Friday, March 24, 2023

Protecting Creativity with a Bottle of Jack on the Floribama Shore (and tiny JDI oral argument observations)

Media Law Resource Center conference, Southwestern Law School

Kevin Vick, Jassy Vick Carolan LLP (Moderator)

Just a few panel notes since I’m not going to recap Rogers or MFGB v. Viacom.

Evynne Grover, Vice President, Media Liability Claims Practice Leader, QBE North America: Rogers is incredibly important for clearance. It gives us confidence in insuring productions. It can be applied on a MTD, which costs $50-$75,000 but that’s much less expensive than going to summary judgment. It allows us to clear more productions, support more speech, and charge lower premiums. W/Rogers, 85% of threat letters go nowhere, and the rest go away quickly. If we take away Rogers, we’re facing lengthy litigation, losing settlement leverage, lose MTD opportunities, which would substantially increase the costs of defense that are now low. Would have to be factored in to premiums and retentions, and could make insurance cost-prohibitive for some creators.

Susan Kohlmann, Jenner & Block, counsel for Viacom/MTV in MFGB Properties v. Viacom: emphasizes the cost and burden of discovery in having to go through all the depositions etc. Rogers would have counseled early dismissal.

Lynn Jordan, Kelly IP, amicus counsel for the Motion Picture Association in MFGB Properties v. Viacom: MFGB is a case that couldn’t have been litigated by an independent filmmaker because of the highly burdensome discovery/costs of defense.

Guilio Yaquinto, Pirkey Barber PLLC, amicus counsel for the American Intellectual Property Law Association in Jack Daniel’s: wants to distinguish commercial products from speech.

Rebecca Tushnet, Professor of Law, Harvard Law School

A test that deems this toy confusing with Jack Daniels is a bad test. And it’s a bad test for the toy for the same reason that the multifactor test is bad for movies and books: because that’s not how people interact with products that are purchased for expressive purposes; people buy this dog toy because it’s funny, because of its expression.

Cohen v. California: Paul Cohen was arrested for wearing a jacket that said fuck the draft. The Supreme Court understood that because he was arrested for his expression, the fact that it was on a jacket was not relevant. [I admit that the Court seemed to think that T-shirts were different from dog toys.]

I want to drill down on the (oft-heard) statement “Most reasonable people won’t think the TM owner is making fun of itself.” Where’s your evidence of that? Walmart’s WalQaeda survey said otherwise, finding 59% confusion over WalQaeda and Walocaust T-shirts with plenty of other criticism of Walmart on them, using the same questions asked in the VIP case. The jurisprudence on confusion over affiliation means that the claim about successful parodies being nonconfusing is not going to survive actual ligitation. Alito showed some interest in treating the reasonable consumer test as an objective standard, which it often is in other First Amendment areas, which could handle both the dumb surveys and the larger problem of circularity (if consumers think that the law is that parody or any reference to a TM owner requires permission, then the law will require that permission if Jack Daniels has its way).

Q: on as applied challenges? RT: That seemed unappealing; if you have hundreds of as applied challenges eventually you get a rule, which would likely be something like Rogers.

Kohlmann: Registration is different from infringement, which made the references to PTO practice sort of mysterious.

[While I’m here, other stuff I particularly noted about the Jack Daniels oral argument:

Sotomayor’s point that Polaroid isn’t in the statute either! And that’s important because Polaroid works really badly for expressive uses; Rogers can be a substitute test for finding when material confusion is likely, and when it's not, given the special characteristics of noncommercial speech.

Use as a mark: Justice Jackson seemed interested in an intuitive concept of use as a trademark, but most lower court cases (with the partial exception of the 6th Circuit) don’t accept that as a question different from whether confusion is likely: They reason that, if confusion is likely, then there is use as a trademark. More generally, I think it is easy to get entangled in lay ideas of what trademark infringement means (something like counterfeiting), which trademark claimants have exploited to expand rights far beyond passing off.

The faux amis of use in commerce, commercial use, and commercial speech showed up a bit; the Court seemingly well understood that selling T-shirts could be protected speech if the regulation was imposed on the shirts because of the expression printed on them, but no one seemed confident of where the line was. Perhaps that’s the thing that should be done on a case by case basis.

Small points about JDI’s claims:

Gone with the Wind isn’t a trademark? Has anyone told Turner Entertainment Corp. which holds a registration for, inter alia, “books”?  So too with the claim in rebuttal that TikTok videos aren’t use in commerce—they very much are, even though many are not commercial speech; this is the faux amis problem.]

Thursday, March 23, 2023

Another digital "buy" button case survives motion to dismiss

McTyere v. Apple, Inc, 2023 WL 2585888, No. 21-CV-1133-LJV (W.D.N.Y. Mar. 21, 2023)

Plaintiffs alleged that Apple made false representations when it “sold” them digital content on the iTunes Store only to later remove their access to that same digital content. They claimed violation of sections 349 and 350 of the New York General Business Law, as well as unjust enrichment. Consumers can “rent” movies from Apple on the iTunes Store for about $5.99, but the “buy” option costs much more. “Regardless of which device is used to access digital content, or which ‘iTunes’ app is used to buy or rent the digital content, the app provides a tab or folder labeled ‘purchased.’ ” But when third parties terminate their licensing agreements with Apple, Apple “must revoke [a] consumer[’s] access” to purchased digital content “without warning.” Plaintiffs alleged that if they had known about the possibility that Apple might later revoke access to already-purchased content, “they would not have bought [ ] digital content from [Apple] or would have paid substantially less for it.”

Apple was not collaterally estopped from raising arguments against liability that were rejected in Andino v. Apple, Inc., 2021 WL 1549667 (E.D. Cal. Apr. 20, 2021), given that the claims arose under “completely different state laws.”

Apple argued that it wasn’t misleading to say “buy,” because to “buy” something means to “acquire possession, ownership, or rights to the use or services of by payment especially of money.” Apple argued that plaintiffs in fact received the “right to the use of” the digital content at issue here, so its advertising was not misleading regardless of whether their ability to access that digital content later disappeared.

But that “right to use” argument cannot carry the water that Apple asks it to carry. The right to use something may last but a moment or forever. And by ignoring that issue, Apple’s argument begs the question.

Take, for example, two consumers who each pay $19.99 to “buy” two different movies on the iTunes Store, each planning to watch the movie the next night. The following night, the first streams his movie purchase without a hitch. But when the second sits down on the couch and opens the iTunes Store, she finds that the movie has disappeared from her “purchased” folder. As it turns out, Apple lost the rights to that movie minutes before. Both consumers had the “right to the use of” their movie purchases for the twenty-some hours between the time they purchased them and the time they sat down to watch them. But the second would-be movie watcher understandably might feel a little miffed if she were told that she received exactly what she paid for.

In a footnote, the court noted that Apple’s argument would mean that both the consumer who “rented” the movie and the one who “bought” it would receive the “right to the use of” that digital movie. Someone who plans to rewatch a movie might not pay the enhanced price to “buy,” and just rent instead, if they know that “buying” is no guarantee of continued access.

Thus, “reasonable consumers might have been misled when they purchased digital content with the mistaken impression that the content could not later be removed from their libraries.”

Apple also argued that its iTunes Store terms and conditions alerted the plaintiffs (and other consumers) to the possibility that they might lose access to purchased digital content and should download digital content to prevent that possibility. The parties disputed whether Apple’s terms and conditions were equivalent to front-of-package clarifications, which was a factual issue. Also, it wasn’t clear that the T&C were sufficient. The earliest applicable terms and conditions that Apple has submitted warn consumers only that “Apple and its licensors reserve the right to change, suspend, remove, or disable access to any iTunes products, content, or other materials comprising a part of the iTunes service at any time without notice.” A reasonable consumer “might read those terms and conditions and nevertheless believe that once he or she has ‘purchased’ digital content and that content is saved to his or her ‘purchased’ folder, Apple cannot at that point suspend or terminate access to it, notwithstanding whether it otherwise could do so to other material in the iTunes Store before purchase.”

Apple argued that the plaintiffs were warned to download digital content “to ensure continued access to it”; once consumers download content, Apple said, they can in fact continue to stream that content even if Apple terminates its licensing agreement with another party. But the plaintiffs argued that not all content can be downloaded and that the “right to download” does not fully protect against the possibility that a consumer will lose access to digital content. This couldn’t be resolved on a motion to dismiss.

Although the unjust enrichment claim could ultimately be deemed duplicative of the other theories of recovery, the court also declined to dismiss it at this stage.

Wednesday, March 22, 2023

Supplement guide was plausibly an agent of supplement company; direct and secondary liability available

Ariix LLC v. Usana Health Sci., Inc., 2023 WL 2574319, No. 2:22-cv-00313-JNP-DAO (D. Utah Mar. 20, 2023)

The parties compete in the supplement market using direct marketing, so compete in both consumer supplement sales and in sales representative recruitment. “Nutritional supplements are largely unregulated, and there have been several recent scandals regarding supplement quality. To empower consumers and sales representatives to make informed decisions, NutriSearch … publishes the NutriSearch Comparative Guide to Nutritional Supplements …, which is the leading source regarding nutritional supplement quality.” It’s written by Lyle MacWilliam and purports to provide independent and unbiased supplement reviews.

Ariix sued NutriSearch and MacWilliam with similar claims to those raised here about Nutrisearch’s alleged lack of independence from and bias towards Usana, resulting in false advertising. Ariix alleged that Usana paid MacWilliam to give Usana’s supplements the top rating in the Guide. As a result, “[t]he misstatements directly reduced Ariix’s revenues by causing both consumers and professionals to select Usana over Ariix.” The Guide, and promotions for it, contained several statements depicting itself as an independent, unbiased source of information, e.g., “This guide was not commissioned by any ... company whose products may be represented herein. The ... findings are the sole creative effort of the author and NutriSearch Corporation, neither of whom is associated with any manufacturer or product represented in this guide.”

Usana has also taken advantage of these neutrality claims. “For example, when Usana receives a new award from the Guide, it contextualizes the award by quoting language from the Guide claiming that it provides independent and objective evaluations. Usana’s website includes pictures of MacWilliam and the Guide next to quotes made by MacWilliam about his confidence in the quality of Usana’s supplements.”

However, plaintiff alleged, “Usana has directly paid NutriSearch and MacWilliam hundreds of thousands of dollars per year in fixed stipends, speaking fees, promotion fees, and promotion costs.” MacWilliam allegedly concocted the Guide as a sales tool while working as a Usana sales representative. Then he informed Usana executives that “I should not be on the board or a representative anymore because it looks like I’m biased. I am going to create more of a third-party appearance, but I’d like you to use me for speaking and support me.” Usana responded, “Yes, if you give us the number-one rating.”

Usana withdrew its support after NutriSearch awarded several other supplement companies, alongside Usana, with a Gold Medal rating in the Guide. This caused a sharp decline in book sales and speaking opportunities; Usana “told him that it preferred being the only company that received the Guide’s highest accolade.” MacWilliam asked “would it help if Usana is number one in some way?” Usana said yes, and MacWilliam added a new “Editor’s Choice” award to the Guide, which was solely bestowed upon Usana; the payments resumed.

The next year, plaintiff alleged,

MacWilliam informed Usana that, as calculated by the Guide’s publicly disclosed criteria, Usana would not receive the Guide’s top ranking. Usana reminded MacWilliam that “we pay you to make us number one.” MacWilliam stated that he would either need to alter the Guide’s ranking algorithm or Usana would need to reformulate its supplements. Usana and MacWilliam then collaborated to ensure that Usana maintained the top position.

Usana allegedly benefited financially from the Guide. It arranged the initial publishing agreement between NutriSearch, MacWilliam, and the publisher. “As a result of arranging the initial publication agreement, Usana receives a portion of the profits derived from the Guide’s sales.” [So it’s literally NutriSearch’s literary agent?]

Usana incorporates the Guide into its marketing training. Sales representatives are told to purchase the guide, “learn it, refer to it in making sales, and ... pitch the guide to end consumers.” Usana characterizes payments to NutriSearch and MacWilliam as marketing expenses. Usana reposts testimonial statements made by MacWilliam on its website and social media pages, and issues press releases announcing the awards it receives from the Guide.

Usana is also allegedly involved in editorial changes to the Guide and “orders” MacWilliam to meet with Usana’s chief product officer every year.

In 2013, Usana increased the Vitamin D and Iodine content in its supplements and rebranded to focus on these additions. The Fifth Edition of the Guide was then “rewritten from cover to cover” to highlight “the most recent and exciting scientific findings on two super-nutrients: Vitamin D and Iodine.” Prior to the Sixth Edition of the Guide, Usana reprinted its supplement labels to emphasize the potency of its products with regards to “cell signaling.” The Sixth Edition noted that the Guide had been “completely rewritten” to account for “groundbreaking discoveries” in cell-signaling. Usana ordered NutriSearch to add a new platinum tier of achievement to the Sixth Edition and Usana was the only company awarded with a platinum level rating in the Sixth Edition.

Usana has also allegedly used its relationship to harm competitors, as when, based on information from Usana,  NutriSearch initially awarded Ariix a three-and-a-half stars rating for a new product, later revised to five stars. “Usana instructed NutriSearch to print a new version of the Guide displaying Ariix Optimal’s three-and-a-half stars rating prior to Ariix’s product launch.” Ariix also had various difficulties obtaining the Guide’s Gold Medal of Achievement; while Usana was grandfathered in using old verification methods, NutriSearch rejected the same type of evidence from Ariix; after Ariix invested significant financial resources working with NutriSearch to develop new testing protocols, NutriSearch again rejected it because it “could no longer confidently assure the consumer that what is on the label is what is in the bottle.” “At the same time that NutriSearch claimed that its concerns regarding testing accuracy precluded it from awarding Ariix a Gold Medal certification, NutriSearch and MacWilliam represented to consumers that they were confident in the Guide’s verification abilities.”

MacWilliam declined Ariix’s offer to speak on behalf of Ariix, saying that he no longer wanted to travel, but he continued to travel and promote Usana. When Ariix confronted him, MacWilliam responded by admitting that Usana would “cut [him] off the second I ... [speak for Ariix.]”

This case is proceeding separately from the case against NutriSearch because of personal jurisdiction issues.

Timeliness: Utah has a three-year statute of limitations for fraud, and Ariix sued NutriSearch nearly five years before suing Usana with very similar allegations. Because the Lanham Act has no limitations period, the court used laches as the framework. To prove the affirmative defense of laches on a motion to dismiss, the complaint must clearly establish that “there has been an unreasonable delay in asserting the claim, and that the defendant was materially prejudiced by the delay.” This complaint didn’t do that.

Usana’s claim of prejudice from “fading memories, lost evidence, and the other difficulties associated with defending against stale claims” was conclusory and there was nothing in the complaint to suggest that Usana has lost relevant evidence. “On the contrary, the complaint alleges that Usana was either in a principal-agent relationship with MacWilliam and NutriSearch or that Usana conspired with them. Under these theories, Usana would have been aware of the ongoing litigation between MacWilliam, NutriSearch, and Ariix.”

As for economic prejudice, a defendant

must demonstrate that it continued to invest in the allegedly challenged behavior to its own detriment, in reliance that plaintiff would not bring a suit. But the mere fact that Ariix alleges damages does not establish that Usana continued to invest in the Guide or otherwise took actions in reliance on Ariix’s delay in filing suit….  Indeed, Usana vehemently denies any suggestion that it invested in or controlled the Guide.

Failure to state a claim: Ariix argued that Usana could be either directly liable for the Guide’s false statements or secondarily liable under a principal-agent theory. The court agreed that the compliant sufficiently alleged both.

Direct: Usana used MacWilliam and NutriSearch’s alleged misrepresentations in its own marketing. Usana argued that it couldn’t be liable for false statements made by third parties. But the cited cases all protected retailers, including digital retailers, who sold allegedly falsely labeled products: “[A] retailer is not liable if the retailer played no role in making the products or in formulating or disseminating the alleged false statements ....” This rule creates “a limited exception to liability when the defendant is a retailer who had no knowledge or role in the third party’s misrepresentation.” [I’ve never found this particularly convincing, and the knowledge part is particularly unjustified, but ok.]

Usana didn’t qualify for a retailer exception. “MacWilliam and NutriSearch’s misrepresentations directly promote Usana’s supplements and Usana did not inadvertently display third-party products with misleading labels.” As courts have held, quoting someone else counts for 43(a)(1)(B) purposes: “[T]o fall within the text of the Lanham Act, a defendant does not need to make a statement but only needs to use a statement or other form of conduct specified in the Act.” And the facts here supported a claim of “use.” The complaint alleged that “Usana was both aware of and encouraged MacWilliam and NutriSearch’s misrepresentations.” [That sounds like contributory liability—I think the liability is direct, without any agency issues, when they quoted MacWilliam and NutriSearch; the court notes facts recited above that go both to Usana’s encouragement and Usana’s own republications of their statements.] “Every time Usana won a medal of achievement, it issued a press release quoting the Guide’s statements that the Guide employed an independent and objective ranking mechanism, despite Usana knowing and actively encouraging the contrary. Although Usana itself did not state that the Guide was independent, Usana directly used MacWilliam and NutriSearch’s misrepresentations to promote Usana’s supplements.” [Knowledge is not an element of direct liability!]

Secondary liability: The complaint plausibly alleged that MacWilliam and NutriSearch were acting as Usana’s agents in making the misrepresentations. At common law, principals are vicariously liable for torts committed by their agents within the scope of the agency relationship. “To establish agency, a party must show (1) the principal manifested its intent that the agent act on its behalf, (2) the agent’s consent to act on the principal’s behalf, and (3) that both the principal and the agent understood that the agent is subject to the principal’s control.”  A plaintiff does not need to show an actual written agreement or plead specific details regarding the terms of the agency agreement. The court rejected Usana’s argument that there was no plausible allegation of an agreement because the complaint does not provide “the terms of performance, when it was entered, or other basic terms.” But the complaint did include the time and (some) terms of the agreement, which was enough. “A principal’s manifestation of assent to an agency relationship may be informal, implicit, and nonspecific.” Five years after the agreement had allegedly been entered into, one of Usana’s executives told MacWilliam that “we pay you to make us number one”; Usana receives a portion of the profits generated from sales of the Guide; Usana encourages its representatives to “get the Guide, learn it, refer to it in making sales, and even pitch the Guide to end consumers”; at Usana’s annual conference, MacWilliam is the only independent speaker who is allowed to sell his own product; Usana displays the Guide on its social media pages and issues press releases quoting the Guide’s claims of independent objectivity when Usana wins an award; Usana characterizes payments to MacWilliam and NutriSearch as marketing expenses. That was (possibly more than) sufficient.

Likewise, telling Usana executives that “I should not be on the board or a representative of the company anymore because it looks like I’m biased. I am going to create more of a third-party appearance, but I’d like you to use me for speaking and support me,” manifested MacWilliam’s consent and objective understanding that he was acting for Usana’s benefit, as did the instances in which he allegedly tried to not be so tilted in Usana’s direction and got financially punished for it, then got rewarded when he reversed course.

As for control, there are multiple nondispositive factors; fundamentally, the court asks whether “both [parties] understood that [the principal] was to be in charge of the undertaking.”  The complaint was sufficient there too, given the allegations above, e.g., that Usana conditioned speaking gigs and book sales on MacWilliam meeting this requirement and had MacWilliam rewrite the Guide to focus on Usana’s marketing priorities.

And it was plausible that the agents had actual authority to make the misrepresentations, including that the Guide was independent and objective.

"GoodBelly" and "GoodHealth" plus label plausibly communicate net digestive health benefits

Andrade-Heymsfield v. Nextfoods, Inc., No. 3:21-cv-1446-BTM-MSB, 2023 WL 2576770 (S.D. Cal. Mar. 20, 2023)

Plaintiff brought the usual California claims against a line of fruit juices — GoodBelly Probiotic JuiceDrinks — “that expressly or implicitly convey the message that the JuiceDrinks are healthy” with these package statements:

(1) START YOUR GOODHEALTH GAME PLAN ... Drink one 8 oz. glass of delicious GoodBelly a day for 12 days;

(2) Reboot your belly, then make GoodBelly your daily drink to keep your GoodHealth going. Because when your belly smiles the rest of you does too;

(3) WE DIG SCIENCE. LP299V is naturally occurring in the human gut. It has been studied more than 2 decades and has numerous research trials to show that it may help promote healthy digestion and overall wellness; and

(4) GoodBelly Probiotics is a delicious blend of fruit juices and a daily dose of probiotic cultures created to naturally renew your digestive health, right where your overall health gets started – in your belly.

Plaintiff alleged that, in fact, JuiceDrinks are unhealthy for digestive health because they contain “excessive amounts of free sugar.” The complaint pled facts indicating that juice consumption leads to numerous negative health consequences.

Plaintiff has plausibly alleged that a reasonable consumer would read JuiceDrinks’ label as claiming to promote digestive health. The product itself is called “GoodBelly,” which can be read by the reasonable consumer as a claim that the product is good for digestive health. The label, moreover, can be read by the reasonable consumer as claiming that the product is good for “rebooting” digestive health and making the belly “smile,” i.e., as improving digestive health. The label uses the conjunction “GoodHealth” in such a way that the reasonable consumer would likely view the label as claiming to promote good health.

Although the label could be read as claiming only that probiotics are good, “Defendant is selling a juice beverage, and the label may be read by the reasonable consumer as promoting the health benefits of the beverage, not merely one ingredient in it.” Thus, it was plausible that consumers would read “GoodBelly” and “GoodHealth” as claims that the drinks are good for digestive and overall health.

Disclosing the sugar content in the nutrition label was not sufficient. That wouldn’t suffice to cure the message of good digestive and overall health as a matter of law.

Although statements (1) and (2) alone would be puffery, “when read together and in context, the Court cannot determine that the reasonable consumer would not rely on the label as promoting good digestive and overall health.”

Call for papers: Trademark and Unfair Competition Scholarship Roundtable 2023

 Trademark and Unfair Competition Scholarship Roundtable 2023

The Trademark and Unfair Competition Scholarship Roundtable co-hosted by Harvard, NYU, and the University of Pennsylvania will take place in person hosted this year at NYU. The Roundtable is designed to be a forum for the discussion of current trademark and right of publicity scholarship, covering a range of methodologies, topics, and perspectives. Five to six papers will be chosen for discussion over the course of the Roundtable, with each paper allocated an entire hour for discussion and assigned a commentator. 


The Roundtable will be held on Friday, October 6, 2023. Participation at the Roundtable will be limited and invitation-only and we expect all participants to have read the papers in advance. The Roundtable will cover the travel and lodging expenses for invited authors.


We invite submissions from academics working on any aspect of trademark, false advertising, marketing, right of publicity, or related areas of the law. Priority will be given to those who can attend the entire event and a dinner the night of the event. Submissions must be of full drafts in Microsoft word format. The deadline for submission is May 15, 2023, and decisions on participation will be made shortly thereafter, ideally, by June 1st. 


To submit a draft paper, please fill out the form here ( and upload an anonymized version of your draft.  Please note that the maximum file size that may be uploaded is 10MB.

For further information about the Roundtable, please email either: Barton Beebe (NYU):; Jennifer Rothman (Penn):, or Rebecca Tushnet (Harvard):

Tuesday, March 21, 2023

Today at noon EST: free HLS webinar on developing professionalism in students

 Developing Professionalism in Students

Register here:

Noon EST, March 21

What is professionalism for a lawyer? How can we as teachers help students develop professional identities in ways that honor their diversity and commitments? Norms of professionalism can be exclusionary, even when our students adapt consciously and strategically to them. But the ideal of serving clients with specialized legal knowledge has value and meaning. Our panelists will discuss their strategies for working with developing lawyers to find professional identities that honor both themselves and the legal profession.

Kendra Albert is a technology lawyer and scholar of computing, gender, and society. They are a clinical instructor at the Cyberlaw Clinic at Harvard Law School, where they teach students to practice technology law. Kendra also serves as a lecturer in the Program on Studies of Women, Gender, and Sexuality at Harvard University. Kendra holds a JD cum laude from Harvard Law School and a BHA from Carnegie Mellon University. They serve as the Chair of the Board of Directors for the Tor Project, and as a member of the Board of Directors of the ACLU of Massachusetts.

Jack Lerner is Clinical Professor of Law at the University of California, Irvine School of Law and Director of the UCI Intellectual Property, Arts, & Technology Clinic. Professor Lerner works to find solutions to problems at the intersection of law and technology, particularly how technology law and policy affect creative expression and innovation.  He has written and spoken widely on copyright, privacy and other areas of technology law. In 2021, Professor Lerner authored the landmark Rap on Trial Legal Guide, the first-ever treatise on the use of rap lyrics in criminal trials (with Kubrin et al.). He is also Executive Editor of the award-winning treatise Internet Law and Practice in California (CEB). In 2015, he authored The Duty of Confidentiality in the Surveillance Age, 17 J. Internet L. 1 (2014) (with Lee et al.). See more of Professor Lerner's publications at his UC Irvine profile.

Kim Thomas, HLS '99, is a Clinical Professor of Law at the University of Michigan Law School, where she has taught since 2003.  She teaches in the area of criminal law, primarily in the Civil-Criminal Litigation Clinic and the Juvenile Justice Clinic, a clinic which she directs and co-founded. In 2021, Thomas was appointed as a member of the Governor's task force on juvenile justice reform, which issued its recommendations for structural reform of Michigan's youth justice system in 2022.  Thomas' research focuses on youth who commit serious offenses and those who are serving long and life sentences, as well as adult sentencing and post-conviction proceedings. Her scholarly work has been published in the California Law Review, the Ohio State Journal of Criminal Law, the U.C. Davis Law Review, among others.  In 2017, Thomas received a Fulbright award to teach juvenile justice at the University College Cork, in Cork, Ireland. 

Monday, March 20, 2023

Panel on Jack Daniels argument at AU-WCL, March 22

 IP at the Supreme Court Series: Jack Daniel’s Properties, Inc. v. VIP Products LLC

March 22 | 5:00 - 6:30pm EDT | Hybrid | NT01 | Reception to Follow
Registration Required

Moderated by Professor Christine Farley

American University Washington College of Law regularly invites counsel of record and counsel for selected amici to offer post-argument reflections in intellectual property (and related) cases heard by the Supreme Court. These events are held on the afternoon of oral argument before the Court. 


Issues: (1) Whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s traditional likelihood-of-confusion analysis, 15 U.S.C. § 1125(a)(1), or instead receives heightened First Amendment protection from trademark-infringement claims; and (2) whether humorous use of another’s mark as one’s own on a commercial product is “noncommercial” and thus bars as a matter of law a claim of dilution by tarnishment under the Trademark Dilution Revision Act, 15 U.S.C. § 1125(c)(3)(C).


Bennett Evan Cooper
Dickinson Wright PLLC
Counsel For Respondent

Prof. Rebeccah Tushnet
Harvard Law School
Amicus Brief for Law Professors in Support of Respondent

Paul Levy
Public Citizen
Amicus brief for Dan McCall, Sky Shatz, & Don Stewart  in support of Respondent

Edward T. Colbert
Hunton Andrews Kurth LLP
Amicus brief for Constellation Brands, Inc. in support of Petitioner

Megan K. Bannigan
Debevoise & Plimpton LLP
Amicus Brief for IP Law Professors in Support of Neither Party

Vijay K. Toke
Rimon P.C.
Amicus brief for INTA in support of neither party

two melatonin class actions alleging higher doses than needed survive

Mack v., 2023 WL 2538706, No. C22-1310-JCC (W.D. Wash. Mar. 16, 2023)

Plaintiffs alleged they bought and used Solimo, a melatonin supplement manufactured and sold by Amazon. Each product purports to provide a specific dose of melatonin per serving (e.g., 3mg or 5mg). Melatonin is commonly used as a sleep-aid. Plaintiffs alleged that Solimo falsely substantially understates Solimo’s true melatonin dosage in each serving, exceeding what would be a “reasonable excess” allowed by the FDA. Plaintiffs alleged that a “reasonable excess” is any amount greater than that needed for a supplement to meet “the amount specified on the label throughout the product’s shelf life.” They alleged that, had they known Solimo’s true melatonin dosage, they would not have purchased it at any price. They sued for violations of Washington’s Consumer Protection Act, breach of contract, breach of express warranty, and breach of implied warranty. The court denied Amazon’s motion to dismiss.

The court found standing, including for injunctive relief: Plaintiffs alleged that, if not for the fact that they cannot confidently rely on Solimo’s labeling, they would purchase the product again. 

Amazon argued preemption because (1) the FDA permits melatonin overages and (2) Plaintiffs’ allegations are supported by a test that deviates from the FDA’s 12-sample testing protocol. The court disagreed. It’s true that, because supplements like melatonin degrade over time, the FDA allows manufactures to formulate the supplement with some overages to ensure “that the finished produced can meet the label declaration for that dietary ingredient through the product’s shelf life.” But the FDA doesn’t “allow the manufacturer to add excess dietary ingredients in unspecified amounts that would be in excess of the amount actually needed to meet the label declaration.” Thus, if a product’s label falsely states the dosage, relative to this permissible excess, the product is mislabeled. Plaintiffs sufficiently alleged that this was the case. The complaint recognized that some overage is allowed, but contended that the amount in Solimo “increases the risk of adverse side effects” and puts at issue its “long-term safety” and, for these reasons, it is an “unreasonable excess...prohibited (not permitted) by FDA regulations.”

The FDA also requires that compliance with food labeling requirements be determined through a 12-sample testing protocol. The complaint didn’t allege that plaintiffs actually used this protocol when testing Solimo, so Amazon argued that it was preempted. But “plaintiffs are generally not expected to provide evidence in support of their claims at the pleading stage...nor are they required to plead the ‘probability’ of their entitlement to relief.” 

Murphy v. Olly Public Benefit Corporation, --- F.Supp.3d ----, 2023 WL 210838, No. 22-cv-03760-CRB (N.D. Cal. Jan. 17, 2023)

Plaintiffs alleged that Olly’s products include significantly more melatonin than the label asserts, and therefore violate state consumer protection laws. Plaintiffs’ usual California claims, plus claims based on New York’s GBL and other consumer protection laws of various states mostly survived.

Murphy allegedly selected a 3 mg dose “because she did not want to take more than 3 mg of melatonin from the product, “due to increased concerns about side effects and safety” and would not have purchased the melatonin had she known that it “was inaccurately labeled and unreasonably overdosed.” Plaintiffs’ liquid chromatograph-mass spectrometry analysis on four non-expired bottles and four expired, or nearly expired, bottles and alleged that the true amount of melatonin in the bottles was 165% to 274% of the amount claimed. They alleged that this was “far more melatonin than the ‘reasonable excess’ permitted by the FDA.”

There was no preemption. The complaint properly alleged nothing different than what the FDA requires: “if a manufacturer includes materially more melatonin than is actually needed to ensure that by the time the shelf life ends, the product has approximately the amount of melatonin that is declared on the label, this violates the FDA’s mandates.” They weren’t trying to establish a percentage mandate, but alleged that “other U.S. manufacturers” who sell melatonin supplements put their products on the shelf with a 10–15% overage, which is “reasonable because, by the time the shelf life ends, the product has approximately the amount of melatonin that is declared on the label.”

Also, federal pleading standards don’t require plaintiffs to allege that they complied with FDA’s sampling practices. As the court pointed out, quoting a different case, it is “uncertain how a plaintiff, prior to discovery, would have access to ‘randomly chosen shipping cases’ from which he could have selected 12 consumer samples that he could be sure had come ‘from a single lot.’ ” Plaintiffs would eventually have to prove that Olly failed to comply with the FDA overage regulations, but not yet.

A state law claim also doesn’t exist if the state claim wouldn’t exist if the FDCA didn’t exist. (In California, though, the state has adopted the FDCA and its regs as its own law.) Olly argued that was exactly what plaintiffs were arguing. “Plaintiffs are not bringing suit because Olly’s conduct allegedly violates the FDCA; they are bringing suit because Olly’s conduct allegedly violates state consumer protection laws in such a way that is consistent with the FDCA.”

The primary jurisdiction doctrine also didn’t bar the claim; the FDA has already provided helpful guidance that “the amount of overage should be limited to the amount needed to meet the amounts listed.” Nor did this require hyper-technical expertise to apply. 

Olly argued that reliance was implausible because plaintiffs alleged they wanted the exact amount of melatonin listed on the label, but they also alleged that they wouldn’t have purchased if they knew about the unreasonable overdose. It further argued that customers do not care about overages because they “do not possess technical and scientific knowledge regarding melatonin, degradation, or what constitutes a ‘reasonable overage.’ ” But the complaint plausibly alleged otherwise, e.g., “consumers don’t want to unwittingly take excessive amounts of a neurohormone that alters brain chemistry” and “consumers want to make their own, informed decision about the dosage that is right for them.... This choice is reflected by their decision to purchase 3 mg, instead of a higher dose.” Maybe consumers also care about form (gummy, powder, soft gels) and flavors, ingredients and branding, but the complaint plausibly alleged that the melatonin dosage is material to consumers in selecting an Olly melatonin product.

The court declined to dismiss the requests for equitable remedies at the pleading stage, even though plaintiffs were also seeking damages.

Olly also argued that the plaintiffs failed to allege “why they were economically injured when they got more melatonin than advertised and they do not contend that the Products were not effective sleep aids.” “That is a rather disingenuous take on Plaintiffs’ allegations. It is not as if Plaintiffs got a box with 11 chocolates in it when they were expecting 10. Plaintiffs allege that they wanted to take an accurate amount of a neurohormone that affects their brains, that they trusted the label’s representation of how much of that neurohormone they were getting, and that the inaccuracy of that label was ‘alarming,’ such that the product was essentially worthless to them.”

However, plaintiffs didn’t plausibly allege that non-purchased, non-tested Olly melatonin products were overdosed. Although the fact that the products all contain the same ingredient can sometimes satisfy the pleading standard, the issue here was not the presence of a particular ingredient, but the quantity of that ingredient.

Plaintiffs also had standing to seek injunctive relief. The complaint didn’t allege that plaintiffs “now know[ ] how to interpret” Olly’s melatonin labels, “other than to assume that they are dangerously inaccurate,” which was not enough to deprive them of standing. The continuing inability to rely on the label provided standing.

Other states’ laws: In light of the minimal briefing, and because the complaint only asserted claims based on the laws of   four additional states “(far outweighed by the populations of California and New York),” the court would wait for a class certification motion.

Express warranty and unjust enrichment claims also survived.

claims to "take a beating," "withstand," and "increase durability" were puffery

Lowe v. ShieldMark, Inc., No. 1:19CV00748, 2023 WL 2540296 (N.D. Ohio Mar. 16, 2023)

Lowe sued ShieldMark for (as relevant here) false advertising of its line floor tape. The court granted summary judgment because the accused statements were not falsifiable:

1. Mighty Line Floor Tape’s “[b]eveled edge tape can take a beating from industrial wheel traffic”;

2. “Mighty Line Floor Tape withstands industrial brush scrubbers, forklifts, and heavy industrial wheel traffic”;

3. Mighty Line Floor Tape’s “[b]eveled edges increase durability for forklift traffic.”

Lowe argued literal falsity because ShieldMark admitted in litigation that its tape was susceptible to being “unintentionally lifted [off the floor] when a 2-by-4 block of wood is swept across the tape,” and that “[i]f a 2-by-4 lifts up the tape, then a cleaning device, forklift or skid would also do so.” But the ad statements were “too vague to be actionably false.” The court didn’t think there was any way to determine when floor tape was capable of “taking a beating” or “withstand[ing]” industrial machinery. “[N]o reasonable consumer would expect the tape to last forever, perfectly unaltered, in the face of any or every condition. Defendant’s statements make no measurable promises other than that Mighty Line Floor Tape probably falls somewhere between tape that disintegrates at the lightest touch and tape strong enough to survive a nuclear bomb.” The statements didn’t directly describe a tape’s ability to resist unintentional lifting; they could mean resisting abrasion, discoloration, or deformation when forklifts and other machines pass over it. Even if the statements were factual, they were at most ambiguous, and there was no evidence of actual deception.

trial court erred by presuming materiality of black box warning; $834 million penalty vacated

State ex rel. Shikada v. Bristol-Myers Squibb Co., 2023 WL 2519857, SCAP-21-0000363, --- P.3d ---- (Hawai’i Mar. 15, 2023)

The state sued two pharmaceutical companies for violating Hawai‘i’s Unfair or Deceptive Acts or Practices law (UDAP) by misleading the public about the safety and efficacy of their antiplatelet drug, Plavix. What makes someone a Plavix poor responder is complicated, and knowledge has evolved over time. The state alleged that Plavix was less effective in patients who had certain liver-enzyme mutations, and that defendants knew this fact years before 2009, when the FDA updated Plavix’s label with information about the issue. The state argued that their failure to update warnings plus intentionally suppressing information about/research into the issue violated the law.

The trial court found for the state:  defendants misled Hawai‘i consumers by failing to warn them that Plavix was less effective for poor responders. This omission injured consumers by “denying them the drug’s full promised antiplatelet effect, hindering their ability to give informed consent, and preventing them from taking an alternative drug or undergoing genetic testing to determine whether they were poor responders.”

The court imposed an $834 million penalty, which the Supreme Court vacated on materiality grounds: the trial court improperly granted partial summary judgment on whether the label mattered to consumers. A new trial is required for UDAP deception, but not for whether the acts were unfair. Nor did preemption, safe harbor, or statute of limitations arguments protect defendants.

The trial court agreed that the information contained in Plavix’s federally mandated black box warning was material as a matter of law. In the alternative, as the finder of fact at a bench trial, the court found the defendant companies’ evidence on immateriality “weak and unpersuasive.”

Thus, at trial, defendants weren’t allowed to present evidence showing that Hawai‘i doctors and patients hadn’t changed how they prescribed or consumed Plavix after information about the poor responder issue was added in 2010 to the black box warning.

Key issues: (1) Did the defendants mislead anyone by omitting the poor responder information from the Plavix label between 1998 and May 2009, or were they doing “the best they could with incomplete and conflicting scientific information about the causes of variability of response to Plavix”? [For affirmative misrepresentations this wouldn’t matter, but for omissions state of mind does matter.] (2) Did defendants suppress research into variability of response for financial reasons? (3) Did omission of the poor responder information from Plavix’s label hurt Hawai‘i consumers, including by hindering their ability to give informed consent?

The court reviewed the evidence as it developed over the years, both before and after FDA approval. In 2009, a BMS employee wrote:

[I]t looks like we are into stalling some more. I have to tell you that I have had in depth 1:1’s with about 6 senior [key opinion leaders] since I have been at [the American College of Cardiology] and the mood is very negative towards us ([Experts] are all saying that they have been telling us this for years and we chose to ignore them and bury our head in the sand and so they feel no sympathy toward our current situation!)

In 2010, the FDA decided to put information about diminished effectiveness for poor responders, associated with a particular genetic variant, in a black box warning, including language stating that poor metabolizers taking Plavix are more likely to have adverse cardiac events on the drug than non-poor responders. Research and debate continued about the causes of poor response. In 2016, the FDA removed the statement about worse clinical outcomes from the boxed warning and just warned about “diminished antiplatelet effect.”

As to suppressing research, the state submitted internal documents that suggested that defendants were worried about studying variability of response given that it could lead to “restrictive positioning” of drugs, which posed “[p]otential threats for future sales.” Another researcher wrote that “[t]he problem is that, given the variability of the test, we always run the risk to show a difference in a pharmacology study ... and then we really are in trouble.” Another scientist: “In my opinion, [Sanofi]’s/our reluctance to go down the path toward documentation of clopidogrel resistance is understandable, but it will catch up with us and perhaps be an unpleasant and costly surprise when others document it without asking our permission to do so.” The BMS Vice President for the “Sanofi Alliance” at the time wrote: “Sanofi remains adverse [sic] to doing any further work on either aspirin or clopidogrel resistance because of the potential negative marketing implications.” Etc.

On consumer harm, the supreme court reviewed the evidence about whether the relevant genotype was linked to adverse clinical outcomes (unclear; it wasn’t actively harming them, but the state’s witnesses testified that it was essentially a placebo for nonresponders, which defendants disputed) and whether non-white (particularly Asian) patients on Plavix are more likely to receive little or no benefit from the drug.

The trial court found deception by omission, focusing on what defendants knew when Plavix launched, as well as suppression/avoidance of clarifying research. And it found consumer harm, relying on the label’s materiality.

Safe harbor: UDAP’s “safe harbor” exempts “[c]onduct in compliance with the orders or rules of, or a statute administered by, a federal, state, or local governmental agency.” But the FDA “did not issue the companies a special dispensation absolving them of any state-law duties they may have (above and beyond their obligations under federal law) to update the Plavix label as the relevant science evolves. The FDA’s approval of Plavix’s label does not confer the agency’s imprimatur on the companies’ decision not to add information about variability of response to its warnings before 2009.”  Moreover, there was no safe harbor for suppressing research or failing to disclose the results of a meta-analysis to the public.

Statute of limitations: In Hawai’i, the state is not subject to any limitations periods unless it is “specifically designated in such a statute as subject to the limitation period contained therein.” This one didn’t.

Preemption: There was no preemption because the FDA allows manufacturers to change labels to “add or strengthen a contraindication, warning, precaution, or adverse reaction” or to “add or strengthen an instruction about dosage and administration that is intended to increase the safe use of the drug product,” upon filing a supplemental application with the FDA; a manufacturer need not wait for FDA approval. Preemption only applies when there is “clear evidence that the FDA would not have approved a change to [the brand name drug’s] label” required by state law. Here, by contrast, the FDA eventually put information about the poor responder issue in a black box warning on Plavix’s label.

But the trial court erred on materiality. There were genuine factual disputes, and the trial court shouldn’t have weighed evidence before trial.

Under the UDAP law, a representation or omission is considered material if it “involves information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.” The test is objective, not subjective.

The State stressed that a black box warning is the most serious warning the FDA can require and presented eight survey findings from the defendant companies’ 40-doctor telephone survey on how the boxed warning impacted the doctors’ prescribing behavior. But the defendants argued that a decade of evidence disproved materiality in this specific case, even though many Hawai’ian patients are of Asian or Pacific Island descent. [This seems affected by path-dependence: if the warning had been added earlier, when doctors were less comfortable/used to the drug, would that still have happened?] The State’s public health journal also recommended that Hawai‘i doctors not change their prescribing practice based on the boxed warning and that genetic testing not be done.

The trial court reasoned that, when information relates to safety and health, there’s a presumption that it’s material. Moreover, “materiality is determined by an objective, patient-oriented test, [so] evidence about the behavior of doctors could never create a genuine issue of material fact.”

This was an overstatement and a misinterpretation. Overcoming the presumption of materiality is “not a high hurdle.” Defendants may always counter the presumption with extrinsic evidence, including “expert testimony, consumer research, and evidence of how the networks and other expert bodies interpreted the advertisements.” Although there’s an intuition that “something the FDA considers very important for consumers to see must be material to those consumers … materiality is about what consumers do, not what the FDA thinks. Even evidence that the defendants themselves considered the information important isn’t dispositive, because the standard is materiality to a reasonable consumer, not the defendants. And “while the prescribing decisions of doctors are not synonymous with consumer behavior, they are certainly not irrelevant to it…. Objectively reasonable patients may rely on their doctors to help them make sense of drug labels.” There was a genuine factual dispute here.

As for the alternative holding, summary judgment evidence was no substitute for trial, including cross-examination.

Thus the deceptive acts liability holding had to be thrown out; the error on materiality also affected the question of whether the omission in question was likely to mislead consumers. Defendants could make their case that Plavix was not, for a large chunk of Hawai‘i’s population, a bad drug.

Unfairness survived. A practice is unfair under the UDAP if it (1) offended public policy, (2) was immoral, unethical, oppressive, or unscrupulous, or (3) substantially injured Hawai‘i consumers.  The materiality ruling affected (3), but (1) and (2) were independently sufficient. Unlike the FTCA, Hawai’i law allows finding a UDAP violation on any of those bases. Rather, “[a] practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.” This was consistent with interpreting Hawai‘i’s consumer protection law “in a way that maximizes consumer protection.”

Findings about the black box label relied on – and thus were tainted by - the materiality finding. “But the second type of conduct – suppressing research and inquiry into the drug for financial reasons – had no connection to the court’s materiality ruling.” These acts offended public policy given that pharmacos have a common law duty to warn consumers “when the risks of a particular drug become apparent.” The trial court found that the defendantss aimed to avoid their common law duty by: “suppressing research and continuously and repeatedly failing to further investigate the risks of reduced platelet inhibition in poor metabolizers.” And they knew - from the moment Plavix launched - about the diminished effects of Plavix in non-white populations, but didn’t volunteer this information to the FDA and avoided funding studies which could draw more attention to the variability of response. This set back research; “[p]reventing risks from becoming apparent for financial gain offends Hawai‘i public policy,” even if a drug proves to be safe. The same conduct also qualified as “immoral, unethical, oppressive, [or] unscrupulous.”

Nonetheless, the penalty calculation was impaired by the materiality error, so that had to go back too. “That the court landed on a per-prescription penalty reveals how crucial materiality was to the damage calculations.”

video on company's YouTube channel was informational, not commercial speech

WatsonSeal Marketing LLC v. Crawlspace Ninja IP LLC, 2023 WL 2533061, No. 5:22-cv-649-LCB (N.D. Ala. Mar. 15, 2023)

When is informational material related to a for-profit company’s business commercial speech? Here, the court finds a YouTube video noncommercial despite some reasonably solid connections to profit-seeking.

WatsonSeal Marketing sued for false advertising under the Lanham Act, tortious interference with business relations under Alabama law, and unjust enrichment under Alabama law, but, having kicked out the Lanham Act claims, the court didn’t proceed any further with the state claims.

WatsonSeal is “in the business of crawl space and basement performance products.” It develops and manufactures “polymer lumber and concrete sealants” for basements and crawlspaces, including LumberKote, a subfloor and floor joist sealer designed “to protect structural framing and subfloor systems from excessive moisture absorption and rapid moisture uptake.” “Simply put, LumberKote dries out lumber while sealing it off from subsequent water intrusion and moisture. This means that lumber does not need to be dried before LumberKote is applied.”

Crawlspace Ninja “sells and distributes a variety of products designed to waterproof crawl spaces and remediate mold,” including Anabec x70, “a moisture barrier product designed for application to unfinished building surfaces.”

Crawlspace Ninja’s YouTube channel is dedicated to educating “homeowners about their crawl spaces and basements.” The channel and videos contain hyperlinks to Crawlspace Ninja’s website and online store. This case is about one video, “Do Wood Sealers Work at Preventing Mold in Crawl Space,” which was narrated by Crawl Space Ninja’s owner, Church:

… One of our inspectors down in Alabama went to a job that had a subfloor and floor joist sealer applied. And now it has mold growing on it. So I want to talk about this. Are these sealers effective? And how to properly install them.

… Church shows viewers a photo of the mold and specifies that the sealer in question is LumberKote. Id. at 4–5. He explains that LumberKote, like Anabec x70, is a mold preventative that should be applied only after lumber is dried. He then gives some straightforward advice: “If you’re going to install a preventative, if you’re going to install some kind of coating to your flooring, you’ve got to dry out the subfloor ... before you do that.” 

Throughout the video, Church emphasizes that he is not criticizing WatsonSeal or LumberKote. He stresses that LumberKote is not to blame for mold found at the Alabama jobsite, opining that whoever installed the LumberKote at the Alabama jobsite failed to first dry out the lumber. Church even describes LumberKote as “a fine product” that, “like everything” on the market, “is only as good as it’s installed.” At the end of the video, he cautions viewers not to “let some mold remediation crawlspace company come into your house and tell you that they can ... leave the wood wet and apply a LumberKote or an X70.”

WatsonSeal alleged that the YouTube video falsely “leads consumers to believe that both LumberKote and Anabec x70 require wood to be dried prior to application,” when in fact LumberKote has no such requirement.

The court reasoned that  core commercial speech means “speech that does no more than propose a commercial transaction,” while “[n]on-core commercial speech has no clear-cut definition.” Courts weigh three factors: (1) whether the material is “conceded to be” an advertisement; (2) whether the material contains a “reference to a specific product”; and (3) whether the speaker “has an economic motivation” for distributing the material. [Some versions of this look for advertising format in part 1.] No one factor, or combination of factors, is dispositive.

The accused YouTube video didn’t propose any commercial transaction, but merely advised that  

subfloor and floor joist sealers should be applied only to dry lumber. Nor was it concededly an ad. It made only a handful of references to the sealers, and didn’t promote one over the other. [Although the claims here indicate that’s the problem: it denied the existence of a competitor’s purported advantage.] “These limited references to specific products fall far short of bringing the video into the realm of commercial speech.” Finally,

Crawlspace Ninja’s economic motivation for distributing the video is, at most, incidental to the video’s central message. Crawlspace Ninja undoubtably has some economic motivation for uploading the video, given that the video provides the company with market exposure and includes hyperlinks to the company’s website and online store. But such an attenuated economic motivation is wholly insufficient to transform otherwise noncommercial speech into commercial speech.

Ultimately, “In sum, the video possesses many of the hallmarks of non-commercial speech. It communicates information, expresses opinion, recites the grievances of others, and encourages dialogue on matters of public concern.”

In addition, the video wasn’t plausibly made for the purpose of influencing customers to buy Crawlspace Ninja’s products. “Material created for the sole purpose of helping consumers make informed decisions is not commercial advertising subject to Lanham Act liability—even if the material is under-researched, inaccurate, or misleading.”

Thursday, March 16, 2023

no disgorgement/fees in false advertising case even after Romag remand

Harbor Breeze Corp. v. Newport Landing Sportfishing, Inc., 2023 WL 2504988, No. SACV 17-01613-CJC (DFMx) (C.D. Cal. Mar. 13, 2023)

Previous district court ruling on irreparable harm; previous 9th Cir. opinion remanding for reconsideration of disgorgement and attorneys’ fees after Romag. Despite Romag, the court declines to award disgorgement or fees in this false advertising case.

A jury found that Harbor Breeze proved all elements of liability for false advertising but awarded $0 in damages and profits. Romag rendered incorrect the jury instruction that willfulness was a prerequisite to disgorge profits. On remand, the court held a bench trial.

The parties compete to offer whale-watching and other boat cruises off the coast of the Los Angeles metropolitan area. In 2011, Harbor Breeze sued for unfair competition and false advertising in California state court, alleging a variety of unlawful actions, such as submitting a fake business address in Long Beach, creating misleading website URLs, and posting fake reviews about services. “The jury found that the defendants had engaged in false advertising, and the court enjoined them from specified conduct.”

The state court declined to hold defendants in contempt for ads referencing “Long Beach Departures” and the sufficiency of “a graphic stating ‘All Vessels Depart from Beautiful Newport Beach’ [on] each of [Newport Landing’s] websites” that purportedly could not “be ‘read’ by third-party search engines.” The court found that the two ads were “inadvertent” and “subsequently removed” and that the graphic was adequate to comply with the injunction because it was “conspicuous to consumers viewing Newport Landing’s website.”

Later, Harbor Breeze sued in federal court, alleging Lanham Act, UCL, and FAL violations. Harbor Breeze’s evidence focused on two things: First, location. E.g., a consumer who searched on the internet for “Long Beach whale watching” would be directed to a page on Defendants’ website repeatedly stating the phrase “Long Beach residents and visitors,” suggesting that their cruises departed from Long Beach rather than Newport Beach. Second, prices. Defendants advertised, for example, a “$10 whale watching special” even though a consumer could never get on a whale watching cruise operated by defendants for only $10 because of a $2.50 fuel surcharge and a 2% wharfage fee on top of the $10. There was also evidence that calling these extra charges a “fuel surcharge” or “wharfage fee” was misleading because these fees were a way to get extra revenue, not tied to actual expenses, and defendants didn’t disclose these fees until late in the purchase process.

The court subsequently denied a contempt motion for several purported violations of the injunction. E.g., the mobile site temporarily failed to include disclosures required by the injunction because of “a technical error”—“one errant line of code”—but “the webpage in question was updated ... [to] contain[ ] the required disclosures.” Plaintiffs challenged “advertising that prices start at or are ‘from’ a listed price,” but “[t]he Court [wa]s unwilling to interpret its own Injunction to proscribe” as much.

The bench trial focused on previous trial evidence plus additional evidence mostly about defendants’ conduct since 2022. Plaintiffs’ evidence suggested that defendants continued to include locations like “Long Beach” in the title tags of some webpages, which appeared in organic search results on Google. Defendants also included “supplemental charges,” such as those purportedly for the decrease in passengers and higher fuel costs due to the COVID-19 pandemic for their regular whale-watching cruises. And defendants sold $10 Groupon vouchers that customers could redeem for cruises departing “Before 10am/After 5pm,” although Defendants did not offer departures after 5 p.m., and for approximately one week offered vouchers that customers could redeem only when paying an additional $2 fee. And they used the phrase “Feel the Harbor Breezes” in a pay-per-click advertisement on Google.

Disgorgement is available under the Lanham Act “subject to the principles of equity.” “Two reasons foreclose disgorging profits here—first, Defendants’ profits are not attributable to their misconduct, and second, the equitable considerations, in the Court’s discretion, do not weigh in favor of disgorgement.”

The Lanham Act allows disgorgement of profits attributable to false advertising, not other things. “[A] court may deny recovery of a defendant’s profits if,” for example “they are only remotely or speculatively attributable to the infringement.” A plaintiff must “prove [a] defendant’s sales only,” while a “defendant must prove all elements of cost or deduction claimed.”

But here, evidence connecting false advertising to defendants’ profits was lacking. (Is that the right placement of the burden?) Plaintiffs argued that defendants profited because their false fees came with a set dollar value.

But the Court is not convinced that Defendants would have earned less absent their misconduct. Defendants charged significantly lower prices for their cruises even including their fees. And they ultimately disclosed all fees to consumers before any purchase was completed. It seems more likely than not that consumers would—and did—care more about getting a good deal than where the cruise departs or whether a few dollars get added to the ticket cost.

To be sure, Defendants may have “thought [that their] advertising was important or would generate profits,” but that “is a truism. Companies obviously hope that advertising will be a boon to business. What [the evidence] failed to do,” however, was persuade the Court “that the advertising actually had this effect.” Thus, “there is no basis for inferring that any of the profits received by [Defendants] ... are attributable to” their misconduct.

As for the general equitable principles at play, they include (1) “a defendant’s mental state,” (2) whether sales have been diverted, (3) the adequacy of other remedies, (4) any unreasonable delay by the plaintiff in asserting [the plaintiff’s] rights, (5) the public interest in making the misconduct unprofitable, and (6) whether it is a case of palming off.”

Mental state: defendants were at worst negligent, not willful. One of the individual owners testified that they made changes to their websites and advertisements following the state court litigation and thought they were in compliance. Also, the defendants didn’t intend to mislead on prices, “even if their advertising was, in fact, misleading,” since they ultimately disclosed all fees prior to purchase. [This seems to deny the reality that bait and switch ads work because of consumers’ sunk costs in search; it’s a really bad idea unless tied tightly to what the court sees as the unusually sharp price differential.] “And the evidence on Defendants’ advertising on location showed that Defendants intended to optimize their search engine results, not confuse consumers.”

Although they still advertise “nominal” prices, they also conspicuously state that a supplemental charge applies immediately below the ticket prices and that cruises departed from Newport Beach. And multiple options were available at any given moment at their advertised “from” or “starting at” prices.

Plaintiffs accused defendants of trademark infringement for using the phrase “Feel the Harbor Breezes” in an ad in August 2022. The court was dubious that this was even distinctive or likely to cause confusion if distinctive.  But it was also irrelevant to disgorgement for false advertisng, and was at most negligent. “At some point, the volume and nature of mistakes may justify a finding of willfulness. But that moment has not yet arrived…. To date, Defendants’ sloppiness has been just that—sloppiness.”

Although willfulness is no longer required, Romag agreed that mental state remains “a highly important consideration in determining whether an award of profits is appropriate,” as “[a]n innocent ... violator often stands in very different shoes than an intentional one.” Further, as the Tenth Circuit has said, “an award of profits under the Lanham Act is truly an extraordinary remedy and should be tightly cabined by principles of equity.”

Evidence of sales diversion was also lacking. The jury’s award indicted that it must have found that plaintiffs failed to prove that they suffered any harm, or failed to prove to a reasonable degree of certainty an amount of harm, which would include diverted sales.

Other remedies:  A finding of liability coupled with an award of $0 in damages may “support[ ] a finding that there is no [ ]adequate remedy at law.” Nonetheless, injunctive relief sometimes “provides a complete and adequate remedy,” as when a defendant’s misconduct was not willful. That was the case here.

Plaintiffs didn’t delay bringing their claims, favoring disgorgement.

The public interest in making misconduct unprofitable wasn’t important because the misconduct hadn’t been profitable and an injunction was enough. “Any generalized public interest in minimizing false advertising, moreover, is mitigated by the competing interest of the public in robust competition from a competitor that, candidly, offers lower prices than Plaintiffs.”

This was also not a case of palming off.

Basically the same analysis also doomed a fee shift. Octane Fitness directs courts to consider “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” It was even doubtful whether plaintiffs were “prevailing part[ies]” entitled to fees under the Lanham Act. Regardless, this case wasn’t exceptional in substantive strength or public importance— “stopping misleading advertising about whale watching does not ameliorate a serious public harm.” Eight years of litigation didn’t make the case exceptional. “If anything, it undermines Plaintiffs’ claim of exceptionality, as the litigation has achieved mixed results.” Nor had it been litigated unreasonably. “To be sure, the conduct of all parties in this action has been at times vexing to everyone involved. But there has been no significant ‘failure to comply with court rules, persistent desire to re-litigate issues already decided, advocacy that veered into “gamesmanship,” [or] unreasonable responses to the litigation.’”

Wednesday, March 15, 2023

Transformative work of the day, SVB edition

HLS teaching series: Developing Professionalism in Students, March 21, at 12 noon EST

Developing Professionalism in Students

Register here:

Noon EST, March 21

What is professionalism for a lawyer? How can we as teachers help students develop professional identities in ways that honor their diversity and commitments? Norms of professionalism can be exclusionary, even when our students adapt consciously and strategically to them. But the ideal of serving clients with specialized legal knowledge has value and meaning. Our panelists will discuss their strategies for working with developing lawyers to find professional identities that honor both themselves and the legal profession.

Kendra Albert is a technology lawyer and scholar of computing, gender, and society. They are a clinical instructor at the Cyberlaw Clinic at Harvard Law School, where they teach students to practice technology law. Kendra also serves as a lecturer in the Program on Studies of Women, Gender, and Sexuality at Harvard University. Kendra holds a JD cum laude from Harvard Law School and a BHA from Carnegie Mellon University. They serve as the Chair of the Board of Directors for the Tor Project, and as a member of the Board of Directors of the ACLU of Massachusetts.

Jack Lerner is Clinical Professor of Law at the University of California, Irvine School of Law and Director of the UCI Intellectual Property, Arts, & Technology Clinic. Professor Lerner works to find solutions to problems at the intersection of law and technology, particularly how technology law and policy affect creative expression and innovation.  He has written and spoken widely on copyright, privacy and other areas of technology law. In 2021, Professor Lerner authored the landmark Rap on Trial Legal Guide, the first-ever treatise on the use of rap lyrics in criminal trials (with Kubrin et al.). He is also Executive Editor of the award-winning treatise Internet Law and Practice in California (CEB). In 2015, he authored The Duty of Confidentiality in the Surveillance Age, 17 J. Internet L. 1 (2014) (with Lee et al.). See more of Professor Lerner's publications at his UC Irvine profile.

Kim Thomas, HLS '99, is a Clinical Professor of Law at the University of Michigan Law School, where she has taught since 2003.  She teaches in the area of criminal law, primarily in the Civil-Criminal Litigation Clinic and the Juvenile Justice Clinic, a clinic which she directs and co-founded. In 2021, Thomas was appointed as a member of the Governor's task force on juvenile justice reform, which issued its recommendations for structural reform of Michigan's youth justice system in 2022.  Thomas' research focuses on youth who commit serious offenses and those who are serving long and life sentences, as well as adult sentencing and post-conviction proceedings. Her scholarly work has been published in the California Law Review, the Ohio State Journal of Criminal Law, the U.C. Davis Law Review, among others.  In 2017, Thomas received a Fulbright award to teach juvenile justice at the University College Cork, in Cork, Ireland. 

New paper: Bad Spaniels, Counterfeit Methodists, and Lying Birds: How Trademark Law Reinvented Strict Scrutiny

On SSRN, in advance of the JDI v. VIP case:

Bad Spaniels, Counterfeit Methodists, and Lying Birds: How Trademark Law Reinvented Strict Scrutiny


Does trademark law cover noncommercial speech, defined as it is in First Amendment doctrine as speech that does more than merely propose a commercial transaction? This basic question has three different answers, all regularly used in any given jurisdiction. The answers are yes, no, and sometimes, a list both comprehensive and dismaying. The Supreme Court is presently considering a case that may require it to choose—or may leave the field more confused than ever.

In response to the massive expansion of trademark’s scope over the last century, lower courts have implicitly devised a compromise by which trademark is pulled back to a more traditional anti-fraud-like scope when it is applied to noncommercial speech sold in the marketplace, such as movies, newspapers, songs, and visual art, or used as the name of an organization with dues-paying members, such as a political party or congregation. This compromise explains an otherwise surprising feature of the cases: Political speakers and religious speakers can expect worse outcomes than “commercial” publishers engaged in noncommercial speech, given the kinds of cases brought against them.  Of particular note, churches can be prohibited from using names that their worshipers sincerely believe are accurate descriptions of their faith. Although the doctrines articulated by courts are confused and sometimes directly contradictory, the results approximate what would happen if First Amendment strict scrutiny were applied to trademark claims brought against noncommercial speech—as long as material deception, not consciousness of wrongdoing, is the standard for liability.

We would be better positioned to understand the law and to decide future cases if courts were honest about their uses of the commercial/noncommercial line to police whether trademark law can be used for more than anti-fraud purposes. Understanding the relationship of noncommercial speech to trademark law also offers broader insights into the relevance of scienter and actual deception for speech regulation.