Friday, February 26, 2010

Trademark problem of the day

Stonyfield Farm's YoTube. Particularly interesting in this light is what Google first tries to give you upon searching for "YoTube Stonyfield," though it will actually search for "YoTube" if you insist, at which point Stonyfield's site is the top result. Bonus: using autocomplete, type "YoTube" then, after a space, some other letter, and see whose fans can't spell.

I think Google's automated compensatory measures decrease the likelihood of confusion, by making sure you have to take affirmative steps to reach Stonyfield. I'm sure, however, that it would be easy to find a good trademark lawyer to say the opposite.

This also makes me think about how, for big brands, it's hopeless to try to see in any comprehensive way what's going on with your brand. What, are you going to set a Google Alert for YouTube? (Would YoTube show up on such an alert, anyway?)

Friday, February 19, 2010

Product placement in ads

Apparently it's a problem--at least when the services being placed violate the NFL's guidelines for Super Bowl ads.

Wednesday, February 17, 2010

Not quite

Mashable's story on strikes me as a fascinating teaching example. Judge Kozinski thought that would not be entitled to section 230's immunity because of its extensive participation in the creation of unlawful content. How would he deal with this site's aggregation of Twitter feeds from people who indicate they aren't at home? Does it matter that the site claims (and I have no reason to disbelieve) that it's trying to educate people about the vulnerabilities they create with such messages?

Saturday, February 13, 2010

Does presence on the market indicate FDA approval?

Mutual Pharmaceutical Company, Inc. v. Watson Pharmaceuticals, Inc., 2010 WL 446132 (D.N.J.)

Earlier litigation between the parties in the C.D. Cal. Watson sells colchicine, a therapeutic compound in use for more than a century to treat, among other things, gout and, more recently, pseudogout and Familial Mediterranean Fever (FMF). Mutual sells a colchicine product, COLCRYS, recently approved by the FDA as an orphan drug with a 7-year exclusivity period for marketing COLCRYS for the treatment of FMF. Mutual alleged that Watson makes an “unapproved prescription drug” containing colchicine as its sole active ingredient, and advertised its product in competition with COLCRYS.

It’s unclear whether defendants’ product requires FDA approval. It’s an old drug and wasn’t required to go through the current review process. Mutual alleged that defendants use several advertising channels, including price lists, wholesaler ordering systems, pharmacy computers, and websites. (I assume this allegation is designed to deal with the earlier court’s skepticism that any of the acts at issue constituted “commercial advertising and promotion.”). Mutual further alleged that defendants supply “misleading, obsolete, and/or incomplete information” about their unapproved colchicine products to those channels. Pharmacists and buyers allegedly believe that all prescribed drugs identified on price lists and wholesaler ordering systems are safe, effective, and FDA-approved, so by listing their products, defendants “knowingly and willfully communicate to relevant consumers that their products are safe, effective and FDA-approved.” (I think this is a fascinating question: It does seem quite likely that the default assumption today is that all drugs are FDA-approved. Consumers just don’t know that much about the various loopholes and grandfather provisions in the law. If we therefore protect consumers’ expectations, advertising law would eliminate the loopholes enacted decades ago to protect drugmakers’ expectations. So which policy should control? See more below!)

Defendants moved to dismiss the common-law unfair competition count because California only recognizes passing off as common-law unfair competition; the court agreed. They also got rid of the “unfair” prong of the allegations under section 17200 of the California Business & Professions Code, which requires an act that would violate antitrust law.

Defendants further moved to dismiss the entirety of the complaint on the grounds that it was within the FDA’s primary jurisdiction. But the complaint was not brought under the FDCA. Rather, it sought redress for implied falsehood under the Lanham Act. Defendants argued that this was an impermissible end run around the regulatory process, trying to create an FDA approval requirement for colchicine where none exists.

This type of argument—that implications about FDA approval/safety arise naturally from a product’s mere presence on what is generally a heavily regulated market—strikes at the heart of distinctions courts have tried to make between enforcing the Lanham Act and enforcing the FDCA in advance of FDA action. Unsurprisingly, the case law says a lot of possibly conflicting things.

Here, the complaint alleged affirmative misrepresentation of FDA approval status, along with false and misleading representations on product inserts and labels. “Whether these statements are false and misleading to relevant consumers is not a matter reserved for the FDA, but a matter that falls within the jurisdiction of this Court.” Though defendants argued that the relief sought would take their product off the market because they’d affect every single marketing channel, the court concluded that the relief sought was narrow: “the cessation of alleged false advertising that implies FDA approval of defendants’ products which are not FDA approved.”

A lot here rests on what is sufficient to “imply” FDA approval. The court held that the complaint sufficiently alleged that the presence of defendants’ product on price lists and at drug wholesalers creates confusion. Moreover, it alleged that “[s]urvey evidence demonstrates the inaccurate perception of relevant consumers that pharmacy computer systems ... perform a gatekeeper function by displaying only those drug products that have been approved by the FDA.” So resolving the complaint wouldn’t depend on any FDA rules or regulations.

But that’s not really the point of the conflict preclusion argument: the point of the argument is that the structure of the FDCA is designed to ensure that colchicine may lawfully be sold without FDA approval, and to the extent that implicit representations occur merely by being on the general price list etc., the courts can’t prohibit that without also taking the products off the market and defying the structure of the FDA. (Explicit misrepresentations of FDA approval are not troublesome in this way.) I think this argument may be correct, but that protecting consumers against deception is also an important policy goal. Here, given that the approved and unapproved products appear to be identical, I would find the FDCA to be a trump, but if there were health or safety issues I’d probably go the other way. It comes down to this: do we think that old drugs really are safe and effective (or at least as safe and effective as the FDA process can guarantee), such that time is a good substitute for FDA approval? And what do we do with the fact that FDA approval isn’t just material to consumers, it’s a background assumption with which they approach any drug on the market?

Regardless: motion to dismiss denied.

Claims of typical results not puffery

Walter v. Hughes Communications, Inc., -- F.Supp.2d ----, 2010 WL 366639 (N.D.Cal.)

Plaintiffs sued on behalf of a putative class of 80,000 California consumers who bought satellite internet services from Hughes that were allegedly significantly slower than advertised. Despite specific representations of speeds consumers could expect “up to,” which varied between peak and off-peak times, and despite having different pricing plans for different speeds, Hughes allegedly didn’t deliver the “up to” speeds or even close. Its ads touted the speed of its services, for example claiming that its connections were “up to 30x faster than dial-up,” and allowed users to “[f]lip through Web pages like turning the pages of a book” and “[d]ownload large files in minutes, not hours.” The website also stated that speed would depend on a variety of factors and was not guaranteed. Its service plan described “up to” and “typical” times, but plaintiffs alleged that Hughes instead delivered consistently slow and spotty service falling “woefully” short of the typicality claims.

Moreover, Hughes allegedly capped data transfers from heavy users and blocked P2P connections; though it said that a small percentage of subscribers who exceeded the threshold would suffer a temporary speed reduction, in fact, a large percentage of subscribers allegedly experienced lengthy shutdowns, sometimes days long, if they exceeded the threshold. Plaintiffs also complained about the termination fees imposed when, disgusted, they gave up on Hughes.

Initially, the court found that California law applied despite the contract’s Maryland choice of law provision, based on California’s public policy of affording extra remedies, including punitive damages and injunctive relief, to consumers in consumer protection cases. Intriguingly, the court reasoned that “[t]he fact that Maryland law, by and large, forbids the same conduct as California’s consumer protection laws actually undermines Hughes’ argument, because Maryland companies would presumably not be required to alter their behavior to conform to both sets of laws.” No Holmesian bad men need apply!

The next issue was whether plaintiffs stated a claim under the UCL, FAL, and CLRA, which the court found they did sufficiently to satisfy the heightened pleading requirement of Rule 9(b). Even with a number of vague and conclusory statements, there were also detailed, mutually supportive allegations plausible enough to survive a motion to dismiss. Hughes argued that its claims were mere puffery. Though the presence of clear and unambiguous language making it unlikely that a reasonable person would be deceived can justify dismissal, the general rule is that whether claims are deceptive is a question of fact that can’t be decided on a motion to dismiss.

Here, the allegations called into question Hughes’ representations, considered in light of representations about “typical” speeds. Hughes offered “hard, measurable quantities” that couldn’t be characterized as mere puffery, and plaintiffs alleged that they were often unable to reach even the “typical” speeds, and that off-peak speeds were as slow as the advertised “typical” speeds. Even with Hughes’ disclosures that it didn’t guarantee any particular or average speed, a jury could find that its representations were deceptive.

Hughes also argued that plaintiffs failed to plead actual reliance, because they cited recent representations and ads but they’d signed up years ago. But plaintiffs met their burden for pleading reliance even without identifying the particular ads or representations on which they relied. Each plaintiff alleged reliance on Hughes’ representations, which, roughly described, were comparable to the more recent representations, which were alleged with greater particularity. The court was willing to infer that Hughes’ representations have been consistent in certain material respects for the last several years. This was sufficient to provide Hughes adequate notice of the claims against it. The court dropped a cf. to the Tobacco II Cases, 207 P.3d 20 (Cal. 2009) (“[W]here, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.”). Though plaintiffs’ pleadings were less particular about Hughes’ allegedly illegitimate use of its data transfer cap, and about allegations that Hughes intentionally oversold its services by signing up more clients than it had the bandwidth to support, the court saw no harm in permitting plaintiffs to proceed with those arguments as potential explanations for plaintiffs’ experiences; they weren’t independent causes of action.

The court did, however, dismiss the allegations related to the termination fees because they didn’t sufficiently detail how the fees are applied in practice. The only specific allegation—about one customer subject to a $300 fee—didn’t support the general allegation that Hughes imposed a $400 termination fee regardless of the damages it actually suffered, which would constitute impermissible liquidated damages. Nor did plaintiffs sufficiently explain why the fee was procedurally (hidden or unexpected) or substantively unconscionable (shocking the conscience or harsh and oppressive). A $300 fee was less than two months’ worth of service, and plaintiffs didn’t allege that providing the service was costless. However, the court reserved the question of whether the termination fees might also be cognizable as damages.

Wednesday, February 10, 2010

A pizza ad a lawyer could love

Domino's defines puffery for us! Way to turn a loss in court into a win for marketing.

Friday, February 05, 2010

The Soul of Creativity

This part of the semester is always tough for me, so I can't give you a full-scale review of Roberta Kwall's new The Soul of Creativity (Google books) (Amazon), though I hope to do so eventually. Kwall sets out an account of creativity as spiritual and author's rights as fundamentally moral, recognizing the intertwining of their personalities with their works. It's a very well-done argument though on a lot of issues we are in sharp disagreement. A policy-oriented chapter on creating a moral rights law for the US is on SSRN if you want a sample of the book. Recommended reading for anyone with an interest in moral rights, or the respect accorded authors.

Tuesday, February 02, 2010

Goodnight for Twilight unofficial collectors' guide

Summit Entertainment, LLC v. Beckett Media, LLC, 2010 WL 147958 (C.D. Cal.)

Summit owns copyrights and trademarks associated with Twilight and New Moon, the movies. Beckett sold two "fanzines" (labeled unofficial collectors' guides, and not corresponding to my idea of a fanzine, but ok) reproducing numerous images from the films, along with trademarks and promotional images related to the films. In particular, Summit alleged that the fanzines used Summit’s stylized Twilight trademark on their covers; contained unauthorized reproductions of photos, including photos not available from Summit’s website and photos altered in violation of the site’s terms of use; contained removable posters and images of trading cards that were also unauthorized reproductions of Summit’s works. Covering the internet bases, Beckett also featured one of the fanzine covers on its Facebook pages and attempted to auction the printing plates for the covers on eBay.

Summit had little trouble with its copyright and trademark claims, apparently with little dispute from Beckett. Of note: the court rejected Beckett’s argument that Summit’s website gave Beckett permission to use many of the images. Beckett didn’t show likely success on that defense, as was its burden, most notably because it couldn’t explain the use of photos not present on the website. Moreover, the license here didn’t allow alterations of the photos (the terms of use said that users “will not edit, alter or modify any of the Content without Summit's prior written approval”), and Beckett altered them, exceeding the scope of the license.

On trademark, the court accepted Summit’s argument that it owned a valid, protectable mark in a stylized, block-lettered TWILIGHT, and Beckett displayed a virtually identical mark in the fanzines, including on the outside front covers and pull-out posters. Moreover, Summit has licensed its mark for a “seemingly endless” list of goods, including posters, which both indicated the strength of the mark and the relatedness of the goods. In the absence of opposing evidence or argument, the court found likely success on the merits.

The court then presumed irreparable injury for both causes of action, despite Beckett’s argument that it had voluntarily ceased the troublesome activities, recalling the fanzines, terminating the eBay auction, and removing the offending cover image from its Facebook page. But as of the day Beckett’s opposition was filed, the fanzines were still “widely available” in retail stores and over the internet. Thus the dispute was not moot. Then, the balance of hardships followed: if an injunction was wrongly denied, Summit’s copyrights and trademarks are “at risk of being devalued,” while granting an injunction would just force Beckett to keep doing what it said it would (cease all offending activity). And there’s a public interest in vindicating copyright rights and avoiding confusion.

The court did agree with Beckett’s objection to the scope of the requested injunction, which would cover fair use as well as foul. Thus, any injunction needed to make express allowance for §107 fair use, and also needed to define Summit’s marks expressly, especially if any marks other than the stylized TWILIGHT were to be covered.

HT Eric Goldman; further discussion here.

Announcement: Federal Circuit event at AU

A First Look at the 2009 Decisions of the United States Court of Appeals for the Federal Circuit

Feb 4, 2010
6:30PM - 8:00PM ET

Washington College of Law, American University
4801 Massachusetts Ave, NW - Room 603

To commemorate the 25th Anniversary of its Federal Circuit issue, the American University Law Review will host a panel of practitioners who will discuss their impressions of the Federal Circuit’s decisions in 2009. The panelists will offer their insights on significant cases and jurisprudential trends in the areas of patent, trademark, international trade, government contracts, and veterans claims law.

The panelists for this program include: Patent: Joyce Craig, Finnegan LLP; Trademark: Rebeccah Gan, Washington College of Law ’01; Government Contracts: Dan Graham, Wiley Rein LLP; International Trade: Pat Fitch, Alston + Bird LLP (WCL ‘08), and Veterans Claims: Lee Perla, Jones Day. Michael Carroll, Professor and Director of the Program on Information Justice and Intellectual Property (PIJIP), and Scott McCaleb, President of the Federal Circuit Bar Association, will moderate.

In addition to on-site attendance, the FCBA will also broadcast the program live on February 4, 2010 as a part of its regular Horizons series.

Agenda: 5:30-6:30 – Reception

6:30-8:00 – Panel Discussion

Each panelist will speak for 15 minutes on 1-2 significant 2009 Federal Circuit cases in their subject area. The moderators will transition the discussion between each group. The remaining 15 minutes will be reserved for questions. The cases to be discussed are:


· Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 576 F.3d 1348 (Fed. Cir. 2009), plus a general discussion of the Court’s recent trends in approaches to deciding cases


· In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009)

· In re Sones, slip op. 2009-1140 (Fed. Cir. Dec. 23, 2009)

Government Contracts:

· Axiom Resource Mgmt., Inc. v. United States, 564 F.3d 1374 (Fed. Cir. 2009)

· Bell BCI Co. v. United States, 570 F.3d 1337 (Fed. Cir. 2009)

· Daewoo Eng’g & Constr. Co., Ltd. v. United States, 557 F.3d 1332 (Fed. Cir. 2009)

· Tecom Inc. v. United States, 566 F.3d 1037 (Fed. Cir. 2009)

International Trade:

· United States v. Inn Foods, 560 F.3d 1338 (Fed. Cir. 2009)

· SKF USA, Inc. v. United States Customs and Border Patrol, 556 F.3d 1337 (Fed. Cir. 2009)

Veterans Claims:

· Shinseki v. Sanders, 129 S.Ct. 1696 (2009), reversing Sanders v. Nicholson, 487 F.3d 881 (Fed. Cir. 2007)

· Henderson v. Shinseki, 589 F.3d 1201 (Fed. Cir. 2009)

· Reizenstein v. Shinseki, 583 F.3d 1331 (Fed. Cir. 2009)