IPSC 2008

Stanford Intellectual Property Scholars Conference 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Remember that patent caveat above? It applies.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New article on intermediaries and access

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

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

Little Miss Can't Be Wrong

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

The market for pomegranates

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Language Log on "cloud computing"

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

Why create derivative works?

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

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

Copyright and California's anti-SLAPP law

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

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

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

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

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

The law of Star Wars

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

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

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

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

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

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

An anthropological introduction to YouTube

This video by Michael Wesch is a great overview of the upsides of peer production and the new social arrangements made possible by sites like YouTube. I am particularly fascinated by how Wesch remixes Lim's Us, a fanvid that I had taken very much to address itself to a particular interpretive community. (The relevant segment starts at roughly 43:40.) I think of Us as focusing on favorite fannish characters, not all of whom are major pop culture icons, and the "us" of the title as being specifically members of a creative remix community. Wesch, however, makes Us into everyone who uses YouTube, partly by mixing it with a Larry Lessig speech.

Though the Numa Numa video is a structuring device used throughout Wesch's presentation, Wesch doesn't bring in the IP issues--the first famous Numa Numa guy and everyone playing off of him are using the music without authorization--until the very end, though he then does make the point that unauthorized remix is at the core of much of this communicative and self-expressive ferment.

I did feel the presentation was overly tilted towards the optimistic side. Lots of human connection; very little mockery. But then, he's making a move in an argument, and there's no reason he ought to be required to make the case for the harms of peer production when many other people are quite willing to do it.

Wesch did point out that many of the videos weren't made for large groups to see, just for a few people. His use of Us was an example of what he calls "context collapse." Often when we see something bizarre on the internet, we don't stop and ask "well, is this for me?" Sometimes it's not bizarre to the group to which it's addressed. But it's often easier and more efficient to put that highly targeted production out there for anyone to find--the same dynamic that makes it easier and more efficient for Google to index as much of the web as it can rather than hand-selecting what's relevant to queries. Yet the social meaning of what it means for ontology to be overrated, or everything to be miscellaneous, is highly complex--not everyone will be happy with the associations created by dispersed, open, user-tagged information environments. I look forward to seeing more of Wesch's work on the bitter as well as the sweet of the connections forged by YouTube.

Cristal light: laches bars claim against Cristalino

Roederer v. J. Garcia Carrion, S.A., 2008 WL 2901609 (D. Minn.)

Roederer sells the upmarket champagne Cristal. Carrion sells wine from the Spanish winery Jaume Serra, including cava, a bubbly wine. Jaume Serra first used “Cristalino” as a mark for a cava sometime before 1987. By 1989, US sales began at a low volume. By 1997, US sales were at 400,000 bottles/year and Cristalino had nationwide penetration.

The initial label used “Cristalino Jaume Serra.” But in 1993, “Jaume Serra” was deemphasized, leaving “Cristalino” with sole prominence.

In 1998, Carrion began a 14-million-euro modernization project that expanded its capacity to produce all its wines, including Cristalino. Annual US sales for the next three years were about 700,000 bottles; 2002 saw seven-figure sales; and Carrion presently sells three million bottles a year in the US, about 27% of Carrion’s total cava production, making Carrion one of the largest cava exporters.

Increased sales brought increased publicity, starting with minor reviews by Wine & Spirits in 1991 and by The Wine Spectator and San Francisco Independent in 1993. The frequency of such mentions grew significantly by 1999. Carrion has marketed Cristalino in the US as a “value brand,” using standard wine advertising media and in-store promotions.

Roederer’s Cristal champagne, by contrast, is expensive and sold in distinctive, flat-bottomed crystal bottles. Roederer has a US registration for CRISTAL CHAMPAGNE and a related design. It opposed registration of CRISTALINO and similar marks by Carrion in various non-US jurisdictions, including Spain in 1982 and 1990, Colombia in 1991, and the EU in 2004. In 1995, as part of unrelated PTO proceedings, Roederer’s trademark attorneys received an affidavit indicating that Cristalino had been found on sale in California in 1995; the affidavit identified the bottler and included a photo of the bottles. Roederer did not object at the time, though its attorneys did submit an affidavit in response.

In 1997, the CRISTALINO JAUME SERRA mark was published for opposition; Roederer requested two extensions of time to file an opposition, but never did. The application, however, never matured to registration and was deemed abandoned in 2000. (The application was filed as an ITU, for reasons that do not appear obvious from the facts but might have to do with the presentation of the mark on the label.) In 2000, Carrion filed an application to register CRISTALINO, and this one was published for opposition in 2002. Roederer sent letters demanding that Carrion withdraw the application and cease using the mark; it ultimately filed an opposition, then sued, so the opposition has been stayed.

Carrion argued laches. The elements: plaintiff’s knowledge of the use; inexcusable delay; and prejudice to the defendant.

The court quickly disposed of Roederer’s argument that Carrion didn’t stand in the shoes of its predecessors for laches purposes. It owned the goodwill and continued to make the same product. Likewise, Carrion’s importer, though not a trademark owner, had standing to assert laches, just as it would be able to assert a statute of limitations defense (if the Lanham Act had one).

Roederer’s knowledge began no later than 1995, but it waited nearly seven years to object. This exceeds the analogous 6-year statute of limitations in Minnesota, and courts generally borrow analogous state laws for purposes of assessing Lanham Act laches.

The court also found prejudice. During the 7-year delay, Carrion marketed Cristalino, expanded production, and were rewarded by market success. Though Carrion could use its production facilities to make cava under another name, it would lose the benefit of any brand loyalty, which would devastate sales.

Roederer argued that any delay should be excused because the early acts weren’t enough to infringe—a trademark owner has no obligation to sue until there’s a substantial likelihood of confusion, and need not be trigger-happy. For laches purposes, the doctrine of progressive encroachment may require assessing delay from some point after the first instance of infringement, when a defendant comes more squarely in competition with the plaintiff. McCarthy states that, though “a slow, steady increase in the level of business attributable only to the normal growth of any business may not always be sufficient to excuse a prior delay, any change in the format or method of use of the mark or expansion into new product lines or territories should be sufficient to excuse a prior delay.”

The court rejected this argument. Cristalino’s sales have grown over time, but it has outsold Cristal since at least the mid-90s. Carrion’s quality control changed, but there was no evidence of significant changes in the product’s quality. And the label was largely stable by 1993. There was a “mere possibility” that older-style labels were around for some unknown period as inventory was depleted, and an older label may have been featured on the importer’s website for a while, but that didn’t change the court’s conclusion that Roederer should have acted much earlier.

Roederer then argued that laches does not bar injunctive relief. This is sometimes true, and sometimes not. When an injunction would cause substantial prejudice to a defendant’s investment in brand equity, laches may not apply. Here, given the equities, mechanical application of a rule allowing injunctive relief despite laches would be inappropriate.

The court was particularly attentive to Roederer’s minimal evidence of likely confusion; when laches applies, courts generally require strong or elevated proof of likely confusion, and sometimes even a threat to public safety. Here, the evidence was: (1) name similarity; (2) product similarity in that both are sparkling wines sold nationwide; (3) “one incident in which a bottle of Cristalino was sold as Cristal after the label had been altered to obscure the ‘ino’ in Cristalino (comment: I believe Inwood v. Ives has something to say about that); and (4) “photos and written passages taken from the internet featuring individuals discussing both Cristal and Cristalino or pretending that bottles of Cristalino are bottles of Cristal.” Here’s what I found in a quick search: Cristalino, Cristal’s younger, cheaper brother; Cristalino is what Cristal dreams of growing up to become;

from a newsletter for a wine tasting business;
from flickr (caption: not Cristal, but Cristalino!); and
(from Grape Finds, using Cristal Pop as a sort of headline for Cristalino; this is one that Roederer might well want to take up with Grape Finds, which is no stranger to litigation itself).

Roederer also submitted a shopping mall survey of likely buyers of imported sparkling wine who were familiar with Cristal. (Query: proper universe, given Cristal’s actual purchasers? Isn’t that kind of like saying that a Toyota buyer would be a good person to ask about potential confusion over a Lamborghini? Your answer may differ if your theory is dilution—though here I imagine there’d be an insurmountable barrier to proving that Cristal was famous before Cristalino’s use began.)

In any event, the survey began by showing participants a bottle of Cristal. The bottle was removed, and then test cell subjects were shown four other bottles of sparkling wine. They were then asked whether they saw the same brand; whether they saw a wine produced by the same company; whether they saw a wine affiliated with the company that produced the first bottle; and whether permission from the company that made the first bottle was required to produce any of the sparkling wines. (Comment: Those aren’t leading at all, especially in combination! Now, there may not be many better ways to elucidate likely confusion, but I think the repetition here seems likely to drive up “yes” answers in a way that won’t necessarily be controlled for by the presence of a control group. The respondents are prodded to think about whether there’s a connection, and if there’s even a tiny hook to hang that idea on, they may say yes even though they’d never come to the same conclusion in the wild and even though they’ll say “no” when presented with four bottles with no wording similarity. This is perhaps another reason to cut back on our overly expansive concept of “confusion” as any suggestion of affiliation or connection—a concept that broad is too hard to measure in any reliable way.)

Results: “6.9% of respondents believed the bottle of Cristalino was the same brand as the bottle of Cristal, 9.2% believed Cristal and Cristalino were produced by the same company, 4.6% believed the Cristal and Cristalino were produced by affiliated companies, and 2.3% believed that permission from the maker of Cristal was required in order to produce Cristalino.” The court didn’t mention the percentages among the control group. But it considered the survey insufficient, quoting McCarthy’s summary that 25-50% percentages have been considered “solid support” for a confusion finding. Here, in light of the other evidence, the survey showed only a possibility of confusion, not a likelihood.

The dramatically different price points and differences between the names and labels were important factors. Cristal’s distinctive bottle further differentiated the products, and (aside from the case of the altered label) there was no evidence of actual marketplace confusion. And lack of evidence of confusion over an extended period of time is good evidence that there isn’t a likelihood of confusion. Roederer’s internet evidence showed that people recognize similarity between the two names, but none of it showed confusion.

As a result, defendants won summary judgment on laches.

Brand equity and false advertising

Brands we love get special dispensations for bad behavior. Google and Apple are my biggest weaknesses, and I think many people interested in technology are the same. For the latest example, see Richard Alderman's post on the new iPhone, arguing that the supposed 50% price drop is actually a 40% increase when service charges are taken into account, and that this is false advertising. But he (and I) bought it anyway, because it is just that cool. (Disclaimer: I speak only for myself; Alderman I'm sure has better reasons.) Even Tim Wu is willing to tame his freewheeling ways for the love of a good iPhone.

If I had my druthers, the iPhone would allow a stylus as well as a finger, for greater writing accuracy. But then I've been using a tablet PC for several years now, and I like handwriting digital comments. The point is: deliver enough style and performance, and many customers will forgive you on price. The question is, will the lawyers?

Sovereign immunity strikes down another copyright claim

Marketing Information Masters, Inc. v. Board of Trustees of California State University System, 552 F.Supp.2d 1088 (S.D. Cal. 2008)

Plaintiff does marketing research studies. It sued defendants for copyright infringement, conversion, misappropriation, and unfair business practices, alleging that it performed studies on the economic impact of the Holiday Bowl on San Diego, which were memorialized in written reports provided to the Holiday Bowl organization at below-market rates. When plaintiff told the Holiday Bowl organization that it would need to pay market rates for futher studies, the organization allegedly copied and “plagiarized” plaintiff’s 2003 report to prepare its 2004 report.

The state defendants argued they were entitled to sovereign immunity from the copyright claims. The district court, unsurprisingly, agreed despite the existence of the Copyright Remedy Clarification Act, which indicates that state entities are liable for copyright infringement. Under the Florida Prepaid cases, this wasn’t good enough, because there was no Fourteenth Amendment violation to correct, so Congress couldn’t abrogate sovereign immunity. Plaintiff could still pursue the named plaintiff insofar as it alleged that he acted in his individual capacity, however.

The state law claims, likewise, had to be dismissed against the state defendants due to sovereign immunity. Defendants also argued that the state law claims were preempted by copyright law. On conversion, plaintiff alleged that defendants interfered with its ownership of “tangible materials and intangible ideas.” On misappropriation, plaintiff alleged that material not expressly incorporated into its reports was “confidential, proprietary, and trade secret information” that was used in preparing the 2004 report. And on unfair business practices, plaintiff alleged that defendants were unjustly enriched.

Because defendants didn’t make arguments specific to unfair business practices, the court refused to dismiss that claim. (This seems like a pure technical error: unjust enrichment is regularly preempted when the allegations are like this—the claim is that the defendants failed to pay for something within the subject matter of copyright.)

Plaintiff argued that it was seeking protection for “the methodologies for evaluation, the questionnaires developed by Plaintiff, work papers generated while conducting the impact studies and ‘other intangible property and ideas’ not contained in the 2003 survey.” Since the methodologies were turned into results, and the questionnaires and work papers were fixed, I can’t figure out how this possibly averts preemption. And indeed, the court noted that ideas are regularly considered within the scope of the Copyright Act for preemption purposes, though copyright does not protect ideas. Moreover, the allegations made clear that the rights asserted were equivalent to rights protected under the Copyright Act. The conversion claim wasn’t really for return of tangible property, but for damages caused by reproduction. The misappropriation claim didn’t work because there was no allegation of disclosure of confidential information in breach of a specific duty. Plaintiff was, however, given the opportunity to amend.

My take: a business that thinks that “plagiarism” is actionable, and that it can defeat sovereign immunity, is unlikely to succeed in its next bite at the apple.

Term extension in Europe: just as bad an idea across the pond

Lionel Bently passed on this letter to the Times about the proposed term extension, signed by a large number of prominent scholars:

The proposed Term Extension Directive will alienate a younger generation that fails to see a principled basis

Sir, Europe’s recorded music was about to experience a wave of innovation. For the first time, a major set of culturally important artefacts was to enter the public domain: the sound recordings of the 1950s and 1960s. Apparently not so. If the European Commission has its way, re-releases and reworkings of recorded sounds will remain at the mercy of right owners for another 45 years (report, July 17). Why?

The record industry succeeded to supply the Commission with evidence that was not opened to public scrutiny: evidence that claims that consumer prices will not rise, that performing artists will earn more, and that the record industry will invest in discovering new talents, as if exclusive rights for 50 years had not provided an opportunity to earn returns.

The Commission’s explanatory memorandum states: “There was no need for external expertise.” Yet, independent external expertise exists. Unanimously, the European centres for intellectual property research have opposed the proposal. The empirical evidence has been summarised succinctly in at least three studies: the Cambridge Study for the UK Gowers Review of 2006; a study conducted by the Amsterdam Institute for Information Law for the Commission itself (2006); and the Bournemouth University statement signed by 50 leading academics in June 2008.

The simple truth is that copyright extension benefits most those who already hold rights. It benefits incumbent holders of major back-catalogues, be they record companies, ageing rock stars or, increasingly, artists’ estates. It does nothing for innovation and creativity. The proposed Term Extension Directive undermines the credibility of the copyright system. It will further alienate a younger generation that, justifiably, fails to see a principled basis.

Many of us sympathise with the financial difficulties that aspiring performers face. However, measures to benefit performers would look rather different. They would target unreasonably exploitative contracts during the existing term, and evaluate remuneration during the performer’s lifetime, not 95 years.

We call on politicians of all parties to examine the case presented to them by right holders in the light of independent evidence.

Anyone remember back in Eldred, where US term extension was justified on the ground of "harmonization"? This term extension business reminds me of nothing so much as the Sesame Street sketch in which Ernie tries to make sure that both he and Bert have the same size slice of pizza and the same amount of grape juice; he does this by eating some of whichever slice is bigger and drinking some from whichever glass has more, and since he always overshoots a bit, he ends up consuming it all.

Here's hoping Europe doesn't accept Ernie's flimflam.

Synecdochic on why monetizing social media through advertising is doomed to failure

A very interesting argument, in three parts: one, two, and three. Not ironically--because the alternative platforms are in the same situation--she's using Livejournal as her platform, and Livejournal is struggling with exactly the problems she describes, though she draws her examples from elsewhere.

New article on trademark use

Margreth Barrett has posted Finding Trademark Use: The Historical Foundation for Limiting Infringement Liability to Uses 'In the Manner of a Mark' on SSRN. Interested readers may also wish to consult this compilation of links to articles on trademark use.