feature positively, allowing Huggies to advertise a better fit and greater comfort. Huggies tested size 4 diapers, under the theory that size 4 was the largest seller and spanned a large number of baby weight ranges. Single-size tests are supposedly common in the diaper industry, and size 4-wearing babies generally engage in the standard baby activities of crawling, lying down, etc. The study allegedly supported the “natural fit” claim, though not a claim of less bulk.

Huggies used ads emphasizing natural fit across multiple media. A big part of the campaign involves claims that Huggies are designed for “babies of the human variety” while the on-screen image suggests that other diapers are designed to fit inanimate bricks. Huggies’ own study concluded that the ad was very persuasive.

P&G was less impressed and filed suit, arguing that the “fits more naturally” claim is false

The court found that “natural fit” and “fits more naturally” were puffery, not factual claims. The court identified two kinds of puffery. The first, exaggeration, is a general superiority claim—no one expects that consumers will take claims for “lowest” prices or “best” products seriously. Here, the puffery is different. Instead of exaggerating product quality, the puffing claim is immeasurable. Huggies’ claims about its diapers are “so vague and subjective that they are neither provable nor disprovable.”

First, claims about natural fit are vague “by their very nature.” Neither of the parties were able to identify “a fixed set of criteria” for what “fit more naturally” might mean. There are better and worse fits in general, but the court asked: “which garment fits a woman more “naturally”-a tailored English business suit, a Japanese kimono, or an Indian sari?” Indeed, testimony suggested that consumers’ standards for measuring fit vary widely because fit is subjective, and even depends on the diapers’ appearance.

Despite extensive testing, P&G still doesn’t know how consumers decide that a given product “fits naturally.” (Would this matter if the issue were “tastes better”? Overall taste test claims are considered verifiable, even though individual tastes are subjective and difficult to explain.) In fact, P&G’s designers were once convinced, using quantifiable measures, that a particular diaper would be an excellent fit, but consumers disagreed and “won.”

Given that the benchmark concept is incapable of concrete definition, “fits more naturally” and “natural fit” could neither be proved nor disproved, and thus they could not be falsified. In fact, even if we could all agree on what it meant for a diaper to “fit more naturally,” our individual conclusions on which diaper did so “would be based on purely subjective judgments.” Such “opinion puffery” can’t be proved.

At the end of the day, “the only way of measuring natural fit is through consumer testing.” P&G’s expert noted that different consumer populations use different diaper brands and have different fit goals. So even if P&G internally considers Pampers Cruisers its best-fitting brand, consumers might not agree.

P&G argued, reasonably enough in my opinion, that because consumer testing can substantiate a diaper fit claim, such claims are verifiable through consumer tests. But the court concluded that even if consumer testing provides companies with useful market information, that doesn’t make it a legitimate way of assessing truth or falsity for Lanham Act purposes. The court was guided by the Pizza Hut decision, in which the Fifth Circuit rejected a falsity claim for “Better Ingredients. Better Pizza.” “Better Pizza” was typical puffery, and in context so was “Better Ingredients.” (This is something of a simplification: the court of appeals held that “Better Ingredients” might, in context of slightly more specific claims about quality sauce or dough, have been actionable, except that there was no survey evidence of materiality. Given the apparent evidence of materiality here, in the context of ads showing other diapers fitting bricks better than babies, I would think the analogy would support potential liability.)

The court held that, just as it’s impossible to prove which pizza is better, it’s impossible to demonstrate “conclusively” whether one diaper “fits more naturally.” “[A]n assertion whose truth depends solely on consumer opinion is an inactionable one.” Thus, taste tests showing that Pizza Hut was preferred by 75% of consumers over Papa John’s still wouldn’t have disproved the “Better Pizza” claim. (This is to say that the court is unwilling to believe that consumers perceive an implied representation of a factual basis for a claim as general as “Better.” Depending on the claim, however, consumers may well perceive an implied representation of a factual basis. Imagine, for example, if the diaper claim was “gentler”—which says something to me, as a frequent diaper consumer, about the effects on a baby’s skin—or, perhaps for another product, “safer.”)

Thus, “[w]henever subjective preference is the arbiter of a claim--whether of pizza or natural fitting diapers--resort to consumer studies is of limited value in the Lanham Act context and only underscores the inherent difficulty in disproving such claims.” In fact, the court held, the study results presented to it demonstrated that consumers couldn’t agree on which diapers fit more naturally. For several sizes, 51% of consumers found that Pampers fit more naturally, while 45% preferred Huggies and 4% had no preference. The court called this a “coin toss” based on individual preference, not objective truth. (Hmm. It seems to me that the objective truth is that you are just about as likely to prefer the fit of Huggies as the fit of Pampers, which is probably good news for competition. The court is shifting back and forth between individual preference—subjective—and population results—not subjective. It may get to the right result, but on this evidence it doesn’t seem right to accuse Pampers of being designed to fit bricks.)

Finally, the court pointed out that the studies weren’t just of subjective impressions. They were the subjective impressions of the consumer, not the actual wearer, who ought to be the judge of “fit.” The court was struck by the fact that the “aesthetics of the diaper” play a role in “mothers’” [sic] perception of natural fit. (I’m pretty sure that aesthetics play a significant role in everyone’s perception of fit, even with their own clothes.)

Even if the “fit more naturally” claim were more than puffery, the court concluded that P&G had not disproved it. First, the court pointed out that (in the absence of some signal in the ad itself that there is substantiation) the Lanham Act doesn’t require testing to support a claim’s truth. Thus, challenging the Huggies study does not in itself show falsity: when test evidence isn’t incorporated into an ad, a Lanham Act plaintiff can’t show falsity merely by attacking “any tests that might happen to exist.” It is the difference between “that claim is false” (actionable) and “you have no proof” (not). (Note that the result may be different in courts, like the Third Circuit, that hold that consumers reasonably expect a minimum level of substantiation from factual claims—that is, consumers don’t assume that advertisers pick their claims by throwing darts at a board marked with possibilities. Even such courts, however, are likely to attempt to cabin this substantiation doctrine to cases in which the claims are reasonably specific, so I can’t imagine this rule changing the result here.)

P&G argued, however, that its criticisms and its own tests could actually show falsity. The court disagreed, persuaded by Huggies’ expert that its test was generally reliable, despite minor flaws (the possibility of a “halo effect” leading to positive answers on multiple attributes given that the survey asked 26 questions; the limitation of the test to only size 4 diapers). Huggies’ expert had an interesting mirror-image criticism of P&G’s survey, which only asked about “fit.” He testified that the results indicated “dumping,” meaning that consumers answered the “fit” question even though a “fit attribute” wasn’t driving their opinion, because it was the only way to express a preference for one diaper over another. The court found this “persuasive in some limited sense,” but not enough to make the survey unreliable—or to skew the results.

In sum, the court found that consumer preference as to natural fit was a “close call.” Both sides had decent but not perfect surveys. The court concluded that the experts’ criticisms, in particular the focus on the “halo effect,” pointed in the direction of finding all the surveys unreliable: “[I]f consumers are so fickle that their own survey responses are swayed by such phenomena as dumping and halo effect, how can a Lanham Act falsity claim ever be premised on consumer preference surveys?” (Well, that statement’s never going to be applied out of the context of a vague product claim! I had thought it was well understood that surveys can readily be used to manipulate even apparently objective reactions.)

In the end, P&G’s claim failed because of an “epistemological problem”: how one can “know,” much less “prove,” whether certain diapers fit more naturally than others.

The court also found that there was no evidence of irreparable harm. P&G moved for preliminary relief 9 months after filing suit, and Huggies submitted credible testimony that ads like the “Brick Baby” ad have a limited lifespan. Moreover, P&G’s own brand manager testified that damages are calculable now. This is a good reminder that a large company needs to act fast on false advertising: the larger you are, the more closely you ought to be monitoring the market unless you wish to be charged with relief-defeating delay, and the more evidence you'll have establishing your own damages, making irreparable harm harder to show.

It’s important to be clear about the meaning of this result, and others: When a court determines that a claim is puffery, then even evidence of materiality—effects on consumer purchasing decisions—will be irrelevant. As others have, I find this somewhat paradoxical given that the core stated justification for the puffery doctrine is that consumers aren’t influenced by mere puffing. See Ivan L. Preston, Puffery And Other "Loophole" Claims: How The Law's "Don't Ask, Don't Tell" Policy Condones Fraudulent Falsity In Advertising, 18 J.L. & Com. 49 (1998).

However, the doctrine does fit into the American approach to advertising regulation: you can fool people into making decisions based on irrelevant criteria as long as you don’t actually deceive them. What’s the difference between being deceived and being fooled? It’s in the specifics of the claim. Not a very stable division. But the alternative, which is more European, would be to say that you can only influence consumer decisions based on (a) brand value or (b) objectively verifiable claims, and that’s not a particularly easy row to hoe either.

Colbert and branding

Stephen Colbert, himself something of a branding genius, interviews author Lucas Conley on branding mistakes—the intro made it sound like Conley was anti-branding, but the interview was more Conley admonishing marketers for self-dilution, trying to port brand attributes to incompatible extensions.

false marking, not false advertising

Forest Group, Inc. v. Bon Tool Co., 2008 WL 2962206 (S.D. Tex.)

Forest sued Bon Tool for patent infringement. Bon Tool counterclaimed for false marking under 35 U.S.C. § 292 and false advertising under the Lanham Act, along with invalidity. Bon Tool won summary judgment on noninfringement.

The patent at issue, No. 5,645,515, covers a stilt used in construction to allow people working on suspending ceiling structures to walk around more freely. In this and a separate patent case against another party, the courts ruled after Markman hearings that the patent was not infringed by products that lacked a resiliently lined yoke. However, Forest’s actual product also lacked a resiliently lined yoke until after the courts ruled on the patent. Beginning in February 2008, Forest’s product now has a resilient lining.

Marking an unpatented article with “patent” or a patent number for the purpose of deceiving the public violates the patent law. The intent requirement is that a party must act with sufficient knowledge that it is not telling the truth and that the recipient will be misled. Intent to deceive can be established by objective evidence; false marking plus proof of knowledge of falsity is enough to create an inference of deceptive intent. A plaintiff must show that the false marking defendant did not have a reasonable belief that the articles were properly marked.

§ 292 means that a patent holder can’t mark its product with a patent number when the product doesn’t conform to the patent claims. The court cautioned, however, that this obligation “contrasts and sometimes conflicts with” the obligation to mark a product consistently and continuously to provide constructive notice of the patent; notice is necessary to entitle a patentee to damages. So, if a patent holder stops marking its product, even only temporarily while a lawsuit is pending or after an interlocutory adverse Markman ruling, it will lose the ability to recover damages from infringers, even if it ultimately succeeds in establishing that the asserted patent covers the product. Thus, the “tension” between § 292 and the notice provision puts the patentee in a “precarious” position.

(The court cited a 1966 6^th Circuit case for the proposition that suspension of marking after an adverse interlocutory ruling destroys the ability to recover damages from infringers; it seems wrong and unlikely to be current law for precisely the reasons the court identifies. The solution is not to read the false marking statute incredibly narrowly, but to hold that stopping marking a product that a court has told you shouldn’t be marked doesn’t keep you from the benefits constructive notice, at least if marking resumes when the adverse decision is reversed. Not to mention that actual notice will still be another route to getting damages, so the peril is not necessarily as great as all that. But then, patent law may have nuances I’m missing.)

Anyway, §292 needs strict construction, especially when the false marking allegedly occurred during pending litigation. A single district court adverse claim construction shouldn’t suffice to establish false marking.

In this case, however, the court found “unusual circumstances”; Forest was liable when it could no longer reasonably believe that the articles it was making were covered by the ‘515 patent. Forest’s principals genuinely believed that the stilts were covered by the patent, which was written by experienced patent counsel who possessed an exemplar of the stilt.

But after November 2007, Forest engaged in false marking. At that point, Forest had been sued for a finding of noninfringement by another company; it had received an opinion of counsel in 2005 advising that a stilt without a resiliently-lined yoke didn’t literally infringe the patent; it had two separate adverse Markman results and two summary judgment rulings; and it had retained experienced patent counsel who advised it to modify its stilts. At that point, Forest had no reasonable belief that its stilts were properly marked. Forest’s principal is not a native English speaker or experienced in fields that require interpreting patent language; it was not until November 2007 that he realized the serious implications of the 2005 legal opinion—that his own product wasn’t covered by the patent. Moreover, the decisions’ lack of finality counsels against an intent finding, but that factor was overcome by the existence of four rulings from two separate district courts on a straightforward patent. The court was also influenced by the fact that, at trial, none of Forest’s witnesses could explain how the lining of their stilt was “resilient” in any way.

The court didn’t credit Forest’s testimony that it directed its manufacturer to stop marking the old stilts with the patent number. There was no documentary evidence of such an order, and the court thought an international businessman should have immediately and carefully checked the new batches for compliance. The fact that, a week before trial, the stilts were still arriving marked with the number suggests that Forest did not try to stop such marking. In fact, its failure to notice the continued presence of the markings was strong circumstantial evidence of intent to deceive.

All this, for what? False marking is penalized at $500 per offense, one-half to the claimant and one-half to the US. Cases are divided on how to count “offenses.” The court rejected a per-stilt calculation. The issue is whether there was a single, continuous act or change in the time and circumstances of the false marking sufficient to separate the offenses. Separate orders placed by the patentee for falsely marked articles, for example, might show separate offenses. The court rejected a time-based approach (e.g., one offense each week) as unsupported by precedent or statutory language. Here, Forest made only one separate, distinct decision to mark its stilts after it knew they weren’t covered. $500 in damages.

Bon Tool also alleged that Forest’s advertising that the stilts were covered by the ‘515 patent constituted false advertising. In the patent context, the elements of a false advertising claim must be made out by clear and convincing evidence. Falsity was undisputed and, because the statement was false rather than misleading, the court assumed consumer deception.

What about my good friend materiality? Bon Tool had no evidence that the false claim of patent protection was likely to influence purchasing decisions by consumers. Likewise, Bon Tool couldn’t establish that it had suffered injury; even with falsity by a competitor, there’s no presumption of causation and harm in the absence of a comparative falsehood.

Both parties’ fee requests were denied.

IPSC 2008: Closing plenary

Copyright Through a Liberty Lens
Abstract | Paper
Jennifer Rothman
Loyola Law School

Proposes a fundamental shift in thinking about copyright uses, away from free speech as an outer limit on copyright. This dominant approach has been a virtual failure in facial and as-applied challenges. Why do we keep beating the First Amendment drum when it’s not working? (Comment: Fred Schauer has something to say about this.)

Lawrence v. Texas has a lot to say for a small subset of uses: identity-based uses unrelated to political or cultural dialogues.

Why did the 1A fail? Copyright as a free speech exception; copyright as already incorporating speech protections; copyright as the engine of free expression. Even if it worked, it would be highly constrained in defending identity-based uses. The vast majority of 1A scholarship on copyright has focused on the democratic civil society, valuing the political over the personal, ideas and facts over expression, and transformative over non-transformative uses.

What does she mean about identity? Our understanding of ourselves; important life-altering experiences; our beliefs and values. These all become intertwined with copyrighted works. Religious works: one’s entire belief/value system could be entwined with copyrighted works. Or a particular song could have been playing during a vital life event, as for example a woman who was raped while a particular song was playing. Or a photographer could have taken a picture of Lindsey Lohan kissing Samantha Ronson, and Ronson could put the picture up on her personal website. This is a heartland identity use because it documents something that happened to her and it doesn’t matter that she wasn’t the one who took the photo.

Why liberty is better at this: Substantive due process connects up better with our understanding of the freedom at issue than First Amendment concepts. This is more a feel argument than a doctrinal argument. Lawrence: “Liberty presumes an autonomy of self that includes freedom of thought, belief, expression, and certain intimate conduct.” Copyrighted works are important to self-definition. So we should focus less on freedom of speech and more on freedom of a person.

If we try users’ rights as speech rights, copyright owner will likely prevail—copyright is supposed to generate more speech overall. Or, if copyright is property, there’s no right to “make someone else’s speeches.” If a user’s interest is a liberty interest, liberty can trump property—the Civil Rights Acts weren’t viewed as takings (comment: note that this was a legislative enactment; the courts didn’t find a liberty right). If you call the copyright owner’s interest a speech one, speech has to be balanced with user’s liberty (and there’s no issue of compelled speech); likewise if you call the copyright owner’s interest.

Implications: no permission should be required; no payment should be required; entire works may be copied. The liberty based approach asks for the reason for a use, not whether copying the entire thing was necessary. (Comment: I don’t see how this is consistent with interest balancing. Can’t the user who was raped while a certain song was playing express that by playing thirty seconds of the song, in recognition of the copyright owner’s competing interests?)

Likewise, the private/public nature and the commercial/noncommercial divides would not be important. And it wouldn’t be necessary for the use to have a role in political dialogue or public debate. A lot of the work would be done through as-applied challenges.

Comments: This seems to me essentially a variant of fair use, with a constitutional candy coating. I’m happy with anything that gets us to think that there are a bunch of different possible fair use configurations, including self-expressive use. Amour-propre also compels me to note here that I’ve written on these issues, both standard First Amendment doctrine and an extended defense of nontransformative copying done in the service of personal commitments or meanings.

Q: A rule providing that no payment is required disturbs me where the loss is unambiguous. If you took someone else’s personal property without permission just because it was iconic for you (your foreclosed house, your repossessed car), we wouldn’t allow that. Imagine if I license my work for $10, but you refuse to pay. Why can’t I get my $10?

A: This is a concern about line-drawing. It would be a limited defense—the work has to be integrated into your life. The court would have to look at motivation.

My question: Where is “the right to communicate yourself to others” in liberty? See, e.g., Boy Scouts v. Dale, don’t ask don’t tell—you have no interesting right to communicate core aspects of your identity, at least not if that core is your gayness. As applied here: Why should you be able to play a song that’s important to you to other people online who don’t know you? If you should be able to play it, should you be required to take reasonable measures to prevent downloading?

A: One could argue that the 1A and free speech is really contained in liberty. This has an interaction with the autonomy-based, self-expressive features of the First Amendment; this is just a way to hook up liberty principles. W/r/t downloading, your identity interest doesn’t extend to others’ downloads, so you’d have to find a way to limit access. (I guess I have trouble seeing why your liberty interest extends just far enough to let them hear it while they’re visiting your page, but no farther. What interest do you have in their hearing it? How is it a liberty and not an expression interest?)

Wendy Gordon: Why do you think liberty will be any more successful? What cases are your models?

A: Lawrence is a fundamental broadening of our contemporary understanding of substantive due process, from privacy to autonomy.

Samuelson: This seems like fair use.

A: She is not trying to revitalize fair use. Her perception is that the 1A has failed as an outer limit, and she’s trying to find something else. She wants to remind courts that there are real people involved in using these works, and if that affected fair use that would be great.

Justin Hughes: A right of private performance would be the type of thing barred by your framework.

A: Even on a facial challenge. (Really? Because while Integral is a song vital to my self-concept, Boy with a Coin isn’t; if we really require investigation of motive, then a private performance right would generally be okay except where there was a specific reason to reject control over a particular person’s use of a particular work.)

Patent and Antitrust: Differing Shades of Meaning
Abstract | Paper
Robin Feldman
U.C. Hastings

The trend has been to harmonize the bodies of law by folding antitrust into patent, but it hasn’t worked well. The divide is deeper than courts/commentators realized—it’s not just that one encourages monopoly and the other restricts it, but that the fields use the same terms to mean different things, and that makes reconciling them very hard.

Two examples: The concept of exclusivity and the definition of product. Antitrust: exclusivity means one party can do something to the exclusion of all others. Using that language, people analyze patent rights as if there was a right to exclude everyone from the sphere defined by the patent, but that’s not always true. A patent doesn’t grant the right to make, use and sell the invention. She’s not talking about the availability of competing substitutes, but something more fundamental. Suppose a patent holder has a patent on use of a substance as an industrial cleaner, and the patent says “all uses.” If someone else discovers that the same substance treats breast cancer; she can patent that use. Anyone who wants to use that substance to treat breast cancer will have to negotiate with both of them, as with an improvement patent. That’s far less powerful than complete control.

The misperception that the patent holder is like a monolithic power in a particular space overestimates the power of the patent grant, encouraging courts to make improper assumptions about patent markets and be overly lax in defining patent markets.

Second example: what’s a product? The patent shouldn’t be looked at as a product in itself, because patent power often comes from interaction with other patents. E.g., defensive patenting. Biotech firms may engage in selective suppression, holding patents on multiple paths and only working on one at a time. This might be ok or not, but if you look only at the single patent you won’t be able to analyze it properly. Likewise, pharmaceuticals can have interactions that antitrust doesn’t quite notice, like the difference between a chewable and a nonchewable form of the same medication. Or selling two medications together could be tying, but putting them in the same pill has the same anticompetitive effect but is only one product. Or look at Roundup and Roundup Ready grain—is that one product or two?

Antitrust law’s conception of a monopolist has an explicit conception that some consumers enjoy the product or at least some substitute. Patent doesn’t assume that consumers get anything during the term, allowing perfect suppression. So treating the patentee like a monopolist underestimates the amount of competitive damage accepted under patent law.

Pragmatism, Knowledge, Copyright
Abstract
David McGowan
University of San Diego

This is in part a descriptive model of academic discourse about IP, and in part a normative model, with an acknowledgement of limitations. Arthur Leff’s classic Some Realism about Nominalism: we like to talk about things, but the critique of knowledge has been so powerful that we have few tools left. The economic analysis of law was a way to keep talking without saying anything. Conversation requires common vocabulary, and Posner’s law and econ has drained the appearance of conflict out of our definitions. We’ve stripped out the things motivating us and speak of costs and benefits.

Deirdre McCloskely pointed out that much of what passes for economic analysis is actually the product of introspection; we rarely have data, even crude data. So we introspect about what a rational actor would do, according to us, and then we call that consequentialist/utilitarian analysis. And we never measure or net it out; our graphs don’t even have numbers.

How people argue about IP: his introspection suggests that we retreat from extreme reflexive positions until we find safe ground within the range of plausible consequential arguments. Law profs are practical and like to talk about consequentialism, but all arguments within the space are structurally/logically sound, and choice between them is a matter of psychology. McGowan would like to shrink the area of “plausible consequential arguments” in order to make it less likely that we will be talking past one another.

Facts shrink the area. So our copyright policy should adduce facts, rather than suppress their production. We tend in copyright to opt for the suppression of facts. We substitute moralism for utilitarianism—Grokster. This calls into question the extent to which copyright is utilitarian.

Examples: (1) Parody/satire. Walking Mountain case: Mattel had a mall intercept survey about what people perceived when looking at photos of Cactus Barbie and the like. He doesn’t believe surveys are probative in the slightest, but he still thinks that the survey should have been considered in the copyright half of the case (hunh?). People were asked, along with sponsorship, about the message/meaning. 97% of people didn’t mention parody. OTOH, 25% of people surveyed in a mall intercept thought that Joan of Arc was Noah’s wife.

The 9^th Circuit refused to consider the survey on the copyright side. That doesn’t mean that there will be no parody/satire analysis. It means that the panel will be the one to do it. Given our socioeconomic status and our verbal agility in this room, we’re all going to want the hoi polloi to be kept out of it—they might miss the point and suppress speech. A utilitarian has to reject that, because if people miss the point, than the utility of the parody is not what we introspect it to be.

One of the things the free speech argument in copyright does is make facts irrelevant: that’s the point of a right. It doesn’t matter if porn leads to rape: you have a right.

Second example: Perfect 10 v. Visa: Perfect 10 argued that the ability of credit card payment increased the availability of porn/infringing porn. One could measure the incremental effect of access to credit on consumption of porn, but the 9^th Circuit said that inducement was not a matter of actually causing incremental infringement. Likewise, Sony is a fact-suppressing doctrine because it doesn’t examine how much infringement actually goes on; if there are potentially significant noninfringing uses the case is over.

His proposition: get facts. Inquiry is costly, and his proposal is costly. Limitations: Perfect 10 v. Amazon. The court says that proof of market harm is required. And yet there’s a standard Texaco circularity problem: how do you know there’s harm before knowing there’s a right? Demanding harm is unrealistic because you need to know the scope of the right first. That is a limit on his thesis—you can’t reduce all uncertainty with facts.

Second, is tailored pricing working? He likes tailored pricing, pay per use. But there are positive externalities from use and pricing is costly. The question whether the pricing mechanism is worth it drives a lot of copyright discourse, and it’s very difficult to get a handle on. We should focus less on questions of law—this is a contrast to Rothman’s paper—liberty, freedom, and speech are too diffuse and cut off inquiry.

Lemley: You’d add property to the list of those concepts, right?

A: Yes.

Lemley: The level of generality at which facts are valuable to us. How many people find this to be a parody? Or something else might be relevant—not this particular work, but the broader effects that having a category of parody has on innovation and creativity. How do you think about that?

A: As a function of a cost of inquiry/uncertainty. It’s rule/act utilitarianism.

Gordon: Yes, we all love facts, but we can’t jump to the position that there are no rights arguments or principled arguments worth making. Just because we’re a practical bunch doesn’t mean we’ll all follow you on this—we look at particular facts because they plug into particular values.

A: He doesn’t mean to deny framing based on priors, or the relevance of moral debate. But where is it going?

IPSC 2008: "Other"

Trade Secrets, Counterfeits, False Advertising

The Suprising Virtues of Treating Trade Secrets As IP Rights
Abstract | Paper
Mark Lemley
Stanford Law School

Nobody seems to agree why we have trade secret law. The dominant theory in the 19^th century: tort theory. But if acts are independently wrongful, why do we need trade secret law? The remaining justification, free riding, is ultimately empty because it doesn’t tell us what is ok and what isn’t. Standards of commercial morality: ultimately no more helpful in giving us a standard of commercial morality. And it adds the layering problem of judicial anthropology. Contract, too, can only explain part of trade secret law—why do we need a secret to have a contractual issue? And it doesn’t explain why we treat trade secret as a crime.

What about property? Well, let’s ask what the justification is for the creation of new property rights. In the end, trade secret has a standard IP justification: it provides an incentive to innovate. That extends beyond contract, so you don’t need an agreement; it extends beyond patent, so you don’t need the subject matter; and it’s easier/faster to get than patents. For startups/fast-moving industries, trade secret is better.

But trade secret seems strange as IP. Why would we want to encourage secrecy? His answer: trade secret law discourages secrecy.

Law can substitute for what would otherwise be investment in secrecy. Without trade secret law, you’d still try to protect valuable secrets, but you might do so in inefficient ways: this is an explanation of the classic DuPont case, where we don’t want DuPont to have to invest in building a roof over the facility while it’s under construction. Evidence from countries that lack strong trade secret protection suggest inefficient investments in secrecy: they’re less likely to enter into business relations with strangers, and have a tendency to hire as employees people who are trustworthy but less competent, notably relatives. There’s also evidence in the breakfast cereal industry that, fearing ineffective protection, companies won’t outsource. (Raises the question: do people know about trade secret law? Why isn’t it working in breakfast cereal?)

Trade secret lets you spend money only in the circumstance in which misappropriation actually happens.

Arrow’s information paradox: you need to have a legal right over which to bargain if you want to enter into a transaction. How does a person evaluate whether an idea is worth $1 million without knowing the idea? Disclosing the idea destroys its value unless there is a legal ability to constrain the behavior of the person given the idea. Contract could do a lot of that, but all. Trade secret does.

If trade secret law encourages disclosure, then we ask: why require secrecy at all? Why not just a legal right over information? The answer: secrecy serves a channeling function, creating a legal right only when it’s needed. The wheel (the secret is that it’s round) v. the formula for Coca-Cola. Trade secret law won’t change people’s behavior w/r/t the wheel. If I want to make money from it, I have to sell it, and I disclose it to the world. W/r/t Coca-Cola, in the absence of trade secret law, people will invest too much in secrecy. So trade secret law creates incentives only in the case of non-self-disclosing information.

Implications: (1) Secrecy is an important, not an accidental, requirement in trade secret law. Tort-law cases regularly dispense with proof of secrecy when there’s a bad act. That’s backwards. But if the info could have come from public sources, then there isn’t property—the question IP forces you to ask is “what right do you have?” (2) Reminds us that balance is everything. Incentives aren’t pure goods. Creation of rights comes at a cost. Trade secret law should preempt and substitute for other state laws that would otherwise create freestanding rights without similar limits, such as unfair competition. We don’t want to protect the wheels of the world. Treating trade secret as IP doesn’t define the scope of preemption, but it at least allows us to tap into a doctrine that has been thinking about these questions in the right way for decades.

Ann Bartow: Look at how easy it is to get injunctions in IP cases, as you’ve written, Mark Lemley (with Volokh)—enjoining average people who work in the factory will become easier; enforcement of noncompete clauses will be made easier.

Lemley: Relative to what? He thinks the answer is the opposite. In a world without trade secrets, parties will have even more stringent employment agreements. He sees trade secret as a substitute for noncompete clauses. It’s true that treating it as IP v. tort might incline a court to an injunction rather than damages. But eBay helps moderate that—the move is to make injunctions less automatic. Also the availability of criminal relief for trade secret theft is important.

Q: At heart, trade secret is about competition; calling it IP might lose that mooring.

Lemley: If he believed that the alternative to IP was pro-competition, he’d agree, but he doesn’t. The trade secret cases talking about competition often restrict it in the name of “good” behavior. The more we rely on the general statement of bad acts in tort, the easier it is to treat unfair competition as redundant.

Q: What are the other implications of your approach?

Lemley: Dubious of the “reasonable efforts” requirement—if we care about disclosures, those efforts are largely wasted, though they may serve as proof of secrecy. Also, other IP rights have expiration dates. Maybe at some point we say your incentive has been realized.

Q: What about security-led innovation?

Lemley: Certainly, without legal protection, people would invest in TPMs. Innovation in secrecy has collateral consequences for the info kept secret, which swamps the innovation of TPMs.

Trade Secret Prices and High-Tech Devices: How Medical Device Manufacturers are Seeking to Sustain Profits by Propertizing Prices
Abstract | Paper
Annemarie Bridy
University of Idaho College of Law

Two lawsuits involving a medical device manufacturer: implantable devices for use in cardiology. First case: Guidant sued Aspen, a healthcare consultant, claiming trade secret for its strategic pricing process, its sales contracts with hospitals, and the prices and terms in each individual sales contract. The contracts all provided that the hospitals wouldn’t disclose the prices. ECRI, a database, then sued after threats by Guidant over ECRI’s database of prices paid by hospitals for Guidant devices. Guidant counterclaimed, seeking protection for the pricing process and also for the actual price paid for every device. This is an ambitious claim. The endgame: maintain negotiating leverage with customers by preventing benchmarking and other forms of price comparison, chilling discussion among hospitals and among healthcare consultants and other third parties.

Such a claim didn’t used to be viable, under the common law as expressed in Restatement §757. But it could be now under the Uniform Trade Secrets Act. There are good policy reasons for excluding prices paid for medical devices, and other goods, from the scope of trade secret.

Early evolution: protection was given for processes and formulae, also tools. Early days: courts said there was no protection for private but ordinary business information that was not the product of special ingenuity. The Restatement required that trade secret be information that was more than ephemeral and was in continuous use in the business. It preserved the separate treatment of trade secrets and private business information.

1970s: UTSA is drafted with no reference to the earlier limits. UTSA’s definition is information “including” all these things. The drafters thought they weren’t opening it up too much—they wanted to protect information that was generally but not presently in use by the plaintiff—but the words of the statute don’t reflect that.

Under the early common law cases and the Restatement, the price paid is not the product of special ingenuity, is ephemeral, and is not for continuous use, though the formula for determining the price might be protected. What would be a question of law under the common law becomes factual under UTSA—what measures were taken to keep it secret? Does it have economic value?

Both cases settled before trial, though Guidant avoided summary judgment in each. Neither opinion discusses any limits on subject matter. This shift from a bounded to unbounded definition is generally a challenge to the public domain. And markets need info, including comparative price info, to function efficiently. The medical device market in particular is highly inefficient in ways that hurt buyers.

Courts can read and some have read the UTSA as a codification of common law, rather than an expansion. Most courts continue to rely on §757 when interpreting the UTSA, and it was intended to codify the common law except in very limited circumstances.

Pam Samuelson: This is a regulatory issue!

A: There is a bill on transparency in medical devices, but the drafting was so leery of takings issues in light of Monsanto that it’s incredibly narrow.

Counterfeits, Copying, Class and Confusion
Abstract
Ann Bartow
University of South Carolina School of Law

Grew up in a working-class family, and when she was growing up designer jeans were coming into their own. She was a nonconformist, but that would have been more fun if she’d had a choice, and that experience left her very dubious about the value of TMs. TMs are manipulative, and coerce people into buying more and paying more than they need. Posner & Landes say people reap value from paying more, and she doesn’t believe that’s a conscious choice. Posner & Landes say it’s ok to pay more for branded laundry detergent. Michelin makes 20,000 types of tires, but they’re all the same tire, just priced and branded differently. But if most people knew it was all from the same factory, then they wouldn’t spend the extra money.

Counterfeiting and copying: everyone knows that high-end designers are looking for paracopyright. But plan B is to use TM, by conflating counterfeiting with knockoffs. Knockoffs are not counterfeits, and are not a TM violation. She won’t defend counterfeiting, but how do we think about it as a scholarly community?

Pharma counterfeiting ought to be a crime. But why is it with clothes and sneakers? We ask about crime in copyright law. Ask how many sales are lost? Very few people are actually fooled. The buyers are less likely to buy the real thing.

Who goes to jail? The person sitting on the blanket/at the flea market. The people making money may occasionally pay the fine, but poor people are the ones who get rounded up and taken to jail.

Is buying counterfeit goods worse than downloading? TM owners want to offload enforcement costs on other people, including swap meet owners. Microsoft: it can be hard to detect software counterfeits, even for experts. One of the amazing things about the eBay/Tiffany’s case was that even Tiffany’s had trouble telling whether 22% of the merchandise was real or counterfeit.

Why is imposing liability on intermediaries important? Because it makes second-hand items very difficult to have at swap meets. It’s great for Tiffany to kill the secondary market, but it’s terrible for people who like Tiffany and don’t have much money. The eBay approach should be applied to physical swap meets.

Copying is endemic in clothing—partly from the creative process and partly because the market requires it. If consumers are asking for it, don’t we need to take that into account in our balancing of interests and assessment of welfare effects?

TM owners denigrate copying and consumers who buy copies. They are tacky scumbags trying to fool people—an instrumental muddying of counterfeit and knockoff. The dominant discourse deploys class signifiers—you need to buy the “authentic” thing. But protecting design rather than TM is not a legitimate use of authenticity. If you like a dress but don’t have $6000, it’s not morally wrong for you to buy a similar dress at a lower price. Ultimate agenda: the designers want to sell the same clothes at lower price points under “stealth” TMs; they want exclusive rights in the lower-end market.

Any new legal regime should be unambiguously linked to either copyrights or design patents. Illegitimate prestige is not a TM problem. Judges have contempt for shoppers whose purchases are driven by style and not TM: they seem to think that if you aren’t paying attn to TM you are defective as a consumer. That’s wrong.

McKenna: You don’t like trade dress, but you’re willing to protect the Polo pony logo?

Bartow: Yes.

Lemley: If you buy a shirt with the Polo logo or a Chanel handbag, are those serving TM functions? You seem to draw a sharp distinction between depicting TM and not that doesn’t necessarily map to what consumers do. E.g., Burberry plaid.

B: When the TM is the design feature, she agrees that law should protect it as TM. But shape, color, rhinestones, fabrics—they should be excluded. She thinks the line is maintainable.

Pasquale: Think about the worries about domain names, the pressure of which was reduced by the rise of search engines. If you can verify provenance in the label, it’s less important what the overall design is. (This is the standard rationale for providing less protection for trade dress when house marks can distinguish the products.)

Lisa Ramsey: Is knockoff the right term? Some knockoffs do violate TM. Counterfeiting is where the mark is identical.

B: It’s the closest term; she wouldn’t advocate limiting protection to identical marks.

Some discussion by various commenters about functionality as another way to say this—if you can’t protect it with copyright or with patent, you can’t bar copying in itself.

Running the Gamut from A to B: Federal Trademark and False Advertising Law
Abstract
Rebecca Tushnet
Georgetown Law

TM was born as false advertising and remains tightly connected. For preliminary relief, remedies, and survey evidence, courts treat the cases interchangeably. Elsewhere, there’s been more divergence, and that’s bad. Today I focus on materiality.

In false advertising law, for a competitor to win a case, a falsehood must be material: it must be likely to affect the purchasing decisions of a substantial number of ordinary consumers. Older cases sometimes spoke of this in terms of the elements being (1) falsity plus (2) harm, because harm requires causation and materiality shows causation. A five-factor test breaking materiality out specifically also developed and now dominates, because law tends to become more elaborate over time.

False advertising law has some basic theories about materiality. We can presume materiality for (1) health claims, (2) safety claims, and (3) central ad/product claims. But there’s lots of room for specifics: a tax preparer’s claim to offer instant “refunds” and not “loans” was material given evidence of consumer fear of “loans” and desire for “refunds”; a representation of EPA approval was material because consumers care about the environment. False advertising law also recognizes immateriality: misstating the number of real estate transactions at issue by 4%; statements about technical aspects of a product which was consumed by people who didn’t care about the technical aspects; statements that sports scores were updated “from the arena” when they were really updated from the radio; etc.

In false advertising cases, there’s been a regrettable trend to require overly specific evidence of materiality, starting with the Fifth Circuit’s Pizza Hut v. Papa John’s case, in which the court held that the false claim “Better Ingredients” wasn’t actionable because there was no survey evidence of materiality, mangling the rule that surveys or other response evidence is required when a claim is only implicitly, not explicitly, false. Because of this heightened attention to materiality, we see things like the Pom Wonderful court carefully going through the evidence that consumers actually cared that a product called “100% Pomegranate Juice” had 100% pomegranate juice.

Materiality remains, though, a matter of consumer preference. The public is entitled to get what it chooses, even if it is choosing by caprice, fashion or ignorance: FTC v. Colgate-Palmolive, 380 U.S. 374 (1965). The Supreme Court explicitly linked TM and false advertising, holding that infringement and false advertising are barred even if the product’s actual quality is high and consumers would be satisfied with it. The seller may reason that when the “annoying or irrational habit” (preferring a particular brand, preferring verification of a product claim) is broken consumers will be happy. But a misrepresentation cannot be used to “break the habit.” I focus on this language because it presumes materiality—an immaterial claim would not break a reasonable consumer’s habit because it wouldn’t change her behavior.

Now, though, we’ve abandoned materiality in TM; confusion is king, with no consideration of whether it matters. And it’s worse than it seems: abandoning materiality has feedback effects on infringement liability, because our multifactor test tells us that consumers are more readily confused when they aren’t paying much attention, and consumers don’t pay much attention to things they don’t care about, so confusion over an immaterial matter is automatically more likely, simply because courts have detached confusion from its moorings.

A couple of traces of materiality remain in TM at the margins, for example in discussions surrounding expressive works.

We should return to this conception of TM infringement, in which materiality is an integral part. We have a semi-natural experiment of what that would look like in the fallout from Dastar. Pre-Dastar, people sometimes brought false attribution claims as false advertising claims; they basically always lost. Bringing them as §43(a)(1)(A) claims proved much more successful, until Dastar, which explicitly said that §43(a)(1)(B) claims remained. But it turns out to be very hard to replead false attribution to be false advertising, and materiality is one reason.

How could materiality help TM? Certain people have devoted a lot of energy to finding a TM use requirement in the structure and history of TM law. But Mark McKenna responds that the question of whether a defendant is using a term “as a mark” can be collapsed into whether consumers are confused about source or sponsorship. Materiality allows us to cut at least some of the loops of that Gordian knot. And it has a substantial history and current presence in the Lanham Act.

Possible counterargument: materiality shouldn’t be required because false perceptions of connection can damage the value of the plaintiff’s brand. Mark McKenna is rebutting this empirically. Moreover, materiality can help us force TM owners to explain this story concretely rather than allowing it to stay as cliched doctrine. If we unpack the assumptions here, it becomes clear just how badly this brand-value rationale fits the modern sponsorship/permission cases. Even if people believe that Google needs GEICO’s permission to run ads in response to a search for GEICO, and even if those people become disillusioned with Google as a search engine, it is bizarre to suggest that they’d conclude there was something wrong with GEICO. It’s bizarre, frankly, to suggest that they’d even remember half-consciously thinking that GEICO gave permission to Google.

Presumptions can help us manage materiality in TM, like the health/safety presumptions in false advertising more generally. Thus, core “source” use can be presumed material, and we can identify source the same way we identify core general advertising claims: what’s the focus of the ad? What’s the biggest word on the product? Is there a special font drawing your attention to it? Etc.

Materiality won’t solve all our problems, nor should it. But it can answer some vexing questions and contribute to restoring some sense to the TM side of the Lanham Act.

IPSC 2008: Copyright/First Amendment and Trademarks/Reputation

Copyright and the First Amendment: Comrades, Combatants or Uneasy Allies?
Abstract
Joseph Bauer
Notre Dame Law School

Standard reactions to copyright/speech conflicts: minimizing the conflict by harmonization (same goals); internal mechanisms of copyright (idea/expression, fair use, limited duration, merger/scenes a faire, others). The growth in the scope and duration of copyright makes that a harder sell. There are various reasons why each of these doctrines fail. He is particularly concerned with the chilling effects of fuzzy boundaries and limits on copyright.

There is still a problem, despite claims by copyright maximalists. He thinks that true compelling interest analysis should be applied at least in some cases. Antitrust, like the First Amendment, offers ways of thinking about what alternatives a defendant had to particular infringing content. Would the alternatives have been effective in conveying the speaker’s viewpoint without copying expression?

This perhaps turns into a question of debating and defining “traditional contours” after Eldred.

Trademarks/Reputation

Marks of Rectitude: Fair Trade, Brand-based Regulation and New Global Governance
Abstract
Margaret Chon
Seattle University School of Law

(Came in a bit late, unfortunately.) There’s a signifcant fair trade premium for coffee sold in the US and EU. There are a lot of middlepeople between the coffee grower and the drinker—for every $3 spent on a latte, only $.02 gets to the farmer. (Coffee is the second-largest traded commodity in the world, after oil.)

Fairtrade Labelling Organizations International is a nonprofit, multi-stakeholder organization uniting 20 labelling initatives in 21 countries. They aspire to set fair trade standards worldwide. They set several generic standards for producers and traders. The standards cover farmers and laborers. FLO only works with associations or cooperatives, though, not individual farmers, which is a source of critique.

Chon is interested in competition among intermediary certifiers. There’s a competing coffee certification process focused on environmental issues and provenance, and another one focused on ensuring a higher fair trade premium for farmers. There are vast differences in the kinds of standards they care about, and that consumers might or might not know about—the use of GMOs; whether the certifier is independent of the industry; etc.

Dinwoodie: there are two different modes, passive and active construction of consumer understanding of marks. There is market competition for standards; what does the consumer understand from all these certification marks? There’s also a genericism issue attached to the term “Fair Trade”—we might have a feel-good association attached to the term, but we don’t know what it represents.

Certification marks are much less specific than traditional “source or origin” functions of TMs. They imply more objectivity: but we don’t know how consumers understand that. OTOH, certification marks are arguably much more specific than merchandise licensing, esp. in terms of quality control. The solidity of meaning is contextual.

Consumers may not be aware of specific standards, but they may have different awareness of the certification process or outcomes. That awareness may also be low, but it could be affected differently. US law, she thinks, insufficiently regulates the stringency/honesty of certification processes.

Similarities between GIs and fair trade: they guide consumers to different consumption paradigms, and they make a more specific connection to local culture and local values. They can also link with traditional knowledge. Do they form an alternative to the hegemonic trade system? Given the percentage of fair trade coffee traded, it’s not a huge impact.

Third party certifiers are regulatory entrepreneurs, doing work necessary in a fragmented global structure. Development hasn’t focused on TMs as a source of development. Certification marks can provide institutional standards promoting tech transfer, which may have occurred with forestry certifications.

Eric Goldman: Chicken-and-egg problem—certification marks are a supply-side solution, used to further normative goals. But we can’t ignore the demand side—there isn’t necessarily an organic demand for fair trade coffee. But then the certification agency has to market to consumers to convince them of the need to demand fair trade.

Chon: That goes to the passive/active construction of marks. Most of these agencies devote most of their resources to producers, and have limited marketing budgets. And they have an ideological dilemma: are they marketers, or are they helping farmers? “Organic” is a good example of where consumers have taken up a term without much marketing by USDA.

Q: The Idaho potato organization has done a lot of marketing to convince suppliers and consumers of the value of the certification mark.

Chon: Consumer education is a huge deal. Middlepeople can also help—Starbucks can sell its coffee as fair trade coffee.

Justin Hughes: A difference between GIs and fair trade marks is that there isn’t a clutter problem for GIs. We expect tens of thousands of GIs and it doesn’t feel like clutter. Will the market cause fair trade marks to shake out a few dominant ones?

Chon: Democratic, grassroots approaches aren’t efficient, and the groups are trying to respond to decentralized constituencies.

"Smithers, release the hounds": Adopting a new normative framework and analysis (safe harbor?) for dealing with copyright infringement by electronic agents
Abstract
Eran Kahana
Datacard Group

It’s clear that courts are much more likely to enforce browsewrap in a B2B situation than in a consumer-to-business situation, so his analysis is confined to B2B. The “hounds” in his title are bots that are released and return to their bot masters with the content “duck,” and then the masters post the duck on their own site.

He argues that human-centric analysis of bots is flawed. The bad cases include discussions of things like “awareness” on the part of a bot, or the location of a Terms of Use, or the color and font thereof. His argument: you should look at whether (1) a bot was used (2) in a wrong way, with “wrong” to be the appropriate subject of debate.

Internet Archive v. Shell: IA argued that Shell failed to state a claim for breach of contract because it only learned of the ToU after it copied the pages and no human was ever aware of the ToU—he thinks those are weak arguments. Field v. Google is better in how it treats the bot, but it is still human-centric in relying on fair use.

Remedy: dispose of notions of consent and fairness to the bot master. The solution: adopt technical specs for safe harbors for bot designers. Roommates.com provides a useful guide. If a bot designer adheres to the standards, then the designer doesn’t need to monitor each site visited. Reciprocally, drafters of ToU must follow drafting conventions. A compliant bot encountering noncompliant ToU would still be immune from suit for browsing, while a noncompliant bot would not be immune.

The drafting conventions must mirror the terms the bot recognizes, like “do not archive.” Future bots might recognize Boolean logic, synonyms, and antonyms. The more sophisticated the intelligent bot, the more flexibility there is in drafting. Drafters could allow some indexing and not others.

Pasquale: Niva Elkin-Koren argued “let the crawlers crawl.” Let the Crawlers Crawl: On Virtual Gatekeepers and the Right to Exclude Indexing, 26 Dayton Law Review 180 (2001). Smaller entities need to be indexed, and larger ones don’t be. A person trying to build a new search engine is stymied by Google’s prohibition on crawling its site.

Goldman: robots.txt is much of the solution that’s necessary. There are some automated robots, but when people configure scrapers, there’s almost always a human factor. Is it fair to say that they couldn’t review every user agreement?

Kahana: Bad actors will never use this standard—e.g., competitors who don’t want to configure scrapers to comply with ToU. Robots.txt is a good beginning, but it won’t help with your desire to ban competitors from scraping while allowing Google. It could be made much richer.

The Economics of Reputational Information
Abstract
Eric Goldman
Santa Clara University School of Law

How do we help consumers make better decisions? Goldman defines reputational info as info about an actor’s past behavior that will help predict the actor’s future performance. Examples: word of mouth, recommendation letters and references, job evaluations and student evaluations—these are unmediated, going directly from giver to receiver. Mediated: credit scores, investment ratings, GPAs, product reviews and ratings on Amazon, ratemyprofessor.com, possibly voting systems like Digg and PageRank.

Hypotheses: (1) Anomalies in reputational information supply and demand, whether over or under, hinder markets. (2) Inconsistent regulation of reputational information should be examined for unwarranted dichotomies. Credit scores are heavily regulated, but GPAs are not, nor are Google searches. There may be good reasons for difference, but examining the family of reputational information might give us good lessons for changes.

One specific topic: the undersupply of reputational information. People have first-hand reputational information that remains non-public—our individual opinions of movies, banks, etc. Every single person has some such info. Why? Costs in time, vendor retribution, norms against public criticism, privacy, legal risks. Thus, the market doesn’t work as well as it could.

His solutions are designed to be provocative: We could make more information about consumer decisions public information—automate disclosure of when Mark Lemley switches banks, publish customer lists. Or, we could increase channels for anonymous distribution of reputational information. (He earlier referred to the problem of pollution of the data stream; I expect that will come up as to this solution.) We could recalibrate the legal consequences of sharing reputational info—make it harder for plaintiffs to win; make it easier for evaluatees to fight back; we could protect intermediaries facilitating production of reputational information, as §230 does. Government funding of reputational information production: his least favorite solution.

Q: Undersupply is an instance of the general problem that a market in information is inherently imperfect.

Goldman: Absolutely, which puts gov’t involvement on the table.

Lemley: Wants to push on the premise of undersupply. Striking to offer that argument when we now have more info than we ever have. Maybe the market worked much worse in the past, but our personal behavioral decisions on the basis of nonpublic info may be a sufficient proxy for public info. If enough people leave the bank/don’t go see the movie, the aggregate effect of that sends a signal the market can internalize.

Goldman: Yes—there is feedback just from choice. His concern is that’s not enough. Lemley’s Facebook page gives much better info about movies than Lemley’s movie attendance.

Me: This is getting into the tension between analyzing behavior in terms of incentive and analyzing it in terms of taste that is also hampering copyright analysis. Because producing such info has costs, we sometimes ask what the barriers are—if we want more, we try to lower the costs or increase the benefits. But some people just don’t want to talk: should we try to change their tastes?

Goldman: And that structures the question—do we have enough people providing the information, or not enough?

Elkin-Koren: These proposed solutions will affect the other problems you haven’t discussed—corruption and manipulation of information. Every solution you offer may increase that problem.

Goldman: Absolutely. Fixing undersupply is linked to avoiding/correcting oversupply.

IPSC 2008: IP and Government, with YouTube detour

The Political Economy of Intellectual Property
Abstract
Clarisa Long
Columbia Law School

She collected all the amicus briefs in the Federal Circuit since 1982 (only 385 of them) looking for correlations between support and outcome. She’s done the same thing with proposed bills in Congress on copyright and patent since 1952 (about 6000) and will be running regressions.

Copyright law’s rate of evolution has been much faster than patent’s. To some degree this can be seen in statutory length—copyright is 2x as long and tends to be much more industry-specific. One conclusion: one of patent law’s successes is its uniform nature. The relative paucity of industry-specific provisions has slowed down change and kept interest groups from getting a toehold into the law. Copyright doesn’t have a uniformity norm.

Copyright changes that get passed: have uniform industry support, are industry specific or are about a small number of organized industries, and are in copyright-only bills. Patent changes that get passed: it helps to be related to tax. Death knell: patent bills that stand on their own and are only about patent law; patent bills that don’t have unified industry support.

Who supports whom before the courts? Bottom line: nobody likes big pharma; nobody cares about big manufacturing whether to support or oppose it; one of the most powerful interest groups is “big finance,” a group that flies further under the radar than she would have expected. She also wants to look at the effects of law professor support (laughter from the audience).

In questions: Long discussed the hydraulics of regulation—if you can’t get a result from Congress, maybe from a regulator; if not patent, maybe the FDA; etc. This is very hard to take into account.

Pam Samuelson: Big pharma’s biggest success in the past decade has been TRIPs, and other work with the USTR, so looking for success there might also be of interest.

Long: one of the ways she measured success was the number of bills proposed, who they benefited, and whether they got passed. Big pharma’s success rates there are quite low, but the key may be output. (Samuelson pointed out that stopping unfavorable bills may also be success.)

Other comment: private term extensions for patents are also an indicator of success.

Long: These were very popular until the mid-70s, and they almost always failed; since then, the number has dropped off sharply. The success rate has gone up a little though.

Q: What about effects on international treaties, creating pressure on domestic governments to change law?

Long: Yes, she should also take that into account.

Comment: It’s really easy to introduce a bill. The story of a piece of legislation is qualitative, not quantitative. Interview people about particular bills. So much happens behind closed doors, and involves exchanges that go beyond individual bills.

Mediating Public Choice Problems in the DMCA Safe Harbors
Jason Schultz
U.C. Berkeley School of Law

Public choice theory says that producers have more influence than consumers, and private interests have more influence than public ones.

Given the insights of public choice/interest group theory, should we treat statutory interpretation like contract interpretation? That is, unrepresented parties should be favored in term construction, whereas interested parties who participated in drafting should have terms construed against them. If necessary, they can go back and get an amendment, whereas unorganized/unrepresented parties are unable to do so.

Special note with tech law: there may be nascent public benefits, emerging and undefined, which means that existing users are advantaged over future innovators, users, and consumers. The amount of user-generated content in 1998 when the DMCA was passed was very different than it is today; the economy of UGC has changed and the level of investment has risen.

Who was unrepresented with §512 of the DMCA? Large copyright owners served as proxy for small copyright owner interest, while telecom carriers and ISPs served as proxies for small users. Question: how well did they do? The vast majority of §512 deals with service provider and copyright owner interests. User rights are only represented in counternotificaiton provisions and the cause of action for takedown notice abuse.

Look at the requirements of notice v. counternotice. Notice requires substantial compliance; counternotice requires strict compliance. Notice requires reasonably sufficient contact information; counternotice requires full name, address, and phone number. Notice: no consent to jurisdiction or service; counternotice: mandatory consent to jurisdiction and service. Notice: takedown mandatory and must persist 10-14 days even if user files declaratory judgement; counternotice: putback not mandated. Notice: filing suit voids putback; counternotice: filing suit has no effect on putback.

Injunctions: injunctive relief only requires notice to the ISP, not the user.

§512(f), allowing suit against knowing misrepresentations of infringement in a DMCA takedown notice. A number of cases: Diebold takes down embarrassing emails; Ric Silver takes down videos of people incorrectly dancing the electric slide; Viacom takes down Colbert Parody; Uri Geller takes down a critique of him; etc.

Two arguably ambiguous terms in the statute: (1) “knowingly” materially misrepresent and (2) “infringing.” In Diebold, the N.D. Cal. applied a pro-user stance, finding “knowing” when no reasonable copyright owner could have believed in infringement. Rossi v. MPAA: pro-copyright holder, applying a subjective good faith standard.

Currently: Lenz v. Universal: Prince argues that even an unreasonable belief that 29 seconds of a dancing baby is infringing is enough to defeat a §512(f) suit. Public choice says no: we should interpret the ambiguous provision in a pro-user way, because Prince was well-represented in the drafting process and the mom who filmed the music video and put it up on YouTube was not. Universal is also arguing that “infringement” means a prima facie violation of §106, regardless of whether there are any applicable defenses or exclusions. Schultz argues that this is wrong—copyright owners could have drafted a version that spoke only of violations of §106 rights; users should get the benefit of the doubt, and copyright owners should have a duty to consider defenses like fair use before sending a takedown.

Susan Crawford: Does this create perverse incentives to stay out of drafting? How long does a sympathetic reading for nonparticipants last—100 years? And sometimes courts are more sympathetic to expansive readings because they don’t know anything about drafting.

Schultz: Staying out is a high-risk strategy. This theory only applies to ambiguous provisions, and so if the drafter is working alone she can just write the most unambiguously favorable provision she can think of. Courts like to read the statute as if the language were plain; but we all know that something else is going on.

Q: Where do legislators fit in?

Schultz: There’s a big debate in the literature.

Q: Incentive to draft as carefully and specifically as possible, which is the point, but the result would be to limit judicial discretion—are we worried about that?

Schultz: Yes, we’ve seen a patent/copyright difference with courts’ ability to jigger patent doctrine as appropriate.

Sag: Sometimes Congress is deliberately vague.

Schultz: Yes, that shows that the interests were equally opposed, and that’s useful info for the judge to know.

Sag: Where does constitutional theory come in?

Schultz: The majority of the public choice literature focuses on constitutional rights, arguing that courts should be more sensitive to interest group manipulation.

YouTube and Sharing: Competing Business and Cultural Models in the Digital Era
Abstract | Paper
Olufunmilayo Arewa
Northwestern University School of Law

There are a wide range of behaviors: copying verbatim, reuses and recreations, transformative uses—all are enabled by the digital era. We often assume that cultural practices are homogenous, but they’re not.

Sharing is not new. Lessig: one way to see Disney is as a major remixer of existing cultural works. And the Brothers Grimm from which Disney borrowed were also remixes. Still, the high culture model of the isolated genius in the attic retains a lot of influence in our discourse. There are extensive interactions between high, medium, and low culture. High borrowed from folklore; low borrowed from high and popular; low is redefined over time to become high—classical music is canonized, though at the time it was written it was popular music. Many classical composers were persistent borrowers.

19^th century: folklorists ran around collecting peasant folklore, because they assumed it was going to die out; they were also worried that people who came to the city stopped doing peasant dances and started hanging out in bars. But folklore is persistent and can give us an alternate model of how people create, by sharing. Riddles, jokes, proverbs, urban legends. There are multiple variants, shared cultural elements. People are using and partaking of them in everyday life—a model of Web 2.0 creation.

What do we care about—Culture or culture? Culture is perfected, while culture is evolving—Matthew Arnold and Andrew Keen like Culture. She’s not sure Keen is entirely wrong about the narcissism of Web 2.0, but it’s useful to think about what people who aren’t “authorized” to create culture actually create. The peasants who came to new urban enviroments behaved differently—not like they were supposed to, going to dance halls etc.

Cultural studies treats copying as something very different than copyright law. In musicology, there are dozens of words to talk about copying, from borrowing to homage, and we in law don’t have similarly rich tools. Folklore could be a good model for thinking about culture.

From a business perspective, the competing visions of culture are (1) vibrant, where existing works are building blocks and (2) valuable asset, where copyright enables the protection of revenue streams from existing works and strains towards a pay-per-use model. They aren’t mutually exclusive, but they do tug in different directions. She sees parallels with the canonization of classical music in the 19^th century. The canon was untouchable, had to be performed as-is, and classical music died as a vibrant, living cultural form.

Q: What about the economic motivations of creators? Bach stole from Vivaldi because they were both being paid by the church.

Arewa: True, there have been significant structural changes in entertainment industries. Before the 19^th century, it was hard to print sheet music. But the uses were very different: ordinary people routinely sang at a level we don’t reach now. It’s not economic returns that she is focused on, but culture and the appropriate scope of copyright rights.

Q: How do you deal with the tension between the two cultural models? And how do we put interdisciplinary research like this into the classroom?

Arewa: She teaches music and copyright. Students aren’t aware of precedents—music out of context, even 10 or 15 years, loses the context of creation. With copyright getting so long, we have no idea what the original work sounded like. So something that sounds original to us now may have sounded completely unoriginal to its initial audience. Students think that great composers were total originals, and they’re just wrong.

As for dealing with the tension, we reconceive copyright as being about culture as well as assets. Compensating creators is good (but standing recording contracts don’t do it that well), but we also have to think about enabling reuse.

Privacy, Free Speech and "Blurry-Edged" Social Networks
Abstract
Lauren Gelman
Stanford Law School

Focus of her research: the conflict between privacy and free speech. And the effects of disintermediation on privacy; work in copyright may have insights for privacy.

The basic question: why do people post content on a medium available to the whole world that is not intended for the whole world. (See also: context collapse.) Clay Shirky responded to critiques that most blog content isn’t interesting, because it’s just trivia about people’s lives: It isn’t for you. It is interesting to people it’s for.

People have undefined networks. Users are calculating that they can’t identify in advance all the people they are intending to reach with their posts because their social network is undefined. So they make their baby pictures available to the world on Flickr, and don’t need to expend energy figuring out who to send the pictures. Old-world analogy: do you want to make your phone number public so that anyone who wants to can find you, or will you keep it private and only tell people you know will want to contact you? This cost-benefit calculation is dependent on how well we assume we’ll be able to identify good contacts in advance. (Comment: also on costs.)

What if you have been diagnosed with cancer? Your social network includes people who know you, but it may also include people with the same diagnosis. Before the internet, you might have had to seek out a hospital with a support group; now, you can start posting your story, and find people who are in a different physical space. This creates enormous value and new communities of interest. By posting publicly, the cancer patient takes advantages of the blurry edges of her social network.

You have to disclose in order to get this value. This is the cost of Facebook: you say what high school you went to, and get access to that network. Right now, our privacy regime finds that once you disclose something you have no more privacy in it. What she’s concerned about is that if we continue, we are forcing people back into a world of not disclosing and we won’t get all the speech benefits of being able to share information without fear that this information will be completely uncontrolled and used against you in any way possible.

Why should we care? First, our stories are rarely about ourselves. Even if you say people take their own risks, they’re often taking risks with their friends, parents, etc. Second, users make mistaken assumptions about access, storage, and search, though it might be changing over time. Third, we will get less speech if people stop using the medium for this purpose. The speech argument against privacy has to be weighed against the speech-encouraging benefit of protecting privacy.

Legal history: why do we think that disclosure of any kind destroys privacy? There’s been a move from intermediated institutional organizations to non-intermediated individual publication. With newspapers, if you wanted to tell your story, you needed to go through an intermediary that made determinations about newsworthiness. This created a binary notion of information: either it should be disclosed or it shouldn’t be.

Technically, we started with message boards, which were targeted at limited groups and felt more private. WWW was public to the world, but info there was much different than the info on message boards—more commercial, more government, etc. Web 2.0 combines both of the above.

Copyright analogy: my ability to protect my privacy may affect your ability to tell your life story. She thinks that the greater policing burden on copyright owners is a good thing overall, but as a privacy theorist she is worried about the social costs of eliminating intermediaries.

Q: Suggests further specification of harms. What are the problems of having people reveal information partially? Chillingeffects gets a bunch of DMCA notices that are ostensibly about protecting copyright but are really about people trying to hide youthful indiscretions. What are the implications of continuing down our current path?

Sprigman: What’s the relevance of Facebook’s ToS? And new tools to control partial access?

Gelman: Maybe Facebook can solve much of this problem. She’s nervous about proscriptive analysis that endorses how Facebook does it and ignoring the rest of the internet. And she’s not totally happy with Facebook—it’s relatively hard to protect information; you have to make your Wall available to allow other people to write on it. Market solutions have to be a part of the solution, but we’re not there yet.

IPSC 2008: IP & Creativity

Does Law Inspire Creativity? An Empirical Analysis of Copyright's Bounty
Abstract
Raymond Ku
Case Western Reserve University School of Law

He looks at copyright registrations to see if they can give us any evidence of copyright’s importance as an incentive. Though registrations have risen over time, there’s been a drop in serial registrations, which may be an artifact of a rule change allowing registrations to come in a group.

Hypotheses: (1) changes in copyright law change the number of works produced; (2)(a) expanding copyright increases the number of creative works; (2)(b) decreasing protection decreases the number of creative works. The baseline is some copyright protection, and thus the study does not address the on/off question of copyright protection.

He’s studying registrations, not works; the number of works is not known, but he argues that registrations are a good proxy, because registrations were required for any protection at all and are still required for important remedies. (Query: what is a work? He doesn’t seem to mean an email—does he mean a creative work whose creation required some sort of extensive effort or that is part of a generally economically valuable set of works, like a movie or song?)

Variables: population; the economy; law changes (amendments to the Act; significant Supreme Court decisions; registration fee); and technology milestones. Other studies have looked at lower court decisions, but there are statistical challenges to that because of the vast number of decisions. Other difficulties: creating categories that are consistent over time. Possibilities: monographs; performing arts (musical works, dramatic works, pantomimes); sound recordings; motion pictures.

In general, law changes do not always impact creativity. Only 8 law changes affected monographs in a statistically significant fashion. Performing arts and sound recordings: the same thing. The correlation between registrations and law changes is arbitrary, even random; registration is almost entirely driven by population (except for sound recordings), the economy, and registration fees (comment: which might suggest something about creators’ discount rates?). Even the Berne Convention didn’t make a difference to the numbers.

What about scope contraction? In general, scope contraction at least in the form of a pro-fair use decision is associated with increased production. Law changes that increased criminal liability either don’t impact registration or are associated with decreased registration.

Q: Why would criminal liability decrease registrations?

Ku: There may be people creating at the margins of acceptable use who stop. Given how price-sensitive registration is, it’s easy to stop registration. Most creators aren’t sure of the value of their works, though sound recordings are a bit countercyclical; thus the price sensitivity.

Justin Hughes: How long would you expect the lag to be? Statutory change and judicial change may take different times to percolate through the system. Also, some of these no-correlation findings are completely unsurprising: VARA shouldn’t have had any effect on monographs.

Ku: On the lag, they went a while—out to five years, and also taking the changes into account on a continuing basis. On the second point, he wanted to make all the data available, including where you wouldn’t expect. (Though one could make the theoretical argument, pace Glynn Lunney, that increasing the rewards for visual art should shift investment away from monographs if the basic economic theory were true, so we should expect decreased production of monographs, all else being equal. That result seems unlikely because painters are rarely novelists, but that objection is merely to say that creativity is deeply resistant to economic analysis.)

Sag: Dubious about longitudinal analysis at all.

Ku: It’s not enough, but no one’s done this work before and it’s interesting.

Q: We still can’t exclude the possibility that the average “size” of a work—the investment, the return, whatever—has increased even if numbers stay the same.

Ku: Sure, we’re just looking at absolute numbers. This isn’t saying that individuals aren’t motivated by law change—a creator may look and say “95 years! Now I will write the great American novel!” But overall there’s no effect.

Q: This is a different paper, but: the default remedy is an injunction. Is there any difference between pre-1819 and post-, when we added an injunction as a remedy?

Left Brain vs. Right Brain: Conflicting Conceptions of Creativity in Intellectual Property Law
Abstract
Gregory Mandel
Temple University--Beasley School of Law

The law of joint inventorship for patents is very different than the law of joint authorship for copyright—copyright requires both intent and contribution of independently copyrightable element; patent does not require intent, and can involve contributing only to one claim without independent patentability. The common explanation is that these differences stem from the subject matter. This explanation is oversimplified at best.

(1) These doctrines arose a century apart, and didn’t involve any consideration of subject matter or differences between patent and copyright. (2) If you look at the relevant opinions, they look like gut reactions rather than careful considerations of overall systemic objectives. (3) Other countries have wide variation, which is significant given the substantive harmonization in other countries. So there’s a lot of variability in rights, right to assign/license, the relevance of intent, etc.

If these differences are not based on legal differences, what causes them? Common bias in social attitudes about the creative processes that go into artistic expression v. technological innovation. Artistic creation is commonly perceived as holistic, relational, and internal—springing from the author’s mind. It’s intuitive, subjective, random, synthesizing, and fundamentally personal/individual. Thus copyright law resists joint authorship in the absence of intent and copyrightable contribution. Technical innovation is by contrast viewed as logical, rational, focused on the parts, sequential, analytical, and objective. And because the process proceeds in parts and steps, anyone who participates in a part is entitled to inventor status regardless of intent or contribution to the whole.

Both these views are substantially exaggerated. Invention is dynamic, messy, stochastic, unexpected, produces surprising results: e.g., microwave ovens were invented when a scientist working with vacuum tubes discovered he’d melted a candy bar in his pocket; Post-Its were invented in the attempt to develop a really strong adhesive, not a really weak one. The meaning of ideas is not clear at the beginning, or is different at the end. Problem-finding, as opposed to problem-solving, is particularly a right-brain mode of activity, and thus a particularly creative form of innovation.

And artistic creation often involves linear and externally mandated needs, esp. if we focus on classic areas of joint works: plays, songs, movies. The Mona Lisa and Michelangelo’s David involved significant amounts of planning, arrangement, and step-by-step practice. Success comes from integrating both types of creativity, left and right brain.

International variation can’t be explained by subject matter, but can be explained by different cultural understandings of creativity. Eastern cultures often focus on integration of different things across time: Confucius said, I transmit rather than create. Western cultures tend to idolize single iconic inventors, despite Newton’s remark about standing on the shoulders of giants.

Cocreator law based on mistaken cultural concepts of creativity may fail to promote the goals of copyright and patent.

Joint inventor doctrine: entitled to joint inventorship if contributed to conception of a single claim. Joint inventor gets equal, undivided interest in entire patent; can sue even if the infringer didn’t infringe that claim. Contracts aren’t sufficient; there are a growing number of cases where there was no contract. This discourages joint work, because intent is irrelevant and small contributions won’t be enough. Some inventors won’t know this; others will know to protect themselves; but at the margins, it will discourage collaboration, and that’s a problem because so much research is collaborative. Studies find that extraordinary innovation usually arises from integrating teaching from highly disparate fields.

Copyright is suboptimal too. Because of the intent requirement, potential collaboration is discouraged: the other person may not have the requisite intent. We should incentivize collaboration.

IP has paid insufficient attention to psychological and other perspectives on how to promote creativity. We should look beyond our stereotypes.

Goldman: Can’t we just expect parties to bargain around the entitlements in Coasean fashion?

A: We have lots of evidence that this doesn’t work all that well—lots of failure to bargain. There’s often a dominant inventor/author and a nondominant one, and the incentive isn’t in the right place.

Hughes: You need to talk about the work for hire doctrine, which dominates the majority of the value of collaboratively produced copyrightable works, if not the number. The patent system has draconian rules for getting your attribution wrong, and that is a problem too.

A: You can get a certificate of correction for patent, so it’s not devastating. In general, he wants to look at work for hire and shop rights too.

Sag: It’s hard to justify our joint authorship rules as determining a final allocation of rights. If you think of it as information-forcing, then Larsen in the Rent case looks undesirable as a human being because of his insistence on sole authorship, but at least you knew where you stood with him.

A: There’s no good explanation of why the patent and copyright default rules are so different. So we should ask what the right default rules are; other default rules could also be information-forcing.

Q: Maybe you could look at other kinds of creativity; patent and copyright don’t fully structure creativity, which are also controlled by things like the corporate context.

A: Fair enough. Processes of creativity may be more similar than they are commonly perceived, but that doesn’t make them or their outputs identical. Still, a central goal of IP is to incentivize creativity, so it’s worth asking about.

Q: Does thinking about a “work” and an “invention” help any? Because a patent is more heavily examined, maybe we want to make sure that everyone relevant is present? (I’m not sure why that would be the case.)

A: Possibly—the courts have interpreted joint work to focus on joint authorship, though.

Ordinary Creativity in Patent Law: An Artist Within the Scientist
Abstract
Amy Landers
University of the Pacific/McGeorge

She looks at the KSR decision, which opens up the question of the creativity of the person of ordinary skill. The PHOSITA has always served as the breakpoint for patent protection. How do you know what sort of creativity a person has to have to do her everyday job? Copyright cases occasionally discuss the process of creating things like photos, offering an artistic judgment standard. Those cases often look at whether the artist’s goal was expression or function, and that question isn’t relevant for patent. We lack a rich vocabulary for discussing scientific creativity. Current judicial language is about education, experience, and competence, rather than creativity as a separate attribute.

Some decisions associate creativity with skill. But intelligence and competence are necessary, but not sufficient to creativity. The psychological literature treats creativity as a separate attribute.

Does patent law in fact have a theory of creativity? There’s been a lot of research on scientific innovation, moving away from a focus on unique genius to the conditions that inspired results. Looking at “the problem to be solved” is of interest—the more definition there is of the problem, the less creativity is needed to solve it. Patent law rewards results and not questions, but we should pay more attention to who defines the problem to be solved.

We also have studies on people who publish more: they have certain characteristics, like associative richness. And we have studies on multiple inventions—the same thing many times invented independently. They suggest that many inventions are inevitable and will come about given appropriate circumstances.

Ordinary creativity should be taken seriously by courts, a number of whom rush by it due to a lack of vocabulary. Conceptual change/pushing back a prior constraint/taking a risk: these are things to look for.

Hughes: Ordinary creativity as the kind of creativity needed to understand a suggestive trademark? I.e., doing so requires creativity, but the kind that basically everyone can exercise. The copyright creativity standard is already incredibly low: it’s anything that’s not produced by a mechanistic, deterministic process.

IPSC 2008: Copyright and Technology, and iP

Copyright and Copy-Reliant Technologies
Abstract | Paper
Matthew Sag
DePaul University College of Law

Sag’s paper focuses on technologies that copy en masse, but do not make the expression of the copies available to the public. The archetype: plagiarism-detection software, which looks for repeated strings of words, and can report on how much of one work was copied from another (10%, 50%) without even showing you the expression. Or Google Books can tell you how many times the word “whale” appears in Moby Dick and other works.

Do copyright owners have a right to object to the functioning of this technology? His argument: a nonexpressive use of a copyrighted work is presumptively noninfringing/fair use. He also investigates the use of opt-out mechanisms in such technologies.

Key doctrines, including idea/expression, substantial similarity and other limiting doctrines, have a common thread: expressive communication to the public is the touchstone of the copyright owner’s right. He also looks at the collective work privilege as interpreted by Tasini—the Supreme Court doesn’t care about how the data is stored, only about how it’s presented to the public, whether it’s presented as the freelancer’s separate work or as part of a whole.

Interesting doctrinal wrinkle: there are lots of cases (strike suits) involving movies where someone who’s written a short work will sue for copyright infringement. They get kicked out at summary judgment, and plaintiffs invariably say “even if the final screenplay doesn’t infringe, you should allow discovery of the unpublished drafts, because that will show copying of my work earlier in the development process.” Courts reject this argument because the rights of the copyright owner are limited to the communication of original expression to the public. We don’t care if you start out with a copyrighted work and revise until you get to a noninfringing work: the only question is whether the result is infringing.

Descriptive proposition: all of the rights of the copyright owner are limited by or at least calibrated in reference to the communication of original expression to the public. Normative: acts of copying that do not communicate the author’s expression to the public shouldn’t be seen as copyright infringement. Prescriptive: There might be reasons to call some such copying infringement, because the distinction between expressive and nonexpressive is occasionally unclear. So rather than having a categorical exclusion and shift the debate into category definition, the better approach is to use this insight in fair use.

Nonexpressive uses should be presumed to be fair uses, basically because of their purpose and character. He thinks the commercial/noncommercial distinction is dead. We have a copyright system to free authors from patrons and government. If that’s what copyright is good for, it’s good for commercial and noncommercial players alike, and we should not discriminate against people for wanting to make money. There may be increased spillovers from noncommercial use, but that doesn’t make Google’s commercial aims relevant to copyright claims against Google Books.

The third and fourth factors: shouldn’t matter unless the copier is interfering with the copyright owner’s ability to communicate its expressive message to the public.

Opt-outs are very common—the remaining question is how to think about them. He thinks they must be relevant in that opt-outs change the market effect, as well as the character and purpose of the use. (On this record, I’m not convinced—the synergy of large databases is harmed by opt-outs.)

Eric Goldman: Google is complicated, because some excerpts can contain significant expression—e.g., AP News headlines. And the cache has the whole thing, which is displayed to the public (Goldman’s always found Field v. Google bizarre on this point, though I’m certain he thinks it’s rightly decided). So Sag should consider disaggregating different Google practices.

Sag: Displaying search results is at least potentially infringement because it displays the expression to the public, so for example display of full-size images as part of image search could be infringing, or excerpts from news stories. He’s focused on the underlying copying that creates the database that is used to generate the search results. Up until the results are displayed, the copying is not expressive. If you ask Google how many books in the Stanford Library use the word “whale,” and Google gives you just a number as an answer, no one would argue that the display could infringe. You assess the merits of the display based on substantial similarity etc.

My comments: I like the proposal as a way of separating out different kinds of uses that have been confusingly lumped under the general heading of transformative use. It’s even a way to combat the pernicious dictum in Perfect 10 that Google’s use was more justified than parody.

Also, in combination with transformativeness as it’s more conventionally understood, this proposal would seem to make the first factor into a parabola—as the use becomes expressive of nothing at all, it becomes more fair; likewise as the use becomes expressive of something other than the copyright owner’s expression, it becomes more fair. Of course you are left with the problem that tweaking a different slider—say, the marketplace harm slider—could in theory make even a nonexpressive use unfair. Sag’s theory is a way of crystallizing the idea that database use isn’t an appropriate market any more than parody is an appropriate market for factor-four analysis.

The Role of Copyright Policy in the Enforcement of Copyright Licenses, Information Contracts and Technical Protection Measures
Abstract
Chris Ridder
Stanford Law School

His paper is about the ways copyright owners can limit uses. He focuses on licenses purporting to bind the public at large, not individually negotiated contracts. Background: Restrictions in licenses can be scope restrictions, or they can be covenants—e.g., agreements to pay royalties. Only contract damages are available for breach of covenants (as opposed to copyright remedies). Sometimes it can be hard to distinguish between covenants and scope restrictions: MDY v. Blizzard. The Terms of Use said that you had to be a human to play the game; the court said that this was a scope restriction—there was only a license for a human to copy the code into RAM, not a bot; he thinks this was a tough call. There can be conditions precedent to rights vesting—if the contract says “pay before you get the right to copy,” then the right doesn’t vest until you pay.

How if at all should copyright constrain conditions precedent? The GPL relies on conditions precedent: you can convey the code, as long as you publish the license and convey the source back to the community. Licensors may also use covenants controlling access, which implicate the RAM copy doctrine. And they use TPMs.

Copyright owners have discretion to choose whatever form they want, and opt in to whatever restrictions they want. For attribution, copyright owners could embed a scope restriction in the license; they could use a covenant; they could use a condition precedent like the GPL does; or they could use TPMs. If attribution is consistent with copyright policy, which he thinks it is, then copyright owners should be able to require it using any method they want. Contrariwise, regardless of the form, anti-reverse engineering terms should be unenforceable.

Creative use of copyright, including preemption and misuse, is the way to deal with this. Unconscionability can also play a role. The tough part will be figuring out what’s consistent with copyright policy. The form of the restriction should not be dispositive; rather, courts should look to the substance.

Q: Easterbrook says license rights are just between the parties, not against the world like copyright.

Ridder: Not true of modern mass market contracts, which apply to everyone who touches the work, making them a special case. The contract in ProCD was like that.

Sag: What about if the copyright owner offers, off-the-rack, a really restrictive $5 license that bars reverse engineering and critical commentary and everything else, and also a $500,000 license that allows such things—wouldn’t Easterbrook’s position be more attractive?

Ridder: Copyright policy still has a role to play.

Christina Bohannon: The touchstone is whether the contract interferes with copyright policy. In ProCD, the terms allowed price discrimination, and price discrimination is generally assumed to increase access to the thing being sold.

Ridder: The problem in ProCD was that the contents were uncopyrightable information.

Bohannon: But the price discrimination increases access to the information, which is consistent with copyright policy. (Whoa, I detect some sleight of hand here, since copyright has a theory about how access to facts is to be achieved.)

Ridder: You shouldn’t be able to get all the remedies copyright allows for material copyright won’t protect.

Rethinking Anticircumvention's Interoperability Policy
Abstract | Paper
Aaron Perzanowski
UC Berkeley School of Law

The DMCA interferes with interoperability much more than traditional IP law. The internal mechanisms intended to safeguard interoperability have largely failed. Reliance on antitrust to solve this problem is problematic. Thus he proposes a legislative fix to expand the scope of §1201(f).

Generally, IP permits and even encourages unilateral efforts to achieve interoperability, unless it entails patent infringement. The DMCA prohibits certain acts of reverse engineering that might be necessary for interoperability. Congress tried to fix this with §1201(f), which both allows reverse engineering for interoperability and purports to allow creation and distribution of circumvention tools for interoperability purposes.

So far there have been no successful §1201(f) defenses, largely because courts have done such a bad job interpreting it. Remeirdes is a particuarly bad offender in this—see the paper for details. Lexmark and Chamberlain, being decided on other grounds, didn’t offer much help.

But it’s not all on the courts. §1201(f) only allows circumvention of TPMs that restrict access to computer programs, as opposed to other sorts of works like movies and music. Why is access to those works important? The relation between iTunes and the iPod demonstrates why we might care about interoperability of programs/devices used to experience audiovisual works.

Antitrust as a remedy? There are three pending class actions against Apple in the US for having 70%+ market share; competition scrutiny of Apple in Europe. Legislation in France requires disclosure of technical information for interoperability, which Apple has attacked as legalized piracy. But he thinks that antitrust is unlikely to succeed, because each of the theories has weaknesses: tying (the iPod and the iTunes store aren’t clearly tied to one another and there are DRM-free options for filling your iPod); essential facilities for people who want to compete in the digital music or digital music player markets (access isn’t denied); refusal to deal (it’s generally ok to refuse to license one’s legitimate IP).

Partial solution: expand §1201(f): permit all sorts of interoperability, conditioned on adherence to/respect for other material restrictions on accessing/copying the works protected by the TPM. So you should be able to circumvent to play your rented video on a different, unauthorized video player, but only if your player adheres to the time-limited nature of the rental.

Hughes: What kind of access/copying controls are unrelated to the playback device?

A: Many TPMs rely on the ability to control hardware in order to impose restrictions, which is a problem. A 30-day-access restriction isn’t connected inherently to the hardware. If someone constructed an interoperable technology to play DVDs, §1201 should just make sure it didn’t allow the sort of copying CSS is intended to block. (Comment: So, bye-bye Linux player? Or Linux players would be ok, so long as they didn’t have record buttons?)

iP: Making Our Culture
Abstract
Madhavi Sunder
University of Chicago Law School

An expansion of earlier work into book form. Clay Shirky’s story about a little girl watching TV, who jumps up and goes behind the screen. Why? She’s looking for the mouse. Culture of the last century was symbolized by a Mouse: Mickey. This century’s mouse is different, a tool for making culture. Culture itself is radically shifting from commodity to community. It’s not off-the-rack, but bespoke—tailored for the self, like Harry Potter fan fiction that foregrounds Hermione or that resets Harry as Hari and gives him adventures on the streets of Bombay. Democratizing culture has a parallel in von Hippel’s Democratizing Innovation. Those who don’t have power over the stories that construct their lives truly are powerless.

The aim: to shift the single-minded focus away from efficiency and the production of more products of culture to the promotion of democratic values and pluralism in which each individual has the power to create the world—to put the “I” back in IP.

The “author function” defined the 20^th century: power and knowledge was controlled by a few (comment: or at least some of us pretended that was true—the challenge to the author predates the 21^st century). Not so anymore. Virginia Heffernan says: The only authentic response to a YouTube video is another YouTube video.

(I think that Sunder is, quite understandably, romanticizing these phenomena; looking at only the good stuff may be a necessary corrective to the way that mainstream media defenders want to compare only their best work, not their worst or their average work, to the average piece of “user-generated content.” Sturgeon’s Law: 90% of everything is crap, and UGC is no different, though perhaps it’s a larger pile. My main criticism is that calling practices of customization and talking-back new, as opposed to newly accessible and salient in an industrialized and internet-enabled world, makes them seem risky and utopian. Practices of distributed cultural production, and individualized interpretation of mass-culture products, are the baseline. It’s current IP that is new and creepingly (creepily?) imperialist. Subcultural reinterpretive practices, along with theoretical investigations of them, are a lot older than I am, and older than the 1976 Copyright Act.)

Traditional IP takes a micro view of production and ignores the macro context. IP is not just economic policy or trade policy; it is social and cultural. WIPO’s new development agenda focuses not on GDP but on freedom: health, equality, democracy, the right to participate in cultural life. As American IP scholars, we haven’t asked ourselves enough what implications this has for our understanding of law at home.

One possible critique of her own argument: This YouTube world is narcissistic, individualistic, and not about community or democracy: the Cass Sunstein argument bemoaning the rise of the “Daily Me” and echo chambers in which individuals surround themselves with likeminded individuals. For historically disadvantaged minorities, cultural democracy allows creation of diverse images; for many minorities, the “Daily Us” Sunstein likes is the “Daily Them.” Also, the proliferation of derivative works shows how people are engaging with one another in shared cultural forms and debates. Many of the benefits in political dissent hold true for cultural dissent as well.

Another critique: Alternative accounts of IP are dangerous because they lead to maximalism, shrinking the public domain. But recognizing the diversity of values is more likely to open up the public domain. New theories of property from personhood enhanced our ability to explain limits on some property rights.

Q: One argument: the internet is just “look at me!” That’s one issue, but the other is Andrew Keen’s The Cult of the Amateur. When everyone can be a moviemaker, what happens to Bergman and Woody Allen? If everyone’s an expert, then no one is.

Sunder: You’ll find examples of narcissism, but the constant viral nature of the discourse means there’s a back-and-forth. Even when someone just shows off their own life, there’s a speaking-to a broader culture, filling in holes in past representations. On the cult of the amateur: yes, we are moving away from the cult of the expert, in favor of a recognition of each person as a valued contributor of knowledge. (I think there’s a lot to be said here about “expert on what”—see the work on Wikipedia about people who contribute substance v. people who edit the articles for style, grammar, etc.)

Q: Look at China, where it’s mainly young men on the internet—who is making this culture? And which groups get left behind?

Sunder: Absolutely—this has been happening for some time, and the move to democratize culture follows on the heels of the Enlightenment itself; culture has lagged in recognizing the right to dissent and talk back. The technology has pushed cultural movements forward much more dramatically.

IPSC 2008: assorted papers

Some copyright, some trademark:

Copyright Statutory Damages: A Remedy in Need of Reform
Abstract
Tara Wheatland & Pamela Samuelson
University of California, Berkeley, School of Law

US statutory damages are largely open-ended. When the statute was written, Congress didn’t anticipate that they’d be a jury issue, but the Supreme Court decided there was a Seventh Amendment right to a jury determination.

The basic goal: compensation, when it’s difficult to prove actual damages or when the cost of proving damages is disproportionate to the damages to be awarded. The 1909 Act specified that they were not to be a penalty, and the 1976 Act retained the compensatory aim for ordinary infringement.

Result: excessive and arbitrary awards. One case awards $10K per infringed work, another $50K for an almost identical infringement. Jammie Thomas: $9250 per song, or $222K, for 24 songs that she could have purchased on iTunes for $.99, while some jurors wanted to award $150K per song.

Other results: chilling effects on many creators, such as documentary filmmakers; aggregate awards make secondary liability an even bigger risk, chilling technological innovation.

Constitutional due process lens: BMW v. Gore and its progeny, striking down punitive awards as excessive. Bridgeport v. Justin Combs Pub’g (6^th Cir. 2007): $3.5 million award on a common-law copyright infringement claim, struck down as unconstitutional. Most important factor under Gore: the reprehensibility of the conduct, which has many subfactors. In Bridgeport, only one subfactor was present—willfulness—and therefore only a 1:1 or 1:2 ratio was appropriate. Other factors: (2) disparity between harm to plaintiff and award; Campbell said that few awards exceeding a single digit ratio will satisfy due process, while Combs said the compensatory award was large and already included a punitive element; (3) comparison of award to ordinary civil penalties, which Combs said was excessive in relation to copyright statutory damages. The 6^th Circuit then refused to apply Gore to a statutory damages award, Zomba v. Panorama (2007).

Most other countries don’t have statutory damages at all, aiming to compensate, though some provide exemplary damages in extreme cases using a multiplier model. Some other countries—most of them having Free Trade Agreements with the US--have statutory damages, but usually require the plaintiff to demonstrate the difficulty of proving actual damages; provide discretion to reduce the damages when disproportionate; or have other limits.

Statutory damages should be based rationally on actual damages, except in egregious cases. Extra awards for deterrence may be appropriate, but they should reference actual damages, and deterrence is less important when actual damages are already high, defendant’s profits have been disgorged, and/or fees are already being awarded.

Juries should be asked to find certain elements before awarding statutory damages above actual damages. Thus, they should be asked to first find actual damages. Then they should be given guidelines for other mitigating and aggravating factors, such as reprehensibility.

The ultimate solution is statutory reform. Statutory damages don’t serve a legitimate function, especially since they’re only available to a small subset. Plaintiffs with unregistered works have the same problems proving damages, but they still have to do it.

If we retain them, they should be available to all plaintiffs, whether the works are registered or not, as long as they approximate actual damages and there’s discretion to award zero in cases of innocent infringement.

Q: It would be useful to look at the empirics of the deterrence argument—do statutory damages deter? Registered/nonregistered case outcomes would provide some evidence (though I’d note that there are many confounding variables there).

Q: Would eliminating statutory damages encourage “efficient infringement” like “efficient breach”? Or would fees remain an issue?

A: That’s a big rationale for statutory damages. (Comment: injunctive relief plays a big role too, especially for commercial infringement.)

Q: What if there are no actual damages? If people wouldn’t pay the plaintiff’s market price—if they’re in the deadweight loss of the usual copyright scheme—and if the defendant is infringing noncommercially, so you can’t award profits either.

A: She’s not sure (comment: reasonable royalty might be one).

Search Costs in Trademark Law: What Are We Searching For And Have We Found It Yet?
Abstract
Laura Bradford
George Mason University School of Law

Search costs are now the conventional explanation for TM. But that hides a problem: divergence about what search costs are. Recent court decisions seem to assume that any information that distracts consumers looking for brands they already know, or makes them think, is a search cost. This puts TM on a collision with the First Amendment and basic competition policy. This paper argues that the problem is not the utilitarian goal of lowering search costs, but with a failure of consensus about what search costs are.

The search costs theory was developed in response to a particular problem: looking for information about a set of options before purchase of any of them (sampling). First, there’s a mismatch between the economic conception and the colloquial understanding of how consumers search and what consumers look for. When consumers have fixed opinions about known goods and know what they’re looking for, they behave differently than consumers who are unsure. Second, the market when the theory was developed was more stable, so if you were looking for a car you could readily identify the set of choices; currently, the role of identifying the set of options one wants to investigate is much larger in search, and the original search costs theory was not designed to deal with that.

Trademarks can help overcome problems of imperfect information. Driving down the costs of search leads to more search and less ignorance. The role for TMs is simply to provide a basis of comparison. You compare the prices of A, B, and C for widget W. Later works examined buyer-seller information asymmetry. Advertising can act as a signal of quality, as can warranties, transforming unobservable product qualities into information buyers can use before purchase. TMs allow buyers to attribute the signals to the right seller. TMs don’t embody info buyers already know so much as they offer ways to categorize info.

Compare to the legal literature, such as Landes & Posner. Landes & Posner are primarily concerned with the purchaser who already knows what s/he wants. TMs convey information allowing consumers to avoid search altogether; search is a bad. The consumer doesn’t have to think about the product class ever again. That’s a very different model of search! Depending on whether you think more buyers are in Period 1 (their first and only search) or Period 2 (repeat purchases), you might prefer different versions of TM law. Period 1 leads you to want more comparative information, more information about relationships.

Areas of conflict include keyword ads; initial interest confusion; dilution (Herbrozac as a low-cost way of communicating that you have an herbal antidepressant for sale versus Herbrozac as a distractor from the consumer’s not-quite-laserlike focus on getting that Prozac); and nominative fair use versus sponsorship confusion, especially with the use of logos and distinctive scripts.

The legal version ignores the information asymmetry problem that search costs theory was designed to address. Moreover, search is not in itself a bad. Reducing ignorance before purchase is a good thing, and some search can help do that. Especially now, we have faster product cycles, faster entry and exit, proliferation of new product types and categories, proliferation of information sources; using brands to filter out all other information is not welfare-enhancing. There is also a big agency problem with giving TM owners authority over filtering information, as opposed to guarding against deception of the classic type. Their interests diverge sharply from consumers.

Lisa Ramsey: Another potential area of conflict is descriptive TMs, when some people familiar with the market know about the TM meaning, but new entrants might take the terms as descriptive.

Ann Bartow: Is your concern about consumers pretextual? When we care about search costs for consumers, we might want to regulate ads directly: require disclosures, ban false advertising.

Bradford: It’s hard for the government to stay ahead of ways in which consumers get information. The marketplace is impoverished if the government says “this is what you can say about your product.” As to sponsorship, she agrees: it’s in producers’ interest for everyone to be slightly confused about how much sponsorship/permission exists in things like movies. So government regulation might be useful to define the rules there.

Chris Sprigman: Antitrust is more willing to generalize in these circumstances. Could we say that the search cost from a nominative fair use is always less than the competition benefit?

Bradford: Yes—she’d be willing to say that “internal search costs”--burdens on memory from nominative uses--are a result of search, not a cost of search, and better for competition.

McKenna: Likes the idea of differentiating between consumers at different stages, though he imagines that consumers float in and out of the stages. One of the ways in which search cost discussion is impoverished is that it doesn’t account for what qualities we’re searching for—just physical characteristics? The image of the company? Without clarity on that, we don’t know what consumers are searching for. An unauthorized use may affect a consumer’s view of a company’s moral probity; do we care?

The Linguistic and Trust Functions of Trademarks: Law and Economics Perspective
Abstract
Ariel Katz
University of Toronto

The Landes & Posner story again: TMs condense complex meanings into concise and unequivocal identifiers, and provide an incentive to maintain consistent quality. He wants to identify a broader and distinct benefit—TMs are essential to the existence of some markets.

For credence and experience goods, information asymmetries may drive high-quality products out of the market—the market for lemons. If TMs allow TM owners to build reputations, then they can solve the lemons problem and make the market stable. This “trust function” provides a framework for evaluating various rules.

If rules are consistent with both functions—condensing meaning and enhancing trust—then they are good TM rules. If they are inconsistent with both, they’re bad. If they are consistent with one but not the other, they need much more careful examination and limitation.

Classic example: passing off. This frustrates both the meaning and the trust functions. Frustrating the trust function is more problematic than frustrating the linguistic function. The consumer who can’t rely on the mark can still look for other indicia of meaning. That leads to higher search costs, but the market still exists. But if wholesale passing off is allowed, including counterfeiting other indicia of origin, then the market collapses.

Comparative advertising: using another company’s TM in advertising is legal in the US if nonconfusing, whereas it is not legal in many other jurisdictions. The American approach is normatively robust because comparative advertising is consistent with both the trust and linguistic functions: comparative ads reduce search costs by providing more information (comment: this is exactly the kind of loaded statement Bradford wants us to deconstruct).

Initial interest confusion: does it increase search costs (as when I leave the highway because of a deceptive billboard promising McDonald’s), or does it decrease them (as when trade dress of a store brand enables us to find a cheaper alternative if we want it)? His analysis suggests that, regardless of effects on linguistic function, the trust function of the mark will remain because the consumer is fully aware of the facts at the time of purchase. That doesn’t mean that IIC should never be enjoined, only that the cost calculus is different. Similarly with dilution.

(Comment: we are all in TM now circling around different ways of saying: Certain kinds of confusion just don’t count. Nominative fair use was the harbinger of this trend, a useful corrective to broad confusion uber alles/confusion in the air decisions.)

Lemley: (1) Can you think of something that harms the trust function and not the linguistic function? (2) We also need to identify the source of the costs as well as of the benefits—you’ve described the benefits of TM protection more specifically, which is useful, but before deciding about IIC we need to know what the costs of barring IIC are.

Katz: (1) Not yet. (2) Informational benefits from non-TM owners are clearly part of this story.

Q: Dilution law could preserve the trust function. Argument: A dilution law maximizes the range of products on which to apply the mark, therefore the value of the mark is maximized, therefore the incentive to invest is maximized.

Katz: He had “mental search costs”/imagination costs in mind when saying that those search costs don’t effect the trust function, because you still are unconfused. (Comment: this is like saying that low taxes increase the trust function.)

McKenna: Comparative ads can affect the linguistic function by changing the content of the information. Comparative ads can convince you that the product you thought was high-quality actually isn’t. (But it doesn’t necessarily change the density—if density is even the right word here.)

Katz: He means the quick correspondence between a term and a product: the Chicago Bulls, not the 3-time NBA winners from Chicago.

McKenna: But the benefit of that term is that you then know what it means. Comparative ads can increase your uncertainty about what that compact term means.

My take on McKenna’s argument: a successful challenge to a TM meaning makes it like “democracy,” a compact term but one with so many meanings that it’s hard to grasp all at once. Which is to say that Katz’s argument works, but must carry with it a normative argument about the difference between the TM—the signifier—and the product—the signified, in which it is ok to contest the meaning of the signified even though we might condemn attempts to interfere with the meaning of the signifier. And that’s perhaps related to the difference between “contesting”—offering alternative meanings for the product—and “interfering”—which carries with it ideas either of deception (I fool you about whether my product really is Coca-Cola) or of free-riding (I piggyback on extant meaning). But that’s not an uncomplicated divide; an advertiser will often see comparative advertising as unjustified free riding.

Perhaps we can rebut the anti-comparative advertising position by pointing out that the comparative advertiser is making an argument about product attributes by the comparison: the TM owner’s product is not unique/uniquely valuable. The “boost” the comparative advertiser gets by the reference is justified by the fact that the comparative advertiser has a competing product, or a relevant product, to offer. The pure dilutive free rider, by contrast, is not making any argument about the original product’s attributes; it is happy for your original view of those attributes to stay right in place and cast their gentle glow over the junior user.

Copyright Beyond the Right to Copy: Translations, Adaptations and Creative Reworking in 19th Century Law
Abstract
Maurizio Borghi
Brunel University Law School

Translation right has four possible states. First, the statutes and case law were silent. Second, the translation right was statutorily debarred and/or judicially denied: freedom of translation. Third: statutorily conferred with reservations: the situation in most of the 19^th century. Fourth: copyright owners have translation rights.

Berne decided to extend the translation right. The first Convention, 1886, provided an exclusive right, but only for 10 years. 1896 provided the whole term, but the right lapsed if a translation wasn’t produced within 10 years of publication. 1909 provided the whole term, and then 1967 reintroduced exceptions for developing countries.

Various restrictions on the right: requirement of a notice of reservation; requirement of exercise; nationality requirements; etc. Both utilitarian and natural law approaches were offered. Translations are not, it was argued, acts of copying, but use of the author’s thoughts (Kant); they are independent works (many 19^th century legal scholars); they require learning, talent and judgment. Moreover, there was a cultural interest in the spread of knowledge overwhelming the author’s interest, especially since clearing copyrights was not easy internationally and thus the author was unlikely to be harmed by the absence of a translation right.

Then the wind began to change. Translating began to be seen as reproducing. The cultural change was influenced by the international context—France and Germany lobbied for extension.

On the eve of 1908, free translation survived in Russia (not a Berne member; often mentioned as a shameful outsider), but not much else.

What did we observe? A progressive extension of author’s control, along with a conceptual shift that changed copyright law dramatically. Authors’ control over spin-offs of their works emerged as a dominant concept. This was independent from different legal traditions and from philosophies: it happened in copyright systems and author’s right systems.

What can we learn? “Building upon” existing rights needs to be carefully examined, and we should compare a conception of copyright as a bundle of exclusive rights with a competing conception of copyright as a blend of conditional rights—including use it or lose it. (Comment: possible comparison with working requirements in patent?)

Q: But isn’t it fair to say that translation does cause damage to authors? A faithful translation of A Little Prince versus a translation that Anglicized/colloquialized the original can change the way the work is understood.

A: He agrees, but legal scholars of the early 19^th century didn’t, because copyright was a national matter and the translation reached a different market, not changing the conception of the work held by its original readers. (In other words, “damage” is a matter of baseline. To have damage, there has to be some interest of the author present in the foreign country.)

IPSC 2008

Stanford Intellectual Property Scholars Conference 2008

Usual caveats: these are my notes on works in progress; my attendance at panels is shaped by very idiosyncratic interests and I will miss a lot of great things by necessity; I don’t do patent law so don’t expect much from me there.

In the welcome session, Mark Lemley presented on the forthcoming Stanford IP Litigation Clearinghouse, which collects data about IP litigation across the country and allows you to play with the data in interesting ways, including looking at geographic and time trends, win rates, and damage amounts. They’ve done a lot of work to harmonize party names, for example, so you can find all the cases filed by a particular plaintiff even though there are multiple names used. Academics can get access to the Clearinghouse before its formal launch by emailing the Clearinghouse—contact the executive director.

Modern Trademark Law and the Right to Make Derivative Works
Abstract
Mark McKenna
Notre Dame Law School

The core of trademark protects entities from direct competition; he raises no serious questions about that. Around the core, there can be confusion from noncompeting goods; then further out are outlier doctrines like initial interest confusion and dilution. People focus on the outside ring. Beneath all that criticism, there’s a widespread acceptance of the second ring, confusion over noncompeting goods, and that’s where all the real junky doctrine is as well as most of the junky cases. We would be better off spending more time on confusion over noncompeting goods and less on outlier doctrines.

His focus: claims by trademark owners against others using the mark/similar marks for noncompeting goods. Justifications for such claims: (1) Reputational feedback—bad junior products will harm the senior mark; (2) control—we don’t require proof on (1) because we believe that without control, at some point quality may decline; (3) market preemption—this is a key argument at the time TM expands to noncompeting goods: if we don’t protect a mark owner against noncompeting goods, the mark owner won’t be able to expand into that market; and (4) free riding. (3) and (4) suggest that the TM owner ought to have a superior right to expand into new markets, e.g. Coca-Cola into snack chips, because the junior user isn’t doing anything valuable.

These are all about producer interests, not consumers. And they’re all claims about brand dilution—not about present harms, but about TM owner’s ability to operate in the future.

Can any of these claims be tested against empirical evidence? Brand extension and brand alliance (e.g., Intel Inside on a Dell) literatures. The brand extension literature approximates true source confusion: consumers think that the product comes from the senior user, because they’re told so in these studies. His question: Even when they’re confused, what’s the harm that flows from that? Likewise, the brand alliance literature approximates sponsorship or affiliation confusion.

The studies look for forward (spillover) effects on the new product, as well as reciprocal (feedback) effects on the original, including overall assessments (quality) and specific brand attributes (Neutrogena is mild). Most studies don’t make global claims, but McKenna sees certain themes emerging.

For extensions, forward spillovers to the new product depend on whether the original brand is a good fit for the new product. Backwards effects on perceptions of global brand quality: none. unsuccessful extensions may impact evaluation of future extensions, at least for lower quality core brands. Effects of extensions on specific brand attributes: this is complicated, but they can be affected by congruence and motivation; if Neutrogena began selling sandpaper, consumers might think Neutrogena was less mild as an overall brand, even though their opinion of the hand soap remained the same. Congruence has to do with whether brand attributes fit together. Congruent extensions benefit core brands; incongruent extensions hurt only if familiarity is high (though in that case consumers are less likely to be confused).

Alliances: They just don’t affect perceptions of the core brands. This casts real doubt on the harms from sponsorship/affiliation confusion. Even true source confusion doesn’t cause much feedback harm, and its costs may be offset by benefits of reminding consumers about the brand.

Thus, we aren’t talking about robust evidence of present harm. This is about the ability to make “derivative works.” This is more like copyright/other forms of IP because it is about allocating markets between producers, not anything about consumers.

Lemley: Does this depend on the marketing literature? Should TM be a norm-follower?

McKenna: He’d be happy to talk about norm entrepreneurship, but the doctrine makes empirical claims, and those claims don’t hold up. (Comment: and this is true even given that the studies took place in a context in which the law already protected TM owners against use on dissimilar goods—it’s not the belief in the connection that’s at issue; it’s the effects of that belief, which apparently haven’t been shaped by law.)

Jennifer Rothman: There’s still a role for consumers to be concerned about those uses, in particular with source confusion. It will influence purchasing choices, consciously or unconsciously, if a company starts calling its cars Sony cars. This is a harm to consumers.

McKenna: His goal is to get us to think about both pieces of the puzzle. They are tradeoffs. Where producer interests are really strong, we might be less concerned about consumers. Where producer interests are low, we need a compelling consumer-based story to maintain those rights. The extension literature suggests that consumers are much more nuanced and complicated than we give them credit for. In some cases, they will rely on the brand. But not in nearly as many cases as we assume, so let’s look for the factors that do prompt such reliance. (Comment: consumers might have a cause of action, but is there a reason Sony needs to sue? It’s GM that has the problem in Rothman’s hypothetical.)

Kathy Strandburg: What about brands as identity, community, etc.? People like having “Apple” stuff because they like the computer.

McKenna: It’s real, and poorly accounted for in current TM law. It’s hard to imagine retrofitting TM law to account for it. Sociological impact is true; but it’s also true that there are lots of “apples” out there. So he doesn’t know how we’d rebuild TM law from the ground up, looking at sociological meaning instead of product information, though dilution law may be pressing in the direction of accounting for soft meaning. If we don’t just give an exclusive right to “apple,” it’s very hard to figure out which “apples” are going to interfere with meaning.

Mark Janis: Does the literature tell you anything about “famous” marks?

McKenna: Marketing people don’t treat fame in the same way we do. They focus on marks as compared to other marks in their categories—dominance.

Rethinking the Patent System's Early Filing Doctrine
Abstract | Paper
Christopher Cotropia
University of Richmond School of Law

Remember that patent caveat above? It applies.

Various rules remove barriers to, or incentivize, early filing. There are numerous articulated benefits to this, from ending patent races to earlier patent expiration.

Technology goes through cycles, beginning with many technical solutions that are winnowed before eventual commercializations. An early filing date encourages filing before a lot of market information is present.

Costs of the “File early, file often” mentality in which people err on the side of filing: (1) More applications, more patents; always have a continuation on file, and have a lot of follow-on filing, negating the benefit of early filing for earlier expiration, since the Patent Office gives you credit for the time they take. (2) Underdevelopment of issued patents (referencing an article by Michael Abramowicz) because people wait for more market information and don’t develop the technology, and because of the relatively high cost of commercialization versus the cost of obtaining the early patent—an early patent turns into a cheap option with a relatively high exercise cost. (3) Encourages trolling, since people don’t have to invest in commercializing the technology; they can just file suit. (4) Leads to unclear patent boundaries.

Proposal: eliminate constructive reduction to practice and require actual reduction to practice, including observation that the invention works for its intended purpose, and this would need to be included in the specification. That pushes the filing date forward.

Comments focused on the effects on smaller firms. Cotropia made the point that in certain industries, such as pharmaceuticals, huge resource investments are already required to get to the patenting stage to meet other requirements such as utility. His proposal aims to develop additional market-relevant information.

Lemley: The underlying assumption is that there’s not net social value in having bunches of people come up with ideas and never commercialize them. Semiconductor industries, for example, have a lot of failure to reduce to practice. Do we benefit, in a theory of the firm sense, from being able to separate out invention and purchase it from people outside who are just able to come up with ideas?

Cotropia: Those ideas may be beneficial, but patents might not be the right way to do it. Contracts could monetize the relationship between the idea person and the prototype person. (So now Cotropia is walking towards trade secrets.)

'Gift Failure' versus 'Market Failure'
Abstract
Wendy Gordon
Boston University School of Law

We know our current copyright systems are wasteful, but we have thought that they were less wasteful than the practical alternatives. Is it time to look at alternative models, and not wait for market failure before looking outside the market? One possible default is the commons, a starting point for figuring out where social and economic relations should go. With the growth of the internet, the failure of patent, the importance of lead time even in the absence of IP, and the development of Creative Comments and the GPL, it seems time to start looking at nonmarket models more systematically.

Gordon here focuses on gift. For 3 kinds of intangible products, gifts should be the starting point. Nobody imagines that a perfect market exists; nobody imagines that a perfect gift exists. But that concept can be a good place to start.

Her 3: (1) High culture/high art; (2) peer science; (3) software programming. (1) and (2) persistently involve people who do the work saying that they’re producing gifts—the scientists and artists involved constantly talk about gifts, from the sense of a muse giving them ideas they wouldn’t otherwise have to the desire to share and the experience of pleasure in sharing with others. (1) and (2) are areas in which doing the work is the point of doing the work, not to make money or get famous.

They’re not indifferent to money or prestige, of course. But direct payments can hurt quality—the work of Teresa Amabile shows that direct payments for art degrade performance while increasing quantity. See also Punished by Rewards. Nonetheless, we need to recognize the need of the producers to eat, so we sometimes need rewards, direct or indirect. The research suggests that it makes a huge difference how the rewards are provided—directly or indirectly; slowly or fast; as a return gift—these things can sustain the artist’s creativity without weighing it down.

Community matters, especially to the impecunious poet or struggling writer. Some people need to respect a bohemian, less profitable lifestyle and freely critique the work, or other people will not be able to stay in that lifestyle long enough to become successful as artists (or economically). What encourages and inspires poets/scientists is the work of other poets/scientists. Create a community, and art and science flow from it. (And people in the community may have psychological reasons to reject commercial success.)

Why these fields and not others? Because some situations induce gift failure, and if you know in advance there’s going to be gift failure then there’s no point in using gift.

Definition of gift: there’s no tit-for-tat, bargained-for remuneration. It fits the need for a reward that isn’t exactly a reward.

Is this all hypocrisy? Any contradiction can be explained away—scientists repress their need for prestige/credit. But there is some bad faith. Jeff Koons is interesting because he takes advantage of the culture of modesty in a way that is openly exploitative.

The big problem with gift is reciprocity, the pressure to pay back. The GPL says “we don’t care about reciprocity, just use our stuff.” But in gift economies generally, the gift must circulate, and we still need to give our creators the means to eat. Gordon’s model: soft reciprocity. Jean Schroeder has written that contract is superior as a meeting of equals, while gift is a relationship of subordination. In all anthropological studies where gift is exchange, people have things they value and gift is about getting rid of what you don’t want by tricking the other party.

But gift can also be “keeping while giving”—especially when it comes to IP, because IP is intangible and inexhaustible. Through attribution and memory, people know where the gift came from.

Should we eliminate patent and copyright entirely? No, that’s an example of gift failure. A gift should be voluntary for the giver and the receiver, and have soft reciprocity to take the sting out.

What about the GPL? That’s a conditional gift: you can copy my software if you do certain things. Reciprocity doesn’t naturally arise in the recipient; it forces the recipient to put his own stuff in the gift world. But that’s a tolerable distortion—it doesn’t force destructive, Veblenian competition on the givers.

Eric Goldman: What about the broader relationship between giver and donee? He thinks of gifts in a personal context. How can this work in a commercial context? Reciprocity may break down if there are few social contacts between the parties.

Gordon: She’s not looking for the true or essential gift, but some model that will create and sustain creative communities. The personal gift is a way to take the sting out of reciprocity—the perfect gift to someone you know well shows that you are taking account of them as a person, recognizing them. When you generalize, the gift is no longer tailor-made, but there are other ways to eliminate the sting.

In a truly commercial realm, there is likely to be gift failure.

Q: What about managing boundaries, as with commercial and noncommercial scientists?

Gordon: Gifts are a way of managing boundaries. If you accept this gift, you are part of our community, and for the GPL that means a commitment to certain kinds of noncommercial use.

Niva Elkin-Koren: Why describe all these as gifts? You assume ownership of a gift, and the right to withhold it.

Gordon: It can be a labor relationship, not an in rem relationship.

E-K: What do you gain by calling it gift instead of “communicate, share, care”? Gift implies something that is exclusively mine that I can possess or withhold. When I share my opinion, it’s not a gift. When I share my scientific discovery, it’s not a gift because there’s no give and take.

Gordon: This relates to E-K’s critique of Creative Commons as overemphasizing copyright/ownership. Gordon doesn’t see a divide between “share” and “gift.” There is a danger of making people too conscious of “property” when gift might have been natural/organic without the legal structure. With the GPL, a gift success, programmers were already very conscious of the IP regime. For fine artists, who knows?

Bartow: Look at gifts to universities as gifts that are badly motivated—publicity, help the grandkids get in.

Gordon: If all a gift does is hurt other people in a prestige competition, that’s gift failure. If it ends up with a new lab built, that can be a gift success. Prestige/publicity isn’t a bad thing, especially if people aren’t compelled to give.

Reputation Regulation: Rationalizing Internet Intermediary Responsibility
Abstract | Paper
Frank Pasquale
Seton Hall

This paper could be called “the law of Google, eBay and Facebook.” We love Google, but what if Google decides to make Google Books like Lexis or Westlaw, so that you have to pay to get access? What if Google manually changes rankings by downgrading sites that sue it, or upranking sites of business partners? Should Google at least have to disclose this? Should eBay be able to favor certain sellers, like Disney, and disable search functions for competitors’ merchandise? Should law be part of making eBay a level playing field? Should Facebook be able to kick members off without due process?

Intermediary markets are very concentrated: eBay, social networking by country, Google in search. The new neutralities: net nondiscrimination, devices (iPods), operating systems, and intermediaries. Regulate intermediaries when competition is unlikely to develop, especially search engines and auction sites. It is important to recognize social and cultural effects, not just economic analysis.

Dominant search engines and social networks are becoming like other entities who control other layers—the concerns are for common carriage of data; discrimination based on the source of data; transparent routing; and vertical integration—“will Comcast charge more to let you watch YouTube?” is the same sort of question as “will YouTube cut special deals with Universal and not with Fox?” There are also political issues with control of substantial methods of communication by dominant entities. Pasquale’s overriding point is that net neutrality arguments map really well onto Google and other dominant intermediaries at the content level.

So, for example, there should be due process for banning on social networks, and data portability to make it easier to leave. Auction platforms are less troublesome; note that eBay has added substantial elements of community and democracy, to moderate the control imposed by being a “company town.”

Intermediaries are cultural voting machines. If we’re concerned about transparency in voting machines, we should have the same concerns about online intermediaries. We shouldn’t rely just on the market and the black box of algorithms subject to hidden manipulation.

Lemley: His worries about regulation cover more than just expertise. Capture is a huge problem in telecom. Restrictions on innovation are also troubling. The more you advocate a model that is beyond openness/data portability, but allows the government to determine what you put on your site and in what order (e.g., TM owners allowed to attach info to the search results) the more you affect innovation. Think about levels of intrusiveness.

Pasquale: Interoperability is so hard to arrange—like Google and AdSense data portability—how hard is it to reveal that data? It might be an iterative process rather than a one-off mandate.

Q: Ten years ago the referent would have been Microsoft, not Google. Fun shift to note? Separately: the thing about network effects is that replicating structures can be wasteful, so regulation is a better substitute. But that looks like the costs of all software—a declining marginal cost is a characteristic of software generally, not just market dominant software. So what does that mean for regulation? Open access reinforces network effects and reinforces the dominance of the existing platform.

Pasquale: That’s true. But he doesn’t want to accept a purely economic framework for social networks and search engines. Search engines have an advantage over legacy networks like credit reporting bureaus; should we level the regulatory playing field as between them?

Susan Crawford: The carriers have successfully convinced us they’re content companies, and that’s quite a rhetorical move, because for 100 years we treated them as common carriers. There could be social reasons to treat general-purpose, physical infrastructure differently from everything else. But she doesn’t agree that these internet intermediaries are the same as the telephone or the telegraph. Carriers are carriers, and net neutrality is about pushing them back into the appropriate category, which is carriers and not content providers.

Pasquale: He doesn’t want to apply common carrier rules point for point, but to think about commonalities.

New article on intermediaries and access

Power Without Responsibility: Intermediaries and the First Amendment, 76 George Washington Law Review (2008)

As Jerome Barron recognized in his classic article, the First Amendment rights of speakers and audiences must be evaluated in the contexts of their relationships to larger structures. To the extent that there is a right to speak or a right to hear, who is on the other side of that right? The system of free expression is not atomized, but pervasively structured by conduits such as television broadcasters and Internet service providers ("ISPs"). This article focuses on (potentially) harmful speech as it relates to claims for greater access to those conduits. Any effective proposal for access rights should deal with the recruitment of intermediaries to police and deter unlawful speech and the many and varied ways in which individual speakers will violate existing laws.

Little Miss Can't Be Wrong

Story from Counterfeit Chic. No great commentary, I just couldn't resist the chance to use the post title. Plaintiff has also sued makers of the "Little Losers." The claimed mark, however, strikes me as highly descriptive. Is plaintiff also planning to go after Target's Little Miss Cupcake shirt?

The market for pomegranates

Pom Wonderful LLC v. Purely Juice, Inc. (C.D. Cal., July 17, 2008)

Pom Wonderful sued Purely Juice for falsely advertising 100% pure pomegranate juice when in fact the juice was heavily adulterated with sweeteners and, in some cases, contained little if any pomegranate juice at all. In earlier proceedings, the 9^th Circuit affirmed the denial of a preliminary injunction because the facts weren’t sufficiently developed and there was some uncertainty about what “100% juice” means under FDA regulations.

Pom Wonderful proceeded and recently won at the district court on remand. The tone of the opinion suggests that defendants’ evidence was ultimately so bankrupt that the court might have been a bit discomfited by its prior denial of a preliminary injunction. But sometimes you do need all the facts, and Pom Wonderful certainly brought them to bear this time around: No matter what “100% pomegranate juice” means, it doesn’t mean what was in those Purely Juice bottles.

Pure pomegranate juice has high levels of polyphenols, which have numerous claimed health benefits. The current research does not show the same benefits for juice with added sugar and other adulterants. Pom Wonderful has played a major role in disseminating these health claims and is a market leader in “super premium” juices.

In April 2006, Purely Juice began selling a “100% pomegranate juice” product claiming to have no sugar added. Its website called the juice “all natural” and promised “NO added sugars or sweeteners.” The juice’s sugar allegedly came from natural fructose. Purely Juice made similar health claims to Pom Wonderful’s, but marketed itself as a lower-priced alternative.

Unlike Pom Wonderful, Purely Juice isn’t a grower. It pays a broker, Perma Pom, to buy pomegranate juice concentrate from suppliers in Iran (hey, is that legal?) and other Middle Eastern suppliers. In 2006, industry participants were generally aware that there was a problem with adulteration of Middle Eastern pomegranate juice. The court found that Purely Juice knew or should have known of these problems (though of course that’s not necessary for a Lanham Act violation). Moreover, throughout the relevant period, Purely Juice paid well below market rates for pure pomegranate concentrate.

Pom Wonderful became concerned that Purely Juice’s lower prices were enabled by adulteration. Pom Wonderful secured numerous test results substantiating this concern. The first concluded that the Purely Juice sample tested “contains little or no pomegranate juice” and was in fact mostly corn syrup and other fruit juice. Pom Wonderful complained to Purely Juice, which maintained that its own tests found that its juice was within acceptable legal parameters.

Pom Wonderful had seven independent labs, including the “leading juice authenticity testing laboratory in the United States,” conduct additional scientifically accepted tests specifically designed for pomegranates. The unanimous consensus was that “100% pomegranate juice” was false because the juice had added sugars and other fruit juices, and its levels of polyphenols, antioxidants, and potassium were correspondingly far below what ought to have been present in pure pomegranate juice.

Purely Juice’s own testing also detected high levels of sucrose and corn syrup in its juices—results it had in hand when it responded to Pom Wonderful’s complaint with a denial. Purely Juice repeated its tests on numerous different lots, and got the same results each time; the testing lab concluded that the lots had “little or no pomegranate juice.” After the last round of testing, Purely Juice held some unshipped lots of juice, but it didn’t recall any of the already-shipped products, though those were the lots that it had tested and found adulterated. (The court noted that other competitors whose lots Pom Wonderful also tested and found wanting appeared to take the problems more seriously, though again we aren’t grading on a curve when it comes to the Lanham Act.)

After filing the complaint, Pom Wonderful continued to test Purely Juice lots, and continued to find problems, though from the quotes in the opinion there appears to have been more pomegranate in the more recent batches.

The court accepted expert testimony that pomegranates have scientifically accepted ranges of various characteristics, which can be used to distinguish pomegranate juice from other juices. Moreover, sucrose and corn syrup don’t occur naturally in pomegranates—shocking, right?—and the Purely Juice products were therefore adulterated. Purely Juice attempted to argue that non-US pomegranates have different chemical profiles; the court was not convinced, pointing out (among other things) that corn syrup wasn’t a component of pomegranates even on Purely Juice’s evidence.

What about the FDA regulations that had injected uncertainty into the meaning of “100% juice” in the earlier proceedings? The FDA regulates “Brix,” which measures the amount of dissolved solids (sugars) in a given amount of liquid. Brix measurement, however, is used to prevent dilution of fruit juice with water. It doesn’t distinguish between fruits, the issue here. In fact, the court held, Brix is “almost entirely irrelevant in detecting the sophisticated forms of dilution and/or product alteration made possible by advances in modern [food science].” Only chemical analysis can determine the authenticity of juice.

Thus, Purely Juice’s advertising was literally false; deception is presumed.

The court also considered consumer perception: as you’d expect, consumers of super-premium juices are highly concerned with product ingredients and have even contacted the parties asking about added sugars. Moreover, the relevant consumers are highly concerned with health benefits. Thus, “100% pomegranate” is material. (As the court noted, the fact that “100% pomegranate” goes to the “very nature” of the product would have been enough to justify this conclusion.)

The Lanham Act violation was coupled with a California state law false advertising violation. California law imposes a duty of reasonable care on advertisers; defendants shirked that duty.

Defendant’s president and founder was individually liable, jointly and severally, with Purely Juice.

The court concluded that Purely Juice would have lost most or all of its market share had it truthfully labeled its juices. The court accepted defendants’ damage calculation of approximately $1.2 million dollars in lost profits for Pom Wonderful during the period for which adulteration was proved, plus over $300,000 in profits for Purely Juice.

In addition, the court granted injunctive relief, noting that the fact that Purely Juice imported its juice made it especially likely that the false advertising would be repeated unless enjoined. The public interest strongly favored an injunction: Unadulterated pomegranate juice may have significant health benefits, while adulterated juice deprives consumers of those benefits and the adulterants may even harm them.

On this record, the Lanham Act did exactly its job: attacking a practice that consumers could not detect for themselves, and whose existence would create exactly the “market for lemons” that distorts markets and destroys high-quality products were it not for the requirement of truth in advertising.

You can read Purely Juice’s press release (we never intended to mislead anyone, and there was never any safety danger) here.

Language Log on "cloud computing"

A linguistics professor on the allowance of Dell's claimed trademark for "cloud computing," which I agree is descriptive at best without secondary meaning, and probably generic. The linguist at the end comes close to Lisa Ramsey's argument that descriptive trademarks shouldn't be registrable, though I wonder what he'd think of Coca-Cola.

Why create derivative works?

Shannon Hale, cocreator of Rapunzel's Revenge, explains her reasons in an interview at Girls Read Comics:

With Rapunzel’s Revenge, the fun is taking a well-known fairy tale and unraveling it. The advantage of this instead of just writing an completely original story is the Grimms’ version is in constant dialog with ours, asking questions and creating complications that wouldn’t be there otherwise. It’s also satisfying on a personal level, because Rapunzel is to me the most irritating fairy tale of all time and I couldn’t let it stand without having a snarky thing or two to say about it.

Copyright and California's anti-SLAPP law

Duncan v. Cohen, 2008 WL 2891065 (N.D. Cal.)

Duncan sued defendants, including the Sierra Club, based on Thomas Cohen and Kristi Cohen’s attempts to make a film of Duncan’s book The River Why. He alleged copyright infringement and various state-law claims.

The court first rejected the argument that California’s anti-SLAPP statute applied to federal claims. It then reached the same conclusion as to the state law claims. The threshold question is whether the state-law claims arise out of protected activity—the exercise of free speech. Defendants argued that the lawsuit attempted to limit free speech on a matter of public interest: the “message of environmental activism set in a coming-of-age story” found in Duncan’s book. Then the court took what I think is clearly a wrong turn, holding that the lawsuit imposed no limit on the Cohens’ ability to spread their message, because copyright laws don’t restrain ideas—only expression. This is wrong for reasons most famously set forth in that other Cohen case, but more than that, the state-law claims aren’t copyright claims and can’t be in order to survive preemption, so the analysis needs to look at the elements of the state-law claims and whether they’re based on speech on a matter of public interest. It might still be correct to say that the anti-SLAPP law doesn’t apply, but the reasoning was sloppy. More persuasively, the court noted that defendants claimed rights to use the book not based on free speech, but based on a specific contract between the parties.

A prior case, Kronemyer v. Internet Movie Data Base, Inc., 150 Cal.App.4th 941(2007), found that a right of publicity claim was subject to the anti-SLAPP law. There, IMDB’s decision whom to credit as a producer of a film was an exercise of free speech. The court distinguished the present case, somewhat murkily, because Duncan’s right of publicity claim was based on the Cohens’ “use of his name to solicit funds for production of a film in violation of his claimed copyright,” not on their use of free speech. Despite specific references to films in the anti-SLAPP law, plaintiffs can sue filmmakers without being subject to that law’s heightened requirements as long as they’re not targeting free speech.

This could ultimately be the right result, but I’m disturbed by the cavalier treatment of the arguments here—this isn’t a case in which the caterer is suing the filmmaker for failure to pay the bills; Duncan is suing to stop the production of a film on a matter of public interest. If he is successful, his damages would be based on the creation and dissemination of a work of speech; he could receive an injunction against such creation and dissemination. As an initial cut, that sure seems to fall within the anti-SLAPP statute—although the particular claims at issue might well ultimately involve commercial speech or some other exception to the law.

The law of Star Wars

A new UK decision on costume copyrightability features Lucasfilm versus a seller of Stormtrooper helmets. As one commentator says, "Think of the end of The Empire Strikes Back; neither side has exactly come out with what it wanted, and everything has been set up for a sequel." Things I noted: the way the court grapples with the problems that US courts know as the "useful articles"/separability issue, determining in the end that the helmets are a product of prop design rather than unconstrained artistic judgment and thus not copyrightable in the UK. But the court also rules that the same acts that didn't infringe in the UK infringed in the US, which seems correct to me at first glance, given that I think most US courts would consider prop design artistic rather than industrial design under Brandir. Even our artistic judgments are affected by the commercialization of our culture!

Also, by finding a violation of US law, the court raised the questions of what damages would be available, and whether US cost-shifting rules or UK rules would apply. This isn't my area, but those questions seem central enough to US copyright rules that I'd apply them as part of the substantive law. (The finding was that the helmets infringed design drawings; were they registered? Whether or not they were, the damages claimed in an unenforceable US judgment of $5 million in copyright damages alone seem wildly unreasonable.)

Separately, the court rejected a passing off claim based on the idea that, by representing that the Stormtrooper helmets at issue were made from the original molds, the defendant necessarily implied that they were Lucas-licensed (not true):

It seems to me that such a mis-statement, if made, would be capable of amounting to passing off. However, I do not consider that it was made in the present case. The website makes some wrongful claims. It claims that Mr Ainsworth was the creator of the original helmets and armour ... when that does not correctly describe the situation. The word "created" in that context suggests design creativity, and he did not contribute that (or not much of it) – he made the Stormtrooper helmet and armour to someone else's design. However, that does not amount to any misrepresentation about licensing. I have looked at the entire website. It certainly puffs the alleged originality of the products (in that they were derived from the same moulds) but the emphasis is on Mr Ainsworth and his acts. Neither the extracts referred to above, nor anything else in the website, expressly or impliedly suggests that what he was doing was with Lucas's consent or licence. The references to authenticity are all references to the fidelity of the product to the original design, having been made on the same moulds or tools as the film's original.

I wish our courts would be as careful. And on reverse passing off:

He has not pretended that Lucas's goods are his; nor has he pretended that the goods that he was selling, which were in fact his own, were Lucas's. He says what he is selling are his own, and he is proud of them. What he says is true so far as the origin of the goods is concerned. It might be false so far as the creation of the original design is concerned but that is not misappropriating Lucas's goodwill in the manner required in passing off. What he has done is different – he has described himself as the original creator of the original goods. That may be untrue, and it may amount to one or more other civil wrongs (as to which there was no argument and there is no claim), but it does not amount to passing off. It is a (mis)statement about him, not about the goods he is selling. He does not sell his goods by reference to someone else's goods or someone else's goodwill.