Monday, December 31, 2012

Oh Ars Technica no

“She didn’t write it…  She wrote it, but look what she wrote about.  She wrote it, but she wrote only one of it. She wrote it, but she isn’t really an artist, and it isn’t really art….  She wrote it, but she’s an anomaly.” – Joanna Russ, How to Suppress Women’s Writing.

The latest round, from this Ars Technica article about why DRM on music has declined while DRM on e-books is still widespread:

Another possible explanation over the lack of outrage is that within music, not only is the market larger, but there’s more of a tradition of turning the original work (a song) into a derivative work, like a remix.

“When iTunes was introduced no one was thinking: ‘When I buy this, can I cut it up into ringtones?’” Higgins added. “They weren't thinking, ‘Can I set this to a rhythm game and play fake guitar to this?’ Because people love music, there's avenues for that remix. With books, especially with e-books, books as codecs aren't a very remixable form. People don't really know to do anything with them except start at the beginning and read to the end.”

That’s incredibly dumb, except for just two words: “as codecs.”  Books are hugely remixable!  Though the tradition of scrapbooking, which involved physical collages of images and text on a very wide scale (there were patents; Mark Twain was involved in trying to make money off of the phenomenon; etc.), has faded somewhat, we never lost the tradition of remixing stories.  It’s just that you don’t need to break DRM to remix a story!   There are interesting things to be done with DRM-free books, but the basic condition of remix is pretty firmly ensconced in literary traditions.

The article continues, informing me that Alissa Quart says that “even the biggest literary fans generally don’t do much besides read or perhaps quote other works that they like. ‘There's not really a culture of remix amongst book readers,’ she said. ‘There's a literary culture of appropriation and interesting fair use but I don't think a lot of readers have that relationship to it.’”  Oh, really? 

Look, the set of readers who write fan fiction, create fan art, etc. is smaller than the set of heavily invested readers and also of course smaller than the set of casual readers.  But I call shenanigans on the idea that the proportions are wildly smaller than the analogous music remixers:serious music fans:casual music listeners relation, which is the very comparison we’re supposed to be making.  And I especially call shenanigans on the idea that this conclusion is so obvious it needs no factual investigation.  Maybe musicremix.net is out there and maybe it has 650,000 Nine Inch Nails remixes, but until you show me that, Harry Potter fandom remains king.  (Or perhaps that should be Weasley remains king.)  “Aside from zombie crossover fanfic, few outside the ivory tower are interested in remixing the written word,” another quote from the article, is kind of like saying “aside from blue cars, the highways aren’t that crowded.”  It’s just so aggressively wrongheaded!  (Also, it’s disappointing to see a geeky publication denigrate geek genres—but then, Joanna Russ wouldn’t be surprised at the structure of the Geek Hierarchy.)

The question of why DRM survives on books but not music is an interesting one both theoretically and practically.  But the article does no good by positing an answer that erases transformative literary fandoms instead of one that focuses on the affordances of technology and the kinds of transformative practices that aren’t bothered by DRM.  This false explanation further throws the article off track because it focuses on books v. music, ignoring video, which retains its DRM (thus requiring us to get DMCA exemptions for remix) and has its own histories of remix. 

Friday, December 28, 2012

Barbie as famous works of art

H/T Sarah Burstein: Jocelyne Grivaud puts Barbie in a variety of famous pictures.

 
I'd pay some serious money for a Barbie Venus de Milo, though the one that works most easily as social commentary by physicality is Man Ray's Le Violin d'Ingres:

Wells Fargo wins appeal on resequencing withdrawals

District court opinion discussed here.  The court of appeals found that much of the awful conduct at issue was unregulable because state regulation was preempted, though it upheld the unfair competition finding based on Wells Fargo's misleading statements about its awful conduct.  Ugh.

Thursday, December 27, 2012

230 doesn't yet bar suit against Apple over intrusive apps

Pirozzi v. Apple Inc., 2012 WL 6652453 (N.D. Cal.)

Pirozzi sued Apple for failing to prevent third-party software applications distributed through its online App Store from uploading user information from their mobile devices without permission.  She alleged the usual California claims.  Apple moved to dismiss, and the court granted the motion, though with leave to amend; the court also rejected Apple’s broad §230 arguments.

Pirozzi alleged that apps are integral to users’ experiences on Apple devices, and that the App Store was the exclusive source of apps.  Apple thus completely controls users’ experience in the development of Apple devices and the development and selection of available apps. 

In addition, Apple’s App Store Review Guidelines provide that “Apps cannot transmit data about a user without obtaining the user's prior permission and providing the user with access to information about how and where the data will be used.”  Third parties are contractually required to obtain user consent before they collect any user or device data through their apps.  Apple states that it reviews all apps submitted to the App Store for compliance with its rules.  It also claims that its OS “is highly secure from the moment you turn on your iPhone. All apps run in a safe environment, so a website or app can't access data from other apps. iOS also supports encrypted network communication to protect your sensitive information. To guard your privacy, apps requesting location information are required to get your permission first.”

Notwithstanding these claims, Pirozzi alleged, “Apple-approved apps have downloaded and/or copied users' private address book information (including names and contact information of users' contacts), location data, private photographs and videos without the users' knowledge or consent when a user agrees to allow an app to access the user's then current locations.”  Such apps allegedly include Angry Birds, Cut theRope, Twitter, Facebook, LinkedIn, Instagram, Foursquare, and Yelp! 

Pirozzi alleged that she relied on Apple’s statements when deciding to buy an Apple device and buy apps.  However, she didn’t specify which Apple device she owned, which apps she downloaded, or whether any third-party app actually uploaded personal information from her mobile device.

Apple challenged Pirozzi’s standing on the ground that she failed to allege that she lost money or that any third-party app uploaded her personal information.  But that misconstrued the nature of her allegations: that Apple’s misrepresentations and omitted material facts induced her purchases.  This type of allegation satisfies the injury in fact and causation requirements for Article III standing.  However, Pirozzi failed to allege specifically which statements were material to her purchase decisions, which meant she hadn’t properly alleged injury in fact caused by the complained-of conduct.  (Apple submitted various documents that it argued precluded these claims because of the disclosures therein; this might create an issue of fact as to reasonable reliance, but the disclosures didn’t contradict the representations alleged in the complaint.)

As for the second type of harm identified, misappropriation of her personal information, Pirozzi didn’t allege that a third-party app developer actually misappropriated her personal information, only that it was now at greater risk of misappropriation.  This hypothetical threat was insufficient to confer Article III standing as to her negligence and unjust enrichment claims, absent allegations of specific apps that tracked her personal information and harmed her in some way.

Apple then argued that CDA §230 precluded the claims against it because, since misappropriation of users’ information was the heart of the case, Pirozzi was seeking to hold Apple liable for its exercise of editorial discretion in approving and distributing apps.  Not so: the claims were not based solely on the distribution of apps, but on representations made by Apple itself.  “To the extent that Plaintiff's claims allege that Apple's misrepresentations induced Plaintiff to purchase an Apple Device, those claims do not seek to hold Apple liable for making Apps available on its website.”  Instead, Apple was itself an information content provider as to those claims.  Still, on the record before the court, it would be premature to reject §230 immunity entirely.

Next, the consumer protection claims were grounded in fraud, but they didn’t satisfy Rule 9(b).  Pirozzi failed to allege the particulars of her own experience reviewing or relying upon any of the statements detailed in the complaint, or which devices or apps she bought in reliance thereon, or which apps, if any, downloaded her personal information.  The court declined to decide at this point whether any of Apple’s alleged representations was a specific verifiable claim.

Apple then argued that the CLRA claim failed because App Store users weren’t consumers and the apps weren’t goods or services.  The use of the App Store was free and the apps listed in the complaint were free.  (Angry Birds?  I don’t know about you, but they keep asking me to buy stuff.)  Thus, Pirozzi wouldn’t have paid for Apple’s services or software.  Pirozzi argued that her CLRA claim was premised on her purchase of goods, here Apple devices; the complaint didn’t say that, but she was given leave to amend.

As to negligence, Pirozzi alleged that “Apple owed a duty to Plaintiff to protect her personal information and data, and to take reasonable steps to protect her from the wrongful taking of her personal information and the wrongful invasion of her privacy.”  Apple argued that it owed no such duty to protect her from the conduct of third parties.  Pirozzi rejoined that Apple’s control over the user experience from development of the devices to selection of the available apps created a special relationship between the parties, and that Apple undertook this duty by commiting to review all apps for adherence to its policies.  The court found that these allegations were insufficient to allege an independent legal duty on Apple’s part.  Likewise, her allegations that Apple was unjustly enriched failed to sufficiently allege that Apple received a benefit from the unauthorized access to private user information.

No standing when defendant wore noncompeting hat elsewhere in sales chain

Dominick v. Collectors Universe, Inc., 2012 WL 6618616 (C.D. Cal.)

Dominick is a professional numismatist and rare-coin dealer who owns Westwood Rare Coin Gallery, Inc., which sells rare coins and other numismatic material.  The court dismissed Dominick’s mostly antitrust-based complaint without leave to amend.

Defendant Hall is also a numismatist and rare-coin dealer who owns defendant David Hall Rare Coins.  He also acts as the president, director, and CEO of defendant Collectors Universe, Inc.; he serves as the director of defendant Certified Coin Exchange, owned by Collectors Universe, which operates the main website for real-time trading of numismatic materials; and he is a founding member and the chief executive officer of Professional Coin Grading Service, the service that grades most of the rare coins traded on the CCE website (PCGS is now merged with Collectors Universe and no longer an independent entity).   Dominick also sued CCE’s president and sales director.

Along with antitrust claims based on alleged acts to control the market in real-time numismatic materials trading, Dominick alleged that Hall falsely advertised that PCGS-graded rare coins are “valued accurately and impartially” and that rare-coin dealers can become CCE members as long as they fulfill CCE's requirements.

Defendants argued that plaintiffs lacked standing because the statements were about PCGS and the membership requirements for CCE, neither of which were named defendants.  Article III injury in a false advertising case occurs “if some consumers who bought the defendant's product under a mistaken belief fostered by the defendant would have otherwise bought the plaintiff's product.” TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011).  In addition, Lanham Act standing requires a plaintiff to show that the false statement caused a “competitive” commercial injury: harm to the plaintiff's ability to compete with the defendant.

The complaint showed a lack of standing.  Plaintiffs alleged a Lanham Act claim only against Hall, their direct competitor, but while parts of the complaint ascribed the false statements to Hall, other parts suggested that the statements were more properly attributable to PCGS and CCE, not Hall.  (The court seems to be suggesting that false statements made by an entity wearing the wrong “hat” aren’t within the scope of the Lanham Act; this seems wrong to me.  Compare Harold H. Huggins Realty, Inc. v. FNC, Inc., --- F.3d ----, 2011 WL 651892 (5th Cir.), which involves an allegedly false statement made in part of the competitive chain that the plaintiffs didn’t compete in, but that nonetheless allegedly harmed them as competitors with the defendant; the court of appeals found standing even under a restrictive standing test.  It’s not quite the same because of the different corporate entities here, but I’m not sure why that should be dispositive, since it invites gaming.  Possibly there is a distinction to be made in that plaintiffs weren't harmed as competitors, but I'm not sure there are enough facts here to be very confident of that.) 
 
The fact that Hall owned PCGS and CCE was insufficient to allege that he made the false statements, since they’re separate entities even if Hall owns and operates them “to some degree.”  Thus, the false representations were more properly attributable to PCGS and CCE, and plaintiffs needed to allege a hindrance to their ability to compete with those entities.  But they didn’t allege a claim against those entities, nor did they allege that they provide coin grading services or an online trading platform that competes with the services provided by those entities.  Given that this was the second amended complaint, the court determined that dismissal with prejudice was appropriate.

Studies show people like studies

Man: "My doctor told me to take Centrum Silver a few years ago.  Now, I hear that there's been a study on the effects of vitamins.  The vitamin they used?  Centrum Silver.  Guess my doctor is pretty smart!"  Tagline: "Most studied."  The ad campaign is, I think, a work of diabolical genius: of course having been studied doesn’t mean the results of the studies were good!  But as other studies have shown, advertising an irrelevant attribute can increase consumers’ favorability towards a product even when it’s explicit that the attribute is irrelevant.  And I don’t think this actually allows an escape from regulation: the clear implication—the necessary implication, if you will—of this claim in an ad is that the studies produced favorable results for Centrum Silver.  H/T ST.

Wednesday, December 26, 2012

Challenges to "natural"/"organic" labels survive motion to dismiss

Jones v. ConAgra Foods, Inc., 2012 WL 6569393 (N.D. Cal.)

Plaintiffs filed a class action suit against ConAgra alleging that its website and numerous products, including PAM cooking spray, Hunt's canned tomato products, and Swiss Miss cocoa, contain deceptive and misleading labeling information.  The allegedly deceptive practices include: labeling food products as 100% natural, when they contain petrochemicals or chemical preservatives, synthetic chemicals, added artificial color and other artificial ingredients; labeling food products as “organic” or “certified organic,” when they contain disqualifying ingredients; falsely representing food products to be “free of artificial ingredients and preservatives;” making unlawful nutrient content claims; falsely representing foods to be fresh or have a “fresh taste;” and making unlawful health claims.  Plaintiffs alleged reasonable reliance and actual deception, such that they wouldn’t have bought the products absent the mislabeling, and paid an unwarranted premium for them.  They alleged the usual California claims and violation of the Magnuson-Moss Act.

ConAgra argued that the claims were preempted by the Organic Foods Product Act, the National Labeling and Education Act, and the FDCA.  First, as to the organic labeling claims, In re Aurora Dairy Corp. Organic Milk Marketing and Sales Practices Litigation, 621 F.3d 781 (8th Cir. 2010), found claims that retailers were selling a product as organic when it wasn’t in fact organic were preempted by OFPA.  But that was when the source had organic certification under OFPA.  OFPA preempts state certification requirements, but doesn’t preempt broadly.  The claims here were exactly the type of state claims that other courts have said would be preserved.  California law adopts OFPA standards, so claims based on violation of those standards aren’t conflict preempted.  Merely adding another source of enforcement doesn’t count as an additional state-law requirement.

Similarly, plaintiffs’ claims weren’t preempted by the NLEA to the extent that state law only paralleled or mirrored the relevant federal requirements.  This preserved their antioxidant and other ingredient list/propellant claims, since California has incorporated the NLEA by reference. Some of the claims raised factual disputes: ConAgra argued that plaintiffs’ rosemary extract claims were preempted because they sought to require rosemary extract to be labeled as a preservative, when the relevant regulation states that chemical preservatives do not include “spices, or oils extracted from spices.”  However, plaintiffs argued that rosemary extract was neither a spice nor an oil extracted from a spice, and that created a factual dispute.  Likewise, ConAgra argued that plaintiffs’ claims that it should have identified citric acid and calcium chloride as “preservatives” were preempted because the FDA has never required those ingredients to be identified as such. But the federal regulations require a food label to disclose ingredients being used as preservatives, and the complaint alleged that was happening in this case.

ConAgra then tried the primary jurisdiction doctrine, but no dice: ConAgra didn’t show that there was a need for uniformity or for the FDA’s expertise.  As for “natural” claims, “various parties have repeatedly asked the FDA to adopt formal rulemaking to define the word natural and the FDA has declined to do so because it is not a priority and the FDA has limited resources. Further, when the FDA considered the term ‘natural,’ ‘it was aware of and had reviewed state regulation of the use of the term, yet it made no mention of the need for uniformity.’”  The continued inaction on the term implies that the FDA doesn’t believe that uniformity is required.  (In a footnote, the court distinguished Astiana v. The Hain Celestial Group, Inc., because that was about cosmetics.)

“Notwithstanding Defendant's discussion at the motion hearing of preservatives and firming agents, the Court concludes that this case is far less about science than it is about whether a label is misleading.”  Deceptiveness can be resolved by courts.

ConAgra then argued that plaintiffs failed to state a claim.  Generally, deceptiveness is a question of fact, but courts can sometimes consider the viability of a claim by reviewing the product packaging.  The court found that plaintiffs successfully pled falsity as to the antioxidant claims.  They alleged that ConAgra’s improper use of the term falsely asserted that the products met the minimum nutritional thresholds for such claims.  Also, the “freshness” claims presented factual questions that couldn’t be addressed on a motion to dismiss. However, plaintiffs didn’t sufficiently allege that ConAgra’s website health claims were false or that a reasonable consumer would be deceived by them, only that they were in fact deceived.

ConAgra argued that plaintiffs couldn’t allege reliance on the “natural” claims because the allegedly unnatural claims were disclosed in the ingredient list.  The Ninth Circuit has already rejected this argument:

We disagree ... that reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box.... We do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations and provide a shield for liability for the deception. Instead, reasonable consumers expect that the ingredient list contains more detailed information about the product that confirms other representations on the packaging.

In addition, plaintiffs alleged that the ingredients themselves were mislabeled.

ConAgra then argued that the FDA has recently stated that citric acid is natural, defeating plaintiffs’ argument that products containing it and calcium chloride weren’t “natural.”  But that ignored the calcium chloride aspect, and also the FDA’s letter said that “naturally-derived citric acid” was consistent with labeling a product “natural,” but there wasn’t evidence that ConAgra’s products included the permissible citric acid.

Swiss Miss stated that “Natural Antioxidants Are Found in Cocoa,” while Hunt's tomato products stated that “The Antioxidants Vitamin C & Lycopene are found naturally in tomatoes.”  Plaintiffs alleged that they were deceived by the implicit misrepresentation that the tomato and cocoa products that they were purchasing met the minimum nutritional threshold to make such antioxidant claims.  ConAgra argued that reasonable consumers wouldn’t know what those minimum thresholds were, since that’s a matter of detailed FDA regulation.  But this wasn’t a case where the court could conclude that as a matter of law that the antioxidant claims weren’t deceptive—perhaps because, while consumers might not know detailed numbers, they would expect ConAgra products to comply with the rules, meaning that they’d expect that antioxidant claims to be similar to those found on other (compliant) products.

Then, ConAgra argued that plaintiffs didn’t satisfy Rule 9(b) because they didn’t allege specific dates of purchase.  That’s not required because plaintiffs alleged that they’d bought the products through the class period, except with respect to PAM products where the label didn’t make the same representation throughout the class period; ConAgra recently changed the label to include “(preservative)” after rosemary extract.  Also, the plaintiffs failed to provide details of exactly which products they purchased: they alleged that they bought “Hunt's Petite Diced Tomatoes in a 14.5 oz can and other Hunt's canned tomato products such as its tomato paste in an 8 oz. can,” but “other Hunt’s canned tomato products” wasn’t specific enough.  Nor did they plead with specificity which Hunt’s products contained citric acid and/or calcium chloride, except for the Diced Tomatoes.  They didn’t allege whether the Hunt's tomato paste in an 8 oz. can that they purchased contained only citric acid, or both citric acid and calcium chloride. “This information is necessary because Defendant has submitted a copy of labels from Hunt's tomato paste and Hunt's tomato sauce that do not contain calcium chloride.”  These claims were dismissed with leave to amend.

The warranty claims were dismissed without leave to amend.  Product descriptions, such as “all natural” labels, do not constitute warranties against a product defect.  These products were also excluded as “consumables” under California’s Song-Beverly Act.

Casual empiricism replaces casual historicism

Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. Florida Priory of Knights Hospitallers of Sovereign Order of Saint John of Jerusalem, Knights of Malta, Ecumenical Order, --- F.3d ----, 2012 WL 6582565 (11th Cir.)

The court of appeals sua sponte vacated its original opinion.  What I said then:

Quick review of complicated terminology: the plaintiff Order “is a religious order of the Roman Catholic Church that undertakes charitable work internationally.”  The defendant Florida Priory is an ecumenical charitable organization, associated with a parent (the Ecumenical Order) incorporated in the US in 1911.  The infringement claim is obvious; the false advertising claim is related, as the Order alleged that the Florida Priory, through its parent, falsely claimed a historic affiliation with Plaintiff Order going back to the eleventh century.  I won’t recite the history according to the parties; I’m going to skip to the legal analysis, though it should be remembered that the analysis depends in significant part on the testimony about the history.  The Order’s historical testimony came largely from its representative Geoffrey Gamble and Dr. Theresa Vann, a professor of history at the College of St. Benedict/St. John’s University specializing in medieval history.  The Florida Priory’s historical testimony came largely from the current Prince Grand Master of the parent Ecumenical Order, Nicholas Papanicolaou.  His account diverged around 1798.

The court of appeals didn’t change its earlier reasoning: the district court erred in finding fraud on the PTO and invalidating certain registrations, including word marks, because the declarant didn’t have subjective intent to defraud, even if the organization as a whole knew of the existence of the Ecumenical Order and its potentially conflicting claims.  The court also reversed the dismissal of the trademark claims, because the district court erred in focusing solely on visual dissimilarities in the design elements of the marks.

The false advertising claim was where the analysis changed.  The Plaintiff Order claimed false advertising because, it contended, the Florida Priory didn’t share any history with and had no connection to the historic Order of Malta.  “In assessing this claim, the district court was faced with the monumental task of adjudicating the accuracy of two competing versions of late-eighteenth-to-early-nineteenth century history.”  Plaintiff Order’s witnesses testified that there had never been a split in its organization.  The Florida Priory’s witnesses testified that, when Napoleon invaded Malta in 1798, some Knights of Malta fled to Russia, where the original Order of Malta essentially ceased to exist, but related non-Catholic and Catholic Orders emerged.

The district court essentially agreed with the Florida Priory.  The Plaintiff Order argued that the court got the history wrong because it relied on the testimony of Papanicolaou, who did not hold himself out to be an expert in history, over the testimonies of the Plaintiff Order’s witnesses, only one of whom was qualified as an expert in the history of the Order of Malta.  This time, the court of appeals found that the district court abused its discretion in considering Papanicolaou’s testimony, but that the error was harmless.

It was abuse of discretion to permit a lay witness to testify about historical matters.  But the district court made two discrete factual determinations, each of which independently supported its holding: first, that the two organizations shared a history until 1798, and second, that the Florida Priory expressly associated itself with the Ecumenical Order, a non-Catholic organization that couldn’t cause any confusion.  The second finding was sufficient, because it meant that the alleged deception was unlikely to influence any purchasing decision (though the court didn’t indicate what the relevant purchasing decision would be). “The trial record abounds with references to The Florida Priory's interdenominational nature. And of course, by its very name, the Ecumenical Order is an interdenominational organization.”  (Implicit here seems to be a finding that people would only want to buy [whatever] from the Plaintiff Order, not the Ecumenical Order, on grounds of Catholicism, and that centuries-long continuity with the pre-1798 group isn’t important to selling whatever it is that the Ecumenical Order has to sell.  This is the casual empiricism I mentioned in the headline.)

The state-law trademark claims were also reversed.

Reading List: The Late Age of Print

Ted Striphas, The Late Age of Print: Everyday Book Culture from Consumerism to Control (2012)

The basic message: the present state of books and how we got here is complicated, but it’s essentially about control (and somewhat less about resistance to that control) by capitalist structures seeking to move all surplus away from the consumer.  Striphas argues that book publishing was on the forefront of large-scale rationalization and standardization in mass production.  Among other things, printers were among the first to adopt standard hourly wages, and books were mass-marketed Christmas presents when commercialized Christmas was new; publishers were among the first to adopt universal product codes in the form of the ISBN.

Along the way, booksellers touted physical accumulation of books as a class marker, which meant a proliferation of copies that latterly has come to be seen as “hindering the task of expanding capitalist accumulation” as compared to licensing.  Even in the 1930s, publishers didn’t like that people could lend or give away books, and PR specialist Edward Bernays searched for a pejorative term for “the book borrower, the wretch who raised hell with book sales and deprived authors of earned royalties” (in the words of Bernays’ institute).  I particularly liked “greader,” though the winner was “book sneak.”  This was even less successful than the more recent defining down of “piracy,” but e-books now appear to offer publishers their dreamed-of state of complete control, at least if no one violates the DMCA.

Modern ideologies of writing and reading both require and conflict with mass-marketization: “Many publishers and booksellers have persisted in the belief that books ought to sell primarily on the basis of the qualities particular to individual titles, and that relying on exogenous factors to move them somehow diminishes the worth of these goods. Yet the rapid growth and extraordinary success of superstores reveal just how much built environments and other factors related yet extrinsic to specific titles can make or break the selling of books and bookselling.…”  Superstores then led to labor force downsizing behind the scenes, before Amazon even entered the field with its even greater speedups and pressure on labor. 

Striphas also considers the way in which at least one television program promoted book culture: Oprah’s book club.  Functioning as a brand, the book club designation acted as an assurance of fitness for purpose that convinced otherwise reluctant customers that Oprah’s books were likely to reward the investment in finding the book and carving out time to read—material barriers that many intellectuals, used to reading constantly, downplay.  In language that Landes and Posner would recognize, Striphas contends that “Branding permits publishing firms partially to sidestep the time-consuming, costly, and often haphazard work of identifying or creating a unique audience for each and every title in their catalogs.”   Oprah also explicitly gave suggestions to women about how to fit in reading time; here Striphas references Janice Radway’s work on how romance reading served as an assertion of the self in otherwise other-directed lives.  The content of Oprah’s books is therefore strongly linked to their functions within readers’ lives: a book is “valuable to the extent that it demonstrates a clear connection with life, or that it resonates with their everyday interests, personal experiences, and concerns.”  Thus Jonathan Franzen’s initial rejection of his selection, because he was a snob, didn’t pose an existential threat to the book club, whereas James Frey’s dissimulations did.

As to Franzen, Striphas argues that his dispute with Oprah was really about attribution and branding: His publisher put the book back in print when it was selected, with a new edition featuring Oprah’s insignia prominently on the cover.  Franzen felt that this was a violation of the tradition that hardcover fiction was free of advertising, and that the logo implied “corporate ownership” of his work.  As Striphas notes, though, the fact that Franzen’s publisher was a giant media company didn’t seem to bother him—one example of the way in which authorial preferences/incentives are a lot more complicated than the usual rhetoric surrounding moral rights allows.

Striphas then turns to Harry Potter as global phenomenon, focusing on the extensive, technologically enabled precautions the publishers took to release the later books simultaneously worldwide and their struggles against unauthorized versions in various countries.  While simultaneous release seems like an artifact of globalization, Striphas points out that the purpose of the release was precisely to avoid people in one country from getting their copies from another country; the endeavor was aimed at maintaining territorial distinctions so that each publisher could profit to the maximum within its contractually guaranteed footprint.  The massive scale of the simultaneous release, and its inevitable failures, brought IP and even security and logistics to the forefront of the Harry Potter phenomenon, such that newspapers were reporting on the embargo (since they didn’t have review copies to review). 

Fans were recruited to go along with the ideology of control:  “Those who obtained and subsequently returned early Potter book releases have tended to do so in good faith, believing that their principled acts uphold egalitarian conditions of access to stories that have enthralled millions of readers.”  He doesn’t think that’s wrong, even though they serve the publishers’ own purposes, “laboring to produce the very conditions of scarcity that, from an economic standpoint, might well be contrary to their own interests.”  Striphas only considers, however, commercial appropriations such as purported Chinese sequels and Tanya Grotter; he doesn’t discuss transformative fandom except to mention a German translation group that attempted to get the books translated into German faster than the commercial publishers could.  When it comes to commercial, cross-cultural reworkings, he argues,

Bricolage, indigenization, parody, and other forms of appropriation are frequently perceived by Western journalists, intellectual property rights holders, and others to be insufficiently or inappropriately transfigurative acts. This perception, in turn, places those who have assumed the task of development in an impossible position. On the one hand, they’re charged with repeating foreign values, styles, and culture, while, on the other, they are condemned for having done so under existing economic and infrastructural conditions. Despite their complaints, Western authorities tend not to admit their part—our part—in both creating and sustaining the conditions leading to book piracy and other forms of intellectual property piracy on the world scene.

All these examples lead Striphas to conclude that books are one site of struggle over a transition to “controlled consumption” in which large producers have the power to dictate what consumers can do and what they must pay, diminishing their control from the earlier “consumers’ republic” despite a continued rhetoric of choice.  This transition is contested, but in my view it sure looks pretty good for the producers right now.  Striphas sometimes overgeneralizes—does the experience of one Barnes & Noble in Durham really tell us a lot about the relationship between big box bookstores and larger urban/racial equity issues?—and sometimes just leaves things at “it’s complicated,” but on the microlevel there is much to appreciate about the way the book connects various threads that together bind up books.

Not that this has ever happened to me

Major media outlet receives review copy; along with the review, invites online readers to read an excerpt; it has permission to offer an excerpt.  Through inadvertence, though the file is called “excerpt.pdf,” it is in fact the entire book.  (Assume the inadvertence is on the part of the major media outlet, not the publisher, though it could easily be the latter, especially if the publisher was given the choice of what excerpt it wanted to share.)  The media outlet posts its review online, with the not-excerpt hosted on its servers; now the book is out in the open.  Given strict liability, is the media outlet liable for copyright infringement?  What happens to the reader who only wanted to read an excerpt in order to decide whether to purchase the full book but downloaded what turned out to be the full book—is she an infringer?  Ignorance is no excuse, and the download was volitional, but how about mistake of fact?  Can we distinguish between “I mistakenly think my conduct is authorized” (whether by operation of law or by a license) and “I mistakenly think my conduct will result in a different copy than it does”?  Separately: If the publisher is at least partly responsible, does the author have a cause of action against the publisher for something like waste?

Monday, December 24, 2012

Merely alleging use for commercial purposes insufficient for TM claim

E Clampus Vitus v. Steiner, 2012 WL 6608612 (E.D. Cal.)

Plaintiff ECV sued defendants for trademark infringement/unfair competition based on defendants’ alleged misuse of ECV’s trademarks.  Defendants moved to strike and dismiss the complaint.  The anti-SLAPP motion was denied, but the motion to dismiss was granted.

ECV alleged that it had valid marks, including registrations, for E Clampus Vitus, ECV, and Clampers marks.  The marks were used to indicate membership in its fraternal organization and for related purposes.  ECV also used them for goods such as pins, hats, and shirts.

ECV alleged that defendants “participated in the 2010 City of Woodland Christmas parade as a member of the Joseph Zumwalt Chapter,” and that they used ECV’s marks “for commercial purposes” and “caused confusion by using and alleging that they had the right to use the trademark rights.”  They also allegedly conducted a March 2011 event called the 4–SKIN DOINS, “in which the trademarks of Plaintiff were used for commercial purposes,” and participated in the annual Georgetown Founders Day Celebration using ECV’s marks “for commercial purposes, causing public confusion, and alleging that they had the right to use E Clampus Vitus, ECV, and Clampers.”  The sale of hot dogs at Founders Day in the name of ECV Georgetown allegedly infringed ECV’s marks.  Further, they alleged that defendants “will be auctioning off a motorcycle under the name Joseph Zumwalt ECV.”

The defendants moved to dismiss under the anti-SLAPP statute, arguing that the gravamen of the complaint was that “defendants marched together in a parade as Clampers, engaged in various charitable works together as Clampers, and held themselves out publicly to be Clampers .... This is unequivocally protected speech the whole purpose of which is to raise public awareness and financial assistance for community and social issues and needs.”  But the court decided that the statements/conduct at issue didn’t concern a “public issue” or “issue of public interest” as required by the relevant provisions of the anti-SLAPP statute.  An issue that is of interest only to a definable portion of the public and that’s not in the context of an ongoing controversy, dispute or discussion isn’t enough to trigger the statute.  The issue here was only of interest to a definable portion of the public—members and/or supporters of ECV—and defendants didn’t allege that their conduct occurred in the context of an ongoing controversy, dispute, or discussion.

However, ECV’s complaint flunked the pleading standards.  Defendants argued that ECV failed to plead any specific facts indicating likely confusion according to the multifactor confusion test.  Merely alleging that the plaintiff had a registered mark and that the defendant used it with respect to goods and services not covered by the registration was insufficient to plead that confusion was likely.  Allegations that defendants used the “trademarks of Plaintiff” for “commercial purposes” were conclusory and didn’t indicate which marks were used or the manner in which defendants used them. As to the alleged sale of hot dogs and auction of a motorcycle, ECV didn’t allege sufficient facts from which a reasonable inference could be drawn that these items were related to ECV’s pins, shirts, and headgear that Plaintiff allegedly sells.  Thus, the state and federal trademark infringement/unfair competition claims were dismissed.

As for the state law false advertising claim under California Business & Professions Code section 17500, it was subject to Rule 9(b).  The allegations that “Defendants have further violated [section 17500], committing false advertising, by selling goods and services, misrepresenting their identity, and signing up new ‘members', who think they are joining E Clampus Vitus, but in actuality, are not” were too conclusory to provide the specificity required by Rule 9(b).  They didn’t identify any allegedly false statements or state how any such statement was misleading.   Complaint dismissed with leave to amend.

The hazards of off-label promotion

An off-label medical device promotion that killed.  The story points out that, atypically, patients were denied even the appearance of informed consent—though one has to wonder whether many patients can do more than go along with their doctors’ advice even when they know the use is off-label.

One particularly interesting portion from the Forbes piece, which seems to be online only:

The culture of orthopedic surgeons is particularly aggressive. Predominantly male, "orthopods" are the jocks of the surgical world. Sales representatives tell stories of doctors playing loud rock music in the operating room and throwing instruments at the wall when they get frustrated. Several surgeons tell Fortune they simply don't have time to pore over labels. Lambert offers a blunt appraisal: "'Off-label' is not at all a pejorative term -- it's almost the opposite. Reading the label is for people who read labels."

Surgeons don't always listen to the FDA, but they do heed the young sales representatives who bring them devices and routinely watch them operate. "It sounds ridiculous, because here's a guy who went to medical school and did his residency, and he's listening to some guy in the back of the room," says one former Synthes salesperson. Another adds: "It's not uncommon to have a surgeon with a drill in his hand, about to drill a hole, looking over his shoulder at you saying, 'Is this right?'"

The story also provides insights into why the market doesn’t constrain false or unproven claims, despite huge potential back-end liability in cases like this one: firms are made of people, and individual people both have different incentives than the firm as a whole and, not unrelatedly, deep capacities to read evidence optimistically even as patients are dying.  Indeed, one of two case examples in a brochure given to surgeons promoting the product came from a woman who’d died on the operating table—though the brochure didn’t say that.

One difference between marketers and trademark lawyers

Marketers like ubiquity and recognize that top-of-mind status is not the same as true genericity.  Bill Morris, Explosion of Brands and Erosion of Soul:

[T]he Independence Bowl became the Poulan/Weed Eater Independence Bowl, lovingly known as the Weed Whacker Bowl. ... “Over all, it was a net benefit,” Evin Ellis, the company’s marketing communications manager, [said]. “We consider Weed Eater the Kleenex of weed whacking.” . . . Corporations are now willing to shell out up to $5 million a year to have their name attached to a college football bowl game because they want the brand to become so common and recognizable that it enters the language as the thing itself. The dream is to become ... generic.

Last ellipsis in original.  See also:
 

Friday, December 21, 2012

Trademark question of the day

This truck sign seemed a little familiar:
What do you think the Washington Capitals might say?

Bigger end of year news: copyright reform

The UK government’s copyright modernization plans: “Modernising copyright - a modern, robust and flexible framework.”  Of particular note to me: like everyone sensible, and like the US before Justice Souter sent us on an unfortunate detour, the UK government proposes to treat parody, satire and pastiche together.  Still, it’s a far cry from full-fledged transformativeness, though there’s separate treatment for data mining by noncommercial entities and several other important exceptions.  The UK also proposes to prevent contracts from overriding these rights to the extent allowed by EU law.  Also, while the US tries to keep international obligations on disability limited to print, the UK government proposes to offer exceptions for every form of work and for every form of disability, because that’s the right thing to do.

End of year news

I am 1/2 of one of the top ten most influential fans of 2012, according to the Daily Dot.

Thursday, December 20, 2012

Transformation, commerce, and medium

Here's an art show full of visual work inspired by premium cable.  You can buy prints etc. for varying three-figure sums.  More traditional fan art, too, is often sold at fan conventions.  And I don't expect these folks to get sued.  Why is the anti-commercialization norm so strong with fan fiction and video, but not with fan art, and why have copyright owners seemingly tolerated so much more commercialization in the visual field?  (This is far from the only example of transformative visual works for sale I've seen; it's just the one I saw today.)  Is it the lingering mystique of the unique art object, such that the "original" drawing/painting/etc. seems to have so much more labor value than the "original" copy of a text or vid that a sale of the former is justified?

Also there is no accounting for taste; while my kindergartender couldn't produce any of these, I think my friends do far better work, and for free.  Though I liked this Alternate Ending exhibit better, alternate endings being a staple of traditional fanworks, it does seem to me that traditional fan cultures focus more on classic aesthetics--creating beautiful art objects that are also transformative works--than these producers.  Intriguingly, the artist who in my opinion does the most polished work in the second exhibit has a Kickstarter for a poster of every Wile E. Coyote ACME purchase during the classic cartoons, and its more widespread success--these ACME posters aren't limited editions of small numbers, like most of the works in the exhibits linked above--suggests that the current art world aesthetic has something to do with avoiding mass appeal.  That's not a new insight, but in the context of transformative works specifically I wonder: does beauty make it harder to see transformativeness, or easier?  I know in the DMCA hearings we constantly had to say that it was important to vidders as artists to convey their messages in aesthetically rich ways, and some people seemed to have trouble hearing that, even though we ordinarily accept that attractive, seductive, well-put-together art is more effective art.

Of course, I support bad transformative works too!  Quality isn't the standard for transformativeness; also you don't get good transformative works without a lot of space for bad ones.  But when classical portraiture techniques risk liability for seeming too exploitative of the subject, there's something weird going on about the intersection of art and transformation.

Wednesday, December 19, 2012

I predict, therefore I am copyrightable

A brief note on two copyright cases from the last week, a comparison of which suggests that copyright doctrine has fetishized quantifiability over other forms of knowledge-making.  In one, a court (rightly) denies protection to huge amounts of factual matter, while in the other, a court (wrongly) grants protection to single letter grades because they’re the product of skill and judgment.  Eric Goldman has more to say about National Football Scouting, Inc. v. Rang (W.D. Wash. Dec. 13, 2012), but the money quote from the opinion is: “National’s Player Grades, unlike telephone numbers, are not facts; they are ‘compilations of data chosen and weighed with creativity and judgment.’ The Player Grades represent National’s opinion, based on its data and its expertise, of a player’s likely success in the NFL.”  Justin Hughes on microworks and James Grimmelmann on rankings have written relevantly about what’s wrong with this statement as an endpoint and not a beginning of a real analysis of whether there’s enough copyrightable output regardless of the creativity that went into the grade.

Contrast Effie Film, LLC v. Pomerance (S.D.N.Y. Dec. 18, 2012), which granted summary judgment to the declaratory judgment plaintiff  because any similarities between the parties’ screenplays came from their basis in the same historical events.  Here’s what the Effie court has to say about the creative judgments involved in doing history:

Hoehling is not an opinion about historians’ lack of creativity. 

Indeed, the critique offered by Patry and sympathetic historians—insisting that historians put original work into producing facts and interpretations—essentially assumes a labor-desert theory of copyright law and argues that historians are entitled to more robust property protection because they are performing the requisite creative labor.  See Jeanne C. Fromer, Expressive Incentives in Intellectual Property, 98 Va. L. Rev. 1745, 1753-56 (2012); cf. Wendy J. Gordon, A Property Right in Self-Expression: Equality and Individualism in the Natural Law of Intellectual Property, 102 Yale L.J. 1533 (1993).  But as its opening paragraph states, Hoehling is concerned primarily with the unique importance of maintaining a free flow of accessible historical information: “The rationale for this doctrine is that the cause of knowledge is best served when history is the common property of all, and each generation remains free to draw upon the discoveries and insights of the past.” To achieve that end, Hoehling prioritizes an instrumental conception of copyright law and concludes that weak copyright protections will best facilitate the creation and dissemination of new historical knowledge.

. . . Creativity in history may approximate the creative process of generating works of fiction, but is arguably of a different sort by virtue of historians’ goal of accurately representing past reality and the shared professional norms that discipline factual and interpretive adventurousness.  These differences, coupled with the special role that historical knowledge plays in democratic deliberation, may justify different treatment of originality doctrine with respect to historical facts and interpretation.  Further, incentive-based arguments may ultimately support Hoehling’s approach.  For instance, given the growth of a large professoriate motivated—professionally, personally, and financially—to generate new historical information even in the absence of strong copyright protections, weak protection may suffice to maximize production, or at least to push it above an independently specified floor.

These two cases accurately reflect a division in the case law: creative and effortful historical judgments: no protection.  Creative and effortful judgments about the future, though they are necessarily based on evidence from the past and are equally important to democratic deliberation: fully copyrightable, no matter how small!  This division strikes me as silly.

Tuesday, December 18, 2012

Transformative use of the day?

NASA Johnson style.

United States of Pop

OK, DJ Earworm's unlikely to beat his 2009 United States of Pop in my estimation, but the 2012 mashup is up, and this interview has some nice bits about the difference medium makes; the interviewer describes his work as "a musical equivalent of reading a really good essay about pop music that year," which seems exactly right to me: the juxtaposition of hits works as commentary on the hits and the zeitgeist they reflect.  The other thing that comes out of this interview is a sense of process and progress: the work gets better as it goes, which is why we shouldn't require all remix works to be awesome before they get legal protection: you don't get the best stuff in any form without allowing its practitioners to experiment, learn, and even sometimes fail:
I'm fascinated by pop music, and I'm fascinated by how it relates to culture, and how the little nuances of development in the pop-music landscape reflect often significant cultural developments. I mean, at first it was just an experiment, and then I realized that it could be something more. The first year [my attitude] was like, "Can this be done?" and even the second year I was like, "Well, I might do it again, we'll see if I can get it to work." But by the third year I thought, well, not only do I have to do it, but I realized what it could be. At that point I thought maybe we could be, from the ground up, telling a story that reflects our collective experience, but that also reflects the spirit of the new year, in a way — the passage of time, and renewal, and this idea of us all going through it together. That's when 2009 happened.... I feel like every year I learn a lesson from what I did right and what I did wrong ....
In this interview, he talks further about the ways in which music expresses emotion and conveys meaning, and how his editing choices emphasize particular aspects.  HT GK.

Monday, December 17, 2012

Copying as speech redux

This NYT article on the history of the paper trail includes a discussion of the expressive value of copying the Pentagon Papers:
Mr. Ellsberg obsessively made copies of his copies, even enlisting the help of his children in what she describes as an act of radical self-publishing. “Even though we think of copying now as perfunctorily ripping something off, he was expressing himself by Xeroxing,” [Professor Lisa Gitelman] said. ... The Pentagon Papers were a landmark, in her view, not just in the antiwar movement, but in a “Xerox revolution” that allowed citizens to seize hold of official documents, and official knowledge, and turn them to their own purposes as never before.

Caronia dissent points out FDCA's threatened foundations

U.S. v. Caronia, --- F.3d ----, 2012 WL 5992141 (2d Cir.)

Judge Livingston dissented.  She began with the proposition that Caronia’s intent that Xyrem be used in ways its labeling neither disclosed nor described was revealed through his speech, and it’s unexceptional that speech can constitutionally be used as evidence of motive or intent.  Wisconsin v. Mitchell, 508 U.S. 476 (1993).  By ruling otherwise, “the majority calls into question the very foundations of our century-old system of drug regulation.”

Under the FDCA and its regs, whether a drug’s directions are “adequate … for use” depends on the drug’s intended uses.  Directions are adequate only if they include, for example, “[s]tatements of all ... uses for which such drug is intended,” and “usual quantities [of dose] for each of the uses for which it is intended.”  Unsurprisingly, Caronia didn’t argue that Xyrem’s labeling included adequate directions for the off-label uses he promoted.  Rather, his defense focused on whether he enaged in a conspiracy with others to distribute Xyrem for off-label use.

Intended use has long been a cornerstone of food and drug law.  The Pure Food and Drugs Act of 1906, which prohibited introducing any adulterated or misbranded drug into interstate commerce, defined “drug” to include “any substance or mixture of substances intended to be used for the cure, mitigation, or prevention of disease.”  Courts found violations of the law where (as here) a manufacturer’s speech “demonstrated an intended use that brought it within the scope of the statute.”  The law’s expansion in the Food, Drug, and Cosmetic Act of 1938 “remained anchored to the concept of ‘intended uses,’” and broadened the definition of a “misbranded” drug to include any drug with labeling not bearing “adequate directions for use.”  Courts routinely relied on “oral representations made by ... authorized sales distributors” to determine a product's intended uses. The modern FDCA is to the same effect.

The concept of “intended uses” therefore largely defines the scope of the FDA's regulatory authority. To put the matter in practical terms: it is because of the “intended uses” principle that hardware stores are generally free to sell bottles of turpentine, but may not label those bottles, “Hamlin's Wizard Oil: There is no Sore it will Not Heal, No Pain it will not Subdue.”

The relevant regs have remained essentially unchaged for sixty years.  Intended uses are defined objectively, not subjectively. Xyrem was “misbranded”—and Caronia could be guilty of conspiracy to introduce a misbranded drug into commerce—“if the conduct and statements of the persons legally responsible for labeling the drug (or the conduct and statements of their representatives) demonstrated an objective intent that Xyrem be used for off-label purposes.”

To demonstrate that Xyrem was intended for off-label uses (and thus that it was misbranded) the prosecution in this case relied on Caronia's statements that Xyrem could be used to treat various conditions for which it was unapproved, including multiple sclerosis and fibromyalgia.  (Of course, Caronia also claimed that Xyrem was “very safe” in contradiction to its black box warning, without mentioning the contraindications.  Gleason, a co-conspirator, advocated its use in treating obesity and chronic fatigue and claimed that “for the problems with insomnia there's no better drug, no safer drug, it's as safe as Ambien and Sonata ....”  Caronia’s pay was dependent on his sales; he was unable to meet his sales targets, and at the time was ranked near the very bottom of Orphan’s sales force.)  This was speech used simply as evidence of Xyrem's intended uses, which is totally okay under the First Amendment.

The majority tried to suggest that its reasoning left open the possibility that speech may serve as evidence of intent to introduce a misbranded drug into interstate commerce, but that in this particular case “the government clearly prosecuted Caronia for his words—for his speech” and not for conspiring to introduce a misbranded drug into interstate commerce.  The dissent disagreed, and (like me) failed to see how the majority’s reasoning “would ever allow such speech to support a conviction under [the misbranding provision].”  The district court correctly instructed the jury as to the necessary elements.  When it instructed the jury that “[a] misbranded drug may be shown by a promotion of the drug by a distributor for an intended use different from the use for which the drug was approved by the Food and Drug Administration,” it was explaining the “objective intent” standard with respect to “intended uses.”  In context, it was “instructing the jury that promotion of an off-label use may demonstrate an objective intent that a drug be used for off-label purposes—and thus that it is being placed into interstate commerce without proper labeling.”  And that was no error.  Nor did Caronia argue that the instruction was erroneous or object to references to off-label promotion in the summation.

“At bottom, the majority is troubled that ‘the simple promotion of a drug's off-label use’ can lead to criminal liability under the FDCA.”  But this was a significant departure from precedent.  Even Sorrell noted that “the First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech. That is why a ban on race-based hiring may require employers to remove ‘White Applicants Only’ signs; … and why antitrust laws can prohibit agreements in restraint of trade.”

True, introducing Xyrem into interstate commerce was generally legal so long as the drug was not intended to be used for purposes that lacked adequate directions on its labeling. And, absent Caronia's speech (and speech by other Orphan representatives), the jury likely would not have found that Xyrem was intended for such off-label uses. But it’s consistent with the First Amendment that otherwise permissible conduct can be impermissible if undertaken with a prohibited motive, which may be proven with evidence of the actor’s speech, e.g., sex discrimination proved by an employer’s statements evidencing improper motive.  “Simply put, that Caronia was otherwise free to introduce Xyrem into interstate commerce does not give him a First Amendment right to introduce it into interstate commerce for any intended purpose he wished.”

Caronia argued that off-label use was itself lawful.  That wasn’t enough.  “There might be no law forbidding the consumption of arsenic. But this would not endow Abby and Martha with a First Amendment right to offer arsenic-laced wine to lonely old bachelors with the intent that they drink it. And any statements Abby or Martha made suggesting their intent—even if all of the statements were truthful and not misleading—would not be barred from evidence by the First Amendment simply because arsenic might legally be consumed.”  In a footnote, the dissent pointed out that

speech encouraging others to engage in certain legal conduct has long been directly regulated or prohibited in a variety of areas. For example, an insider who is privy to an impending corporate merger is prohibited from telling a friend that one of those companies is a good buy—even if that statement is truthful and even if the friend (who does not realize that she has just been made privy to material nonpublic information) may legally buy stock in that company. Each of two corporations may be free to raise its prices, but the Sherman Act forbids them from discussing such a course of action. Likewise, nonlawyers are forbidden from giving legal advice even if the advice is sound, and unlicensed laypersons may not provide medical diagnoses, regardless of their accuracy.

Of course, maybe that’s all unconstitutional, if the First Amendment eats the regulatory state.

Other laws, such as the ones at issue in Sorrell and Thompson v. Western States Medical Center, 535 U.S. 357 (2002), targeted speech directly.  If the jury had a reasonable doubt about whether Caronia actually intended to sell Xyrem, Caronia couldn’t have been convicted, no matter what he said.  But the pharmacies in Sorrell and Thompson violated the law as soon as they disseminated information/advertised: speech alone was enough to trigger punishment, whereas speech alone is insufficient to constitute misbranding.

This was the teaching of Whitaker v. Thompson, 353 F.3d 947 (D.C.Cir.2004), rejecting a a First Amendment right to label a product with a drug claim despite its lack of FDA approval:

Assuming that the government may condition the sale of drugs on passage through the elaborate testing that the statute requires ..., the key step is the [ ]FDCA principle that classification of a substance as a ‘drug’ turns on the nature of the claims advanced on its behalf. That principle, in turn, rests on the idea that claims about a product by its manufacturer and vendors, including product labeling, serve as evidence of the sellers' intent that consumers will purchase and use the product for a particular purpose—and, therefore, as evidence whether the product is or is not a drug. … [I]t is constitutionally permissible for the FDA to use speech, in the form of labeling, to infer intent for purposes of determining that [the plaintiff's] proposed sale of saw palmetto extract would constitute the forbidden sale of an unapproved drug.

Caronia argued that the Whitaker drug couldn’t be sold lawfully, meaning that there were no lawful off-label uses to promote.  But the product in Whitaker, a plant extract, could be sold lawfully as long as it wasn’t a “drug,” “and whether it was a drug depended entirely upon the plaintiff's speech, as evidence of his intent, when he offered it for sale. That case is therefore indistinguishable from this case; indeed, even if the FDA had not approved Xyrem for any medical uses at all, Caronia could presumably have sold Xyrem as an industrial solvent if it happened to be excellent at removing grease and grime…. [T]he simple fact that one is generally allowed to sell something does not imbue one with a constitutional right to sell it for any intended purpose.”

Even if using Caronia’s speech as evidence of his intent required Sorrell/Central Hudson scrutiny, it met that test.  “[O]ne of the [FDCA]'s core objectives is to ensure that any product regulated by the FDA is safe and effective for its intended use.” Brown & Williamson, 529 U.S. at 133 (2000).  Premarket approval is the central mechanism to implement this objective. Before the FDCA, the government had to proceed against misleading claims after the drugs were marketed.  The 1938 act required safety preapproval, and the 1962 amendments added premarket approval for effectiveness for stated uses, based on concerns that “doctors could not adequately evaluate frequently misleading claims by drug manufacturers without a body of objective, reliable information.”

According to the Supreme Court in Western States, “[p]reserving the effectiveness and integrity of the FDCA's new drug approval process is clearly an important governmental interest” and “the Government has every reason to want as many drugs as possible to be subject to that approval process.”  The prohibition on offlabel marketing directly advances this interest.  The ability to market FDA-approved drugs for unapproved uses would leave little incentive to seek FDA approval for those uses.  Prohibiting off-label promotion is one of the few mechanisms available to encourage use of the approval process.

The majority was impressed that doctors can prescribe drugs for off-label purposes, and patients can use them:

But this is also true for substances that have not been approved by the FDA for any medical use at all. The law generally permits a hardware store to sell turpentine, and though such conduct may not be advisable, the law generally permits a consumer to purchase that turpentine and use it as a pain reliever. Under the majority's reasoning, then, any substance that may be legally sold for some purpose may be promoted by its manufacturer for any purpose—so long as the manufacturer's statements are merely unsubstantiated, rather than demonstrably false or misleading. But this reasoning would invalidate the very definitions of “drug” and “device” that undergird the entire FDCA.

The majority emphasized that the prohibition was speaker-based.  “But drug manufacturers are the precise group that the government must encourage to participate in the new drug approval process. Indeed, if the prohibition applied to any broader class of speakers, it would likely fail Central Hudson's fourth requirement that a regulation be ‘narrowly drawn.’”  Whereas in Sorrell, the law didn’t promote the interest in protecting patient privacy because it applied only to a small subset of the groups who could compromise privacy, drug manufacturers were the entirety of the group who could undermine the NDA process by not participating in it.

Also, allowing the promotion of off-label uses would undermine the approval process even for new drugs.  Approval requires consideration of safety and effectiveness.  “If a drug manufacturer must be allowed to distribute a drug for any use so long as it is approved for one use, the government's balancing of a drug's benefits against its risks becomes very difficult or even impossible. Drugs viewed as safe for certain uses might be considered unsafe overall if the benefits and risks being weighed are not for a specific intended use but rather for any use at all, whether supported by evidence or not.”  Thus, the ban on off-label promotion is not just a paternalistic attempt to shield doctors and patients from truthful information.  It makes the whole regulatory scheme work. “[I]f drug manufacturers have a First Amendment right to distribute drugs for any use to physicians or even directly to patients, then the entire FDCA may well be unconstitutional.”

Banning off-label promotion by manufacturers was also the least restrictive alternatives; nothing in the majority’s list would be similarly effective.  Disclaimers etc. wouldn’t leave any incentive to submit drugs for FDA approval, and would encourage promotion based on data much less reliable than that required for FDA approval.  (The court cited conclusions that most prescriptions for off-label use, 73%, have little or no scientific support. See Randall S. Stafford, Regulating Off–Label Drug Use: Rethinking the Role of the FDA, 358 New Eng. J. Med. 1427, 1427 (2008).)  Ceilings on off-label prescriptions would require data from “countless” doctors and patients and could “needlessly (and simultaneously) result in the denial of some effective treatments and the overprescription of ineffective and even dangerous ones.”  A ban on off-label prescriptions “would constitute an unprecedented intrusion into the practice of medicine, and would result in perhaps an even greater restriction on speech.”  Most importantly, because what is a “drug” (or “device”) depends on intended use, often established by reference to speech, the majority’s less-restrictive-alternatives analysis is equally applicable to the entire FDCA scheme.

The idea that the FDCA was content- and speaker-based added nothing.  “Every commercial speech case, by its very nature, involves both content- and speaker-based speech restrictions. Yet the Supreme Court has long acknowledged—and acknowledged again in Sorrell—that ‘the government's legitimate interest in protecting consumers from commercial harms explains why commercial speech can be subject to greater governmental regulation than noncommercial speech.’” Plus, the government’s interest here was in preventing dangerous products with false or misleading labels, and insuring a base of reliable, objective information about prescription drugs.  This is a core Central Hudson case even after Sorrell.  (The Supreme Court has applied Central Hudson to statutes that provide for or allow criminal punishment for speech.)

While the simple fear that people will make bad decisions with truthful information can’t justify content-based burdens on speech, that doesn’t mean that “conveying non-demonstrably false information to consumers must take precedence over all competing government interests.”  The dissent concluded by pointing out that the circuit hadn’t applied heightened scrutiny in other cases involving the use of speech as evidence of intent, such as antidiscrimination cases or prosecutions for criminal inducement, attempt, and conspiracy.  The majority decision “calls into question a fundamental regime of federal regulation that has existed for more than a century,” and thus Judge Livingston dissented.

Here’s a more sanguine take from the Drug & Device Law blog, which likes the new First Amendment defense for off-label promotion (and considers Caronia a good guy who didn’t do anything wrong; compare what he said about safety and teenagers). I think that analysis is wrong, though clever; though it initially says that there’s only a First Amendment defense for truthful speech, the core question is whether “intended use” and “misbranding” can mean what the FDA interprets them to mean. If they can, then Caronia engaged in misbranding; if they can’t, then off-label promotion isn’t misbranding and the government can’t constitutionally stop drugmakers from promoting—including mass market advertising—unapproved indications for approved drugs.  Though it could still prosecute false or misleading statements, the scienter requirement would be quite different: knowing falsity, rather than knowing off-label promotion. How many sales reps will know the information they’ve been given by in-house sources is false, as opposed to knowing that the indication they're promoting isn't on the label?

Prosecuting offlabel promotion as misbranding is unconstitutional

U.S. v. Caronia, --- F.3d ----, 2012 WL 5992141 (2d Cir.)

In the latest round of the expansion of commercial speech doctrine to eat away at the basic foundations of the regulatory state, the Second Circuit reversed a pharmaceutical rep’s conviction for conspiracy to introduce a misbranded drug into interstate commerce because all he did was promote the drug Xyrem for off-label use.

FDA drug approvals require clinical proof of the safety and efficacy of a new drug for each intended use or indication. But once approved, drugs can be prescribed for non-approved uses. The FDA itself has recognized that doctors do this and that it may be “appropriate and rational in certain circumstances, and may, in fact, reflect approaches to drug therapy that have been extensively reported in medical literature.” However, the FDCA prohibits misbranding. Misbranding occurs if a label fails to bear “adequate directions for use,” defined as “directions under which the lay[person] can use a drug safely and for the purposes for which it is intended.” The regulations define intended use by reference to “the objective intent of the persons legally responsible for the labeling of drugs,” which may be demonstrated by, among other evidence, “oral or written statements by such persons or their representatives” and “the circumstances that the article is, with the knowledge of such persons or their representatives, offered and used for a purpose for which it is neither labeled nor advertised.” Misbranding bears criminal penalties.

The FDCA and its regs don’t explicitly ban promotion or marketing of drugs for off-label use, but recognize that promotional statements by pharma reps can serve as proof of a drug’s intended use. Thus, off-label promotional statements could constitute evidence of an intended unapproved use. The FDA has concluded that “[a]n approved drug that is marketed for an unapproved use (whether in labeling or not) is misbranded because the labeling of such drug does not include ‘adequate directions for use.’” “Thus, the government has treated promotional speech as more than merely evidence of a drug's intended use—it has construed the FDCA to prohibit promotional speech as misbranding itself.”

Caronia was a rep for Orphan (now known as Jazz), which made Xyrem, a powerful central nervous system depressant with serious side effects and risks from abuse. Its active ingredient is GHB, known as the “date rape drug.” The FDA approved Xyrem to treat narcolepsy patients who experience cataplexy and those who experience excessive daytime sleepiness, but required a “black box” warning, the most serious warning available. It was not approved for teens. To identify side effects, the FDA also regulated Xyrem distribution, allowing only one pharmacy to distribute Xyrem nationally.

Caronia’s salary was based on his sales. He started “speaker programs” for Xyrem, which pay doctors to speak to other doctors about FDA-approved drug use. Orphan’s procedures required Caronia to decline to answer questions about off-label uses of Xyrem, and instead fill out “medical information request forms” sent to Orphan. Orphan would then send information to the inquiring physician. But doctors employed as promotional speakers by Orphan were permitted to answer off-label use questions.

Caronia and a speaker program doctor, Gleason, promoted Xyrem for unapproved uses, including unapproved indications and unapproved subpopulations—e.g., “the youngest patients we have are sixteen in the studies as old as sixty-five. … [T]here have been reports of patients as young as fourteen using it and obviously greater than sixty-five. It's a very safe drug.” The criminal information filed against Caronia said that he “was marketing Xyrem for medical indications that were not approved by [the] FDA when, as the defendant then and there well knew and believed, Xyrem's labeling lacked adequate directions for such uses and adequate warnings against such uses where uses could be dangerous to the user's health.” That is, it didn’t contain adequate directions for use “because such an ‘off-label’ indication or use and related information were not included in the FDA-approved labeling for the drug.”

Gleason and Orphan pled guilty to related charges. The majority found it to be clear that “the government prosecuted Caronia for his off-label promotion …. Thus, the government's theory of prosecution identified Caronia's speech alone as the proscribed conduct.” (Like many a conspiracy.) The jury found Caronia guilty of conspiracy to introduce a misbranded drug into interstate commerce.

On appeal, Caronia argued that the First Amendment didn’t allow the government to criminalize a pharmaceutical company’s truthful and non-misleading promotion of an FDA-approved drug to physicians for off-label use “where such use is not itself illegal and others are permitted to engage in such speech.” The court found in his favor, on what it said were narrower grounds.

The statute and its regs don’t expressly prohibit or criminalize off-label promotion. They use “promotion” only as evidence of a drug’s intended use. “Thus, under the principle of constitutional avoidance, we construe the FDCA as not criminalizing the simple promotion of a drug's off-label use because such a construction would raise First Amendment concerns. Because we conclude from the record in this case that the government prosecuted Caronia for mere off-label promotion and the district court instructed the jury that it could convict on that theory, we vacate the judgment of conviction.”

The government argued that Caronia’s off-label promotion was used only as evidence of intent to misbrand the drug: evidence that the “off-label uses were intended ones[ ] for which Xyrem's labeling failed to provide any directions.” The court disagreed. Even assuming that the government can offer evidence of off-label promotion to prove intended use (which really must be the case) under the rule of Wisconsin v. Mitchell, 508 U.S. 476 (1993), that the First Amendment “does not prohibit the use of speech to establish ... intent,” that’s not what happened here. The government repeatedly argued that Caronia was a criminal because he promoted and marketed off-label use of Xyrem. Even if the government could have used Caronia’s speech as evidence of intent, the government didn’t limit its use of the speech in that way. Mitchell instructs that speech introduced as evidence of intent should be carefully scrutinized “to be certain the statements are not expressions of mere lawful and permissible difference of opinion with our own government.” The only misbranding alleged was promoting off-label use. (Since Caronia isn’t responsible for the labeling, how could he engage in “misbranding” at all under this theory? Indeed, the court points out that the government never argued that Caronia “conspired to place false or deficient labeling on a drug.”) In a footnote, the court wondered about how the speech-as-evidence-of-intent rule would work here—“would a manufacturer be guilty of misbranding if it ships Xyrem to a doctor who, in placing his order, reveals that he prescribes the drug for off-label use—on a theory that the manufacturer now knows that the drug is not properly labeled for that use—but not if the manufacturer ships to a doctor who does not reveal that he prescribes the drug off-label?”

The district court “flatly” told the jury that pharma reps are prohibited from off-label promotion. But “[s]peech in aid of pharmaceutical marketing ... is a form of expression protected by the Free Speech Clause of the First Amendment,” Sorrell v. IMS Health. To construe “simple promotion” of off-label use by manufacturers and reps as misbranding would violate the First Amendment.

Sorrell held that a Vermont statute regulating pharmaceutical information-sharing was content- and speaker-based and thus subject to heightened scrutiny and presumptively invalid.  Even under Central Hudson, the law would have been invalid.  The government’s view that the FDCA’s misbranding provisions criminalized the promotion of off-label drug use by pharmaceutical manufacturers was content- and speaker-based, and, therefore, subject to heightened scrutiny.  Speech about government-approved use of drugs was permitted, while certain speech about off-label uses wasn’t, even though the off-label use was itself allowed and even though non-manufacturers, including doctors and academics, could speak without restriction.  As in Sorrell, the “express purpose and practical effect” of the government's ban on promotion is to “diminish the effectiveness of [off-label drug] marketing by manufacturers.”  The government’s interpretation “thus has the effect of preventing [pharmaceutical manufacturers]—and only [pharmaceutical manufacturers]—from communicating with physicians in an effective and informative manner.”  Plus, the First Amendment claim was even stronger because this was a criminal regulatory scheme subject to more careful scrutiny.

Under Central Hudson, promoting off-label drug use concerns lawful activity, and its promotion is not itself false or misleading.  The government’s asserted interests in drug safety and public health were substantial (though maybe not according to the D.C. Circuit!).  The government claimed an interest in preserving the effectiveness and integrity of the FDCA's drug approval process, and an interest in reducing patient exposure to unsafe and ineffective drugs.  The government didn’t argue that off-label promotion was itself false or misleading; if it were, it wouldn’t be entitled to any First Amendment protection.

In a footnote, the majority rejected the dissent’s reliance on Whitaker v. Thompson, 353 F.3d 947 (D.C.Cir. 2004), which rejected an asserted First Amendment right to label a product with a drug claim despite its lack of FDA approval.  Whitaker “constituted speech about unlawful activities and therefore did not enjoy First Amendment protection because it was unlawful to sell an unapproved product pursuant to claims about disease treatment.” But, as the dissent will point out a number of times, it’s only unlawful because it’s a drug: if you sold it as “paint” the FDCA wouldn’t apply, which means that the rule violated in Whitaker is exactly as speech-based and speaker-based as the rule here.

So the court turned to Central Hudson prongs three and four: does the regulation directly advance the government’s interests and is it narrowly drawn?  No.  Off-label drug use isn’t unlawful, and the FDA generally expects that approved drugs will be used off-label.  Thus, prohibiting the truthful promotion of off-label drug usage by a particular class of speakers wouldn’t directly further the government's goals of preserving the efficacy and integrity of the FDA's drug approval process and reducing patient exposure to unsafe and ineffective drugs.  Instead, it’s a paternalistic interference with “the ability of physicians and patients to receive potentially relevant treatment information; such barriers to information about off-label use could inhibit, to the public's detriment, informed and intelligent treatment decisions.” In fact, in its safe harbors for manufacturers’ dissemination of off-label information through scientific journals, the FDA itself “recognizes that public health can be served when health care professionals receive truthful and non-misleading scientific and medical information on unapproved uses” of approved drugs.  It’s the doctor’s job to consider multiple factors, including FDA approval or lack thereof, in deciding what drugs to use.   “If the government's objective is to shepherd physicians to prescribe drugs only on-label, criminalizing manufacturer promotion of off-label use while permitting others to promote such use to physicians is an indirect and questionably effective means to achieve that goal.”  (Note that the majority has only really addressed interest two, limiting unsafe prescriptions; it’s said nothing about the FDA approval process, and for good reason—the off-label promotion limits are the thread that unravels the “safety and efficacy” approval process.)

Nor was the regulation narrowly drawn to further the government’s interests.  Less speech-restrictive alternatives were available, as were noncriminal penalties.  (Ok, wait: now we can’t prosecute criminal fraud if civil fraud remedies are available?  Remember that fraud is a classic content-based regulation; it’s just ok to ban.)

The government could “guide physicians and patients in differentiating between misleading and false promotion, exaggerations and embellishments, and truthful or non-misleading information.”  It could “develop its warning or disclaimer systems [ed. note: unless R.J. Reynolds applies!], or develop safety tiers within the off-label market, to distinguish between drugs.”  It could require manufacturers to list all “applicable or intended indications” when initially applying for FDA approval, allowing people to track the drug’s development.  (Hunh?  I’m all for mandatory reporting of drug data, but how would this initial requirement help?)  To minimize evasion of the approval process, the FDA could create caps on off-label prescriptions.  It could “remind” doctors and manufacturers of the legal liability surrounding off-label promotion and treatment, and even perhaps further regulate that liability.  (Query: if the doctor says “I think you should take this drug,” is that protected speech?)  And it could prohibit off-label use entirely where there are exceptional concerns. 

The First Amendment means that regulating speech must be a last, not a first, resort.  (One who considered the historical development of the FDA’s powers through the 20th century, including that time when all those kids died drinking antifreeze sold as medicine, might have thought that the current scheme was something of a last resort.)  The government’s response to the proposed alternatives was that they weren’t administrable, feasible, or effective, but its claims were too conclusory to credit.

Thus, manufacturer promotion alone can’t be misbranding, even if speech can be used as evidence of a drug’s intended use.  “We construe the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”