Justice Scalia’s most recent entry in the kulturkampf

From today's decision:

We doubt, to begin with, that small-town broadcasters run a heightened risk of liability for indecent utterances. In programming that they originate, their down-home local guests probably employ vulgarity less than big-city folks; and small-town stations generally cannot afford or cannot attract foul-mouthed glitteratae from Hollywood.

I can't really help but think about "real Virginians" versus, you know, me and people like me, who only live and vote here. But more broadly, who exactly does he think invented the earthier terms, if not the salty salt of the earth?

New article on filters and fair use

Michael S. Sawyer, Filters, Fair Use, and Feedback: User-Generated Content Principles and the DMCA: Focuses on the negative implications for fair use of private UGC principles providing for prescreening by video sites, including the disappearance of counternotifications, the inability of the public to know what’s been filtered out, and the “digital sharecropping” of fair uses. The upshot: “as the interests of copyright owners and service providers begin to merge (creating a shared revenue stream through the combination of the copyright owner’s content and the service provider’s user base and distribution system), no player is left to pursue the interests of individual users” (footnote omitted). The author advocates that human screening be added to automated review before UGC is removed from a site.

Wink, wink, nudge, nudge

From Richard H. Thaler & Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness:

[L]et’s start with a simple example inspired by a wonderful poem by Shel Silverstein (1974) entitled "Smart." The poem is fun as well as brilliant, so if you have a computer nearby, we suggest that you type "Smart" and "Shel Silverstein" into Google and read the poem now.* We will wait for you to get back before continuing.

*Silverstein had personally given Thaler permission to use the poem in an academic paper published in 1985—he said he was tickled to see his work appear in the American Economic Review—but the poem is now controlled by his estate, which, after several nudges …, has denied us permission to reprint the poem here. Since we would have been happy to pay royalties, unlike the Web sites you will find via Google, we can only guess that the managers of the estate (to paraphrase the poem) don’t know that some is more than none.

Some thoughts: (1) This is a broken system. (2) Are Thaler and Sunstein inducing infringement? (3) Thaler and Sunstein, on the next page, immediately recount the plot and structure of the poem; given that Silverstein uses pretty basic language, there’s a lot of language overlap. This is not to suggest that Thaler and Sunstein infringe—to the contrary. It goes to the question whether copying the poem in the context of an analysis of apparently irrational economic behavior should even count as infringement, or at the very least should be fair use, given that the purpose of the book is so different from the purpose of the poem.

New book on privacy

Ian Kerr sent me a copy of his new edited volume on privacy, identity, and anonymity, Lessons From the Identity Trail: Anonymity, Privacy and Identity in a Networked Society. It’s Canada-focused but ends with a bunch of country-specific pieces on the law of anonymity in various places. My favorite piece was a very interesting essay by Jane Doe on anonymity for rape victims, discussing the way anonymity is presented as protection for women, because to be a woman is apparently to be endangered. Similarly, another piece by Jane Bailey looks at the implications of webcamming for women. Available online, and also from Oxford.

IP/Gender: panel two

Panel Two: New Forms of Organizing: Women Reinterpret the Legal, the Educational and the Political

Ann Shalleck, Moderator: Political aspects of fan cultures: how does law form part of the context; what do female fan cultures have to teach us about public advocacy, scholarship, and teaching? Given that most people don’t litigate even legal issues, how do we place fan cultures within the overall cultural background?

Jordan Gilbertson, We Will Not Be Ignored - Integrating Fan Created Works Into the Traditional Copyright Classroom: The case method and the Socratic method are the main approaches in law school. Inherent inadequacies in the methods; voluntary participation supplements them, but does not fix them. Studies conclude that female students participate less than men. The Socratic method focuses on characteristics associated with men, including hostile and confrontational dialogue. Adding volunteer opportunities doesn’t help because of fear, professorial bias, lack of interest in the battle for classroom dominance, and silent protest.

Case briefing has not been subject to as much criticism. Feminist pedagogy is basically about stories: using cases is using stories.

Proposes using fanworks to teach copyright. (1) Fanworks are on the cutting edge of IP law. Non-fan students will go out and do IP law. They need to know what’s out there no matter what side they’re on. (2) Aspects of fandom are dominated by women; this allows the class to keep the interest of women.

Gilbertson took us through various issues with a Doctor Who drabble: access is clear, but is there substantial similarity? Does it matter whether you need to know the context of the fandom to recognize the characters? If infringing, is it transformative? Is it fair? She did the same with Lim’s vid “Us.” And finally: “Ralph Wiggum” by the Bloodhound Gang: quotes from 19 seasons of The Simpsons make up the entirety of the lyrics.

Karen Hellekson, Intellectual Property, Transformation, and Academic Journals

Here for Transformative Works and Cultures: Submit early and often! Hellekson’s background: STM (scientific, technical and medical) publishing. Creating a journal involved a bunch of tough decisions about distribution, copyright, and so on. OTW’s liberal take on fair use and remixing was an important foundational principle, though the editorial team is totally separate and has independence in publishing.

One goal: record the history of female-dominated fan cultures, which were getting erased in discussions of the “new” creations of largely male cultures. Another: link fans and scholars; some people are both, but if you’re just one or the other the journal wants you too. Fans write meta; academics write criticism; those are the same things. Indeed, fan fiction and other creative works are also criticism. Fans and academics are immersed in their own texts and get deep references. Example: Rachel Sabotini’s essay on fans and gift culture.

As an editor for the STM industry, she has standing instructions: cut all song lyrics. Get rid of figures published elsewhere, even if the author created that figure; the author likely signed over the copyright to a journal and would have to pay $500 to reuse his/her own figure. Someone with no background in law is generally deciding what can be published; there will not be a discussion with lawyers about marginal cases, in many cases—the thing will just be cut. The press will not pay permission fees; the author may have to pay. Publishers are extremely risk-averse. Some authors can reinstate lyrics if they go high enough up with the publisher, but that’s not normal. Legal chill is pervasive. One media studies publisher won’t permit dialogue quotes, episode titles, plot summaries, or screenshots. What kind of analysis can you do without those things?

Work is not being done because it’s unpublishable, and that’s where TWC comes in. We’ll take your screenshots, your embedded video, your color shots (which in print are so expensive that authors need grants to get it done). This is a cultural service. Moving beyond self-censorship and beyond print. Medical articles: often there’s a video extra showing how a surgery is performed; in print, it can’t be integrated with the article.

STM pioneered open access: rigid criteria for openness, not just free availability on the internet. Public Library of Science-Biology is the best-known. PLoS sustains itself by charging a page fee for publication, which is usually paid by grantors or institutions. TWC chose Creative Commons Attribution-Noncommercial licenses. PLoS-Biology doesn’t have a noncommercial restriction, but TWC chose NC in order to make the point that enough people are making money off of fan cultures and that the least someone who wants to make commercial use could do would be to ask. TWC will say yes.

Why give TWC the right to license? Because authors may disappear, and the availability of TWC as licensor helps preserve use rights. Because it’s standard practice in the industry, and familiar. There’s no moratorium on republishing elsewhere, no embargo period. Open access works are 3x more likely to be cited. Remixing has occurred: People have made PDF versions.

TWC also chose an open-source journal platform. It permits commenting on articles, which is important to the audience and the community. The conversation will be public.

Current print models stifle creativity. The alternative is freedom, enabled by open access.

Laura Murray, Boys and Their Toys? On the Gender Dynamics of Copyright Activism in Canada: Copyright reform legislation in Canada faced a public outcry. Gratifying for activists, but Murray found herself disengaged from the discussion, including the very large Facebook group that formed, Fair Copyright for Canada. She started to think about gender issues: there weren’t many women speaking out. She interviewed participants in copyright advocacy and IP professors, and analyzed a recent Canadian film, RiP: A Remix Manifesto.

IP academics: 34% women; public interest advocates, 34% women; Facebook group, 37% women. Different pattern when it comes to discussion: women represent 11% of Facebook page discussants; men make more posts, so the percentage of posts by women is lower. Women tend to make their points and then retreat. Polls showed 49% opposition to reform from men, only 29% from women. Question from public interest advocate: are women disproportionately uninformed and uninterested in copyright? Or have they formed restrictionist views, making them less likely to oppose a restrictionist copyright amendment?

Librarians have carried the torch for users’ rights for many years, and librarians are a heavily female group. Women have cellphones too and have reasons to want to unlock them.

Facebook participants are highly invested—one man talks about “cool innovative products that let you do impressive technological things,” another about interference with stuff that is his. Gendered claims to property ownership and to display. RiP: Rhetoric of “war” over ideas. Politically astute about a certain type of audience, but also politically blind to the ways in which its rhetoric is exclusive.

Why don’t women change the rhetoric? One male undergraduate says: women don’t care whether downloading/cutting clips is illegal. They don’t say “screw the rules,” they just do what they want—they’re more carefree, he says, but he doesn’t know whether that’s lack of maturity or lack of understanding. Here’s the problem with women’s silence: it’s often interpreted by men as immaturity/ignorance.

RiP: There’s a lot of fandom in this film—a boy filmmaker in love with/fanboying Larry Lessig (“the coolest lawyer in the world”). Student filmmaker: having chosen to make a particular speculative documentary about copyright law, he found that women’s perspectives didn’t fit in. They were too conceptual, too diffuse. He wanted to focus on technical questions that showed how severe the copyright bill was. He didn’t recognize that it was his choices that made their perspectives not fit.

IP professor: Women self-censor more. They aren’t willing to speak unless they’re totally sure of their expertise, while men go out on a limb.

RiP’s rhetoric is about community: a “posse” creating this movie together. Lessig uses the language of community too. Women say they feel more comfortable in community—so why not this one? Mystification about what causes community. It’s not tech. These student filmmakers were asked to create this film by their professor. That structure disappeared in the final product.

The main character in RiP is the DJ Girl Talk, which name is ironic given that there are only a few speaking girls in the whole long film. One: Marybeth Peters, the US registrar of copyrights who says she’s never seen a mashup or downloaded a song or used a computer at home. Two: a girl in bed, Girl Talk’s girlfriend (she gets a couple of lines). Also Girl Talk’s mom; a Brazilian girl. Paris Hilton also shows up, and the filmmaker expresses his fandom. Then Girl Talk makes the analogy: DRM is like a urinary tract infection. But has anyone involved in making this film ever had one?

The film asks the question: who would have an issue with Girl Talk’s music? Peters is then immediately presented, even though she doesn’t have an issue (and is presented as awed by Girl Talk’s technical acumen)—the people who might object are the largely male copyright owners of the works Girl Talk reuses. But Peters is given as the representation of the heavy, the bad girl.

Things copyright isn’t: war; urinary tract infection. Things copyright is: discussion; challenge.

Working principles: don’t equate concerned citizens/active scholars with internet visibility, or with identification with polarized opinion. Question claims about community. Multiply forms of engagement and the range of examples in play. Question the user/creator binary more fully. But a film like RiP puts Girl Talk in the place of the Romantic male author—remix discourse turns out to be original genius discourse. On the other hand, we need to recognize the validity of the distinction in some cases. There is a difference between creators trying to earn a living (implicit: with their creativity) and other kinds of creators. There’s a gender dynamic in that because of the history of the procreation metaphor as a model for creativity—quick is good, and men are quicker than women (a couple of minutes versus nine months, it would seem).

For Hellekson: Is fic acceptable for TWC?

Hellekson: Not as such, but we’re open to nontraditional expressions like games that critique games accompanied by a critical paper.

Zahr Stauffer for Gilbertson: She teaches literary reworkings, and loves that experience. When you’re in a classroom and you want students to have an equal ability to judge transformativeness, you may need to familiarize them with the source work and the fantext both. So you may need fanworks that rework very short things.

Gilbertson: Sometimes you can listen to filk, read fic, watch vids without deep ingrained knowledge. Part of what she’s proposing is a juxtaposition. Ask the students to bring in something that interests them, and the professor can choose examples to show.

Peter Jaszi: As Murray points out, RiP sets itself in part in the US, but it’s a US of the mind—a US without any system of fair use. Has this film been subjected to a critique of its own mythology except by Murray?

Murray: Not yet. The film’s political message is very limited: remix this film. It lacks practical context.

Jaszi: This is also Lessig’s public attitude: fair use is the right to hire a lawyer, a snare, a will o’ the wisp. This attitude works well for certain alpha male authority figures, but not so well for others who labor in areas where fair use is an important contributing element.

Murray: So how do we create a compelling and concise public message that is not oversimplified? RiP is lively and sexy; how do we do better and still get attention? Later, she suggested more collective blogging so that there was less pressure to provide new content every 5 minutes. That would enable women and men who feel like they need another model.

Shalleck: Cautions against essentializing in the discussion: women are more likely to do X, men to do Y. A useful concept: hegemonic masculinity. Cultural criticism has achieved subtlety in criticizing particular dominant concepts and people, as well as identifying the ways in which favored participation gets coded as masculine.

IP/Gender: Panel Three

Panel Three: Cui Bono? Economic Contexts

Peter Jaszi, Moderator: This panel is about various forms of contestation around fan cultural production and around genre itself. Arguments about authority: cultural, legal, economic, both formal and informal. Other themes: Market hierarchies; systematic devaluation of women’s work; balancing risk and safety and the romance of transgression.

Abigail De Kosnik, Women’s Work and 'Free' Fan Labor: An ongoing contest between copyright owners and individual copiers who feel poor and powerless in comparison, but are perceived by copyright owners as thieves. Fans take comfort and refuge in a rule of thumb: if we don’t sell our fanworks, we’re okay.

Free fan labor means free labor. Many fans think this is a great deal. Copyright owners don’t need to turn a blind eye to fanworks; the law is not definitive and they could harass fans if they so chose. But even if this is a settled issue, we haven’t addressed whether fan labor can or should be paid.

Free productions are key to web 2.0. And fan free productions help sustain profitability for commercial works by enhancing enthusiasm and feeding continuing appetites—they discuss, expand and advertise the productions during interim or hiatus periods. (Note that in another browser window I have open a campaign to save Chuck. Here’s to a Nerd Herd Third!)

Money already permeates fan productions. It just doesn’t go to fans. Fans are settling for too little, too soon, in the ongoing negotiations between capitalist markets and individuals. Compare to genres of male fan labor, like fan films and game mods, which are sometimes paid. In early years of fan fiction, George Lucas set the precedent that owners of the source texts had the right to determine whether fanfiction was allowed and what types were acceptable. Over the last three decades, Lucasfilm has run the gamut of responses, from establishing a bureau to approve scenes to sending cease and desist letters to barring “pornography” to offering to host fan fiction. Unpredictable paternal authority produced a chilling effect. Lucasfilm is the daddy, who can choose to ignore fans but retains the ability to step in. Lucasfilm has treated fan films made mostly by male fans very differently from fan fiction, and given them favorable treatment as they became widely circulated on the internet. Lucas himself identifies with male fan filmmakers and disidentifies with female fan writers.

So, do we benefit from establishing and guarding safe spaces in informal communities—like quilting communities—and staying out of the art market? As long as women’s creative work is not bought or sold, the argument goes, it remains free of scrutiny and control, since men control the “public” sphere and noncommercial work is private. Of course the internet throws that assumption of privacy into doubt.

Kristina Busse, Original Genius and Transformative Reptition

Most aesthetic theories of modernity have invested in the myth of originality. Creativity in an age of mechanical reproduction can be at odds with copyright, which often requires some account of originality to counter infringement arguments. Even as artistic theory values repetition and familiarity in pastiche and other ways, law is not keeping up. Law should look at genre theories and poststructuralist approaches to understand fan engagements and productions.

Difference and repetition are both required to create. Law has trouble recognizing this in accounting for transformativeness. Language can only be recognizable if it is repeated, not just on the level of the word but also on the level of narrative: tropes work because we understand them. Tropes allow readers to establish expectations and follow the narrative. Aesthetic theory describes creativity as interplay between old and new. T.S. Eliot’s important essay: “Of Tradition and the Individual Talent.” Woodsworth: Truly new and great art takes time to become popular (which is why he wanted copyright terms extended). People have to learn/be taught what it means. Adorno: argued that the “new” was created for economic purposes, and was actually the old dressed in new clothes in order to sell better.

Fanworks are postmodernist in their emphasis on retelling in different narrative styles. The repetition highlights the differences between retellings. Fan fiction also has its own tropes: amnesia stories, stories in which characters grow wings, stories in which male characters get pregnant. We’re always covering well-trodden ground, but we get something new out of it by doing so. Caught between Scylla and Charybdis of repetition and originality.

Legal defenses of fandom find themselves tempted to valorize the individual genius of the fan author. Focusing on originality is strategic in a culture that respects individual genius, but fanworks are always also embedded in repetition. One can’t exist without the other.

Zahr Said Stauffer, Taking the ‘Grrr’ out of ‘Grrrl’: Strategically Gendered Marketing in Cathy’s Book: Cathy’s Book purports to be a sort of ARG (alternative reality game) about Cathy who does sleuthing, but it’s much more fixed than a real ARG, in that plugging in the “clues” doesn’t change the outcome. The marketing is gendered, not just in conception but in performance. She posits that the gendering of the marketing ultimately stifles creativity and impoverishes the fan culture, if any, of the novel. Cathy’s drawings focus on self-presentation/portraiture/makeup. There’s an official makeup sponsor for the trilogy, with prominent Cover Girl product placements. The motto of the sponsor’s site, beinggirl.com—“for girls, by girls.” Except of course, not really. It’s for girls, by Tampax. And the trilogy comes from two male writers, who recruited a female illustrator who did the iconic drawings that defined the works and attracted the fans.

Cathy has a presence on many social media sites. “She” says a book should be something “we all do together—me and my friends, you and yours.” But this isn’t a fan inviting you in. Fans are encouraged to produce and submit fan art for an online gallery: she’ll showcase the ones she likes best in “my ‘prestigious’ gallery link.” Dangles the possibility of reproducing them in her next book, which actually happened to 3-4 of the dozen or so she posted. “Cathy” was also “solicited” to create comics about menstruation for the Tampax site. She asks her fans what they think of her comics, offering her fans the option to vote “like” or not respond at all. This is how the trilogy treats its fans: speak up, but only when spoken to and only when you say what we like.

Marketing proceeds through “fill in the blank” solicitations—offering girls different positions into which they might fit, corresponding to, for example, scents of deodorant that P&G sells. Marketing of Cathy’s Book proceeds the same way, soliciting only particular approved identifications. There are no “none of the above” options, no options to identify with Cathy’s mother.

Cathy solicits input of a particular source: fill in the blank. And she solicits compliance with Cathy’s constraints by holding out the possibility of publication—creating an incentive to produce work “Cathy” would like. Disincentivizes subversive work and solicits a compliant, good-girl identity. A false economy of scarcity makes this even more powerful: even though it would be trivial to post all submitted works, Cathy won’t; she’ll exercise control and only reward the good ones.

Poststructuralist theory: the thing cannot logically contain its own supplement, as Turk argues with respect to vids. By attempting to contain its own fanworks, Cathy’s Book destroys its fandom. Fanworks derive meaning from addressing gaps in the source, mysteries—externality is authenticity. Being brought in-house is destructive, creates good girls/collaborators. If we buy the incentive story that incentives are necessary for creation, then corporate control strategies should very much disturb us because of the way they distort incentives. Fandom should be by fans, for fans.

Jaszi: Is this attempt to create a fan community a success?

A: It doesn’t seem like the size of the fan community is that large—no fan fiction at fanfiction.net; 41 interested users on Livejournal.

Ann Shalleck: Wouldn’t fans feel ripped off/denigrated? Why wouldn’t it prompt a critical, concerted attack?

Busse: Why would we care? Lots of books are disposable; we read and forget.

Coppa: We might criticize something we love, but without an investment, that’s boring work. You don’t get my cultural criticism for free.

Stauffer: This form took a lot of work/investment—it’s an expensive product with evidence packets, unusual images, and so on. Some girls may respond to it as a place valorizing female creativity. There are positive female role models in there.

Q: Maybe this attracted fan art, rather than fan fiction. Check DeviantArt and other art forums. (Note: I found a couple, though many seemed to be copies of images from the official books.)

Busse: Maybe a protected space is appropriate for 12-year-old girls. (But a protected corporate space?)

De Kosnik: Fan fiction authors basically invented the public extension of texts. Cathy’s Book is a mild form of cooptation compared to what NBC, movie studios, etc. have done in creating official websites, character blogs, wikis allowing fans to upload/submit new material, including new characters, etc. Fan fiction created the protocols for interactivity.

Busse: Kyle XY fandom is completely commercial. They created a fan character, who turned out was an employee, and then a character with that name turned up on the show. Diegetic spaces were all mixed together. Fans didn’t mind—current teens are so accepting of commerciality that they didn’t care that he was fake.

Me: That may be a function of teens being more accepting of performance of identity, since as danah boyd says they’ve already been taught to fake their own identities to keep themselves “safe” on the internet. It can still be problematic to channel their creative labors in corporate-approved ways. At de Kosnik: I also think that it’s difficult to say we ought to get paid for our fannish labors: by whom? Supernatural is never going to pay me, and I don’t want to take money from other women, who may well be much less secure than I am.

De Kosnik: A powerful argument, but note that rap artists did commercialize copying.

Jaszi: For Busse: is the claim of transformativeness/genuis inevitable, or can we expand the category in ways to give space/recognition to the kinds of participatory practices we’ve been discussing?

Busse: We have a tendency to do one thing—enjoy particular kinds of stories with repeated tropes—and praise another—originality.

Coppa: Fans aren’t using those words the way they’re customarily used. Every story is new: the words are in a different order. Bookstores are full of genre fiction books that are very similar. A story that’s too different—everyone dies—is strange or “literary” or experimental, but most people still want a good adventure with a third-act climax or a good romance. Even movies: sequelitis is about the profitable sale of sameness.

Busse: But we don’t aesthetically reward it. “Genre” has been a derogatory term.

Coppa: Not for us! OTW doesn’t intend to protect the top 10 best fan fiction stories the way a literature professor might want to identify and teach the top 10 best.

Stauffer: TM might be the better model, instead of copyright. Genre functions like TM, transmitting reliability. (Hmm. Need to think about this.)

Jaszi: We are part of defining what transformativeness means. We can bring these insights into the legal analysis of transformation.

IP/Gender: Panel One

Panel One: Is There a Text in This Work? Transformation Beyond the Written Word

Francesca Coppa, Moderator: Fan fiction is moving out of fair use conferences to literary theory conferences, where it belongs. Other forms have existed for a while, but you’re only hearing about them now because women have been trained to fly under the radar. Guys have brought forward their RPGs, fan films, and so on more readily than women.

Casey Fiesler, Paper Dolls: Role-Playing, Gender, and Pretending Without A License:

RPGs: Beyond Dungeons & Dragons Include collaborative writing. The key features are collaboration and taking on the role of imaginary characters. On average, women prefer the storytelling aspects to the combat/dice-rolling aspects. Focus on world and characters rather than authorial intent and structure. Related to how little girls play: the socialization of play. Today, toys are more licensed and integrated into media tie-ins: even Doctor Barbie has been replaced by Hannah Montana Barbie. They have (copyrighted) storylines inherent in them. A girl may sleep on Cinderella sheets, wear a Cinderella tiara, and have a Cinderella Barbie: she is Cinderella (question: what does it mean to identify with a doll, an object that you dress up, in this way?), so the next step is to perform her character.

Fan-based RPGs are created and maintained by creators, not copyright owners. Artifacts produced are often very similar to fan fiction. Blogs are great for this: the affordances of the medium allow you to be your character. They’re interactive, so other characters comment back and forth. Virtual worlds: Second Life hosts a huge simulation of Hogwarts. This raises the issue not resolved in the City of Heroes/Marvel case. Players aren’t making money but are using commercial venues—how will we treat that? Copyright/TM owners have reacted: takedown notices to Twitterers playing the roles of Mad Men characters, though despite the DMCA notice the Twitterers are back.

Playing with dolls is legitimate; moving online with playing creates new copyright issues. Closing question: when is it fun and games, and when do you need to call the lawyer?

Melissa Tatum (work conducted with Robert Spoo), Does Gender Influence Attitude Toward Copyright in the Filk Community?: A filker and a law professor, though not an IP scholar; borrowed Bob Spoo for the legal analysis. Filk started at sf conventions, and now has its own conventions and awards. Traditional form: take existing music and use new lyrics. Filk also contains original music & lyrics, and lyrics based on characters from existing works. A separate category: filk based on other filksongs.

Tatum surveyed filkers and looked at award-nominated songs to look at copyright issues. Did not expect to find differences, but found some. Men publish more filks than women, but award nominations are basically equal. Statistical difference in type of melody: women are more likely to use original or public domain melodies, while men are more likely to use another filker’s melody or a copyrighted melody. 45% of women use melody not subject to copyright, 38% of men. Maybe originality of melody is a constraint on publishing, because most filk magazines are just sheets of lyrics marked “to the tune of…” Men slightly tended to use more original lyrics and women tended to use lyrics based on someone else’s characters/world.

Nonscientific survey of 62 respondents. 1/3 were involved in filk for more than 20 years. 62% of men worked in a technical field, while only a small percentage of women did. Males are more likely to perform songs written by another person, around 82% v. 90% (so the base rate is pretty high). Legally: 17% of men considered all legal requirements when making writing/performing/recording decisions, but 0% of women mentioned that. 34.5% of men didn’t worry because they were only performing informally, while 21% of women didn’t worry for the same reason. 63.6% v. 31% men v. women said that fair use includes not profiting from others’ work. 13.8% of men leave fair use “to the lawyers,” while 0% of men did.

Also asked about attitudes towards copyright; men had stronger opinions—men were more likely to think copyright lasts too long (51.7% v. 24.2%); women were weakly more likely to say they didn’t know enough (21.2% v. 3.4%), and weak evidence of greater participation in Creative Commons by men (around 44% v. 18%). Further work will target these issues.

Question: what do filkers think of Wizard Rock? Or Olivia Chrestomanci’s Supernatural-based album (recommended)?

Tisha Turk, Transformative Narrations: Fan-made Videos and Fair Use: English prof and vidder. She approaches copyright as a vidder. (See Sarah Trombley’s Visions and Revisions.) Ambiguously legal, but ought to be legal: nobody’s going to mistake it for an authorized work, and she’s not making any money.

Not very many vids (female-dominated artform) are parodies in the ordinary sense. Women are usually coming at the sources from a more affectionate point of view. We like this world and want to spend more time with it. We have to stretch the term parody pretty far to talk about vids as parody. Vids do function as textual/literary criticism: they are close readings of a text. This is a broader category. If a vid is a visual essay that stages an argument, to make the argument you have to quote from the source. That’s how it works.

Other cases: less clear-cut. All vids are arguments to one extent or another, even if only in the basic sense: see what I see! Read this show the way I do! Some are more obvious about this than others. Trombley: A fanvid that recapitulates a plot or a character relationship is perhaps the least transformative; they don’t seem to be fighting back or talking back. But they are still fair use, not just because of market failure but also because they are fundamentally transformative, according to narrative theory.

What exactly is transformed? What’s the difference between that and abridgement/condensation? Narrative theory offers an explanation. A vid, in one view, is visuals + music. But thinking about vids that way enables the false assumption that a vidder should just be able to swap audio. And that doesn’t work. The audio is not independent of the video.

A narrative has two parts, story and discourse. This is true for any narrative, written, oral, TV, what have you. The story is what happened; the sequence of acts and events. The discourse is how we find out what happened; the way the story gets told. Discourse can be divided into plot and narration. We tend to use plot and story interchangeably. But the story is just the events; the plot is how and when those events are conveyed to the audience. Mystery novel: the premise is that part of the story is withheld; events are not told in the order in which they happened. There are not that many stories, and yet so many books: that’s the magic of plot. Rearrange the plot, and you have new narrative.

Narrative is also a matter of choices about how to tell the story. Is the story told by a main character, a secondary character, an omniscient character? Is it in past tense or present? In TV, narration is different: you can have a voiceover, but that’s unusual and often misguided. The narration is nonverbal. What does the narration is the camera angles, duration and sequencing of shots, the music. Those elements of narration are exactly what vidders alter. We usually can’t change the camera angles, but we do make choices of what to keep. Often change duration and sequencing of shots. Always change the soundtrack that tells the viewer how to interpret the visuals. Even if the vid does not change the story, it still changes the narrative. The discourse is different.

That retelling can be a telling against the grain, but even a telling again is a transformative difference. These changes are the point, not an interesting side effect. A vid generally relies on knowledge of the existing source: it’s not a replacement. You can read literary criticism without reading the original text, but it’s not clear what you’d get or why you’d want to—vids are the same way.

Why drag narrative theory in? It helps us think through the audio elements. A song is part of a narrative strategy. It’s what makes the vid’s discourse different from the original. But the song is also part of the story of the vid. If the story is changed, the song choice is a big part of why the story is changed. The audio/video split is artificial and does not explain why vids produce the effects that they do. It’s a repurposing of the song, but is it a transformation? Yes. Some songs have stories; others are pure discourse. Listeners project onto the song—I had that relationship! When you turn the song into a piece of a larger narrative you’ve produced a structural change in the role of the song and the way in which viewers respond.

Ann Bartow, Commentator: the unifying theory of the panel is that women have a different view of the First Amendment than men. Each speaker talks about the value that women place on noncommerciality. Maybe women don’t really feel that commercial value is plausible for them.

Turk’s paper begins: Vidding ought to be legal because we’re not making any money; you’d never mistake it for the original so it doesn’t serve as a market substitute. Carol Gilligan’s A Different Voice: women’s arguments about texts may be different than men’s. Her argument is one about separating sound from pictures: copyright law is warped. Audiovisual works have one copyright, but the reason for doing that is to make the work-for-hire doctrine work, so contributors don’t have individual rights.

On Tatum: If awards are a signifier of quality, women are outperforming men. When women were a smaller percentage of law schools, they tended to be unusually talented/motivated. Once they’re half the class, they are more likely to include some of the less accomplished. Is there something deterring women from participating? Women seemed to be more copyright-compliant/overly obedient, and even when they used copyrighted works they seemed to be more invested in not hurting anyone. Also, look here how badly concepts of joint authorship work—participation is asynchronous.

On Fiesler: Communication in character raises the issue of threats: what is a threat does not necessarily depend on the explicit words; it’s a context-dependent issue.

Back to the First Amendment and copyright: Courts get into a circular loop where they say a use isn’t fair because it couldn’t have been licensed. Women more than men may be processing this as: if it’s not losing you money, I can do it. A stronger claim would be: even if it’s costing you money, I have a free speech right to do this.

Women are spoken about in certain ways; our bodies are used in advertising; our bodies are more strictly disciplined: how does this affect our relationships to free speech and the First Amendment?

Kristina Busse: Are women asserting ethical responsibilities greater than legal ones, or just different? Anime/manga translation communities that withdraw availability once a licensed version becomes available: ethical piracy.

Coppa: Women’s art still exists on someone else’s suffrance: we don’t assert the right to say what we need to. If our encounters with commercial entities, who do attack women in various ways through ads and other ways, are ones in which we’re instinctively more aware of our roles as buyers, then we are negotiating our artist roles with our consumer roles. We claim that we become better consumers as a benefit of our artistic productions: is it a specifically female argument to say that fanworks increase the value of the original? May be a Gilliganesque ethic of connection, but may also suggest that our minds are colonized: what would it mean to say—“hey, I’m an artist, I don’t so much care to consume your stuff”?

Coppa: Fiesler talks about the huge array of products sold to girls. As long as you’re purchasing these things, have you bought the right to fantasize? What if you knit your own Dalek or Harry Potter scarf—are you a bad consumer? (Is it the bare minimum of surviving in a consumer culture that we get to talk back?)

Fiesler: Music videos have been increasingly commercialized too, so there is competition or arguable competition in a place there wasn’t formerly. Relatedly, how many people are using Livejournal, or Second Life, or City of Heroes because they can play fannishly? Helps other entities make money, creating secondary liability issues.

Fan Q: What happens when the corporation appropriates the form—Twitter, the fanvid?

Turk: They’re not very good at it. Failure to understand that the fan wants to make new stuff, not sit and watch the official fanvid. (Hmm. What about the audience for fanvids? I agree that the official versions are unsatisfactory for fan audiences, but the stasis is produced in a variety of ways.)

Busse: BSG official contest was gendered in that the clips vidders were allowed to use were of big spaceships, not of the relationships in which women were more likely to be interested.

Fan: Stealing authenticity: corporations are searching for authenticity, but that’s an inherent contradiction. Our content is more valuable for its authenticity, and perhaps we’re on the cusp of ownership claims over our stuff because it’s more valuable.

Coppa: the practice of sharing among friends is now part of a business plan. Giving things away for free is part of our marketing strategy now! Fans interfere with that by existing in the world!

Stauffer: NBC now calls itself a general-purposes service company—tied to the rise of embedded ads. Question for Fiesler: stepping into the shoes of Cinderella (heh). How is playing online experienced—is there a suspension of disbelief as there is with a novel? When you’re out in the real world dressed as a princess, people constantly comment on it and point out that you’re not a real princess. You can’t be as “real” in the real world. Cinderella at the ball, freeze-framed; brushing her teeth with a toothbrush bearing a picture of herself. A hyper-real, weird version of Cinderella. You may have more privacy/intimacy in fan RPGs.

Fiesler: There is a difference, but the difference is getting smaller as more play moves online. (You find people willing to suspend disbelief with you. Ties in to Clay Shirky’s point: 90% this stuff online seems so weird to you because it’s not for you.)

Julie Cohen: You can build in that in “real” life roleplaying is socialized as childlike, which has gender implications. A separate point: Bartow’s comment on Tatum—Cohen read the statistics exactly the opposite way—the pattern of men trying to be Weird Al is copyright-compliant to the extent that it’s exploiting a known exception and following the parody model. Women were trying to be transgressive in a non-free speech way (not clear to her that claiming the First Amendment helps copyright transgressors).

Q: Struck by Fiesler’s point that no one would care if people were cutting out pictures and playing with them, but online it suddenly raises a copyright issue. How long until the computer is recognized as just like paper, instead of creating a corporate presence in your home? (I think the standard move is to go the other way: the paper dolls always did create a copyright issue, but transactions costs made it not worthwhile to do anything about it.)

Fiesler: RPGs didn’t initially produce fixed artifacts; all of a sudden they do. Like the ways in which vids used to circulate on VCR tapes.

Turk: Think of mixtape culture, where you would give someone else a mixtape based on the contents of your soul. That was unenforceable; once it’s on your blog, it’s findable, but there are also issues of privacy/friendship. The openness of our online definition of friends is changing.

Coppa: As a media educator, she’s supposed to be teaching a language. But it turns out that each “word” is owned. We don’t expect people to invent their own words in general conversation. There’s a problem with the metaphor, if she’s teaching the “language” of film and video. Educators must face this problem quickly.

Bartow: On Cohen’s point: when women’s filk production went down was about the time of Napster—maybe 2003-2007 coincided with increased tech making it easier for men to spread filk through the web, and women were more hesitant/had less tech experience.

Coppa: Female-only conventions also have filk; maybe women are moving out of the mainstream community.

I asked my question about Wizard Rock’s relation to filk.

Tatum: there’s a growing schism in community about (1) definition of filk—if you bring in Irish/Scottish/instrumental music to the circle, does that count, or is it lyric-driven? (2) Spread of new tech—who is a filker? If you record tracks in a professionalized way and perform not in a circle, are you a filker? Some valorize community over the form of the work produced.

Cohen: Where are the age distributions for vidders and role-players? We’re all talking about the same types of creative play, but maybe the different methods of expression have different distributions—relatively older in filk, and perhaps relatively younger in RPGs.

Tatum: Caveat that the survey may well have been distorted because longer-term participants may have been particularly motivated to explain themselves.

Q: Is law just too far from practice now?

Fiesler: Notice that people make ethical norms even without much fear of law: noncommerciality, attribution, anti-plagiarism are self-policed norms that roughly track law.

IP/Gender: keynote

IP/Gender: Female Fan Culture and Intellectual Property

American University Program on Information Justice and Intellectual Property

Opening remarks by me: I’ve never been a big fan of Donna Haraway’s cyborg, but I’m increasingly attracted to the image because of the ways in which it turns contradiction into complexity, always in motion. This is important because one challenge of defending women’s fanworks before the law is to protect them from charges of overinvestment (get a life!), incoherence, or unintelligibility from outside. If the standard aesthetic response of lawyers is “I know art when I see it,” then we need to add Catharine MacKinnon’s response: you need to know what I see when I see what I see.

I want to talk about the role of hybridity: First, there’s an obvious contrast between many fanworks and the prototypical fair use of biting, mocking criticism. This isn’t a reason to reject fair use claims, but a reason to endorse multiple prototypes of fair use. And the multiplicity could be founded in part on multiple literary theories refusing to settle on a particular position about the values of originality and difference versus repetition and familiarity, in Kristina Busse’s words.

Fandom is particularly suitable for producing multiple prototypes because multiplicity is at the heart of fan cultures: you can have fifty first-time romantic encounters between the same two characters, or five hundred, because fanworks are not constrained to follow a single canon. Contrast that to the rhetoric of scarcity Zahr Stauffer identifies in attempts to monetize fandom and reward the “best” fans of a particular series. Commercial culture promises an infinity of options but cannot deliver; nobody gets to go home with the entire contents of the store. Selectivity seems so natural to the commercial project that the copyright owners trying to turn fandom into marketing don’t even seem to notice the way in which their baseline assumptions about value, coherence, and scarcity contradict the assumptions of the fans they’re trying to reach.

Multiplicity of actors: Transformation often evokes the idea of one work or author performing a sort of alchemy on an inert original work, which serves as an ingredient. But transformation is more than that: transformation exists in the mind of the author, and in the minds of the audience. This type of transformation is not just dynamic, it is interactional. It is embedded in a context, and this has lessons for the law. Fanworks make particularly salient the ways in which one work’s linkages to other works—its relational and positional attributes—matter to our understanding of every one of those works.

So what does that mean for legal analysis?

Ties in to interdisciplinarity in the humanities: Tisha Turk, for example, brings in film and literary theory to understand fanworks and provide a structure for analyzing transformation in non-word-based works. In this context, it’s important to recognize that even economics has proved to require noneconomic accounts of fair use, as Wendy Gordon’s foundational work on fair use as market failure does. Gordon treats the copyright owner’s preference to avoid criticism as something a market analysis need not respect, though ordinarily private preferences are counted for purposes of efficiency analysis. It is the normative value of criticism, not economic valuation, that does the work of justifying many types of fair use even in the supposedly neutral economic calculus. It is the normative value of criticism, not economic valuation, that does the work of justifying many types of fair use even in most standard law-and-economic analysis.

Interdisciplinarity specifically draws our attention to the poverty of current legal analysis as applied to multimedia works; lawyers are very good at text and not very good at images or music, but fanworks increasingly incorporate multiple media: art and photomanipulation and video, extradiegetic music and snatches of dialogue and text, challenging law to use the insights of other disciplines to assess transformativeness, as Turk does.

Casey Fiesler investigates another hybrid form, the role playing game, which has caused rather a lot of cultural anxiety, at least when it comes in the form of a video game. Some states have tried to regulate violence in videogames in ways they concededly can’t regulate violent films, because the game medium is arguably different in its effects—aesthetic and moral—on players. Our First Amendment-loving courts have not been particularly receptive to these regulatory claims, but that may be more a symptom of lawyers’ inability to see differences in media than a positive sign. As Fiesler tells us, because videogames mix types and positions of authorship—graphics, dialogue and storyline may all have multiple sources—they challenge our existing views of creativity and control, especially when female gamers start participating.

Likewise, Melissa Tatum with Bob Spoo does fascinating work investigating the relationship between words and music in filking; both existing and new music can be used with fannish lyrics, and filkers seem to treat both forms relatively equally. And indeed, most filkers’ understanding of copyright law suggests they feel relatively unconstrained, at least in private noncommercial settings, in their choices of music. Explicit transformation or what’s conventionally called originality are coequal, as perhaps they should be in any artistic community.

Another feature of ties between works is the pervasive dialogue between works and people that might at first seem to exist in separate spheres: Fiesler looks at an inherently collaborative form, the role-playing game, which foregrounds the role of community in constituting the creation as well as the value of the creation. Stauffer and Busse likewise emphasize the web of texts. One feature of a web: Put a foot down on one strand, and everyone else on the web may tremble. Connected to the debate over commercialization: is there a spider at the center of the web? If it can now sense us more easily, will it demand to suck out our juices?

Commercial and noncommercial spaces interpenetrate. De Kosnik asks whether we should retreat from fan culture’s valorization of noncommerciality given that other people make money from us: we are only noncommercial in a particular sense. Given that I don’t think the appropriate baseline is that everything should be paid for by someone else, this is problematic precisely to the extent that it is distributionally unfair, and I think that’s a very hard question.

As de Kosnik points out, there areat least two relevant positions: fans should have to pay copyright owners to share their creative works withothers, or somebody else should pay fans for sharing. Avoiding option one has been a fan priority, even though it may position us badly to take advantage of option two, should option two become a realistic prospect.

I think this focus on noncommerciality makes sense, given that option-one problems remain quite pressing. One legal aspect of the hybridity of paid and unpaid labor, for example, is that noncommercial actors use commercial spaces; how will we deal with that mix of pecuniary and nonpecuniary interests when third parties claim that the noncommercial actors are therefore engaging in commercial use subject to compensation/control requirements?

Dreamwidth: commercial venture designed to be fan-friendly, without preexisting ties in the traditional media. Many things to say about this, but one point I want to make here: it's an open source project involving 80-90% female coders, similar to the OTW’s Archive of Our Own—possibly the largest female-dominated open source projects on the web. There are ties between the ultimate goal--protecting our fan communities—and building these new spaces. It turns out if we want a place to chat, we need to build a meeting house. So now we are carpenters because we are readers and writers and vidders. Likewise, to represent ourselves in academia, fans created a journal, which Karen Hellekson is going to talk about, and thus started to negotiate academic power, Open Access publishing, and the power of categorization, including the ISSN. Skills are connected in sometimes surprising ways. Laura Murray is going to talk about copyright activism in Canada—women may understand copyright as relevant to the extent that they negotiate the divide between underground safety versus public participation.

What can we get out of making these links? Drawing on Carol Gilligan’s concepts of moral maturity, based on studies of certain women’s moral reasoning: I would argue that maturity in copyright’s theory of creativity requires both independence (respect for dissent) and connection (respect for the community). Women in fan communities seek recognition as creators and regularly recognize the claims of other creators in the form of credit and compensation. Asserting their creative independence and their creative embeddedness at the same time—their basis in and distinctions from the commercial economy--fanworks offer a working model of hybridity in creative production, one the law would do well to recognize.

She blinded me with science

Via Eric Goldman: putative class action against eHarmony, alleging that the advertised scientific matching system is decidedly unscientific and leaves subscribers open to scammers. eHarmony denies the allegations.

Dilbert explains why rebates are misleading

In today's strip.

Turnitin still on top

A.V. v. iParadigms, LLC (4^th Cir. 2009)

The court of appeals affirmed the district court’s finding of fair use, though reversed on the counterclaim for violation of the CFAA. I only have things to say about the former.

Further evidence for Tony Reese’s explanation of transformativeness as dealing with purpose, not transformation of the content of the work: “The use of a copyrighted work need not alter or augment the work to be transformative in nature. Rather, it can be transformative in function or purpose without altering or actually adding to the original work.” This is true even if the function isn’t well served, the Fourth Circuit says, rejecting the claim that Turnitin isn’t transformative because it’s not very good as a plagiarism detector: “The question of whether a use is transformative does not rise or fall on whether the use perfectly achieves its intended purpose.”

Other bits of the fair use analysis: the second factor didn’t favor plaintiffs even though the works were creative because the use here was “unrelated” to the creative components—it was designed to find plagiarism. Same with the third factor.

On market harm: the potential market effects were “theoretical and speculative” because plaintiffs declined to participate in the market that did exist—the market for selling term papers and other student work.

Slate isn't Fox

Fox fired a reviewer for watching and writing about a leaked copy of Wolverine. Slate now runs Farhad Manjoo's piece on how he's basically given up on Netflix for Bittorrent. Hope Manjoo has a good lawyer. Also: People have said for a while that movies/TV were heading towards where music went in terms of online accessibility, but Manjoo's piece notes that movies are subject to very different contractual relationships making changes in authorized online delivery perhaps even harder to work out.

When casebooks become cases

Mark McKenna pointed me to this story about a lawsuit over a casebook supplement that bears the name of the casebook authors but didn't come from them. He asks whether Dastar is a problem. Courts have been, at a minimum, confused over the application of Dastar to explicit passing off; at the very least, this seems like a case in which the rump cause of action for false advertising should apply.

This is even more meta because the Ginsburg et al. trademark casebook contained, or at least used to contain (my memory for editions is a bit limited, and they really reshaped this section after Dastar), a hypothetical about a publisher who put out a new edition of a casebook with different authors but original names.

Advertising Law CLE

Barbara Wilson of Franklin Pierce Law School pointed me to a program on European and American advertising law run by Franklin Pierce and the University of Limerick in Ireland, July 24-25, 2009. Topics covered include green claims, embedded ads, and testimonials.

My colleague David Vladeck to the FTC

To head the Bureau of Consumer Protection. CL&P blog has details.

Public performance

President Obama read Where the Wild Things Are at the White House Easter Egg roll, followed by Michelle Obama reading If You Give a Mouse a Cookie, both great favorites at our house. The AP may go after Shepard Fairey, but will the copyright owners go after the President and C-SPAN?

Statin advertising and FDA preemption

New paper on SSRN: Theodore Eisenberg & Martin T. Wells, Statins and Adverse Cardiovascular Events in Moderate Risk Females: A Statistical and Legal Analysis with Implications for FDA Preemption Claims. Abstract:

This article presents: (1) meta analyses of studies of cardioprotection of women and men by statins, including Lipitor (atorvastatin), and (2) a legal analysis of advertising promoting Lipitor as preventing heart attacks. The meta analyses of primary prevention clinical trials show statistically significant benefits for men but not for women, and a statistically significant difference between men and women. The analyses do not support (1) statin use to reduce heart attacks in women based on extrapolation from men, or (2) approving or advertising statins as reducing heart attacks without qualification in a population that includes many women. The legal analysis raises the question whether Lipitor's advertisements, which omit that Lipitor's clinical trial found slight increased risk for women, is consistent with the Food, Drug, and Cosmetics Act and related Food and Drug Administration (FDA) regulations. The analysis suggests that FDA regulation should not preempt state law actions challenging advertising that is not supported by FDA-approved labeling. Our findings suggesting inadequate regulation of the world's best-selling drug also counsel against courts accepting the FDA's claimed preemption of state law causes of action relating to warnings and safety. Courts evaluating preemption claims should consider actual agency performance as well as theoretical institutional competence. Billions of health care dollars may be being wasted on statin use by women but the current regulatory regime does not create incentives to prevent such behavior.

Lather, rinse, repeat: horse shampoo TM case continues

Schneider Saddlery Co., Inc. v. Best Shot Pet Prods. Int’l, LLC, 2009 WL 864072 (N.D. Ohio)

Sometimes a judge just decides to opine on the state of the law, as I fondly remember Judge Edward Becker doing: often enough, a Judge Becker opinion would tour both the basics and the intricacies of the area of the law at issue in a case, whether the tour was necessary to get to the final destination or not. So it is here, in a case about two parties who both wish to use the term ULTRA on equine grooming products.

In 1984, Schneider began selling ULTRA horse grooming products. It registered its marks in 1985. In 1990, unaware of Schneider, Best Shot began selling ULTRA grooming products targeted at a variety of animals, but not horses. In 2001, Best Shot expanded to horses, using ULTRA WASH, ULTRA PLENISH, and ULTRA VITALIZING MIST.

Before registering the marks for equine care, Best Shot had a trademark search done. The search turned up Schneider’s marks and the trademark attorney expressed some concern, though the attorney noted that there were a large number of ULTRA registrations and uses, making the mark likely weak. Best Shot applied for and received a registration, though it didn’t explain to the PTO that the marks were intended for use in the field of equine care, nor did it disclose the existence of the Schneider products. (The registrations are for “animal/pet grooming products”; from what I saw online, Best Shot sells the products for cats and dogs as well.)

Schneider didn’t contest any of the applications, but the court considered this of negligible significance in this case, though noted that matters might be different if a registrant failed to contest a new mark that was subject to an “extremely public unveiling” prior to registration. (The Travatan v. Xalatan case I was involved in litigating is an example of a case where the competitor, Pharmacia, should have objected when the registration was published, because so much was at stake and Pharmacia knew so much about Travatan.)

Scheider hasn’t identified any customer confusion, though Schneider’s sales decreased in the only catalog known to carry both parties’ products.

Counterfeiting

Schneider alleged that Best Shot’s marks were counterfeit. The court granted Best Shot summary judgment on this issue. Counterfeiting requires a lot more than infringement; it requires that a mark be identical to, or substantially indistinguishable from, a registered mark.

Summary judgment is usually appropriate if word marks differ by two or more letters. Schneider argued that the marks were “identical” because they both use ULTRA, but the court thought that was in direct contravention of the statutory scheme, which reserves counterfeiting liability for the worst of the worst, not arguable cases of infringement. Reasonable consumers would not believe that the junior mark was the senior mark; there was no counterfeiting as a matter of law. The Best Shot marks include an entire word that the Schneider marks don’t, and the commercial appearance differs.

The court commented that some cases suggest that the inquiry is “not really whether the marks are substantially indistinguishable, but whether the marks are employed in such a way as to cause a consumer to believe that the product itself is counterfeit.” But the court thought that standard, whatever its practical merits given the lay meaning of “counterfeit,” clearly conflicted with the statutory language, which focuses on the mark.

Best Shot asked for attorneys’ fees on this claim; the court denied the request, even though Congress wanted to discourage plaintiffs from making frivolous allegations of counterfeiting in an average infringement case, so as not to raise the specter of treble damages where they’d be inappropriate. The court thought that interpreting “counterfeit” was a relatively new area of law involving a number of judicial glosses; Best Shot would be allowed to renew its motion at the conclusion of the case if appropriate.

Infringement

The court found material issues of fact on many of the relevant factors.

Strength: Schneider argued that its marks were strong because they were incontestable. The court took the (better) view that likelihood of confusion is a separate issue from validity. Some courts treat incontestability as creating a rebuttable presumption of strength, but the analysis should be separate: “there is no apparent reason that the incontestable status of a mark should automatically translate into a well-known mark.”

On to the evidence, then: Best Shot’s expert did a survey that allegedly proved ULTRA weak. The court found this consumer survey to be “strong and currently uncontroverted evidence” of weakness. Best Shot also argued that there was extensive third-party use of “ultra,” which may weaken the mark even if used on other goods, but Best Shot had the classic problem at this stage—it didn’t show that the “ultra” marks were actually used in the marketplace, as opposed to being registered at the PTO.

Schneider argued that its marks were strong because Schneider had used ultra for 23 years and spent considerable money on promotion. Schneider could use this evidence to persuade a jury, but a reasonable jury could consider the marks weak.

Relatedness of goods: They’re the same, which weighed heavily in favor of finding likely confusion. In a European context, or in an earlier period in American trademark law, same goods plus use of highly similar mark would be the end of the story. The court found that the “better” cases relying on a presumption of confusion in such circumstances require identical use plus a clear intention by the junior user to derive a benefit from the senior mark.

The court even went out of its way to identify a “misstatement” of law in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979), which said: “When the goods produced by the alleged infringer compete for sales with those of the trademark owner, infringement usually will be found if the marks are sufficiently similar that confusion can be expected. When the goods are related, but not competitive, several other factors are added to the calculus.” This was not a misstatement at the time. It may be so now. As Mark McKenna has noted elsewhere, the multifactor confusion test now so dominates that it seems to have erased even judicial memory of the simpler tests once used for directly competing goods. The court rejected any “[rigid] rules” enabling a confusion finding, even a presumption of confusion where the marks are similar and the goods are the same, noting that this is one reason summary judgment in infringement cases is rare.

Nonetheless, identical goods substantially increase the likelihood of confusion where the marks are similar.

So, similarity: First, the court concluded that standing alone, Best Shot’s addition of a word or words did not render the marks dissimilar. Given the products at issue, “plenish,” “vitalizing mist,” and “wash” were not sufficiently distinctive in themselves to render the marks dissimilar. Similarity still exists when the marks have the same overall connotation. However, the use of “Best Shot” as a house mark would allow reasonable jurors to find less likelihood of confusion (or more, if they found that consumers would think Best Shot had been licensed to use the mark). The court commented that, were it the factfinder, it would be persuaded by the licensing argument because the products serve identical functions, but a reasonable jury could disagree. (And I hope it would, with a mark as inherently weak as ULTRA.)

The court concluded that the similarity of the logos gives Best Shot “an extremely steep challenge at trial on the question of similarity,” but the house mark plus the additional words still create a genuine issue of fact.

Actual confusion: No evidence of it, which a jury would weigh in Best Shot’s favor. The court commented that, were it not bound by precedent, it would conclude that the absence of substantial confusion could often by itself answer the question of whether there’s a likelihood of confusion. “If consumers are exposed to substantial marketing efforts from both companies, yet no evidence shows that any consumers have actually been confused, there is substantially less likelihood that consumers do or will find the marks confusing.” But binding precedent is to the contrary, and anyway even this conclusion wouldn’t entitle Best Shot to summary judgment, because both parties have a fairly small market share and there’s no evidence of extensive marketing to a unified customer population.

Some evidence supported the inference of likely confusion. Schneider argued that consumers generally don’t allow unauthorized products to be used on their horses. Thus, consumers “constantly” return products because someone mistakenly bought the wrong product for them. If consumers have been confused by the marks, then, some record of confusion ought to exist.

Marketing channels: both use the internet and catalogs, and the customer base overlaps. But there was only one catalog that carried both, and no evidence that the same websites carried both. The court quoted one case holding that when both parties use the internet, confusion is more likely—which means that the likelihood of confusion, or “confusion in the air,” if you will, has simply increased over the past ten years. A reasonable jury could conclude that this factor favors Schneider, or could accord it little weight.

Degree of purchaser care: Schneider’s sworn testimony was that customers of horse grooming products exercise little care. Horses are expensive, but consumers might still just use any old shampoo on them, just as the owner of an expensive car may use the same car wash as the owner of a cheap car. (Horse lovers, don’t come after me: not my analogy.) Best Shot argued that end users, though, do exercise substantial care. The court concluded that Schneider had the better argument. Purchasers can have big effects on trademark value even if they’re not users. End users might stop requesting a particular product if purchasers keep bringing back the wrong product; or end users might decide to try the new product and switch.

Anyway, where the marks are similar, purchaser care becomes less relevant—confusingly similar marks may lead a careful purchaser to nonetheless assume affiliation or other connection. Since the marks here are quite similar, the degree of purchaser care is less significant. (I think this does exactly what the court cautions against elsewhere: risks reducing infringement to circularity. If the marks weren’t similar, you wouldn’t be doing a confusion inquiry at all. If purchaser care is to be a meaningful factor, it must affect likelihood of confusion when the marks are similar enough to create a dispute.)

Intent: Good faith is rarely relevant, but bad faith is—it allows a factfinder to assume that a party’s intent to cause confusion was successful. Schneider argued that Best Shot’s knowledge of Schneider’s marks allowed an inference of intentional infringement. But Best Shot argued that it was just expanding its own marks from other animal care markets. A jury could agree with Best Shot, creating a material issue of fact.

The court commented that the current law of intent is messed-up, though “the ship has likely long-since left the port on this point.” Within the multifactor test, intent is circular: presume bad intent because the marks are similar and presume that the marks are similar enough to confuse because of the bad intent. It might be better to consider intent only when there’s direct proof of intentional infringement.

Ultimately, “Best Shot has an unquestionably difficult task before a jury,” and the court commented that as the finder of fact it might well find infringement, but that wasn’t the court’s job.

Finally, the court held that, though the issue was a close call, Schneider might be able to get an accounting of profits or damages if it prevailed. First, the court held that—given the 1999 amendments to the Lanham Act, and despite some older precedent—willfulness is not a prerequisite to an accounting of profits, and anyway Schneider had enough evidence of willfulness to go to a jury. Schneider could also get damages even if it couldn’t prove particular diverted sales, as long as it showed some damage. (Showing infringement alone wouldn’t be enough.) But there was testimony that Schneider saw a drop in sales in the one catalog where the parties competed. Schneider had enough to survive summary judgment on both profits and damages.

False accusations of patent infringement justify fee award, not damages

Veteran Medical Products, Inc. v. Bionix Development Corp., 2009 WL 891724 (W.D. Mich.)

Veteran Medical makes a plastic double-ended ear curette. The CEO of Bionix accused Veteran Medical of infringing a Bionix design patent and misappropriating trade secrets; this included calling one of Veteran Medical’s suppliers and threatening litigation. Veteran Medical and related individuals/entities sued for a declaration of noninfringement and nonmisappropriation (if you’ll excuse the neologism), as well as for state and federal unfair competition and tortious interference. Bionix made the expected counterclaims of patent infringement and trade secret theft.

The district court granted declaratory judgment on noninfringement and dismissed the patent infringement counterclaim. There was a jury trial; the court granted judgment as a matter of law on the tortious interference claim, but, though finding plaintiffs’ evidence “very thin,” refused to do so on the unfair competition claims.

The jury found for Veteran Medical, awarding various plaintiffs nearly $200,000 in damages, divvied equally between Lanham Act and state unfair competition claims, as well as rejecting Bionix’s trade secret claims.

Bionix renewed its motion for judgment as a matter of law. It argued that there was no proof of damages, and that four of the plaintiffs lacked standing. The court agreed on the damages point. There was no evidence that Bionix made any statements to existing or potential customers about alleged patent infringement.

Plaintiffs brought their state law claims not as injurious falsehood/trade libel claims, but as general unfair competition claims. Michigan unfair competition law doesn’t fit the situation very well; most cases concern trademark-type claims, but the gist is that the defendant’s deception causes the plaintiff to lose some trade. A showing of actual confusion isn’t required, but actual or probable deception must be shown. Michigan courts have condemned as unfair competition any conduct that is fraudulent or deceptive and tends to mislead the public; the law is based on the principles of “common business integrity.”

Unfair competition, however, requires competition. But most of the plaintiffs weren’t in competition with defendants, only Veteran Medical. One of the other plaintiffs was a contract manufacturer for health care companies including Veteran Medical; it didn’t sell any of its own products. And the individual plaintiffs worked for the manufacturer. Even if they’d worked for Veteran Medical, they couldn’t have filed a claim on behalf of their employer. Thus, they lacked standing.

Bionix’s CEO did make a statement to a third party that Veteran Medical’s product was infringing. This supported Veteran Medical’s common law unfair competition claim based on defamation. Corporate defamation doesn’t require a showing of special damages. However, Veteran Medical still needed to establish the amount of damages to obtain a damages award. The court agreed with defendants that Veteran Medical didn’t prove anything to justify the damages awarded by the jury ($25,000, at this point). The testimony on damages was too vague and based on speculative business plans.

Finally, the court turned to plaintiffs’ argument that the patent infringement counterclaim was an exceptional case justifying an award of attorneys’ fees. Despite threatening suit, filing an infringement counterclaim, and filing suit in another district, Bionix ultimately didn’t oppose plaintiffs’ motion for summary judgment of noninfringement.

An exceptional case usually involves bad litigation behavior, including vexatious, unjustified, or frivolous litigation. Assertions of infringement of a granted patent are presumed to be in good faith; patentees aren’t liable for vigorous prosecution or enforcement of a presumptively valid patent. The underlying improper conduct must be shown by clear and convincing evidence; the burden is on the accused infringer to show that the patentee knew or should have known that the suit was baseless.

Here, the court determined that the infringement suit was baseless and brought in bad faith. The patent was a design patent, and the differences between the parties’ products were “startling.” “The Veteran Medical curettes have an hourglass-shaped, ribbed handle[] that is flat on one side. The Bionix curettes have a straight, elongated, smooth, octagon shaped handle with a flat rectangular-shaped recess (‘the notch’) in the middle of one side of the handle. Within the notch, the name BIONIX is spelled out in raised capital letters. It is difficult to conceive of much greater differences between two handle designs, and certainly no ordinary observer would be confused.”

Bionix knew this from the beginning. Nonetheless, defendants spent two years threatening litigation and insisting on litigation. The court concluded that Bionix had an anticompetitive motive. This was the type of case Congress had in mind when it authorized courts to award fees.

Too much attribution?

This discussion of a Dow Jones site's reuse of other blog content suggests that over-attribution, though accurate, was the source of bloggers' protest: by using pictures and bylines for the bloggers, the site seemed to imply that the bloggers were actually working with the site. Would a Lanham Act claim be barred by Dastar? I think not (though I wouldn't advise bringing the claim or think it ought to be won), but there are cases out there that suggest otherwise.

5 Hour Power struck unfair blow against alleged infringer 6 Hour Power

Innovation Ventures, LLC v. Body Dynamics, Inc., 2009 WL 877640 (E.D. Mich.)

The court adopted the magistrate’s report and recommendation, which was as follows: Plaintiff does business as Living Essentials; the parties sell dietary supplements formulated as energy shots. Living Essentials, which sells 5 HOUR ENERGY® shots, sued Body Dynamics (BDI), alleging that BDI’s use of 6 HOUR ENERGY infrined its trademarks by using a substantially similar phrase and package illustrations. BDI counterclaimed for false advertising, tortious interference, and related business torts. BDI also sought a declaratory judgment of the registration’s invalidity—that ® comes from the Supplemental Register (which makes invalidation unlikely, but also points to the highly descriptive nature of the mark).

The key: Living Essentials obtained a preliminary injunction in a separate case, then created the impression that BDI’s product was the subject of a court ordered recall.

In September 2007, BDI began selling MINI THIN RUSH® dietary supplements in liquid, capsule, and chewing gum form. The liquid energy shot has “6 Hour Energy!” at the top of the label. Living Essentials has been using 5-HOUR ENERGY since September 2004, and it registered a trademark a year later.

In April 2008, the court granted Living Essentials a preliminary injunction against N2G Distributing, not BDI, for trade dress infringement, finding that N2G’s bottle label for INSTANT ENERGY was “remarkably” similar, with the same color scheme, font, and depiction of a silhouetted figure ascending a mountain. But it didn’t enjoin use of the descriptive phrase “6 Hour Energy Shot.” Living Essentials hadn’t carried its heavy burden of showing that the primary sigificance of 5 HOUR ENERGY was to identify the source of the product rather than the product itself, and plenty of competitors used highly similar phrases such as “7 Hour Energy Boost,” “6 Hour Energy!,” “Extreme Energy Six Hour Shot,” and “6 Hour Power,” making Living Essentials’ secondary meaning claim less persuasive.

After the injunction issued, Living Essentials issued a press release and notice to customers, “RECALL OF ‘6 HOUR’ SHOT ORDERED.” It said:

Court orders immediate stop to manufacturing, distributing and sale of 6 Hour Energy shot.

Dear Customer,

We are pleased to announce that we won a decision against a “6 Hour” energy shot that closely mimicked 5-Hour Energy®. The United States District Court, in Case No. 08-CV-10983, issued a preliminary injunction ordering the immediate recall of all the “6 Hour” product, and told its manufacturer to stop making, distributing and selling it.

If you have any of the “6 Hour” energy shots in your store(s) or warehouse(s) contact the product’s manufacturer or your distributor to return the product immediately.

DO NOT RETURN ANY 5-HOUR ENERGY®. It can be difficult to tell 5-Hour Energy® apart from the "6 Hour" knockoff product. …

The press release didn’t identify the manufacturer, didn’t identify the product, and didn’t include an illustration of the trade dress. It was published as a “legal notice” in the Convenience Store News, the primary industry publication. (Query: did counsel approve this? What should counsel have told the client who wanted to run this notice?) As a result, numerous brokers and distributors of MINI THIN RUSH contacted BDI about returning its products, and BDI lost a bunch of sales. BDI had to hire a PR firm to respond.

The press release was misleading in saying that Living Essentials won a decision “against a ‘6 Hour’ energy shot,” when it really won a trade dress injunction against N2G. The use of the case number doesn’t communicate what product or party was enjoined (and indeed, why use the case number and not the name?). Moreover, the judge specifically denied an injunction against the only feature Living Essentials did identify, “6 Hour.”

Living Essentials rejoined that any confusion was BDI’s fault, for using the confusingly similar 6 HOUR ENERGY slogan, which constitutes trademark infringement. This conflated two separate issues, the alleged infringement and the press release, which falsely communicated that Living Essentials had achieved a court-ordered recall of all drinks using “6 HOUR ENERGY” on the label. Even if Living Essentials has a meritorious trademark infringement claim, the press release is misleading. Living Essentials could easily have avoided confusion by identifying the manufacturer and the trade dress—it included a picture in the complaint and the motion papers—but chose not to do so. Unless and until Living Essentials establishes trademark infringement, it’s misleading to represent that all energy drinks using “6 HOUR ENERGY” on the label are subject to a federal court’s recall order.

The district court adopted the magistrate judge’s reasoning on this point over Living Essentials’ strong objections. It argued that the court shouldn’t look at likelihood of success in isolation from its trademark infringement claim, because if it wins on trademark infringement, then BDI would have no legitimate interest in “6 HOUR ENERGY” and therefore no ground to claim harm. But the present procedural posture of the case involves nothing more than allegations of infringement; Living Essentials hadn’t moved for a preliminary injunction or offered evidence to support its claim. Right now, BDI is entitled to use the phrase on its products. If Living Essentials ultimately wins its infringement claim, BDI may not be able to claim any further false advertising injuries, but that’s for later.

Living Essentials then argued that the press release didn’t misstate any facts. It took steps to avoid misleading the audience by providing contact information for any questions and concerns, and by using “singular” words such as “the,” “its,” and “a” to indicate that it had won a victory against a single product and manufacturer. (Note: this is why we pay lawyers—to get them to make such claims with a straight face.) The court thought the magistrate got it right, considering Living Essentials’ anti-confusion measures “modest at best.”

Living Essentials also contended that the issue was moot because it didn’t intend to publish the press releases again. Voluntary cessation doesn’t render a claim for injunctive relief moot.

BDI showed actual deception among brokers, distributors, and customers. Among other things, at a trade show, one convenience store manager refused to take a free sample, believing it to have been recalled because something was wrong with the product.

The falsehood was material: a consumer is less likely to purchase a product she believes is subject to a court-ordered recall, as the trade show incident demonstrated.

There was a presumption of irreparable injury from a Lanham Act violation. (eBay hasn’t yet been held to change this in the Sixth Circuit.) BDI’s goodwill was being tarnished in the industry. The public interest also supported an injunction, since the public has an interest in avoiding deception.

tax protest as false advertising

United States v. Benson, --- F.3d ----, 2009 WL 902291 (7th Cir.)

Benson is a tax protester. The district court enjoined him from promoting, organizing, or selling his “Reliance Defense Package” and “16^th Amendment Reliance Package,” which were based on the false premise that customers could stop paying federal income taxes and escape prosecution by relying on the packages. The court of appeals affirmed, and also required Benson to divulge a customer list.

Benson wrote a book claiming that the Sixteenth Amendment was never properly ratified. He packaged the book with other materials to create his packages, which he sold for $3500. His theories were bunk.

Benson argued that he didn’t violate the tax laws—he was simply urging political action, not promoting any tax plans or affirmatively help his customers—and that the injunction violated his First Amendment rights. The court of appeals was unimpressed. Benson’s plan was a tax evasion plan that, instead of filing false returns, encouraged customers not to file at all. This “don’t-do-it-yourself” kit required nothing more to be an illegal method to avoid paying taxes.

Indeed, the materials were prepared to be sent to the IRS, including a customized “Reliance Letter.” And he made numerous statements about the tax benefits of buying his materials, boasting that he hadn’t been prosecuted for failing to pay taxes after his release from federal prison for tax evasion, and that the IRS hadn’t prosecuted any person who relied on his materials. He knew or had reason to know that his statements were false or fraudulent: his claims have been rejected by the Seventh Circuit in his own appeal, and his attempt to rely on his book in his own criminal case was ineffective, as it has been in numerous other cases. It’s also false to claim that the government can’t prosecute any person who fails to file a tax return based on a sincere belief in the income tax’s unconstitutionality. A defense of misunderstanding the tax code can raise a true state-of-mind defense, but one who believes that the tax code is unconstitutional is in a different position; one’s views of the validity of the tax statutes are irrelevant to willfulness.

Benson’s false statements were material. “There is no matter more material to the sale of a tax avoidance package than whether the package effectively allows customers to avoid taxes.” Benson’s program was promoted as a “golden ticket” to avoid tax liability and prosecution; his falsehoods would naturally have a substantial impact on a purchasing decision. “Even if some of Benson’s followers purchased the Packages for educational purposes or to take political action, as Benson claims, it is hard to believe they would have bought the materials knowing they were false.”

Benson claimed he was engaging in political speech. The government called it false commercial speech. The court of appeals agreed with the government. The injunction covered false statements made in connection with the sale of a product, not mere distribution of court opinions or expression of opinion. Benson can even sell his book with its mistaken claims. He just can’t promote its sale by claiming the ability to rely on it to avoid prosecution, or making any other false promises. Benson made many false statements about the benefits of buying his packages; he made them for the purpose of promoting sales, and therefore the statements were commercial speech. He said he was selling a way to avoid tax liability; he was really selling “a way to increase tax and criminal liability for failing to pay taxes.” That’s false advertising and it can simply be banned.

If the injunction bars Benson from actually selling the packages, not just falsely advertising their sale, that’s okay because the packages inherently involve false commercial speech. Their very names—Reliance Defense Package and 16th Amendment Reliance Package—imply falsely that a customer can rely on them. “Therefore, according to our great tradition of tolerating nutty opinions, the marketplace of ideas remains open to Benson; the commercial marketplace, however, is appropriately limited to speech that is not deceptive.”

The customer list also had to be surrendered. The government found 7 people who failed to file tax returns using Benson’s materials. Reliance on the materials will irreparably harm Benson’s customers, who are exposing themselves to civil and criminal penalties, and harm the government, causing it loss of taxes and expense in finding non-payors and collecting from them. Producing the customer list would also allow the government to monitor Benson’s compliance with the part of the injunction requiring him to mail a copy of the injunction to everyone to whom he sold the packages. This didn’t offend the First Amendment because “Benson operated an

Internet marketing scheme, not a membership organization.” A commercial enterprise doesn’t have the same rights of association as a political group or meeting.

MSNBC.com on the Fairey v. AP case

I participated in an interview with NBC's gracious Lisa Green.

FDA warns companies over sponsored links

The FDA sent warning letters to 14 companies about sponsored links whose text did not sufficiently disclose the risks of the advertised drugs. A useful reminder that background principles of law--not just crazy extensions of trademark law--apply to sponsored links. I found notable the comment from an FDA spokesperson that the FDA hadn't contacted Google and other search engines because "its policy is not to contact third parties that carry drug ads, even if they violate agency rules." Section 230 might also have something to say about that!

Things you never want your musician-client to say

"'Our very first spark was the Marvelettes,' Marr has said. 'We very, very consciously wore our girl group, retro, sixties influence on our sleeves. "Girlfriend in a Coma" is "Young, Gifted, and Black"—the music of it. You can sing "Young, Gifted, And Black" over it.'" Cf.

Plastic fantastic: failure to monitor packaging dooms TM claim, but other claims proceed

Perrin & Nissen Ltd. v. SAS Group Inc., 2009 WL 857606 (S.D.N.Y.)

Perrin & Nissen sued SAS for trademark, trade dress, and copyright infringement; related state claims; and breach of contract. Allegations: Perrin & Nissen is an English company that makes toy balloon products under the names “Magic Plastic” and “Amazing Elastic Plastic.” The toy is plastic compound with a blow-pipe.
Users can turn the plastic into balloons by balling up some of the compound, inserting the pipe, and blowing into the pipe. Perrin & Nissen has made the toy since 1947 under the name “Magic Plastic,” and began importing it into the US in 1994 in toy stores like FAO Schwartz.
Allegedly, Claney, one of the defendants, approached Perrin & Nissen in 1997 about selling it in the mass market, with Perrin & Nissen to retain all ownership rights.

The parties agreed to use a different name than the name used in American high-end stores: “Amazing Elastic Plastic.” Some customers required assurances that the product was the same as “Magic Plastic,” which fact Perrin & Nissen confirmed in writing. At the same time, The Better Blocks Trust filed an ITU for “Amazing Elastic Plastic”; the ITU was signed by Claney. Better Blocks later assigned the ITU to RJM Ventures; the registration issued in 1999.

In 1998, Perrin & Nissen entered into an agreement with International Chemical Corp., licensing it exclusively to manufacture the toy in North America in return for a royalty of 52 cents per four-pack, with a minimum of $260,000/year. Perrin & Nissen disclosed its trade secrets in return for ICC’s promise of confidentiality. Claney and ICC chose a distributor; it was given no ownership in either the trademark or the product.

Perrin & Nissen decided to change the “Amazing Elastic Plastic” packaging, and licensed the new trade dress to Claney, ICC, and the distributor, who agreed to use the trade dress only with the name “Amazing Elastic Plastic” in North America to mass market retailers and only in connection with Perrin & Nissen’s product. Then the distributor filed for bankruptcy, and a new distributor stepped in.

In 2002, royalties began decreasing, until there were no sales at all in April-May 2003. According to the distributor, this was because of competing imports from China. In 2004, Perrin & Nissen agreed with the distributor that Perrin & Nissen would make the toy in England and sell it directly to the distributor, and they agreed to a price increase for retail customers. But their retail customers (Target & Walgreen’s) not only rejected the price increase, but decided to stop selling the toy, and the distributor declined to take the already-agreed-on quantities. The distributor took the position that it had cancelled the outstanding order, worth $95,000, and that it owned the registered “Amazing Elastic Plastic” trademark, though it wouldn’t use Perrin & Nissen’s photos or art in connection with its sales.

In 2006, Perrin & Nissen learned that beginning in 2002, the distributor had been selling toy balloon products made in China using packaging that contained part of Perrin & Nissen’s trade dress and the mark “Amazing Elastic Plastic.” The distributor substituted those products for Perrin & Nissen when filling orders for the toy for retailers, while telling Perrin & Nissen and ICC that customers didn’t want to sell the toys any longer.

Perrin & Nissen alleged valid claims for copyright infringement of its packaging, fraud, and breach of contract.

The interesting stuff happened with the Lanham Act and coordinate claims. Perrin & Nissen alleged secondary meaning in its trade dress because of use on the Amazing Elastic Plastic product since 1998. But that packaging says “Amazing Elastic PlasticTM is a Trademark of SAS Group Inc.” (SAS being the distributor.) Perrin & Nissen received an earlier version of the packaging in 1998 from SAS’s predecessor in interest, RJM Ventures (the filer of the ITU, in case you don’t remember), which stated “Amazing Elastic PlasticTM is a Trademark of RJM Ventures Ltd.” Since the packaging was attached to the complaint and relied on in the complaint, the court could properly consider it on a motion to dismiss. So: Perrin & Nissen clearly had notice that SAS’s predecessor in interest was asserting ownership of the trademark and printing its own name on the packaging as early as 1998.

Perrin & Nissen could not therefore plausibly claim that its trade dress acquired a secondary meaning in the minds of purchasers as being associated exclusively with Perrin & Nissen, since its name never appeared on the packaging. (Hmm. I don’t think this throws licensing into doubt; it just means that the licensor has to inspect the product to make sure that the licensee isn’t making trademark claims adverse to the licensor!) So Perrin & Nissen failed to state a claim for false designation of origin based on trade dress.

Perrin & Nissen also alleged two false advertising claims. The first was that the packaging “Established Toy Since 1947” misrepresents the nature, characteristics, qualities and geographic origin of SAS’s product by falsely suggesting that the product is the genuine toy Perrin & Nissen has been making since 1947, instead of a Chinese knockoff. Perrin & Nissen also alleged that “Established Toy Since 1947” had secondary meaning, which allegation was defeated by the court’s reasoning above. The genuineness argument, too, failed because Amazing Elastic Plastic has never been marketed as emanating from Perrin & Nissen, but always marked with someone else’s trademark claim.

The other false advertising claim did better. Perrin & Nissen competes with SAS because it sells “Magic Plastic” toy balloons in the US. Perrin & Nissen also alleged that SAS was advertising toy balloon products on its website using a 1997 video with Jayne Phillips of Perrin & Nissen and her daughter demonstrating the toy, which falsely represents the quality of the product because SAS is selling an inferior knockoff that doesn’t work as well. This was sufficient to state a claim: the ability to form bubbles is a material characteristic of the product.

FTC ad parodies freecreditreport.com

Slate does the comparison for me, pointing out that freecreditreport.com's annual advertising budget is a significant fraction of the FTC's total budget. Annualcreditreport.com is the only truly free source of credit reports. The FTC actor sings "don't be misled," but the FTC has more tools than internet ads if people are being misled. Perhaps the FTC needs to revisit enforcement against freecreditreport.com.

IPSC deadline extended

The submissions deadline for the 9^th Annual Intellectual Property Scholars Conference at Cardozo School of Law has been extended to April 30^th, 2009. Individual submissions should be directed to David Morrison at dmorriso@yu.edu. For more information, visit www.ipscholars.org.

Discussion questions

The American Indians In Children's Literature blog has a revised discussion guide based on the official discussion guide for Gerald McDermott's Arrow to the Sun. The wholesale copying for purposes of dissection and critique at the blog is unproblematic. Here's what interests me:

After Reading Activities

... Stage a dramatic presentation of Arrow to the Sun. Choose two to three students to be narrators. Rewrite the text for beginner readers or help them memorize their parts of the text. Some students can be actors and the rest can play instruments and provide other sound effects and music. Rehearse the production and present it to other classes and parents.

So: (1) Do teachers and schools have a license from Scholastic to create and publicly perform derivative works of Arrow to the Sun? What if they rewrote the text in light of the blog's critique: would that be within the scope of any such license? (2) Do you think that Scholastic's contract with McDermott allowing audiovisual adaptations extends to Scholastic's invitation here? (3) What sort of contract language would you draft to cover the situation if you were Scholastic?

Settlement disagreement leads to copyright, trade secret and false advertising claims

SimplexGrinnell LP v. Integrated Systems & Power, Inc., 2009 WL 857504 (S.D.N.Y.)

The plaintiff, SG, sells and services commercial fire safety systems. Defendant ISPI doesn’t make its own fire safety systems, but services them. They compete in New York and New Jersey. Often, customers will contract with SG to install a fire alarm system, but retain ISPI to service and maintain it. Before 2002, the parties had a close business relationship—ISPI originated in 1987 as a local service company for SG’s predecessor. But in 2002, they parted ways, and ISPI filed for Chapter 11 bankruptcy. ISPI instituted an adversary proceeding against SG, alleging breach of contract and various business torts. In 2004, the parties agreed on a settlement, which required SG to pay over a million dollars to ISPI and voided all prior agreeements between them. However, SG was required to sell ISPI service parts, including patches and fixes, for its then-existing customer base at list price. It also required SG to provide ISPI with certain forms of technical support.

The basic question in the case was whether the software used to program and configure two systems, the 4100 and 4100U, were covered by the settlement. With both systems, the software can run through a laptop or an on-site network computer; in either case, a software key (dongle) must be attached to the computer for the programs to run. Each time a program is run, it’s loaded into RAM, where it remains while a technician configures the system; this can take minutes or hours.

There are multiple revisions for each program—4100 has revisions 8 and 9, and 4100 goes from revision 10 to revision 12. And each revision has a number of versions: approximately 50 for 4100U. The particular version of the program must match the particular fire system panel installed. Dongles, however, are not version- or revision-specific: a given dongle works on all SG programs. (Query: why no DMCA claim?)

SG didn’t dispute that ISPI could use the 4100 program to service customers on its customer list. And the court concluded that the 4100U program was also a service part. Among other things, the settlement agreement defined “service parts” as items that used a six-digit product identification number, as both 4100 and 4100U programs did and do, and SG repeatedly sent ISPI price lists for “service parts,” pursuant to the settlement, that included the programs. And the programs are necessary to perform various fire system functions, making them service parts within the plain meaning of the term. The dongles were also service parts, despite SG’s attempts to claim otherwise, even if they contained proprietary information.

SG registered copyrights one version each of revisions 8 through 11 of the 4100 and 4100U programs. The registrations are from 2005; it’s also applied to register one revision of version 12, with an application filed in 2008.

ISPI had access to program disks, and later to a SG website to download revisions and updates. ISPI didn’t limit its use of the programs to servicing customers on the settlement customer list. At some point in 2005 or 2006, SG cut off ISPI’s website access, and denied ISPI’s request for new versions, but never sought to have ISPI return the software it possessed. In 2006, SG wrote to two of ISPI’s new customers, telling them that there was no authorized servicer other than SG itself. SG also denied ISPI’s request to buy dongles specifically for two customers on the existing customer list; SG argued unsuccessfully that the dongles were trade secrets, not service parts.

A preliminary issue was the effect of SG’s registrations. In the Second Circuit, registration of a work doesn’t confer jurisdiction over claims of infringement in derivative works. Each new version of SG’s program is a separate derivative work, as set forth in SG’s registrations themselves. Thus, the court only had jurisdiction over claims that ISPI infringed the registered revisions (not, of course, including the revision whose registration is still pending).

The court concluded that ISPI was infringing SG’s copyrights when it used the software with new customers, but not when it used the software with preexisting customers. Each use of the program creates a copy in RAM (the recent 2^nd Circuit Cartoon Network case supported the idea that retention in RAM for a few minutes, as here, sufficed), implicating the reproduction right. In some cases, new customers had the appropriate program and dongle installed on their onsite computers; in other cases, ISPI serviced new customers by bringing in a laptop with the appropriate software already installed. In either case, the court concluded, ISPI was infringing.

The court denied SG’s contention that ISPI was only authorized to use versions and revisions existing at the time of settlement, even if the customers on the list changed their systems and therefore needed new software. The settlement agreement didn’t limit ISPI to the systems existing at the time of the agreement; it put a limit on the parties ISPI had a right to service (and a right to get parts from SG for), not the equipment they used.

Thus, SG could refuse to sell service parts to ISPI for the use of other customers; and SG could assert copyright and trade secret rights against ISPI’s use of the parts for new customers, even if ISPI legitimately acquired the parts. (Query how first sale fits into this; but it’s not clear that the software or the dongles are among the service parts available on the resale market.) The court also rejected ISPI’s arguments that ISPI was licensed to use the programs more broadly and that SG was estopped from claiming infringement.

ISPI promoted itself in emails and letters to potential clients as the only company other than SG that had the necessary software to program SG panels. It stated that it used factory parts, had factory-trained technicians, and once said that it had “direct access to parts and support from the factory.” ISPI could obtain SG parts through other companies, even without direct access. Many of its service technicians were previously employed or trained by SG.

Neither party showed any damages from the other’s conduct. SG wasn’t entitled to statutory damages; it didn’t initially seek damages at all in its complaint, and its allegations of copyright infringement were at first limited to two customers on the settlement list; the incidents for which it sought damages were technically beyond the scope of the present action. Even were that not so, SG could only show a couple of instances of infringement of the registered versions, and it meet its burden of showing that its registrations predated the infringement, so statutory damages were unavailable.

Likewise, SG wasn’t entitled to costs and attorneys’ fees; it largely failed to establish specific acts of infringement, and the case was really about interpretation of the bankruptcy settlement, as to which each side prevailed in part. The most equitable solution was for each party to bear its own costs.

The court found that SG was entitled to an injunction against copyright infringement. Irreparable injury could be presumed from infringement; the evidence suggested ISPI would continue to infringe absent an injunction; ISPI had identified no hardship beyond the hardship of loss of ability to engage in unauthorized conduct and the resulting loss of business; and there was no public interest at stake, because SG could continue to service and maintain fire alarm systems that ISPI couldn’t. The injunction, however, would only extend to the particular versions of the programs over which the court had proper subject matter jurisdiction. The Second Circuit doesn’t allow the kind of general prophylactic injunction that other circuits do. (Query whether this rule will fall along with the Second Circuit’s ruling rejecting the Tasini settlement, when the Supreme Court does reverse.) SG’s remedy for other infringements is to register the other versions. The court’s ruling on the dongle will also preclude unauthorized use of the programs.

So: the dongles contain a trade secret, and ISPI misappropriated it as applied to new customers; for customers on the existing customer list, there was no misappropriation because ISPI was entitled to use the dongles. The court held that the dongles are trade secrets. They’re kept secret, even though they’re sometimes left at customer sites, because they are only provided to authorized users and are not available to the public at large. (Are any measures taken against reverse engineering, whether contractual or technical? This analysis seems rather brisk to me, sensitized as I am by Elizabeth Rowe’s recent presentation on trade secrets.)

ISPI misappropriated the dongles; it didn’t really argue the point, instead arguing that it was entitled to use them to service all customers. Its use for new customers was in breach of a confidential duty—it was provided the dongles for use attendant to authorized functions, first as SG’s agent and later pursuant to the settlement. The court also concluded that there was no copyright preemption, because breach of duty is an extra element. The rationale for finding no preemption, the court thought, was “nicely underscored” by the facts here, because the primary claims of copyright infringement were “largely irremediable.” (I would think this is a rationale for finding preemption—if the infringement were irremediable because of expiration of the limitations period, for example, then the court should be clear that a state-law cause of action shouldn’t resurrect what’s actually a copyright claim; lack of subject matter jurisdiction for failure to register is the same type of barrier. This isn’t to say that the trade secret claim should be preempted—though I do wonder whether the DMCA should factor into that analysis—but that the court’s extra reason is not as helpful as it thinks.) Trade secret is uniquely valuable for computer programmers precisely because it protects ideas, processes and systems that copyright can’t.

The court therefore enjoined unauthorized use of the dongles. (Given SG’s recalcitrance on providing any software updates or dongles, I would think ISPI’s also entitled to an injunction allowing it to purchase same for old customers, but maybe ISPI didn’t ask for that.) The court did need to revisit irreparable injury, because recent circuit precedent suggests that damages will often be a complete remedy in trade secret case when there is no danger of further dissemination and the only possible injury is loss of sales to a competitor. The misappropriator who uses a trade secret to profit will often have the same interest as the the owner in avoiding further dissemination. But the court found that here, the interest in preventing copyright infringement of unregistered versions was sufficient to justify a finding of irreparable injury.

SG also alleged unfair competition in violation of the Lanham Act and state law. The court rejected ISPI’s argument for copyright preemption, because false designation of origin and false advertising aren’t rights equivalent to a copyright right. But SG lost the §43(a)(1)(A) claim, which seemed to be that ISPI misled customers into thinking it was a full and complete substitute for SG. Improperly marketing a product by creating a false impression of a link between the plaintiff’s product and the defendant’s product, those, is actionable as false advertising; it’s not a representation that defendant’s product originated with plaintiff’s.

ISPI’s claims that it had “direct access to parts and support from the factory” and “all the software necessary for programming” was only true for old customers, but false by necessary implication for new customers. They’re material statements, and the second one was made broadly to many potential customers; the first was only made to one New Jersey customer, which (1) wasn’t enough to constitute commercial advertising or promotion under the Lanham Act and (2) didn’t violate New York law because it was directed at New Jersey (which kind of sounds like a New Jersey joke).

ISPI’s claim to have “factory trained technicians” was not literally false, even though SG argued that their training was out of date. Nothing in the ads suggested that the training was the most up-to-date. Nor was the alleged misrepresentation shown to be material; the testimony was that most expertise comes from doing the job.

BC Law Review Symposium, panel 4

The First Amendment & The Construction of Copyright

Alfred Yen, Boston College Law School

Yen accepts Eldred, at least partially, but copyright law still chills speech. In particular, third-party liability poses particular risks because the incentives of the person doing the chilling are different. A speaker will fully weigh the value of her own speech—monetary or otherwise—in deciding whether to resist. But the intermediary has much less incentive to resist.

The expansion of indirect liability over time has made this a bigger deal—e.g., the expansion of vicarious liability from cases of direct financial benefit to indirect and diffuse financial benefit. Vicarious liability is strict—there’s nothing the defendant can do to avoid liability other than to censor another party. That makes it chilling. Contributory: similar issues. What constitutes knowledge for contributory liability? If a copyright owner informs eBay that copyright infringement is occurring on its network, is eBay now liable? That would be strict liability on the cheap. Inducement: another form of fault-based liability, here an intentional tort.

At the time of Sullivan, the common law of libel was also strict liability, including both compensatory and presumed damages (which can be awarded without proof). To the extent that vicarious liability is respondeat superior—responsibility for what your employees do—he has no problem with that. But the more expanded vicarious liability in copyright is constitutionally problematic. Sullivan and Gertz also tell us how contributory infringement should be construed. Notice of generic infringement on a network is constitutionally problematic, converting a fault-based cause of action to a strict liability cause of action. A plaintiff must at least show fault before claiming damages: the defendant needs to have behaved unreasonably under the circumstances, and failing to prevent all infringement isn’t unreasonable.

Following Gertz (which requires greater fault before presumed damages can be awarded than when baseline liability for actual damages in defamation can be awarded), to the extent that copyright allows presumed damages, they should be available in third-party cases only for reckless or intentional behavior.

Even if you don’t believe that this is a constitutional requirement, constitutional sensitivity counsels these reforms.

David Olson, Boston College Law School

Other changes in copyright: elimination of formalities, expansion of term—huge change in our lived experience of copyright law. The First Amendment interests accommodated by copyright law are no longer accommodated so well. The traditional contours analysis can show how our lived experience of copyright has changed.

So what counts as traditional contours? Kahle (certain formalities) and Golan (URAA restoration) (where a new ruling was just issued). The Berne Convention requires us to remove formalities. Golan: Taking material out of the public domain transgresses the traditional contours. The Tenth Circuit therefore sent it back to the district court for a First Amendment analysis; the district court applied intermediate scrutiny (both sides agreed that restoration was content-neutral and that the category of “foreign works” was too general to constitute a content-based category) and found the law insufficiently tailored. People who had used the works had reliance interests, and their First Amendment interests could have been protected while still complying with Berne.

Formalities in general might be a target—even though a generation has now grown up without formalities, it hasn’t been long enough to constitute a tradition. Then the question is whether compliance with the Berne Convention, along with equity and protecting authors from tiny mistakes, is sufficient government interest to justify the abandonment of formalities. The other rationales aren’t sufficient, but the Berne Convention is quite strong; the First Amendment interest might not outweigh it. But maybe we should do narrow tailoring for remedies for authors who haven’t complied with formalities: notice and registration. Also gives us a strong First Amendment interest in orphan works. Could have a requirement that a copyright owner comply with formalities, and if not the only remedy for infringement would be payment of a predetermined fee.

Moderator: Elizabeth Townsend Gard, Tulane University Law School: What would a case challenging formalities look like?

Olson: Ideally, you’d find people, maybe scholars/documentarians who want to make use of orphan works, can’t find the authors, and then could show a real impingement on their speech. File a declaratory judgment.

Yen: Who’s the defendant? Is the claim the statute is unconstitutional as applied?

Olson: The defendant is the US, and you could claim as-applied or facial unconstitutionality.

Gard: Can these two papers be put together?

Yen: He’s particularly concerned with third parties; first parties have incentives to assert their own rights. (Isn’t this a classic question of internalization—as Wendy Gordon noted long ago, fair users routinely don’t actually internalize all the benefits of their uses, for example, so are in similar positions to third parties in terms of incentives?) The First Amendment isn’t a cureall. But there might be room in circumvention and DRM to apply his analysis. He isn’t tying what he’s done here to traditional contours. He does highlight that it’s easy now to become an inadvertent infringer, which it wasn’t in 1909, where notice applied.

Me: (1) I’m now wondering about the role of knowledge/scienter/copyright myths among users—if we care about not imposing liability without fault on intermediaries, why shouldn’t we care about imposing liability without fault on initial speakers/copiers, who may think that copyright requires notice? Or are unconscious copiers? (2) Under Olson’s scheme, presumably the Supreme Court should affirm the Second Circuit case rejecting the settlement of the Tasini follow-on claims because the settlement can’t cover unregistered works.

Yen: The logic of his position probably does extend to individual liability without fault. For a later project!

Liu: Say more about what “traditional contours” means. Implicit in your article is a definition of traditional contours, but what could that possibly mean? The Copyright Act has changed so dramatically since 1789 in scope, works covered, rights granted, term, and lots of other ways (even registration and notice have changed hugely—you used to have to publish notice in a newspaper!). Why single out formalities?

Olson: one reason for traditional contours was a notion of judicial economy. Another: deference to Congress, which he expects the courts would continue to do. Courts will resist full cost-benefit analysis. Sometimes, though, balancing will be necessary.

Liu: Would you treat intermediaries the same regardless of how people are using them? E.g., is there a difference between Napster (which arguably had more limited speech value than the NYT) than YouTube (where there’s more likely to be speech value in what’s up there)?

Yen: thought about the project in terms of an ISP who had full speech rights of its own. Vicarious liability should be rare, and limited to employees; most cases should be contributory liability. (So, I guess, his answer is yes, treat them the same.)

The benefit of using contributory liability is to ask nuanced questions about whether a particular third-party defendant is in a position to take cheap and effective precautions against infringement without also wiping out a lot of valuable noninfringing speech. This is important because the market often doesn’t work that well in letting people held strictly liable for others’ speech pass their costs on and work out for themselves who should be doing the screening.

Mammoth opinion in drug false advertising case

Bracco Diagnostics, Inc. v. Amersham Health, Inc., 2009 WL 806581 (D.N.J.)

Fair warning: this decision runs over 120 pages in Word. It is the product of a 39-day bench trial; I hope everyone took a vacation afterwards. Lots of stuff happened, probably the most wasteful of which was that a bunch of expensive expert opinions got excluded on Daubert grounds. The opinion also suggests some of the huge burdens of a false advertising case where many relevant representations are made by sales reps. Here, there were detailed notes of over 300,000 sales visits, creating an enormous job of reviewing and coding them, because the parties disagreed vigorously about how to characterize the notes of what got said.

The parties sued each other for false advertising. Bracco proved some false advertising, but couldn’t establish a causal nexus between the false ads and its alleged lost profits. “[T]he greater number” of Amersham’s ads were true, though some were false in extrapolating beyond the results of reliable, well-controlled studies. Thus, the court granted an injunction and damages for millions of dollars in corrective advertising. On the counterclaims, Amersham gave up on its pursuit of damages and Bracco discontinued the claims at issue, so even though some of Bracco’s ads were false the court didn’t grant an injunction against Bracco. The court required the parties to use an alternative dispute resolution mechanism for future allegations of false advertising.

Falsity

The parties sell x-ray contrast media, which are classified by osmolality. Bracco makes Isovue and Amersham makes Visipaque (a product with the osmolality of blood, also called iso-osmolar). Amersham made establishment claims that its iso-osmolar Visipaque performed better in terms of renal effects than low-osmolar contrast media (LOCM) such as Isovue. Amersham generalized to the class, even though the reliable studies were performed using its own LOCM as the comparator, in part to minimize the impact of its claims on that product, Omnipaque. (There were a bunch of other studies the court concluded did not support the general superiority claim.) In fact, there were no head-to-head studies of Visipaque versus multiple LOCM, or versus LOCM combined with pretreatments, which can improve the performance of LOCM. The FDA has sent warning letters to Amersham indicating that the results of its study can’t be extrapolated to media other than Omnipaque in advertising.

Here’s a bad fact: while one key study that was supposed to prove Visipaque’s renal superiority was ongoing, Amersham took “secret and forbidden peeks at the data looking for trends, and even changed the study endpoints and stopped the study early in response.” When a New England Journal of Medicine reviewer asked if there had been an interim analysis, Amersham and the authors denied it, then amended the article to include this false denial. The “secret attempt to ‘fix’ the study midstream” made the trial non-prospective. The court was also not impressed by the fact that Amersham’s marketing director “provided input to the NEJM article to try to make it misleading, and then celebrated the final version’s obscuring of the limitation of the results of the study to Omnipaque and its overly broad and unsupportable conclusion.”

However, the court determined that the study results were not entirely vitiated by these and other flaws. As long as Amersham carefully identified that Visipaque had been compared to Omnipaque alone, it could use the study results in ads; it just couldn’t use the study to claim general superiority. Notably, the court instructed that if Amersham uses its brand name Visipaque in ads, it must similarly refer to the brand name of the comparator—Omnipaque—instead of the clinical name (iohexol).

The case reminds us strongly that medical literature can say things that the FDA doesn’t allow drug manufacturers to say. One study author testified that he, his co-authors, and the NEJM believed in the scientific reasonableness of the conclusion (extrapolating superiority over Omnipaque to general superiority). But the FDA has repeatedly rejected Amersham’s attempts to make that claim itself.

Bracco doesn’t come off particularly awesome here either; it sponsored a head-to-head randomized trial comparing Visipaque and Isovue on the incidence of cardiac adverse events, then tried to reanalyze the data, undermine the results, and pressure the study’s author when it showed superiority for Visipaque.

Separately, Amersham overclaimed Visipaque’s advantage in patient comfort; its claims are only supported in regard to peripheral angiopathy procedures, not any others, as the FDA has reminded Amersham. Amersham also made unsupported claims of lower costs, based on the idea that Visipaque led to lower rates of adverse events, which are costly. There’s some indication that Visipaque has a higher rate of delayed adverse events than Isovue and other similar contrast media.

Only an unambiguous message can be literally false. The court found three key renal statements: “Visipaque may be better than a LOCM,” “Visipaque is better than all LOCM,” and “Visipaque is as good as or better than a LOCM with prophylactics.” The last two were unambiguous. The first claim was paraphrased from the key study and, without context, may be misleading—in context, it’s clear that “a LOCM” is “Omnipaque,” the LOCM tested. But the court found the phrase misleading on its own. (Is this a stealth application of falsity by necessary implication? I think the doctrine fits.) As for the non-renal superiority claims, there were cardiovascular superiority claims, which included claims of less pain, and cost superiority claims.

These were all establishment claims. (Amersham argued vainly that Bracco had the burden of proof to show by surveys that its claims were establishment claims. It was clear that these superiority claims were based on tests.) So Bracco needed to show that the tests didn’t support the claim, either by attacking the reliability of the tests or by showing that the claim wasn’t sufficiently founded in the tests. The court found that “Visipaque is better than all LOCM” was an extrapolation that strayed too far from the results of the underlying studies. The court found that those studies were reliable, but without identifying which LOCM was tested, disseminating the studies’ conclusions was misleading. Amersham must clearly and conspicuously state which drugs were actually tested. And it may not explicitly or implicitly communicate a superiority message over Isovue without a reliable head-to-head study. The non-renal superiority claims fared similarly.

The court found testimony about FDA guidelines to be legally irrelevant. In particular, the FDA requires substantial evidence before allowing superiority claims, defined as two or more adequate and well-controlled studies directly comparing the same products. But it’s not sufficient under the Lanham Act to show that claims are inadequately substantiated under FDA rules; claims must be shown to be literally false or misleading. Thus, a defendant could advertise the results of one adequate well-controlled head-to-head study without violating the Lanham Act (and just wait for the FDA letter, I suppose).

However, the FDA’s response to the claims at issue is probative and persuasive. Here, the court didn’t have to interpret the FDCA or speculate on the FDA’s position, since the FDA had provided its views in “numerous letters” to Amersham about Visipaque’s misleading superiority claims. (One lesson: even if FDA enforcement is dead, worry about your competitors’ use of FDA warning letters!) Amersham argued that, to the contrary, the FDA never acted against Amersham, despite Bracco’s attempts to convince it to do so, and that Bracco was using the Lanham Act as an end run around the FDA’s inaction, since none of the FDA letters were final agency action.

But the court wasn’t usurping the FDA’s authority or preempting its findings. The FDA had already made its position abundantly clear. Still, Bracco can’t prove falsity simply by relying on the FDA’s letters applying FDA’s standards. Inadequate substantiation under FDA standards is not the same as falsity. But Bracco had other evidence of falsity.

On implied falsity, the court excluded Bracco’s consumer survey and thus had no evidence of misleadingness, as required by the case law.

Amersham’s falsity was not willful, because the claims were based on scientific studies that have not been invalidated—just not sufficiently based. Amersham did have a protocol in place attempting to weed out false claims in ads, but, perhaps unsurprisingly, that protocol let through some claims that a neutral adjudicator later found false.

Puffery

I’m not sure why the court thought it necessary to say this, but: Amersham’s statements were specific and measurable factual claims, not puffery. The use of footnotes also didn’t help, because footnotes purporting to change the apparent meaning of claims but are inconspicuous or in fine print can’t remedy a misleading claim. Amersham’s footnotes simply cited studies, without further explanation and in particularly without explaining the studies’ limitations.

Materiality

The court found materiality because: (1) Amersham’s sales and marketing teams repeated certain unsupported claims; (2) the substance of the claims can’t be observed anecdotally by doctors (this is not directly about materiality, but it shows that doctors would have to take the claims on faith); (3) the type of claims—drug safety—were shown by Amersham’s own observations and market research to be useful at generating sales; (4) there was evidence that it will take several years for Bracco to recover from the falsity. Also, given that some of the claims were literally false, there is a presumption of materiality and deception.

Commercial Speech

Not everything at issue in the case was commercial speech actionable under the Lanham Act. Most obviously, internal company documents that were never publicly disseminated in the US weren’t actionable.

Scientific articles in peer reviewed journals also aren’t commercial speech, even if the underlying research was funded by one of the parties in the hopes of improving its economic position. Amersham may have sponsored the research whose results were reported in the NEJM, but it wasn’t the author; the author wasn’t paid for his work on the article; the article didn’t advocate a particular purchase, even though it came to specific conclusions about which product was better suited for medical purposes; and the article was published by the NEJM, which is an impartial educational journal.

In its initial form, the court refused to inquire into the article’s reliability, but the court nonetheless determined that using articles “in a secondary dissemination in the form of commercial advertising” puts their reliability in question. Manufacturers will only seek to disseminate favorable information, and their considerable financial resources mean that favorable findings are more likely to reach doctors than unfavorable findings, distorting doctors’ understanding of safety and efficacy. When manufacturers disseminate favorable studies in order to get people to buy their drugs, they are engaging in commercial speech.

Likewise, oral statements made by Amersham’s sales reps were actionable commercial advertising or promotion, if proved. Amersham argued that the sales notes weren’t sufficient evidence of what the sales reps said; and as mentioned above, there were epic disputes about interpreting whether the notes indicated any kind of falsity. But many cases accept sales notes as evidence of what was said. Under the standard Lanham Act test, commercial advertising or promotion must be disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within that industry, which in the case of oral statements means that they’re widely disseminated and part of an organized campaign in the relevant market.

Amersham argued that the number of actually false statements at issue was too small to be actionable. Bracco contended that, given how vital face-to-face communication is to selling drugs, the sales call notes were enough. The court agreed: the sales calls weren’t made in isolation, but as part of a large-scale marketing plan. “[E]ven if the offending sales calls are a very small percentage, and thus, alone would not be actionable, when the sales calls are combined with [the] overall campaign, which was promoted through press releases, websites, and [continuing medical education], the result is false ads which have been sufficiently disseminated to be actionable under the Lanham Act.”

Amersham also argued that a good faith effort by a company to educate its sales force about what can fairly be said about published studies rendered any limited false or misleading statements made by representatives outside of those parameters not actionable. But that’s not the law; the law targets not unreasonableness, but falsity. Nonetheless, the court considered Amersham’s training “evidential,” just not dispositive; I’m not clear what that means, but my guess is it has to do with the ultimate finding that Bracco couldn’t show that it was the falsity that cost it sales.

As for the rest of it: website ads, print ads, and TV ads are all actionable, as were continuing medical education events (CMEs) sponsored by Amersham, because they were designed by Amersham to deliver a specific message of Visipaque’s renal superiority. CMEs are presented by doctors, but here Amersham had a substantial role in the creation of their content. One example of a sponsored CME used slides that had the defendant’s logo on every slide and was given by an authorized representative. The “direct control” made the CME commercial. The court also specifically found commercial speech when defendant’s logo was on the first slide of another presentation and the presentation was made in part by its paid consultants.

Unclean Hands

Bracco’s own alleged false advertising wasn’t a barrier to relief because Amersham’s claims had significant safety implications. The unclean hands defense is rarely successful, because of a strong public interest in avoiding misleading ads. Bracco’s misconduct, even if taken as established, was largely defensive and limited in scope and duration.

Injunctive Relief

Bracco met the standards for injunctive relief. The court ordered corrective advertising: Amersham is to issue a press release, including on its website, about the decision and the corrective ads. Corrective advertising is appropriate in cases of falsity that bear on public health. Amersham is also to re-train sales and marketing personnel in accordance with the opinion. Future disputes about Amersham’s ads are to go to arbitration, which may include NAD (though I suspect NAD might decline jurisdiction over some standard methods of communication with doctors, like CME and sales rep visits), and Amersham is to bear the costs associated with the disputes if the ads are found to be false, while Bracco will bear them if the ads are not found to be false.

Damages

Falsity leads to a presumption of consumer deception and harm. But that doesn’t alone justify an award of money damages. For that, you need willfulness or other evidence. Here, there was insufficient evidence of willfulness; the studies were subject to interpretation (though Amersham wrongly interpreted them in its own favor) and Amersham did have an extensive ad approval process that considered FDA and other issues.

Amersham’s witnesses conceded that the Visipaque renal safety claims drove substantial sales increases, a big chunk of which were at Bracco’s expense, since the market is effectively a duopoly. Nonetheless, only some of the claims were false; others were “accurate touting of favorable results of reliable scientific studies,” which means it was impossible to conclude that the false ads were the cause of Bracco’s lost profits, so lost profits couldn’t be awarded. In particular, the court found that the falsity wasn’t the cause of Bracco losing several major contracts to Amersham. The basic problem was that some of Amersham’s uniqueness claims were true, while others were false, and it’s hard to tell which drove sales.

Disgorgement of Amersham’s profits was also inappropriate. Using the Third Circuit’s five-factor test: (1) Amersham’s acts weren’t willful or deliberate. (2) The court found insufficient evidence of sales diversion, as noted above. (3) Other remedies—injunctive relief and compensatory damages for the costs of Bracco’s corrective ads—were sufficient. (4) Bracco acted fast in asserting its rights, which favors disgorgement. (5) There’s a strong public policy in making false advertising unprofitable, deterring false statements about drug safety, and deterring inflated drug prices based on inflated clinical claims. But deterrence alone isn’t enough to justify disgorgement without willful conduct.

Bracco was, however, entitled to recover its costs for corrective ads and other damage control expenses if (1) there was a likelihood of confusion or damage to sales, profits or goodwill; (2) the damage control expenses were responsive to the misconduct; and (3) the expenses were reasonable under the circumstances and proportionate to the damage that was likely to occur. Bracco met these requirements. Hundreds of millions of dollars were at stake; it was reasonable of Bracco to spend a bunch, and the court awarded nearly $11.4 million.

However, the court concluded that Amersham wouldn’t have to pay Bracco’s expenses in investing in research to disprove the falsity. The parties compete fiercely, and Bracco has an incentive to invest in studies anyway. Given the number of studies submitted to the court, it appears to be “commonplace, if not a necessary part of the industry,” to spend significant amounts on comparative studies. Indeed, virtually every clinical trial, study, and publication in the area was sponsored by one of the parties; the court lamented the absence of a truly independent clinical study.

Bracco also didn’t get attorneys’ fees, which probably ate up a huge amount of the award (one expert alone got paid $500,000, which among other things made the court skeptical of claims that Bracco couldn’t have done a bigger survey because of the expense).

Counterclaims

Amersham alleged that Bracco falsely advertised Isovue’s superiority to Omnipaque. The court agreed that Bracco’s tests didn’t prove its claims. Bracco stipulated that these claims were no longer in use, and the court found no real possibility that it would revive the claims, so it declined to grant injunctive relief. But if disputes do arise, the same arbitration procedure is to be used, with the same cost-bearing structure.

BC Law Review Symposium, panel 3

Publicity, Reputation, Commerce & The First Amendment

Diane Zimmerman, NYU Law

Not all things we think of as IP will offend a First Amendment theorist. Trade secret: We respect rights not to speak, so much of trade secret law is acceptable under the First Amendment. Similarly, free speech doctrine is not that friendly to false/misleading speech. But outside of copyright, IP has a problem—when the label property gets placed on an interest, suddenly the image of dollar signs changes the way speech regulations are approached by many courts and they start balancing property versus speech. Is that legitimate?

Used to be that noncommercial use of persona was privileged, but use in advertising or products, or even some forms of commercial entertainment (Elvis lookalikes) would violate the right of publicity. This was based on a view of what constituted commercial speech that is now quite outdated. Leave aside commercial advertising uses for her purposes, and deal only with nonadvertising uses, including merchandising (coffee mugs, T-shirts).

Whatever you think about the First Amendment’s role in ads, there are speech concerns in these areas. Horror story: The Tony Twist case, Doe v. TCI--$15 million verdict (down from $24 million) bankrupted a comic book publisher because of the use of a hockey player’s name for one character who appeared in a fraction of the issues. The court admitted there was a free speech interest at stake, but found defendant’s intent to obtain commercial benefit sufficient to allow a jury to decide whether the commercial benefit outweighed the plaintiff’s property right.

That’s an example of a balancing test; the others are peculiar and troubling too. The Restatement of Unfair Competition sets out the common-law approach: if the use is a use on a product, plaintiff presumptively wins because that’s not expressive. That’s plain silly. You don’t put Springsteen’s face on a t-shirt because it’s a beautiful decoration; you do it because people who buy it want to express something about themselves, their origins, their allegiances. Also, the Restatement says that use of a persona unrelated to an expressive work is actionable, because the speech interest is subsumed by the property interest. But magazines use celebrity images just to attract attention all the time.

Saderup: Cal. S.Ct. came up with a test for the explicit reason of trying to salvage publicity rights against a very serious First Amendment defense. Why take transformativeness from copyright, which is provided for in the Constitution? Anyway, a realistic depiction of the Three Stooges violates the right of publicity, but turning Johnny and Edgar Winter, musicians, into half-worm, half-human characters in a comic book, that’s transformative. Wacky.

Then recently, the 8^th Circuit applied the Missouri Doe v. TCI rule in a way that seemed to invalidate all right of publicity claims, by saying that information in the public domain was free to all comers. Conclusion: chaos! Because if you try to fit the right of publicity into any kind of normal First Amendment analysis, it doesn’t work well. This is content-based regulation, identifying prohibited subject matter. How did we get to a point where we’re balancing right of publicity against free speech? Money—courts will look at an economic interest and analogize it to physical theft. But that is a false analogy.

Many people take comfort from Zacchini, which Zimmerman thinks is not a true right of publicity case. But using Tony Twist’s name is not the same thing as paying Tony Twist to play hockey, which was the issue in Zacchini. Lowe v. SEC: The Court said there would be real First Amendment problem to combat securities fraud by preventing a former security adviser from publishing a newsletter. P&G case—economic interest in barring newspaper from publishing harmful information was insufficient to justify suppression.

Roberta Kwall, DePaul Law

Wrote about the right of publicity and the First Amendment a while ago. Now interested in a particular factor she identified: morally based harm, where the use is an affront to the plaintiff’s dignity or autonomy interest. The Fat Boys case, where personas were used in a beer commercial when the Fat Boys were anti-drinking. Another case: Jackie Mason v. Jews for Jesus. JfJ used a caricature of Mason on the cover of a recruiting pamphlet—“Jackie Mason … a Jew for Jesus?!” Inside, there was a riff on his routines. But he’s not a JfJ; he’s an ordained rabbi.

The courts don’t do well understanding morally based harm in a right of publicity action. The autonomy and dignity interests at the bottom of some conceptions of the First Amendment are also at stake in the right of publicity as dignity.

The cases Zimmerman reviews don’t work to protect dignity interests. Money has nothing to do with dignity-based causes of action. In Doe v. TCI, looking at the predominant purpose of the defendant has nothing to do with the dignity-based harm. Likewise, the “actual malice” test used in Hoffman v. Capital Cities has nothing to do with dignity. Intent and money aren’t the right questions.

Two questions for a court when a plaintiff is largely or primarily concerned with dignity: (1) to what extent does the defendant’s use force the plaintiff to say something she doesn’t want to say; (2) to what extent does the defendant’s use of the plaintiff’s identity create a link between the parties? When a persona is compromised by a portrayal that the public understands as emanating from the persona, then there is a right of publicity violation. This test can show where First Amendment interests should prevail even when there is a dignitary harm—fictional portrayals aren’t compelled speech and don’t create a linkage; people understand the fiction doesn’t come from the persona. Use of Carol Burnett’s Charwoman character in Family Guy to mop the floor in a porn shop—the public understands that the parodies aren’t authorized, thus they don’t cause dignitary damage of the kind she recognizes. Closer case: when a political campaign uses an artist’s song as a theme, and the artist strongly disagrees with the politician—is that compelled speech? Is there a possible public link of the persona and the candidate? Something to discuss.

Moderator: Stacey Dogan, Northeastern University School of Law

She was struck by the difference in presumption between the two approaches. Zimmerman: presumption is that speech may not be limited absent a good reason. Kwall: if there is a harm, there’s a presumption in favor of protecting against it, which the speaker must overcome.

If the harm is dignitary, the right of publicity might be a bad idea. The vast majority of dignitary harms arise from clearly protected speech. So just because there’s some commercial hook in some instances, that doesn’t make those instances the right ones in which to address dignitary harm, when so much more harm is left unaddressed. Dogan drew an analogy to the argument I make about dilution in Gone in 60 Milliseconds.

Question for Kwall: what do you think about the merchandising right? Depending on the answer to that question, Kwall and Zimmerman may be far apart or close together.

Kwall: Wants a multifactor, context-sensitive test.

Zimmerman: She thinks courts are moving away from the newsworthy/commercial distinction, and are recognizing that other kinds of uses, including product uses, have major speech implications. Once you own up to the fact that a T-shirt is a form of speech, then it’s hard to explain why it’s not protected the way a newspaper is. We should be applying strict scrutiny!

Dogan: To her, the right of publicity is about TM law. If publicity is false endorsement, then §43 covers the waterfront. So we could abolish the independent right of publicity without trouble.

Q: How would the dignity claim survive death? Also how do you deal with postcards showing John Wayne wearing lipstick, titled “it’s a bitch to be butch”?

Kwall: if it were up to her, she’d protect personas under a theory of moral rights, but in a very cabined way. Attribution would be a requirement; you could use someone else’s persona/work as long as you identified that this was not emanating from them. And she’d terminate the interest at death.

Dogan: the problem of circularity/feedback effects—licensing practices develop in the shadow of court rules. Courts should thus draw lines early on, to protect speech interests.

Q: How would you apply dignity to Hustler v. Falwell? How would it change if it were actually a Campari ad?

Kwall: The Court said that no one would believe Falwell actually endorsed it, which is what she’d do too. If it were an ad, would it be construed as an endorsement? (No.)

Kwall eventually gets to the place where the dignity harm is being misrepresented. Dogan points out then that criticism alone leaves you with no claim. (Zimmerman points out that laudatory presentations have also been historically considered potentially actionable in false light, but most states are now collapsing that into defamation and that’s dying out.)

Lidsky: Rapp v. Jews for Jesus: same case, but not a celebrity—false light. Fla. S.Ct. used it to declare that it wouldn’t recognize false light as an independent cause of action; have to meet defamation’s standards. But the standards are different in publicity cases.

Zimmerman: we should rethink that separation. S.Ct. has said that privacy as a justification for regulating/punishing speech regularly doesn’t rise to a sufficient state interest. We haven’t used the right set of standards for evaluating publicity, though maybe we now have in privacy since those cases are so hard to win.

Papandreau: Why not return to the tort of misappropriation? If the only actionable dignity harm is misattribution, then why do you need the right of publicity? Consider what’s going on in the law of misappropriation in New York.

Kwall: The problem with misappropriation: same ills as IP generally—undefined and standardless, and almost discredited. Misappropriation might not advance the analysis.

Kwall for Zimmerman: What does she think of the idea of the plaintiff having speech interests, or autonomy/self-realization interests, in her own persona?

Zimmerman: She doesn’t think it’s two speech interests, but one speech and one self-realization/liberty interest, always in tension in a First Amendment system because unpleasant, cutting, hateful speech regularly causes the target to cringe. People’s feelings about themselves are subject to possible assault. That’s just the constitutional scheme.

Dogan: But if you define dignity only to included compelled speech, then there may be a speech interest.

Zimmerman: compelled speech is rare; disclaimer would be better.

Kwall agrees on disclaimer remedy.

Me: I don’t get the difference between Kwall’s (1) and (2). How can a copy of my image be compelled speech by me? I am not my image. Or, more specifically: how can there be any harm of this type without false endorsement? What she means by coerced speech is unclear to the extent it means anything other thus false endorsement. And the Burnett example, among others, makes it important to ask whether her definition of false endorsement is normative or empirical; it sounds empirical. But false endorsement, as we just discussed, is manipulable: suppose the plaintiff is Paris Hilton. Isn’t it easy for her to convince the public that all representations of her are endorsed by her?

Kwall: There’s a relation between compelled speech and linkage. Compelled speech goes not to public perception but the defendant’s taking the plaintiff’s image and using it in a way that makes the plaintiff look as if she’s saying something she isn’t. (I still don’t get how you know what the plaintiff looks like she’s saying without evaluating what the audience sees.)

Q: Why worry about the dignity of celebrities and not the dignity of other people?

Kwall: She wouldn’t draw any distinctions.

Minor Rescuecom question

Is it just me or does the Rescuecom opinion appendix have a bizarre reading of “bona fide” to mean “good faith generally” rather than “real attempt to use the mark as a mark and not just reserve rights”?

See: “In order to qualify to register one’s mark and receive the enhanced protections that flow from registration (giving the world notice of one’s exclusive rights in the mark), the owner must have made ‘bona fide use of the mark in the ordinary course of trade, and not merely to reserve a right in the mark.’ Id. § 1127. . . . [I]t would make no sense whatsoever for Congress to have insisted, in relation to § 1114 for example, that one who ‘without the consent of the registrant . . . use[d]. . . [a] counterfeit . . . of a registered mark in connection with the sale . . . of . . . goods [thereby] caus[ing] confusion’ will be liable to the registrant only if his use of the counterfeit was a ‘bona fide use of [the] mark in the ordinary course of trade.’ Id. §§ 1114 & 1127. Such a statute would perversely penalize only the fools while protecting the knaves, which was surely not what Congress intended.”

But if “bona fide” just means real use – good faith in use – which is strongly suggested by the words immediately following, then there’s no conceptual problem of knavery at all. The court returns to this rationale numerous times, and I think it’s quite unfounded, though I agree that trademark use can’t do the work being asked of it. My own preference would be for courts to continue the common-law development of secondary liability to make clear that Google is not directly liable for any infringement, but could be secondarily liable is those standards were met.

BC Law Review Symposium, panel 2

Panel 2: Corporate Reputation, Corporate Secrecy & The First Amendment

Elizabeth Rowe, University of Florida Levin College of Law

Trade secret lawsuits against web site operator for distributing decryption code; against individual to bar publication of sensitive photos and other materials; against a TV network to keep it from broadcasting film of a factory interior; against former employees. Assume there’s a threat to free speech from trade secret litigation. What should be done?

One question: is trade secret property? Courts are more solicitous of property rights as counterbalances against free speech claims. What is the justification for using someone else’s property? If an embezzler takes money, there’s no problem proceeding against him. Property explains the reaction of defending against the intruder. Another way to think of it: commercial privacy. But no one has ever explored what that means—how like individual privacy would commercial privacy be? A right to control access—greater protection against surveillance by competitors than the Fourth Amendment gives against surveillance by the government.

The First Amendment is generally outweighed in standard trade secret cases because the First Amendment protects public information, and a trade secret is not public. If there’s a breach of a duty of confidence, the courts will find no free speech issue. Where there’s no contractual or quasi-contractual relationship, the First Amendment weighs more heavily. Analogy to anticompetitive lawsuits defended on grounds of right to petition the government, where courts have asked (1) is the claim objectively basis, so that no reasonable litigant could believe it valid, and (2) is there a subjective motivation to interfere with a competitor’s business relationships. Courts have asked similar questions when looking at whether assertion of a trade secret claim is tortious.

Trade secret has built-in precautions, procedural and substantive. If applied vigorously, they are speech-protective. A lot of what troubles us about these cases is not unique to trade secret—broader civil procedure issues about the ability of a powerful party to assert claims against a weaker party. Defamation, etc. have the same problems. Big issue: trade secret isn’t defined/established until litigation—there’s no registration system or examination. Proving that the business took reasonable steps to keep the secret secret is usually the hardest step for the plaintiff; unfortunately, most court opinions don’t discuss the threshold question of what counts as a trade secret. That’s improper. The UTSA makes a fee award available to a prevailing defendant in cases in which the plaintiff should have known it didn’t have a trade secret.

Practical limits on lawsuits: threatening lawsuit can encourage further disclosure, as when a disgruntled employee posts a trade secret on the internet. Once it’s out there, the secrecy is lost.

Example of trade secret litigation gone bad: Scientology litigation to protect its religious secrets. Years, dozens of appeals, bad litigation tactics, multiple judges; ended up with a big fees award to defendants. Scientology had a philosophy of using litigation to harass and discourage critics, rather than to win. Was there proper application of the procedural and substative rules? Yes, just way too late, but in the end the courts got it right; the church only got one preliminary injunction (some other TROs, later dissolved once the court clued in). Scientology created controversy and called attention to its secrets; attempt to preserve secrecy failed.

Moderator, Lee Tien, EFF: EFF sees cases at a very different stage, before they actually happen. And usually the cases then don’t happen because EFF tells people it can’t find them counsel, so the people take the challenged stuff down. How much can we derive then from lawsuits, when on the ground the cost to the corporation is a couple of C&Ds and they usually work? Significant chilling effect, which might not be so bad for many things, but expansive secretization can be a problem when Apple sends out 10,000 copies of its OS and then claims it’s still a trade secret. Or people who get devices as a gift and want to reverse engineer them—they aren’t bound by contract, but are still vulnerable.

Rebecca Tushnet, Georgetown Law

Who gets criticize corporations, and under what terms? There are three distinct groups who might want to engage in speech about about commercial entities or to constrain those commercial entities from making particular claims of their own. Competitors may sue each other for false advertising under the Lanham Act and coordinate state unfair competition law; consumers may sue businesses using state consumer protection laws and common-law claims; and government regulators may impose requirements on what businesses must and may not say.

I will evaluate a facially persuasive but ultimately misguided claim about corporate speech: that because consumers regularly get to say nasty things about corporations under the lax standards governing defamation of public figures, corporations must be free to make factual claims subject only to defamation-type restrictions on intentionally false statements—essentially, common-law fraud.

Courts have occasionally evaluated whether the Federal Trade Commission’s findings are consistent with the First Amendment, but have put few limits on the FTC. Likewise, the only courts to consider whether the First Amendment ought to impose restrictions on Lanham Act false advertising claims have rejected free speech claims. Nike v. Kasky, a putative consumer class action, was the first real attempt to apply First Amendment restraints to private consumer protection law. It was not a success, but it came nearer than the others, in part because of a fairness argument unavailable in the other two contexts.

Beginning in 1996, Nike was targeted by protesters claiming that it (actually, its subcontractors) underpaid and abused workers in developing countries. Nike launched a public relations counteroffensive. Marc Kasky believed that Nike was not telling the truth in those claims, so he sued, as California law then allowed him to do. A divided California Supreme Court held that Nike’s statements about its labor practices in press releases, letters to universities which had contracts with Nike, paid “advertorials,” and letters to the editor were commercial speech. The Supreme Court granted cert, but ultimately dismissed certiorari as improvidently granted because of underlying procedural difficulties.

Kasky could have been a New York Times v. Sullivan for consumer class actions. Several aspects of Kasky combined to make the plaintiff’s claim troubling. Nike had faced a well-organized campaign determined to make its labor practices matters of public controversy, and had been seeking to defend itself when it spoke out. California law, like the federal Lanham Act and most state consumer protection laws, lacks any scienter requirement; perfectly good-faith errors, if false, can lead to liability. In addition, California’s standing requirement for consumer suits was minimal at best.

What happened? I want to focus here on one particular, rhetorically powerful argument for Nike and why it was not and should not have been sufficient.

From Nike’s perspective, one significant problem with calling Nike’s speech commercial was its effect on the balance between Nike and its critics. When antiglobalization forces condemn Nike for its labor practices, their speech – concededly noncommercial – is subject only to general libel laws. One side gets to fight freestyle while the other is limited to Marquis of Queensberry rules.

Some responses cast the matter as one of David confronting Goliath. Nike’s side often cast the issue as one of organized interest groups, distinct from consumers, attacking businesses: politically correct Goliath versus business Goliath (or even small business David).

The fundamental difficulty with the fisticuffs metaphor: Advertising law allows many different actors to challenge an ad. The Lanham Act requires both sides to refrain from foul blows, so there’s no unfairness at all between competitors. The FTC, state attorneys general, and similar government actors are referees: cousins to that familiar government agent, the nightwatchman. If First Amendment doctrine requires application of a defamation standard to false advertising claims in the name of equality, it will disrupt other coherent regulatory schemes that are already equal – the referee will go home.

The answer might be to require only consumers to show fault. But that rule would be even more bizarre. The core justification for state regulation and competitor lawsuits is to protect consumers from harm. If consumers themselves can only stop deliberate or negligent falsehood, what justification do others – who have interests that will never quite align with consumers’ – have for suppressing nonnegligent speech?

There is also a second symmetry that is key to Nike’s argument from fairness: nice things versus nasty things. The argument is that, if consumers can attack Nike, Nike must be allowed to defend itself with non-defamatory speech using the same standards. This symmetry is vitally important to the other two regulatory schemes because the usual false advertising scenario involves someone challenging nice things that the advertiser says about itself.

Nike’s attempt to speak positively about itself subject only to New York Times v. Sullivan constraints was therefore a dagger aimed at the heart of false advertising law generally. Conclusion: when gov’t acts as a regulator, as with the FTC, or allows consumers to act as regulators, by using the courts, then the symmetry argument should not apply.

Where might symmetry play a useful role in imposing First Amendment constraints on regulations of commercial speech? Where they actually disadvantage competitors systematically, perhaps. Trademark owners get to take advantage of every non-false sales pitch possible, including appeals to our emotions, the seductive likability of the familiar [Bradford on emotion and dilution], etc. But dilution protection means that critics/competitors cannot appeal to our negative emotions, cannot use disgust or other emotions to get us to abandon a brand. [Deere v. MTD; Katya Assaf’s The Dilution of Culture and the Law of Trademarks, 49 IDEA 1 (2008)] To the extent that dilution actually does force competitors to fight on different terms, it might be subject to the viewpoint discrimination/Marquis of Queensberry objection.

Dilution may be a generational thing. In 1980, dilution was not considered a strong argument; it wasn’t until later, and a general trend towards propertization—we didn’t use “IP” as a term then—that dilution strengthened. His initial reaction to Kasky: this is a case about whether the speech was in fact commercial. It was embedded in a dialogue about globalization. The ACLU was on Nike’s side. But there is a blurring of the line between participating in public debate and proposing a commercial transaction.

Papandreau: For Rowe: protecting public speech isn’t the proper definition of the First Amendment’s scope. There seems to be a real chilling effect of the lawsuits, especially when combined with Jane Doe claims—because it’s so easy to allege a trade secret violation, maybe easier than alleging defamation.

Rowe: True, this is the fundamental problem of trade secret law (not just in its First Amendment intersection). In practice, there can be a long time between a TRO and a preliminary injunction—depends on the defendant whether this is something that it/he can afford. But it’s not a unique problem: the power of civil litigation generally can chill.

Zimmerman: Isn’t it a problem that there’s very little scrutiny of the nature of the trade secret, not just the methods used to protect it ? The Food Lion v. ABC case might have been brought as a trade secret—about the operation of the back room of the grocery. Yet trade secret folks seem to agree that the nature of the trade secret doesn’t seem to matter much. Also, how the defendant got the trade secret matters a lot—if a third party thinks the trade secret has public interest, then that’s a big First Amendment deal and yet the UTSA seems to contemplate a legitimate action against the third party.

Tien: The standard saying that the defendant need only have “reason to know” of the trade secret status factors into that.

Rowe: On the one hand, trade secret law doesn’t make value judgments—marketing info, secret recipes, maybe even illegal/immoral shortcuts (Bernie Madoff’s business model?). But courts in practice do make value judgments. Courts distinguish between technical and business info; courts are more likely to find technical info (possible patent subject matter) to be a trade secret than business (marketing) info.

Zimmerman: But what about drug info, scientific info reported to FDA that the FDA calls trade secret?

Rowe: There are exceptions for disclosing info in the public interest. California’s Bunner case is problematic in many ways, including that it involved reverse engineering. It shouldn’t have gone as far as it did.

Tien: The EFF makes all these arguments! But in N.D. Cal. we have a lot of pro-business judges inclined to protect trade secret first and ask questions after. Given the expense of discovery, the deck is stacked.

Kwall: Privacy v. property—say more.

Rowe: Everybody seems to think that property is the stronger claim. The privacy claim just adds extra, compared to perhaps other rights.

Joe Liu: Say more about equivalence—is it just an aesthetic preference? Being mistaken about statements about yourself is less persuasive. Is Nike hamstrung by application of strict liability, as was the concern in Sullivan?

Lidsky: Protection of speech shouldn’t depend on ID of speaker, right? Separately, Fred Schauer talks about boundaries between areas of law—securities regulation has proved relatively impervious to First Amendment constraints.

Me: I don’t think that first proposition is descriptively or normatively true, at least as applied to non-human entities. Schauer doesn’t have a theory of how the boundary shifts; Nike was an attempt to move the boundary and make it hard to argue with a straight face that the Lanham Act was exempt from scrutiny.

Yen: Unpredictability of damages was a big concern in Sullivan—is that as big a problem when injunction is the only remedy?

Me: Absolutely, the SCt later decided to calibrate speech-protective effects by allowing some lawsuits even when Sullivan’s standards weren’t met, but cabining damages so that only actual damages were available in the absence of actual malice. You can do some rough calibration that way, but in the end a C&D letter may have an irreducible chilling effect, at least depending on the size of the target.

Zimmerman: Rethinking commercial speech—this conversation is ignoring the audience. The audience wants to hear what Nike and Kasky have to say. She’s willing to cabin off commercial advertising, though not to cabin off the SEC and the FTC. But the public benefits from robust debate—it’s going to buy the sneakers.

Me: Sure, and Nike didn’t stop advertising or even talking about its labor policies after Kasky. Unless you get rid of the Lanham Act and the FTC, kicking Kasky out of the running still leaves Nike subject to a plain falsity/misleadingness standard in its ads.

Zimmerman: But Nike should have been free to defend itself—it didn’t start the conversation.

Me: It started the conversation about the shoes—it doesn’t get to control the metrics people use to evaluate the shoes. Every instance of speech participates in an ongoing conversation about what we should value.

Reputation and Property Meet the First Amendment

Boston College Law Review Symposium

Panel 1: Anonymity in Cyberspace

Lauren Gelman, Stanford Law School’s Center for Internet & Society

Privacy issue: if people can’t have better privacy guarantees, they may stop using the internet to do so many useful things. Proposal: a technical solution used to signal how information can be redisseminated, like Creative Commons but based on neighborliness rather than license.

Why do people post things on the public internet that aren’t meant for the public? Because of blurry-edged social networks. Like phone numbers in physical space: you have a listed phone number if you can’t ID in advance everyone you want to be able to contact you. There are social costs—telemarketers, etc.—but also benefits. On the internet, people share stories and build communities. But they end up with a binary choice: share information with everyone or privatize and decide on an individual basis. Problems: data mining is going to get more effective; and our stories/photos/etc. aren’t just about ourselves—they feature other people, meaning that other people control your privacy.

To avoid free speech issues, the proposed solution is built on signalling and neighborliness. Not like copyright—the people burdened by disintermediation in copyright are very different from the people burdened by disintermediation with privacy. They lack resources/economic incentive to protect themselves, they are less sophisticated, and the background privacy law is a lot less favorable to them than background copyright law.

Moderator, Jonathan Zittrain, Harvard Law: We are no longer worried about David v. Goliath (government, Amazon) but David v. David—how to deal with that, while being sensitive to First Amendment concerns? Lidsky addresses similar questions with respect to John Doe defendants in online anonymity cases.

Lyrissa Lidsky, University of Florida Levin College of Law

CDA 230 closed off access to the deep pocket, so it made sense to turn to John Doe lawsuits; anonymity on the internet made it necessary to find your detractor before suing him. Disinhibition: anonymity disinhibits negative expression, including defamatory expression; turns out that communication on the internet also disinhibits, even if you’re not anonymous, so that the effects of anonymity are worse on the internet.

Internet John Doe cases put very starkly on the table the value of anonymity. ISPs just used to turn over your name if sued; if you were lucky, the ISP would notify you of the suit, and you might be able to get counsel and file a motion to quash. Most judges would say: this is an allegation of libel, so the ISP needs to turn over the info. Judges didn’t care about anonymous speech, and they didn’t know the internet norms, so judges were taking statements that were opinion in context and reading them as assertions of facts.

What’s changed in the past ten years? A lot more sensitivity to the right to speak anonymously, and to the context of the internet. Courts are trying to develop a balancing test, allowing John Does to get notice before the identity is revealed and screening libel cases to make sure there’s a serious claim before anonymity is ripped away. There are more legal resources.

Lessons: (1) judicial understanding of tech shapes legal developments quite strongly. (I’ve often wondered: if judicial opinions a hundred years ago had been written like they are today, when would they have stopped defining a “railroad”?) (2) Prominent cases matter to set the paradigm against which people reason—when people think of anonymous speech, do they think of the KKK, Lori Drew, or Publius speaking truth to power? (3) Nonlegal fixes for the problem of online libel—reputationdefender.com and the like. Key adjunct to the law; what can we do to mitigate the problem outside the law? E.g., automatically link a reply to a defamatory statement, for example when the defamatory statement comes up in a search engine. (4) The importance of national approaches; there’s a state by state approach to John Doe now, but if you care about the First Amendment then each state shouldn’t get to make it up as it goes along. (5) Citizens have to be sophisticated interpreters of anonymous speech. The problems can have their own fix if people don’t give too much credence to anonymous speech; good info consumers know this. (Comment: I think this solution is undercut because people forget source more easily than they forget content, causing them to step-up the credibility of anonymous allegations over time.)

(6) Note the growth of cases against nonmedia defendants. SCt jurisprudence is developed with institutional media in mind; at first it seemed that the Court might not even apply the protections to nonmedia defendants. With more nonmedia defendants being sued, and the collapse of the divide between media and nonmedia, we need to rethink. Example: how the SCt defines actual malice. Reliance on one unverified source may be actual malice. But that’s not how individuals think about what they say; need adaptation. Another: do nonmedia defendants get the privilege of fair report, reporting what was said at a government meeting? Statutory protections against libel, such as retraction—does that apply? The statutes are written with the institutional media in mind and need revision. If the comments to a blog have defamatory statements, can the blogger claim reporters’ privilege to protect identity?

CDA immunity: these cases came up because of the CDA. The 9^th Circuit’s Roommates case has opened up a wedge, which may limit John Doe suits.

Zittrain: What does Lidsky think of Gelman’s project?

Lidsky: Some of the norms on some sites, like dontdatehimgirl.com, don’t have the neighborliness norms Gelman assumes. Could we make a presumption that ignoring the poster’s privacy preferences was wrongful?

Me: How would that help with dontdatehimgirl, where the poster is happy to have the info shared? It’s the guy who objects. This seems to be a place where one of Gelman’s key points—our stories aren’t just about us—makes her proposed solution less helpful. Gelman and Zittrain suggest: maybe we allow the subjects to tag content and assert their own preferences about whether this information ought to be shared, and then people can decide which preferences to honor; maybe sometimes knowing that one of the subjects is embarrassed will limit dissemination. I think that’s probably true, but other people will just gleefully disseminate further, and possibly harass the tagger—see, e.g., the Star Wars Kid.

Diane Zimmerman, NYU: Suppose we disagree about what you say about me, and I get to tag the speech with my preferences? Classic problem of privacy/speech: my speech is about your life. You can’t say privacy promotes speech without defining what speech values you’re trying to protect. Troglodyte question: shouldn’t we suggest that people ought to be more cautious? Why should we encourage people to put private information online if they don’t want it disseminated? The best protection of privacy is shutting your mouth. Isn’t the fuzzy boundaries idea just one of convenience, and not to be weighed as heavily as the right of people to use what they learn?

Gelman: That last is the right question. She thinks that an open, integrated internet is a better solution than a series of locked communities, and it’s hard to see how you can get that while also maintaining privacy. Open communities have huge benefits (comment: but maybe that just means that people have to bear their costs as well, which include sudden unpredictable infamy?). If we don’t fix privacy, people will opt out of these very valuable communities. (I think behavioral psychology might help with this—people might well underestimate the risks of exposure and thus overdisclose, maintaining the communities despite the risks.)

Joe Liu: Privacy traditionally thinks about rights not to disclose, but the paper suggests that privacy actually produces more, though limited, disclosure. We protect trade secrets in IP in part in order to allow businesses to disclose info to others and not lose control over the trade secret. We don’t require absolute discretion, just some limiting moves. (Good analogy!)

How do you convince people of the value of these new communities? He used to think that keeping your mouth shut was the best practice, but then he got on Facebook and started posting lots of stuff he never would have posted before. The system is designed to get you to do that! Also, do we need law, or can people figure this problem out on their own?

Gelman: Privacy and free speech are often promoted by the same advocates. Is there a free-speech-friendly argument for privacy? That’s her aim. You can’t get any value out of Facebook if you don’t disclose information (e.g., have a Wall).

Lee Tien, EFF: We are contrasting the online environment with a romantic image of the physical world which is disappearing, where we could meet physically without surveillance. Once the security cameras are everywhere, the camera on the corner will log me as I enter the AA meeting. It’s only a matter of time. He supports the idea of intermediate community formation, but is puzzled by implementation.

Roberta Kwall, DePaul: The relation between norms and law is shown by how newly internet-savvy judges change their interpretation of the law—top-down norms! Gossip, though, is a powerful human impulse. That can only be controlled by norms and law through extreme effort!

Comment: These days, you can’t go anywhere without having a picture taken. “Close your mouth” isn’t good enough any more. Stay in your room and don’t interact, that’s your only hope of being sure to not show up on someone else’s blog. Gelman’s proposal is a way to manage those tensions and allow participation.

Lidsky: Students do understand the privacy implications, but they think it’ll sort itself out because everyone understands that all sorts of information is in circulation.

Zittrain: That suggests we should just wait, and then everyone in a decisionmaking position will have drunken pictures of themselves floating around. Presence of a camera either inhibits behavior or disinhibits; maybe it averages out.

Mary Rose Papandreau, BC: For Gelman—be clear on the problem you’re trying to solve—the person posting info about herself that she wants limited, or about a third party that the third party wants limited. Megan Meier/Lori Drew case: why shouldn’t we know who Lori Drew is? She’s been prosecuted. (Comment: Though a newspaper decided not to name her, and the decision to prosecute was made only after her identity was widely disclosed; I’m not sure that’s independent of the dissemination of her information on the internet, rather than being a consequence of the changes.) Why be optimistic about neighborliness on the web? People on the internet are generally more free in what they say and share, as Lidsky says. Norms exist in some forums, like forums for cancer sufferers/survivors, but there doesn’t seem to be a problem of cancer exploitation.

Gelman: She’s trying to fill in where there aren’t norms already; there may be norms on the cancer forums and at dontdatehimgirl, but in other places there are shapeable norms if you confront people with expectations directly.

Fred Yen, BC: Concerned over creating a new kind of IP—if people tag information/photos to claim them, that will turn tort claims into property claims. Courts may assume people are asserting property rights in their own privacy.

He’s also not sure it’s a good idea to take risk away. Risk is what makes us slow down when we see a yellow light. (This reminds me of Eric Goldman’s take on dontdatehimgirl.) The problem isn’t that we saw a picture in which Michael Phelps had a bong in his hands at a party; the problem is that we’re shocked by the idea that this would happen. Zittrain rephrases him: Creating an architecture that lets people respond to those sensitivities reinforces those sensitivities, which is maybe a mistake.

I made my points about behavioral psychology (w/r/t Lidsky: making anonymous sources more credible than they should be in the long term, as people forget the original source, and w/r/t Gelman: leading people to discount the risk of context collapse, thus preserving communities against precautionary exit), and Zittrain pointed out that even asking questions about preferences/displaying a warning changes (the expression of) those preferences by increasing the salience of various concerns. This might be smart, or might not be, but it’s hard to say that it’s a reflection of the “true” preferences of the user.

Zittrain is reminded by Gelman’s project of a feature in Google News: if you’re mentioned or quoted, you have a special right to annotate the story. How do you show you’re you? Google just does its best to confirm it.

Removal attempt fails despite CAFA, preemption arguments

Asahi Kasei Pharma Corp. v. Actelion Ltd., 2009 WL 801555 (N.D. Cal.)

Asahi, a Japanese pharmaco, entered into a license agreement with defendant CoTherix to develop and market Fasudil, an allegedly promising new drug discovered by Asahi for treating pulmonary arterial hypertension (PAH) and stable angina. Asahi alleged that defendant Actelion interfered with the license agreement (or assumed then breached it) in order to protect its monopoly in treatment for PAH. That is, shortly after the license agreement, Actelion acquired CoTherix at a massive premium, which allegedly allowed Actelion to extend its sales of Tracleer, its PAH treatment, and delay Fasudil. Actelion notified Asahi, on behalf of CoTherix, that it intended to halt Fasudil “for—inter alia—business and commercial reasons, including other pipeline considerations.” These included a possible combination therapy using Tracleer and another PAH treatment from CoTherix, Ventavis. Asahi alleged that it couldn’t find another development partner, putting Fasudil on hold and delaying development in Japan because Asahi can’t use US clinical trial data in Japanese regulatory submissions.

Asahi sued defendants in California state court, alleging various breaches of contract, interference with prospective economic advantage, and violation of state unfair competition law. Its state false advertising claims allege that defendants

advertised Tracleer and Ventavis as a combined therapy for PAH using false or misleading statements of fact regarding the drugs, and promoted off-label combination therapy of the two drugs to medical professionals.

Actelion removed the case under CAFA and under preemption theories. The court scoffed at the attempt to use CAFA: Asahi didn’t bring a class action; using a consumer protection statute to redress one’s own harm is not the same thing as filing a class action, even though Asahi also alleged that consumers had been harmed.

Actelion also argued that Asahi’s claims were inextricably intertwined with violations of the FDCA. Asahi rejoined that the complaint’s references to the FDCA showed defendants’ liability, but are not necessary elements of its false advertising claims. The court agreed: Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804 (1986), held that a consumer claim against a drug company, based in part on the theory that a violation of the FDCA constituted negligence, did not present a federal question, and thus removal was improper. Asahi alleged that defendants falsely advertised Tracleer and Ventavis as a “perfect fit” and “a logical combination,” even though studies of the combination therapy were still underway and the FDA hadn’t approved combined use. The truth or falsity of these statements can be determined without interpreting the FDCA, though violations of the FDCA would be evidence of liability.

Defendants also argued complete preemption by the FDCA. There’s no precedent for this; complete preemption is rare and has only been applied by the Supreme Court to

the Labor-Management Relations Act, ERISA, and the National Bank Act. Lower courts have rejected the theory that the FDCA should be added to this list, and the court here did the same, especially since the FDCA does not provide a private right of action.

The court remanded to state court and deemed Asahi’s request for attorneys’ fees a “close call.” (Comment: even on the CAFA attempt? That doesn’t seem like an argument many litigators could make with a straight face, and frankly the ones who could scare me. But defense counsel apparently argued the court out of it.)