Monday, October 19, 2020

robust TX anti-SLAPP law protects critic despite arguments that she was partly competing

ADB Interest, LLC v. Wallace, 606 S.W.3d 413 (Tex. Ct. App. 2020)

This is an anti-SLAPP case about statements by a disgruntled customer/alleged competitor.

Black, the managing member of ADB, invented the FasciaBlaster, which is marketed by ADB. The user is supposed to roll the product vigorously over his or her body. ADB claimed benefits for pain reduction, flexibility, joint function, circulation, muscle definition and performance, nerve activity, posture, and enhanced beauty, “including the virtual elimination of cellulite.” The product allegedly works by “opening the fascia,” which is a layer of tissue that encloses muscles and organs.

Blac published a book that is “an instructional guide to ‘FasciaBlasting’ ” that identifies numerous risks associated with using the FasciaBlaster, including to people with any history of deep vein thrombosis or a blood clot (“the consequences could be deadly”), or people with a “severe connective tissue problem such as fibromyalgia, Ehlers-Danlos Syndrome, or any issues that makes skin sensitive.” The book lists other symptoms including "changes in menstrual cycles, spotting, swelling, strange-colored bruises, hot skin, flu-like symptoms, and in some extreme cases, vomiting.... This is not an all-inclusive list, and to be honest, the product is fairly new and every day someone experiences something new.... Please check with your doctor for any issues that set off alarm bells." The FasciaBlaster website also had similar (and some additional) warnings.

The FasciaBlaster has fans and detractors, including in private FB groups; defendant Wallace “is only one of many people claiming on social media that the FasciaBlaster causes serious, adverse side effects.”

Wallace “owns a spa in Corpus Christi, Texas that provides a variety of skin care services to its clients, including massages.” She bought several FasciaBlasters for personal use also used the FasciaBlaster on one or more of her clients as part of her rendition of skin care services. She initially recommended the FasciaBlaster to her friends, family, and clients, but changed her mind, as announced on FB:

After my own experience and after seeing results from doctors and specialist[s] [and] [c]ompleting tests and extensive blood work, the tests are showing that extended use of these products can cause a chain reaction in the body that starts with inflammation. That inflammation leads to raised cortisol levels in the body. That raised cortisol causes eventual thyroid dysfunction, hormone imbalance, increased estrogen, extreme detox, and cellular shutdown in your body. [etc.]

… So any endorsements I gave this product in the past I sincerely apologize for without knowing the long term or adverse effects it may be causing people. As it has caused these adverse effects in myself by using it long term[,] I HAVE to warn anyone who is using it [o]r anyone who might be thinking of using it for esthetic reasons to use EXTREME caution.

She became a frequent critical poster on FasciaBlaster-related websites and Facebook groups. She attributed her fibromyalgia diagnosis, other problems, and two miscarriages on her use of the FasciaBlaster (the last because of high cortisol levels).

In response, ADB/Black’s social media/cybersecurity firm publicly named Wallace as one of the “professional trollers” who had written “bad reviews” on Black’s page and were making “false claims and [using] fake profiles.” Its employee also urged these Facebook pages to block the named individuals. Black also left a voicemail for a critic stating, inter alia, “I will prosecute you if this continues.” Two months before Wallace posted her allegedly defamatory and disparaging statements on FB, their attorney contacted another critic, stating that “while the company recognizes that consumers have First Amendment rights and other consumer rights provided by the Federal Trade Commission (FTC), those rights are limited by the company’s rights to not be defamed through slander or libelous actions that include actual malice or negligence regarding the truth of the statement.” The company also posted on its FB group that “While we welcome the opportunity to hear from people who feel they have experienced negative effects from using the FasciaBlaster device, we also need our audience to be aware that knowingly making false or fraudulent injury or defect claims is illegal and may subject you to criminal and civil liability.”

Black and ADB then sued Wallace for business disparagement, defamation and defamation per se, invasion of privacy, intentional infliction of emotional distress, and violations of the Lanham Act. Within days of filing suit, the company sent messages to other participants in the FB groups pointing to the lawsuit.

Side note: the FDA investigated ADB and the FasciaBlaster after it became aware of “over 70 [Medical Device Reporting (MDR) ] reportable complaints and 04 consumer complaints, filed in the last 12 months (June 2016-June 2017), alleging injury due to your Class I medical device, FasciaBlaster.” The FDA’s report revealed failures to create procedures for reviewing and evaluating complaints, despite several specific complaints of serious bodily injury allegedly caused by the device. Although ADB’s attorney initially told the FDA inspector that it had evidence of internal investigations—supposedly represented by pdf attachments to a spreadsheet ADB provided to the FDA—when the inspector asked for a sample of the attachments, “[i]t was later determined that these files (investigation results) did not exist.” The court doesn't explicitly connect this to the legal analysis, but it seems relevant.

Wallace moved to dismiss the claims based on the Texas anti-SLAPP law (the Texas Citizens Participation Act); the trial court granted the motion and awarded Wallace attorney’s fees and imposed sanctions against ADB and Black. Under the TCPA, if the trial court grants a motion to dismiss, it must award costs, reasonable attorney’s fees, and other expenses of defending against the action “as justice and equity may require.” The trial court must sanction the plaintiff in an amount “sufficient to deter the party who brought the legal action from bringing similar actions.”

First, ADB/Black argued that the commercial speech exemption applied to their claims. Not so. The TCPA does not apply:

to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer.

The Texas Supreme Court explained that “[c]onstruing the TCPA liberally means construing its exemptions narrowly,” in part because of “the legislature’s clear instruction to construe the TCPA liberally to protect citizens’ rights to participate in government.” It was plaintiffs’ burden to show that the exemption applied. It does when:

(1) the defendant was primarily engaged in the business of selling or leasing goods [or services], (2) the defendant made the statement or engaged in the conduct on which the claim is based in the defendant’s capacity as a seller or lessor of those goods or services, (3) the statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides, and (4) the intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of goods or services the defendant provides.

The exemption does not apply when a defendant “speaks of other goods or services in the marketplace,” i.e., goods or services that the speaker does not sell or lease.

The record showed that Wallace’s statements were primarily aimed at two overlapping but nonidentical audiences: ADB’s and Wallace’s actual or potential customers—Wallace didn’t provide services outside of a limited geographic area, but posted to reach everyone. To the extent that her statements were directed at her clients, they could be subject to exemption from the TCPA if the other requirements were met. But they weren’t. Under the circumstances, her statements about ADB’s product “cannot reasonably be considered statements about the services that Wallace provides.” Even though she directed readers to her business FB page to read her statements about the FasciaBlaster and mentioned that she provides skincare services in some of her posts, “it is not reasonable to infer from the record that Wallace was intending to promote her services or enhance her business by making the allegedly defamatory and disparaging statements about FasciaBlaster.”  There was “no evidence of a commercial purpose or motive behind Wallace’s posts.”

Given this, ADB/Black had to show, by “clear and specific evidence,” a prima facie case on their causes of action. The TCPA doesn’t “require direct evidence of each essential element of the underlying claim to avoid dismissal.” For example, pleadings and evidence that establish “the facts of when, where, and what was said, the defamatory nature of the statements, and how they damaged the plaintiff should be sufficient to resist a TCPA motion to dismiss.”

Defamation: Note that in Texas, corporations can bring defamation claims, since “corporations, like people, have reputations and may recover for harm inflicted on them.” Plaintiffs conceded that they were limited-purpose public figures here.

Actual malice requires knowledge of falsity or reckless disregard for truth. The Texas Supreme Court has held: “A failure to investigate fully is not evidence of actual malice; a purposeful avoidance of the truth is.” Also: “[A]ctual malice in defamation is a term of art that does not include ill will, evil motive, or spite”; none of that is enough because “the constitutional focus is on the defendant’s attitude toward the truth, not his attitude toward the plaintiff.”

ADB/Black argued that they submitted the only medical evidence in the record, allegedly establishing that there is no biological mechanism by which the FasciaBlaster could have caused Wallace’s medical issues, and thus the only rational inference from this evidence is that no medical professional would have told Wallace that the FasciaBlaster caused her to have two miscarriages and led to the onset of lupus and fibromyalgia. Therefore, they continued, one could rationally infer that Wallace knew that her statements were false. This wasn’t enough to infer that Wallace knew of the falsity or acted with reckless disregard for the truth. There was no “established body of scientific or medical evidence” about the FasciaBlaster for Wallace to ignore or proceed in reckless disregard of. ADB’s proof was an affidavit not available until after the litigation began; it, and the research it recorded, had not yet occurred when Wallace spoke.

ADB/Black argued that it was reckless disregard for the truth for Wallace to make statements about the source of her symptoms “based on self-administered tests she is not qualified to perform,” and that it was obviously dubious to blame “a simple massage tool.” Again, this wasn’t a case involving “a wealth of scientific literature that is widely available to the medical community, much less the general public.” Indeed, when Wallace made her allegedly defamatory statements, “there were no scientific studies addressing whether there was a link between FasciaBlasting and any of Wallace’s illnesses or symptoms.” It hadn’t been reviewed or tested by any physician [and one thus has to wonder about whether those disease claims are ok with the FDA], and based on the statements in ADB’s terms and conditions, they “had no intention at that time to subject their product to meaningful scientific or medical review.” An understandable misinterpretation of ambiguous facts does not show actual malice, even if Wallace was mad at Black.

Nor are Wallace’s claims  “inherently improbable” “considering the fact that ADB acknowledges that the FasciaBlaster’s effects are more than skin deep.” ADB’s own warnings reinforced that impression; indeed, “Wallace did what Black advised her book readers to do if they experienced any alarming symptoms while using the FasciaBlaster—consult a physician.” No actual malice, no defamation.

Business disparagement: Although the Restatement isn’t sure this is constitutional, malice in Texas business disparagement differs from defamation malice because it can be proved by demonstrating “ill will, evil motive, gross indifference, or reckless disregard, of the rights of others.” Here the key problem was special damages. ADB argued that in at least two instances in the record, women stated that they were going to return their products in response to Wallace’s posts (e.g., “I watched your videos and heard your story and it convinced me to send mine back and not let this thing ever touch my body because of what you are going through.”), along with other instances in which women promised to quit using the products they’d already purchased. Black also averred that this all the coincided with a decline in ADB’s sales.

However, neither the video that attracted these comments nor a transcript was in the record, so we don’t know what specific statements Wallace made, much less if any of these statements were defamatory or disparaging. Nor was there any other record showing of economic damage from returned or lost sales. Likewise, there was no specicfic evidence that the avowed no-longer-users would otherwise have purchased related specialty massage creams and ointments from ADB. As for the general sales decline, it was clear that Wallace’s statements “were not made in a vacuum,” and no specific evidence supported the inference that her posts were solely, or even principally, responsible for decreased sales.

Lanham Act: Not commercial advertising or promotion, given the mismatch between ADB’s business and Wallace’s.

The court also upheld the award of attorneys’ fees and $125,000 in sanctions under the TCPA. “Although the award of sanctions is mandatory, the trial court has broad discretion with respect to the amount of sanctions awarded.” Relevant factors include: (1) the plaintiff’s annual net profits; (2) the amount of attorney’s fees incurred; (3) the plaintiff’s history of filing similar suits; and (4) any aggravating misconduct, among other factors.

Wallace argued for a large sanctions award “because both parties were self-described millionaires who have taken aggressive responses to quiet their online critics,” including advertising the lawsuit against Wallace.  Along with the measures described above, ADB subsequently sued at least two other critics who posted negative comments about the FasciaBlaster on the same Facebook group that Wallace used. ADB sought between $2,000,000 and $5,000,000, plus injunctive relief requiring both women to “remove disparaging and defamatory comments,” though it ultimately dismissed those suits.

ADB/Black argued that no deterrence was necessary because Black was not party to either of these suits, Wallace didn’t prove that ADB’s other lawsuits were unsound; and it non-suited its claims anyway, making sanctions unnecessary. It also argued that, unlike Wallace, the other two “voluntarily participated in ADB-sponsored studies, signed contracts that included non-disclosure agreements, and then breached those agreements by publicly complaining about ADB’s products.” [Query: were these contract provisions federally illegal under the Consumer Review Fairness Act?]

But even disregarding those lawsuits, the other evidence of “a deliberate plan to discredit and quiet their detractors, prevent or remove negative reviews of ADB’s products, and threaten those who made negative comments” sufficed to avoid any abuse of discretion.

lack of irreparable harm dooms injunction against false advertising of drug disposal product

In re C2R Global Manufacturing, Inc., No. 18-30182-beh, 2020 WL 5941330 (E.D. Wisc. Bkcy Oct. 6, 2020)

Verde sought a preliminary injunction against C2R, its direct competitor in the drug disposal market, from engaging in false and misleading advertising in violation of the Lanham Act, and an order requiring corrective advertising. Despite likely success on the merits, lack of irreparable injury precluded an injunction. The court applied eBay, as it predicted the Seventh Circuit would, and also relied on Verde’s delay.

Verde sued C2R in March 2018 for false advertising and patent infringement; a few months later, C2R filed for Chapter 11 protection, and Verde timely filed a nearly $7 million proof of claim. After a Markman hearing and decision, the parties settled their patent claims. In February 2020, Verde sought both preliminary and permanent injunctive relief; the court considers only the former.

The technical details are complex, but the core of the claim is that C2R falsely advertised how much drug content its products could render inert. Although it removed specific pill number claims from its website, at the time of the motion it still included the statement that its containers could be filled until contents are two inches from the cap, which was allegedly false. C2R based its claims on various analogies/evidence about the product components/similar competitors; Verde’s tests of C2R’s product yielded at most a 30% adsorption rate, and its experts persuasively critiqued the assumptions on which C2R's claims relied.

After Verde sued, C2R commissioned independent testing that found that the Rx Destroyer deactivated 90-99% of the pills in his experiments. Among other criticisms, however, Verde’s expert critiqued the testing methodology, which included filtering out material that included drug residue (paste), which (Verde’s expert argued) improperly altered the drug deactivation conclusion, and critiqued C2R’s expert’s technique of constant agitation, which was both not realistic and not consistent with the product use instructions.

Verde argued that, based on the testimony of its Chairman and CEO, “if unused drugs are tossed in the trash, they risk being inadvertently diverted by neighbors, children or pets,” and that the “toilet flushing of drugs is now also discouraged, owing to environmental contamination risk to the nation’s watershed.” He asserted that customers purchase C2R’s product over Verde’s because the Rx Destroyer cost-per-pill appears lower due to C2R’s capacity representations compared to its price point. In addition, he opined that “when C2R advertises a product using activated carbon that does not work as represented, that casts doubt on all products using activated carbon.”

C2R, by contrast, argued that Verde wasn’t its primary competitor, though it acknowledged that the fact that Rx Destroyer has a larger capacity is a competitive advantage over Verde, or over anything else on the market. C2R has advertised Rx Destroyer as being more affordable on a cost-per-pill basis. The parties also submitted dueling declarations about whether the damages were merely financial and not irreparable. C2R’s expert, for example, found no meaningful customer overlap, “noting that Verde does not offer product data sheets that are required by many hospitals, and thus cannot sell to those entities, while C2R does provide such data sheets and has such hospitals as customers.” Plus, he indicated that “Verde has enjoyed faster growth and higher annual revenues than C2R during the relevant time period,” suggesting lack of harm.

Verde’s expert disagreed that financial evidence enabling partial quantification of the damages was the same as an adequate remedy at law. [Can a company in bankruptcy be assumed to be able to provide an adequate remedy at law?] Verde identified twenty-five customers to which both Verde and C2R sell. And Verde’s growth could have been greater: the entire market for drug disposal products offered by these parties “dramatically increased during the 2015-2019 period.”

On the merits, when advertising explicitly or implicitly represents that tests prove the claim, a plaintiff can prevail by showing that the tests did not establish the proposition for which they were cited. Even if there is no industry standard test for deactivation capacity, “when advertisements purport to rely on testing, the presence or absence of a government certified test is not relevant.” Predicting capacity for drug disposal products may be challenging, “that does not absolve the manufacturer—here, C2R—from fashioning truthful advertising statements, even if on relatively short notice.” Verde showed likely success on the merits.

Irreparable harm: First, no presumption applies; the Seventh Circuit has yet to say so in the Lanham Act context but likely would apply eBay, given that it has already done so in copyright cases. “But certainly, all of the cases cited above recognize the particular difficulty in assessing harm when a competitor engages in false advertising.”

Verde argued: (1) the parties compete directly; (2) effectiveness and cost are two of the most important factors in a purchase decision; and (3) the false representations were “critical” to effectiveness and cost. However, the Chair/CEO’s testimony didn’t identify specific facts such as survey data or sales reports to show lost sales, and if his opinions were based on statements made to him by customers, those statements would be inadmissible hearsay. “Courts in this circuit consistently have rejected vague summaries of hearsay statements by unidentified consumers.”  His testimony didn’t meet the requirements of Rule 701 for non-expert testimony.

The fact that the parties compete didn’t prove harm. This wasn’t express comparative advertising, and the record didn’t show a two-party market. Trademark cases are different because confusion about source can show irreparable harm because of lost control over reputation; harm to reputation is inherently intangible/impossible to quantify. [Sigh.]

Verde’s expert couldn’t help because he didn’t provide alternative evidence of harm, just criticized C2R’s expert. It wasn’t enough to infer that any customers who knew of both companies would purchase more from Verde absent C2R’s advertising.

Separately, delay proved lack of irreparable harm. The pertinent measurement is from the time the plaintiff discovers the trademark infringement (or false advertising) until the injunctive relief motion is filed, or from the time plaintiff first sent its cease-and-desist letter until filing its motion. “Here, that time frame would be June 2014 to January 2020, or 67 months.” Verde argued that, while it had experimental evidence undermining C2R’s capacity claims prior to filing suit, it had not yet conducted any discovery, and it moved promptly but prudently only after completing that discovery. Verde also argued that “it was not in a position at the time of its earlier testing to expend significant funds on legal fees in pursuit of litigation.”

But this delay was “longer than prudence can bear.” Verde had test results for years. “[T]he span of time during which Verde at least possessed test results discrediting C2R’s website statements is far beyond any duration accepted by courts as reasonable and could well have allowed C2R to relax its defenses and continue its advertising expenditures.” Its reference to the costs of litigation was “an internal cost-benefit assessment Verde made, and when weighed against the amount of time between the first testing in 2014 and the motion in 2020, does not justify the substantial delay in seeking a preliminary injunction.”

Belt and suspenders: It hadn’t been shown that Verde lacked an adequate remedy at law [which I still wonder about—C2R is in bankruptcy!]. Also, harm to the environment or public safety “is not of a degree warranting a preliminary injunction.” Indeed, official websites say that putting unused medications in the trash is not ideal but don’t definitely nix it, mitigating the public interest at this stage.

omitting "all" or "every" can avoid literal falsity of general claim

SkyHawke Technologies, LLC v. GolfzonDeca, Inc., No. SACV 19-1692-GW-PLAx, 2020 WL 6115095 (C.D. Cal. Aug. 3, 2020)

A limited preliminary injunction turning on the difference between literal falsity and implicit falsity: claims that human beings walked each golf course at issue to chart it were literally false, but more general claims of human walking were not.

Plaintiffs sought to stop defendants from advertising that their GolfBuddy products use information “based on walking courses” and that therefore they are the “most accurate.” Defendants contented (in patent litigation) that “[DECA System, the entity responsible for the maps,] primarily uses publicly available Google Earth map data as the course for the geographical data used to create its course data.... in some instances [Deca] may hire a third party contractor to manually survey the course.” Defendants conceded that Deca does not walk every course.

However, most of the statements plaintiffs challenge weren’t literally false. E.g., “GolfBuddy specializes purely in the manufacture of golf distance measuring devices and walks golf courses to create ground-verified accurate maps, which increases the supreme accuracy of their GPS devices over competitors who simply use satellite imagery”; “GolfBuddy … used teams of expert mappers to walk courses and create ground-verified data maps that give precision accuracy and they promise precision accuracy for over 36,000 courses”; “GolfBuddy is … the only company that focuses 100% on golf, maps courses on foot for added accuracy, and provides completely fee-free access to its extensive worldwide database of courses.” [I do wonder what a survey would show about this and what a non-leading way to ask about it would be—this might well be a case where consumers are left with an impression of fully walked courses but prodding them to think about the statement would lead them to realize the ambiguity.] Plaintiffs didn’t convince the court that the necessary implication was that defendants walk every course.

In addition, “ground-verified accurate maps,” “precision accuracy,” and “added accuracy” were puffery.

However, one statement by a GolfBuddy marketing coordinator was literally false: “So GolfBuddy, our motto is Accuracy Matters. And the reason we say that is because every single course that’s in our database out of the 48,000 are walked by foot. So that means we send mappers to that course and they walk every single hole by foot with our own GPS devices.”

The court applied a presumption of irreparable harm to literal falsity, even without an explicit comparison. “[G]iven the small market for golf rangefinder devices, the obvious falsity, and the very narrow scope of the proposed injunction, the Court finds that ‘traditional principles of equity’ warrant a finding of irreparable harm.” The remaining factors also supported a preliminary injunction precluding defendants from claiming that they walk every course in their map library “(until they do walk every course).”

funny survey typo doesn't invalidate confusion survey

Pinder v. 4716 Inc., 2020 WL 6081498, No. CV-18-02503-RCC (D. Ariz. Oct. 15, 2020)

This strip club right of publicity-etc. case is mostly as plaintiff-favorable as others coming out of Arizona. The notable thing: the court says the survey here is fine, despite various criticisms leveled in similar cases, and despite a possibly significant spelling error: “The question asked the participant to indicate his or her strangest impression about the advertisements, when it should have asked for the participant’s strongest impression” (emphasis added). This was merely a challenge to “technical inadequacies,” not to admissibility.

Friday, October 16, 2020

strip club photo litigation: a genre with rulings on false advertising and surveys

Skinner v. Tuscan Inc., No. CV-18-00319-TUC-RCC, 2020 WL 5946898 (D. Ariz. Oct. 7, 2020)

There’s a small cottage industry of right of publicity etc. claims against strip clubs and adjacent businesses, rivalling the timeshare rescue litigation industry; someone could do a public service by tracking these down. Defendant (Ten) used “risqué photos of Plaintiffs” to advertise its strip club. Plaintiffs brought claims for right of publicity/misappropriation of likeness and false light/invasion of privacy, as well as Lanham Act false advertising/false association/endorsement claims. As is becoming standard, plaintiffs do pretty well in the analysis.

Arizona false light/invasion of privacy: One-year statute of limitations; publication starts it running and continued posting online is not a “continuing wrong.” For photos published within that period, there were genuine issues of material fact on whether “the false light in which the plaintiff was placed would be highly offensive to a reasonable person in the plaintiff’s position.”

Ten argued that the ads made no false statements, but implications count and “[a] fact finder could decide that Plaintiffs’ images and the corresponding text in the advertisements falsely suggest the Plaintiffs were somehow affiliated with, promoted, or employees at Defendant’s strip club.” . Ten further argued that the underlying photos were already risqué, but “simply because a woman has modeled in risqué clothing (or even previously worked at a strip club) does not mean a reasonable person in a similar position could not be offended by the suggestion that the person is an exotic dancer at the defendant’s strip club.… Moreover, Plaintiffs’ have declared that the stripper lifestyle is disreputable and being impermissibly associated with such is offensive.”  However, a fact finder could also determine that any misrepresentation was minor and not actionable.

False light for a public figure also requires actual malice (knowledge of falsity or reckless disregard of the truth). This was a factual issue, though the court didn’t make clear exactly what Ten had to know/recklessly disregard: logically, it should be that Ten had to know or recklessly disregard the false implication of connection. Unfortunately, the court—possibly invited by the parties—focused on what Ten knew about the permission status of the photos, which is not the same thing, and cited a case holding that “failing to investigate the origin of models’ photos used in advertising and permission to use raised a genuine issue of fact as to actual malice.”

Arizona common law right of publicity: The right of publicity is rooted in property, not privacy, and thus subject to a two-year statute of limitations. (The court didn’t resolve whether the continuing wrong doctrine applied.) There were no genuine material disputes and plaintiffs were entitled to summary judgment: Ten received an advantage for uses of their photos, and failure to pay them for the use was cognizable harm.

Lanham Act false advertising: Plaintiffs don’t fall within the zone of interests for false advertising. While lost income from a missed photo shoot could be a financial injury, the alleged false advertising wasn’t harmful to their ability to compete.  “Not being hired by Defendant is not equivalent to not being able to compete with Defendant.” Direct competition isn’t required, but a bare assertion of overlapping commercial interests wasn’t enough under Lexmark. “Moreover, Plaintiffs make no allegations that their ability to obtain modeling jobs has been affected by the false advertisement.” Even if they were embarrassed from being wrongly affiliated with Ten’s, “they have produced no evidence that this association has damaged their reputation or their ability to compete in any fashion. Without direct competition or comparative advertising, Plaintiffs must show actual injury from the Defendant’s deception and have failed to do so.”

Likewise, even if plaintiffs were in the zone of interests for false advertising, they didn’t show causation. The only alleged injury, the loss of photoshoot income, “was neither caused by consumers withholding money, nor was it a result of consumer deception; the injury resulted from Defendant’s failure to pay for the photos. Defendant was not deceived by its own misleading advertising, and no consumer was hoodwinked into not paying Plaintiffs but instead giving Defendant his or her money.”

False association: material issues existed on likely confusion, despite the above analysis (which also implies lack of proximate causation of harm from false association). The court emphasizes the I-thought-deprecated “internet troika” of mark similarity, product/service relatedness, and marketing channels. The court equated copying photos to similarity of marks, implicitly holding that any image of the plaintiff is their “mark” (consistent with its idea that “recognizability is a measure of the strength of Plaintiffs’ mark, not the similarity”). The court enhanced the effect of its rounding-up in favor of plaintiffs by quoting prior language: “When the alleged infringer knowingly adopts a mark similar to another’s, reviewing courts presume that the defendant can accomplish his purpose: that is, that the public will be deceived.” But that logic depends on the alleged infringer knowing that there was a mark as opposed to a generic image of a pretty girl. On the intent factor specifically, though, it found that there was a factual issue of whether Ten was just looking for pictures of attractive women or intending to imply endorsement.

Relatedness of goods tipped “slightly” in Ten’s favor; they both use social media, but then so does everyone. There was also not enough evidence on consumers’ degree of care. There was a genuine issue of fact as to whether the plaintiffs “are recognizable to members of the community for which Defendant’s advertising is focused.” Plaintiffs submitted a survey “indicating a small percentage of those surveyed felt they recognized Plaintiffs” and of strong social media findings; Ten didn’t have its own survey, though it identified evidence that plaintiffs’ current recognizability is questionable.

Plaintiffs submitted a survey “indicating that approximately 66 percent of interviewees believed that Plaintiffs would likely participate in the strip club activities at Ten’s, 65 percent thought Plaintiffs were in some way affiliated with Ten’s, and 87 percent felt that it was very or somewhat likely that the Plaintiffs were representative of those employees that performed at Ten’s.” But a fact finder could agree with Ten’s criticisms of the survey methods and the clarity of the questions.

Given the existence of many similar cases, Ten sought to have nonmutual defensive collateral estoppel apply to some of the plaintiffs who’d lost similar Lanham Act/right of publicity claims against other defendants. The court declined to do so; it wasn’t bound by the prior cases’ holdings on surveys/strength of the mark, and the survey expert’s testimony has been allowed in some cases albeit excluded in others. And one case involving a cowboy bar wasn’t as offensive a use.

Skinner v. Tuscan, Inc., 2020 WL 5946897, No. CV-18-00319-TUC-RCC (D. Ariz. Oct. 7, 2020)

This opinion refuses to exclude three experts: two of plaintiffs’ (survey and damages) and one of defendant’s (damages).

Plaintiffs’ survey expert, Buncher, used 600 respondents in two groups; “selected” participants, “half of whom were men, resided within a certain radius of Ten’s and had attended strip clubs in the previous two years.” As noted above, the survey found a high degree of confusion over affiliation/sponsorship. Around 15% of participants believed they recognized the plaintiffs (which is still not the same thing as having a trademark, as the Tiger Woods case made clear). The court found that numerous criticisms of the survey went to weight rather than admissibility: The lack of a control group wasn’t fatal, nor was alleged distorting effects of the questions, nor was the absence of a don’t know option/anti-guessing instruction, nor was the mismatch between respondents and Ten’s clientele. Ten noted that Buncher’s survey evidence had been excluded in other similar cases.

Lack of a control group: Buncher testified that “the survey was a communications study designed to evaluate what messages Defendant’s advertisements communicated to the audience. Unlike a causal study, he claims, communications studies do not require a control group.” [Um. All Lanham Act surveys, so defined, would be “communications studies.” Plus, Lanham Act claims are causal claims: the ads caused confusion of a relevant sort. This is just bad reasoning.] Instead, he used a control question that excluded plaintiffs’ images from the ads and asked respondents how the exclusion affected the perception of the ad. This, he claimed, was “consistent with the logic of the Diamond research standard.” [I can hear Prof. Diamond exclaiming in horror from here. Ten is right that this is not a control question; it is instead a biased comparison drawing attention to the absence of a photo that will predictably elicit “oh, the ad is worse without a picture,” and it fails to test whether the difference is from the absence of a picture versus the absence of a picture of plaintiffs, the only relevant legal question. Even a control question that asked about a different ad with a picture of a non-plaintiff would have done better at measuring reactions to the presence of the plaintiffs—which, one might infer, is why Buncher didn’t use a real control.]

Anyway, objections based on an expert’s “methodology [and] survey design ... go to the weight of the survey rather than its admissibility.”  [I teach my students that, while this is often true, a bad enough survey can just be excluded, especially if there are also problems with the respondent selection; I would have put this one in that category, but the court finds each of these decisions to be just fine and so it doesn’t.]

As for the no response/no opinion issue, Buncher testified that the literature supported the conclusion that “permitting these non-responses would actually increase the amount of guessing.” This is the only decent defense of the survey in the bunch; it seems to be a legitimately contested issue.

Ten also pointed out that the survey was flawed “because participants were not given the opportunity to specify Plaintiffs’ true names and could not express uncertainty. Because of this, Defendant claims, no Plaintiff has been truly identified and the survey results cannot measure identifiability.” But the court disagreed because “it is possible to recognize a person without recalling their name. In fact, as the undersigned is learning all too well, with age this occurs more and more frequently.” That went to weight, anyway, as did criticisms of the ambiguity of the survey, e.g. asking “whether the participants felt the Plaintiff enjoyed the lifestyle portrayed by the strip club or participated in Ten’s events.” “ ‘[T]echnical inadequacies’ in a survey, ‘including the format of the questions or the manner in which it was taken, bear on the weight of the evidence, not its admissibility.’ ” [Note: wording is not format or manner.]

Sample: Buncher testified that the survey used 50% women in order to isolate gender to determine whether the message portrayed in the ads differed by sex. “As Defendant did not provide a clientele list to Plaintiffs, it is difficult to say how a more accurate representative sample of Ten’s clientele could be obtained.” Good enough.

Ultimately, Buncher indicated that he created the survey to conform “with the generally accepted standards and procedures in the fielding of surveys set forth by the American Marketing Association, Marketing Research Association, CASRO and ESOMAR” and “[t]he survey was designed to meet the criteria for survey trustworthiness detailed in the Federal Judicial Center’s Manual for Complex Litigation, Fourth.” Plaintiffs showed by a preponderance of the evidence that he used acceptable methods.

The survey was also relevant despite its failure to make respondents identify the plaintiffs. As for prior exclusions of his evidence, “[w]hile the Second Circuit may exclude survey evidence upon a finding that the methodology is lacking, in this circuit questionable methodology goes to the weight, not the admissibility.” And Buncher’s evidence has “been unilaterally permitted in the District of Arizona in similar cases.” [Uniformly?]

Plaintiffs’ damage expert Chamberlin estimated actual damages at an aggregate amount of $435,000. He first calculated each plaintiff’s day rate—how much they would have been paid to produce the photographs used by Ten’s under a hypothetical negotiated contract—and then multiplied the day rate by the number of Ten’s distinct uses of each photograph. [I really don’t understand how that could be a credible methodology. The day rate is about how long it takes the plaintiff to pose for the photo; the number of uses by the defendant is completely independent of that, even though it could plausibly be the basis for a different damages calculation. It’s like multiplying lost work days from an injury by the cost of treating that injury.]  

It was ok to use each plaintiff’s most lucrative contract to estimate the day rates based on his testimony that models get different rates based on the product they’re promoting. More troublingly, it was ok to use an image multiplier even though none of the disclosed modeling contracts use the kind of “usage multiplier” for distinct usages like advertisements, branding, and social media; rather, Defendant states, the contracts reflect a flat rate per job. Plaintiffs [though it seems not Chamberlin himself] argued that “any modeling agent would consider [various different uses] when negotiating a modeling contract.” [OK, but then wouldn’t the contract be use-based rather than day rate-based? That is, the testimony above indicates that the day rate itself would change based on the use. Are multipliers standard in the industry? If Ten is correct that they weren’t used in any of the contracts on which Chamberlin based his opinion, that seems like a problem.]

But “a party’s disagreement with the sources upon which the expert bases his or her conclusions goes to weight of the evidence and not admissibility,” so his choice of high-value contracts didn’t itself render his testimony unreliable. [I wish the court would have addressed the criticism of “multiply day rate by number of uses” specifically. I just … don’t get it.] The fact that other courts have accepted the same criticisms wasn’t dispositive because the Second Circuit, where those courts were, does things differently than the District of Arizona.

Defednant’s expert Einhorn also got in. He calculated the day rate (including a 50% premium for similar risqué photo shoots) and divided it by the number of images likely to be produced in a one-day photo shoot. He subtracted a 20% modeling agent fee and multiplied the final amount by the number of uses of the photograph. He concluded that the total actual damages ranged from $1,990 to $3,980 per plaintiff. Even though he lacked experience with the modeling industry specifically, his professional experience as a forensic economist and as an expert witness in cases involving “intellectual property, media, entertainment, technology, trademarks, publicity rights, and product design” was sufficient. Even though he relied on other models’ modeling contracts, and used an internet search of the phrase “working day rate, models” to support his day rate calculations, among other criticisms, that went only to weight and not admissibility.

AUWCL debate

David Bernstein, Debevoise & Plimpton: we don’t give controlling authority to dictionary meaning or previous generic use. We consider one thing only: consumer perceptions of the term now as generic or brand name. In the past, courts and scholars have said that a generic term can never be brought back from the dead, but there’s no support in history, Lanham Act, or sound public policy, and rejects that.  A TM need not be born, grow old, and be extinguished. Goodyear case itself proves this point. In 1888, Goodyear was considered generic for a process for making rubber. Today, it’s a wellknown trademark for rubber tires, and registered since 1948. That’s good! If consumers grow to perceive a term primarily as a brand name, it should be protected as a mark.

Protection v. enforcement: even if protected as a TM, the scope may be limited. There are numerous limits that prevent anticompetitive enforcement, which is true for formerly generic terms too. Descriptive fair use defense; crowded field doctrine narrowing scope of protection. Injunctions can’t be issued w/o likely confusion. Ds will have strong argument if they’re using other designs, words, or logos. Law, history, and sound TM policy support using consumers’ current perception of a term as a brand name supports TM protection.

Mark McKenna, Notre Dame Law: Consumer understanding makes sense, but consumer understanding as measured by survey should not always determine this. Genericness has never been solely empirical assessment of consumer understanding. It has always included scope. Because the domain name system already provides exclusivity, the value of a TM registration for a is primarily in enforcement against nonidentical variations. It’s fair to be skeptical that any party that litigates all the way to the SCt is doing so to acquire razor thin rights. More importantly, the rule applies to all other and all other arguably generic terms.

Experience teachers that we can expect registrations overenforced, such as which got a registration for despite freecycle being generic. Enforced against FB groups using only “freecycle.” The promise of limits does not materialize, and it’s worse in C&D situations where they wave registrations around.

Good reason to worry that the claimed association w/a particular term is from market exclusivity (patent, or de facto exclusivity generated by the domain name system). Courts will not be able to tell the difference b/t TM meaning and de facto secondary meaning. 33% of respondents said that was a brand name after being taught the difference and passing comprehension tests.

Given these risks of error and overenforcement, the game is not worth the candle, especially since narrow unfair competition remedies would remain available for true abuse of, e.g. in phishing emails.

Jake Linford, Florida University College of Law: Genericity depends on meaning to consumers; an unyielding legal rule that disregards consumer perception. A word is the skin of living thought, and can vary a lot according to time in which it’s used. A narrow word can broaden to cover a category. A word that identifies a category can become more specific. Consumers change—firms can’t force and courts shouldn’t ignore changes in TM meaning.  De facto secondary meaning courts are more comfortable with dictionaries; surveys are better than that 17th century technology. Better tools to show how consumers use marks. Courts shouldn’t refuse to consider evidence from consumer surveys even if dictionaries suggest that the term was once generic.

In the same survey, eTrade was recognized by 2/3 of consumers and should have been allowed even accepting all survey criticisms. Anyway, now we can do better surveysh

Rebecca Tushnet: The key here is whether the game is worth the candle: what is the marginal impact of allowing generic words plus generic tlds when the claimed TM meaning comes from consumer perception of the combined generic terms.

Bond-OST: cheese not known in this country.  If you asked consumers what it means, they’d choose brand name over generic. But that’s not what it means and a survey should not be used to call it a TM. That happens a lot in an internationalizing economy.

TM claimants are not victims of happenstance; they are actors, and often the most intentional actors in this space, and their acts can hurt competitors and competition as well as consumers. This means two things: (1)  risks of overenforcement, (2) the keys to the prison of meaning shift are in their hands. They don’t need to narrow generics and should not be given incentives to try to shift language in this way. (Notably, Jake doesn’t claim that “booking” has narrowed in meaning or that .com has narrowed in meaning.)

A rule allowing resurrection of generic terms is risky to competition. Ale House: constantly suing other Ale Houses arguing that it has nongeneric meaning. It loses those cases under current doctrine but, according to David & Jake, shouldn’t without getting an [expensive] opportunity to introduce new evidence with each new lawsuit.

Think about scope when you think about validity, as we do in other areas like functionality: because .com will be ignored in an infringement inquiry, it should also be ignored for validity.

The defenses aren’t adequate. Summary judgment is often disfavored in confusion cases, making them expensive. For example, putting a generic term in one’s domain name is likely to be pretty risky for descriptive fair use, given “otherwise than as a mark.”

Consumer recognition is not itself trademark meaning. De facto secondary meaning is a doctrine with a purpose that should still guide us: The Supreme Court recognized that people correctly understood that for a long time all shredded wheat came from Nabisco. That expectation should not be translatable into TM. Even assuming is different because of the absence of a patent monopoly, the available tools for identifying trademark meaning won’t be able to reliably tell us whether we’re dealing with expectations around exclusivity, mere recognition, or the kind of trademark meaning that can justify preventing other uses of a term.

Christine Haight Farley, AUWCL: themes: (1) is this about protection or scope; (2) risks of error; (3) tools available to find consumer perception.

Bernstein: This is all about scope. Just b/c it’s hard or some risk of chilling, that’s not enough: we protect descriptive terms all the time, and the exact same issues arise. As a practical matter, there’s likely to be some chilling, but fair use, crowded field doctrine, and increasing willingness to award attorneys’ fees will be among the different tools that will help prevent anticompetitive conduct. There are real issues w/surveys. If people have never heard of the cheese, we need to know only the opinion of people who have heard of the thing—67% of the people knew that it was generic. We also disregarded the answers of the 33% of those who got wrong; even still, the vast majority recognized The “voice of the consumer” is another way of assessing consumer perception—how is media using it? How are consumers using it? Finally, unfair competition remedies don’t do the trick. There are times when you need a TM. You can’t bring a UDRP action based on unfair competition, or takedowns, or customs recordation. Perfect example: suffered a problem where a retail used car company had a big lot with a sign called and they weren’t affiliated at all with

Linford: disclaimer requirement is no remedy at all. Disclaimers may push consumers in precisely the wrong direction—it doesn’t give much relief to mark owners. There is some point to thinking about scope itself. The better place to address that is in the scope stage at litigation and not try to force that at validity.

Mark McKenna: It’s never been true that unfair competition is limited to disclaimers. The Kellogg court looks at size, prominence, font; we can’t say there’s some recent trend on disclaimers b/c there’s no recent trend of using unfair competition as a distinct body of law at all. This was a missed opportunity.

Disagree w/David that we should take solace in Those 33% were people who had already been told the difference and passed the screener test—they just can’t do this task. It’s one thing to take them out of the survey but those people don’t leave the marketplace; it’s still an inaccurate view of what’s going on in the world. The surveys aren’t telling us about the world!

Farley: you interpret the 33% as people not understanding, but maybe they’re reacting to the compound, making them more likely to interpret it as a brand.

McKenna: and that turns out to be true even for people who have already been trained, including on .coms: they can’t reliably distinguish between things that are de facto secondary meaning and things that are trademark meaning. Yes, it is about scope. Debevoise gets to represent the big owners, not the small businesses that just have to fold.

RT: This is as David says a marginal effect, but it’s a marginal worsening not a marginal improvement. One possibility: more focus on TM function as such rather than just non generic capacity.

For, I don’t see why unfair competition would have failed there, it’s neither customs nor UDRP. The UDRP would also accept a registration of URL+design, which initially tried.

The real question is what happens in new industries or new forms of advertising. It's not surprising that freecycle, a newly invented generic, is one place that problems have developed.

Linford: functionality ignores secondary meaning; the reason is that a functional feature is fixed in ways that language is not and we can safely draw a line b/t functional product features and genericness. [I wish I had said something about this, because it strikes me as plainly wrong (or alternatively, design is a language!).]

Bernstein: there is a difference b/t a suvey that looks at genericism and one that looks at secondary meaning. A secondary meaning study says “is there one thing called American Airlines or is there more than one thing called American Airlines?”  But he wants to emphasize that surveys aren’t the be-all and end-all. There are problems w/surveys & understanding. “Voice of the consumer” is something we’ll see more of. We did in have a linguist who talked about actual use, but the survey got a disproportionate amount of attention in argument. Would also support an anti-SLAPP rule for bad claims.

McKenna: that would be welcome, but for a court to find baselessness, the court has to find the claim baseless. If it’s the case that it’s always a question of consumer understanding, and that’s never fixed in time, it’s much harder to find that without a bunch of evidence which itself will be evidence of not-baselessness.

RT: production v. recognition: really huge difference in some cases, including genericity-relevant situations. In the classic Teflon case, one survey found that most consumers could not come up with a name for the pans other than “Teflon,” which sounds like it’s generic. But when you told them “nonstick,” they understood it immediately. So I’m concerned that “voice of the consumer” evidence may mistake production alone for the full scope of consumer understanding of what terms mean.

Bernstein: after Brunetti & Tam, there was already a lot of concern over failure to function, and may accelerate that pattern at the PTO. We’ve seen more failure to function/ornamentality refusals and that makes sense.

McKenna: agree descriptively. Jury is out whether that’s good b/c it’s really undertheorized, I know it when I see it. That’s b/c we’ve subsumed so much of the work of identifying what a TM is into distinctiveness (that’s a long term consequence of folding unfair competition into TM). Having done that we’ve now realized that the Abercrombie spectrum doesn’t quite match what we think TMs are.

Linford: Q of whether they’ll submit surveys to the PTO or wait for an appeal to the district court.

Thursday, October 15, 2020

former customer lacks Lanham Act standing against platform

Gaby’s Bags, LLC v. Mercari, Inc., No. C 20-00734 WHA, 2020 WL 5944431 (N.D. Cal. Oct. 7, 2020)

Mercari promoted its web platform,, for commerce in miscellaneous goods as a venue where “anyone can sell.” Gaby’s opened a Mercari account in reliance on these claims and began selling handbags on Mercari’s platform. It generated nearly $400,000 over a two-year period until Mercari terminated its account for violating its terms of service, which barred “business accounts.”

Gaby’s sued, relevantly for violation of the Lanham Act claim. Although the terms of service were not “so clear cut as to allow judgment on the pleadings,” the court denied a motion to dismiss, but here granted summary judgment on standing grounds.

Gaby’s failed to show that it fell within the zone of interests for Lanham Act false advertising and also failed to show proximate cause. It sustained its complained-of harm as a consumer, not as a competitor. The statement that “anyone can sell” “related to the type of platform Mercari provided, not any other products (e.g., handbags) available on Mercari.”

Separately, Gaby’s failed to show how Mercari’s statement that “anyone can sell” deceived consumers to withhold trade from Gaby’s.


9th Cir.: formal structure/function supplement claims can falsely imply disease claims

Kroessler v. CVS Health Corp., 2020 WL 5987498, --- F.3d ----, No. 19-55671 (9th Cir. Oct. 9, 2020)

Kroessler alleged that CVS glucosamine-based supplements didn’t provide the advertised benefits; the district court dismissed his California claims on preemption grounds. The court of appeals reversed and remanded.

The express marketing message—which CVS concedes—states that CVS’s glucosamine-based supplements maintain or support joint health. Kroessler alleges that the implied marketing message—which CVS contests—states that the supplements ameliorate the cardinal symptoms of arthritis, namely joint pain, discomfort, stiffness, and lack of mobility or flexibility. Kroessler alleges that the supplements do not provide the advertised benefits.

Label claims included “[s]upports flexibility & range of motion,” “help[s] support and maintain the structure of joints,” and “work[s] to support joint comfort while helping to promote joint mobility.” The label also states that the supplement “is not intended to diagnose, treat, cure, or prevent any disease” and that “[i]ndividual results may vary.” Another label stated that the supplement “[n]ourishes cartilage and promotes comfortable joint movement” and “[s]upports cartilage health & joint comfort.”

Kroessler alleged that glucosamine neither supports healthy joint function nor ameliorates joint pain, discomfort, stiffness, or other symptoms of joint disease, and alleged that good studies supported his claims.

The FDCA expressly preempts “state-law requirements for claims about dietary supplements that differ from the FDCA’s requirements.” Private plaintiffs may bring only actions to enforce violations of “state laws imposing requirements identical to those contained in the FDCA.” But: The FDCA requires manufacturers of dietary supplements to ensure that the labels on their products are not “false or misleading in any particular.”

The FDA specifies that a supplement’s label is misleading if, among other things, it “fails to reveal facts that are: (1) Material in light of other representations made or suggested by statement, word, design, device or any combination thereof; or (2) Material with respect to consequences which may result from use of the article under: (i) The conditions prescribed in such labeling or (ii) such conditions of use as are customary or usual.” The FDCA distinguishes between “disease claims” and “structure/function claims”; the latter requires (1) substantiation of truth/nonmisleadingness; (2) prominent disclaimers of FDA evaluation and of lack of disease claims; and (3) avoidance of a disease claim. Appropriate structure/function claims don’t require FDA preapproval.

FDA guidance recognizes that structure/function claims may use general terms such as “strengthen,” “improve,” and “protect,” as long as the claims “do not suggest disease prevention or treatment.” For example, the FDA states that “ ‘joint pain’ is characteristic of arthritis ... [but] [t]he claim ‘helps support cartilage and joint function,’ on the other hand, would be a permissible structure/function claim, because it relates to maintaining normal function rather than treating joint pain.” Supplement makers “can substantiate structure/function claims with evidence of an effect on a small aspect of the related structure/function, rather than with evidence of an effect on the main disease that consumers might associate with a given bodily structure or function.”

Previous case law has found preemption when plaintiffs challenged structure/function claims without sufficient evidence of misleadingness. Moreover, even though the FDCA requires substantiation, California private plaintiffs can’t bring pure lack of substantiation claims. “But just because California law prohibits private plaintiffs from forcing defendants to substantiate their advertising claims, that does not mean California law prohibits those plaintiffs from attacking defendants’ substantiation.” There isn’t preemption “when a plaintiff attempts to hold a defendant to the same substantiation standard required by the FDCA.”

In a footnote, the court pointed out that the FDA said structure/function claims have to be truthful and not misleading, which counsels in favor of adequate substantiation “for each reasonable interpretation of the claims,” consistent with the FTC’s view. The FDA also considers whether, if multiple studies exist, the most reliable of them point in a particular direction, and it considers the totality of the evidence; the court commented that “[t]his implies that a defendant’s substantiation may be evaluated and challenged.”

The district court interpreted past precedent to preempt any state law claim “seeking to challenge the substantiation of a structure/function claim … so long as the manufacturer’s claims are proper structure/function claims.” It thus rejected citations to studies alleging that glucosamine is “ineffective at supporting or benefiting joint health.” This was error. Kroessler alleged that the structure/function claims themselves were false “because scientific studies directly refute them.” To be sure, many of the studies didn’t match the exact terms of the labels, and many of the titles suggested that they narrowly address glucosamine’s effects on osteoarthritis, rather than its wider efficacy in supporting or maintaining joint health. But he alleged that the contents of the studies support the conclusion that glucosamine is “ineffective” at “supporting, maintaining, or benefiting the health of human joints.” If true, CVS’s explicit claims would be false.

“The FDCA does not preempt California false advertising causes of action simply because the challenged label contains a proper structure/function claim; instead, preemption applies only if the plaintiff’s legal claims and factual allegations would hold a defendant to a different ‘substantiation’ standard than the FDCA.”

Ultimately, “the district court erred by greatly expanding the present state of federal preemption jurisprudence under the FDCA, contrary to public policy.” It isn’t enough for a supplement maker to make “proper structure/function claims.” Rather (quoting a treatise), “it is well established that ‘supplement makers can be sued for false claims, and no federal preemption exists under the FDCA either by statute or by implication, since the FDA does not occupy the field and its controls are unaffected by private false advertising suits against supplement makers.’” The FDCA explicitly leaves open a path for non-FDA enforcers against false or misleading statements.

In addition, Kroessler should have been allowed leave to amend to add an “implied disease” claim.  “The FDA recognizes that products marketed as supplements may nevertheless implicitly claim to impact a disease or the signs of symptoms of a disease.” Its definition says that structure/function claims aren’t disease claims “unless the statement implies disease prevention or treatment,” which can depend on context. Implication can come from words or images, and there can be implied disease claims even without anything specific on the label. “We need not delineate what types of evidence courts may consider when evaluating implied disease claims. It is sufficient to state that many other courts have considered extra-label material when identifying implied disease claims and that those considerations are best made by district courts on a case-by-case basis.” In a footnote, the court mentions “factors such as the product’s advertisements, the consumer’s experience with the product, and market research showing consumer’s typical uses of the product.”

The district court erred when it “considered only the objective representations on the label of the glucosamine-based supplement that Kroessler purchased,” and found that no implied disease claim could be stated because the label had only proper structure/function claims.  Kroessler should have been allowed to amend his complaint, even though the district court was correct to hold that the label on its face didn’t present implied disease claims. E.g., “the images on the labels show an elderly couple leisurely walking along a beach, far from suffering with the symptoms of arthritis,” and there weren’t before and after comparisons. But Kroessler might be able to allege extra-label evidence showing that CVS’s glucosamine-based supplements present implied disease claims.

Tuesday, October 06, 2020

another G v. O preview, shorter

IPLAC/CBA (Chicago) panel

Intro by Adam Wolek, Taft Law

Chris Mohr, GC/VP for IP, Software & Information Indus. Ass’n.: Didn’t participate in this case b/c we have members on both sides. Tension b/t © protection of expression and functionality historically protected by patent. Always been true, including in runup to 1976 Act. Sec. 117 added protections for possessors of lawful copies; rental protections came later; provisions for machine repair. 102(b) polices two important boundaries: patent (functionality, e.g. recipes) v. (c) and First Amendment freedom of ideas. If APIs are protected by (c), then you must consider fair use and SCt hasn’t spoken on that for over 25 years, so that’s attracted a lot of amicus focus.

Charles Sanders, outside counsel, Songwriters Guild of America:

When elephants fight, mice get trampled; the mice provide the lifeblood through which the elephants run. There’s a value gap. FAANG are worth billions, even trillions. Meanwhile, 80% of songwriters lost their jobs as staff writers, other ways of relying on creative output for living. Same is true for novelists and journalists. There are many reasons, but unfair and unbalanced marketplace is responsible in large part. This isn’t what the Framers intended. 12 of 13 original colonies had copyright laws [that protected neither journalists nor musicians]. Berne Convention, Human Rights conventions, EU directive recognize cultural and economic value of ©.

We are hoping SCT will not continue trend of imbalance. Of course tech advances aren’t hurting creators—creators love tech advances. It’s predatory market practices of corporations that run tech that are the problem. Silicon Valley has to realize that the ability to make trillions gives it a responsibility to the people who supply the raw materials on which their businesses are built. Spotify is $50 billion on the backs of music creators solely, and they don’t want to pay market royalties. The concept that shareholders dictate what boards must do ignores the fact that if you destroy those who provide you with raw materials to wring short term profits, you destroy the industry long term. Google is trying to stop the CASE Act, despite congressional support. They didn’t want to pay market royalties to the publishers in Google books, and they’re trying to expand fair use around the world. They’ve received billions of DMCA notices, full albums posted, and they say that it’s none of their business. [Um, they do have both Content ID and robust takedown practices.] Infringement isn’t a “permissionless innovation” technique.

Nation v. Harper & Row: © protection was and will always remain the engine of free expression, but 30 years later the 9th Circuit of Silicon Valley [and Hollywood] decide in Lenz that you have to consider fair use before sending a takedown.

[For really interesting writing on Spotify and the techniques used by the labels using their deals with Spotify to cut artists out of the payment loop, I recommend Kristelia Garcia’s excellent work.]

Peter Menell, Berkeley Law: If this were Grokster, he’d be more in line with Sanders.

Baker v. Selden: process/method for accomplishing a task can be protected by patent, not by ©. Idea/expression frames the dividing line, including methods, even as their implementation through code is protectable. Thus while detailed code is protectable potentially, algorithms, function names, and other things necessary to operate a machine are not. When idea & expression merge, © gives way to avoid monopolistic protection of functionality.

A car manufacturer could use a rigid pattern with sculptural qualities as a key to the car, but couldn’t use © to prevent others from using the same cut pattern for a key to start the car. The same is true if the ignition switch is digital and turned on with a haiku: it’s an unprotected purpose. The digital key can be copied as necessary to start the car because it’s functional. Another example: a beautiful cash register, with gears/levers essential to functionality unprotected so far as other cash registers are concerned. Though separable features are protectable—nonmerged implementing code—only utility patent law can protect features necessary to operate the machine; indeed this case began as a © case.

Oracle doesn’t dispute that Google independently implemented the specifications at issue. It did so in a clean room, using no code from Oracle. This is different from the qwerty keyboard b/c Java is complicated—you need 1000s of declarations to implement the API—but that just makes it a very complicated key. Google looked at publicly available declarations to implement them when negotiations failed, like hiring a locksmith to make you a new key when you’re locked out.

RT (shorter version of last week, based on this amicus): At its core, the fair use argument for Google is about why fair use is a multifactor test and why there are different kinds of fair uses.

Fair use has four nonexclusive statutory factors: the purpose of the use, the nature of the accusing work, the amount of the original work taken, and the effect on the market for the original work.

Beginning as usual with factor one: The extent to which a new work has a new meaning, message, or purpose—transformativeness—is often and rightly prioritized in the fair use analysis. But what constitutes transformativeness is often contentious. Here, the new purpose of Google’s new code implementing the declarations was the creation of a new computing environment in which Java programmers could readily create programs on multiple platforms, which required the use of limited portions of highly functional declarations. This type of purpose has been recognized as transformative because of its role in furthering competition and innovation. A computer interface supports the creation of other creative works, and in such situations, it is important to avoid locking in third parties to specific platforms.

Factors two and three of the fair use test help define the boundaries of this type of fair use.

The jury heard evidence that the declarations and classes of the Java SE API were functional, not merely in the way that all computer code performs a function, but specifically in that these particular declarations perform their mini-duties in noncreative ways. The Federal Circuit acknowledged the thinness of the copyright, but it stated that the second factor never has much weight. But the reasons that factor two favored Google are highly relevant to the overall fair use analysis. No matter how much work and how many choices went into producing Java SE, the highly utilitarian nature of declarations means that copyright grants them thin scope at best. This thinner scope of protection naturally leads to a broader scope for fair use, especially in conjunction with factor three.

On factor three, amount, as the jury heard and evidently credited, Google took an amount from Java SE considered in the industry to be reasonable in light of its purpose of developing new, compatible works. In a fair use analysis, it is vitally important to identify the allegedly infringed work or works. As the statute commands, the proper inquiry considers the amount taken “in relation to the copyrighted work as a whole.” As Justin Hughes has written, “If our goal is to create special incentives for the building of houses, we do not necessarily need special incentives for the making of bricks or the mixing of mortar. . . ..”

So what was the work at issue? Both the copyright registrations and industry practice were clear: the work is Java SE, which had about 5 million lines of code; Google’s implementation expressing the declarations at issue totals about 11,500 lines. As a quantitative matter, what was copied was a rounding error.

What’s more, a large number of books have been published that set forth the Java SE API, in whole or in part, including the declarations and class structures. Numerous witnesses, including Sun’s then-CEO who was there when it developed Java, testified that Google behaved according to industry practice: write your own implementing code but APIs are for everyone to use. Contrary to what you might have taken away from the intro, the evidence showed that reimplementing APIs was standard practice in the industry including by Oracle.

In this way, the thinness of the copyright—factor two—interacts with factor three: even if APIs as a whole cross the line into copyrightability, Google should be able to use declarations (and the organization they necessarily reflected) that were reasonably necessary to pursue its legitimate goal of enabling the creation of an environment accessible to Java programmers.

Which leads to factor four: By downplaying the relevance of the nature of the work and the amount taken, the Federal Circuit fell into the well-known trap of circularity: reasoning that, because Oracle could have charged a license fee for this type of use if fair use were unavailable, Oracle therefore suffered cognizable market harm.

A thin copyright for software, including Java SE, provides software copyright owners with meaningful protection against copying of significant amounts of expression, but meaningful protection does not require the expansive rights that the Federal Circuit granted.

Q: what about derivative works/what do we do about market harm?

RT: Traditional, reasonable, or likely to be developed is important constraint, and traditional/reasonable behavior here was something jury heard testimony on. Derivative work right does not extend to every use, especially when the © is by necessity thin b/c of its functionality. Same issue comes up with maps and charts, which have thin ©.

Q about scope of what was taken.

Menell: 11,500 definitions were taken but those are button labels. They’re not lines from a JK Rowling novel but names of functions; “ProtectionDomain,” and “Add,” etc. They had to be included to let someone write a program for Android that would use features that were part of the Java programming environment. They specified actions & their interrelationship. That’s why the definitions circulated freely for programmers, including on Sun/Oracle’s website.

Q: why did so many entities weigh in? If this wasn’t the right way to protect Oracle’s IP, what should it have done?

Mohr: Not going to answer #2, but you see concern from open source companies worried about when they use a variety of APIs in their language that they will step into a liability minefield if it’s affirmed; other software companies want to license like Oracle wants. The other side of it is about avoiding collateral damage—MPAA and Copyright Alliance, library and user groups. When the SCt says thing about fair use, it’s so infrequent that it sticks for a while. Language in the Nation case, about acquiring rightful access to the work. That required some cleanup and Judge Leval has a long lecture about exactly this point. Thus there’s concern about how this decision plays out in other areas if the API is found to be protectable.

Q: is this a good case to provide guidance?

RT: when the SCt encounters a multifactor test it almost never leaves things less confusing. Star Athletica at least went from seven contradictory tests to only one internally contradictory test, but that wasn’t even a multifactor test.

Sanders: we want the SCt to issue a narrow decision and not speak carelessly in a way that could haunt the creative industries for decades.

Q: predictions?

Menell: not good at those. Breyer will be interested in Google’s position, but SCt doesn’t see itself as clarifying law or dealing w/fragmentation of law; in IP they have an instinct for the capillary. They get caught up in issues of stare decisis and what they call textualism [this is why I’m worried about what they’ll do with the jury questions]. 102(b) is about as clear as you can get, and it’s based on one of the greatest cases ever, Baker v. Selden, but the Fed Cir didn’t see it that way. Asking for supplemental briefing is also a signal—the Court may not want to overrule a jury finding lightly. There was a big trial, at the Fed Cir’s direction. This could sidestep the (c)ability issues and that might be the result.


Friday, October 02, 2020

Google v. Oracle argument preview

Chicago-Kent College of Law 2020 Supreme Court IP Review: Google v. Oracle

Copyrightability issue: Pam Samuelson: Supreme Court has 2x decided that functionality defeats ©ability for certain words/symbols when they constitute a system/method for accomplishing a useful result. Paris v. Heximer, a claim of infringement over D’s copying of a symbol system for ID’ing different types of buildings for fire insurance maps. Baker v. Selden too. Didn’t matter how original symbols/words were or what other choices were possible at the time of creation. Promotes progress of knowledge by allowing authors to build on existing knowledge and promotes useful arts by preventing © from being misused to give protection to patent-like inventions that didn’t satisfy patent standards. Dozens of cases on how shorthand systems, tax record systems, games are unprotectable even when embodied in a © work. Codified in §102(b). Codification came in order to deal w/fears about protecting computer programs as literary works, per legislative history; Fed. Cir. instead ignored every word in §102(b) except “idea” and ignored legis. history of concern for overprotection.

Fed Cir never identified the relevant work of authorship or asked what the scope of protection available to the work in light of Baker & its codification in §102(b). The relevant work is Java SE, which has the API and numerous other elements of the Java technologies created by Sun & its engineers. The Q is whether the specific declarations Google interspersed in 15 million lines of code are w/in the scope of protection for Java SE. Judge Alsup made findings of fact that these were methods/systems, consistent w/9th Cir. law which has twice held that program interfaces that enable interoperability are unprotectable procedures under 102(b). Sun—developer of Java—participated in an organizational brief in support of Borland in Lotus v. Borland, committing to proposition that interfaces that enable interoperability should be treated as a system.

Interfaces are fundamentally distinct from implementations: everyone has to write their own reimplementations, but reimplementations themselves are legitimate, which promotes interoperability and competition.

Merger doctrine leads to the same result. Once you decide to adopt a certain system, that constrains potential implementations. Many cases involving 102(b) thus use merger as an alternative argument.

Anne Capella (Weil): Programmer; represented computer science professionals to talk about the underlying technical aspects. APIs are tools for app developers to write applications. They are the audience for the APIs. Try to make them easy to use and intuitive. Also explained: what is declaring code? May look like a collection of random words, but there are a lot of subjective decisions that have to go into designing those and that are not completely dictated by function. There is original expression. Like a haiku: there are constraints on the format, but also subjective decisionmaking and creativity. API designer that would design declaring and implementation code would be balancing functionality, flexibility, simplicity and trying to make those attractive to app developers, requiring selection of which function to present, how to organize. Not just a filing cabinet but hierarchies that are important as to their locations. There are good APIs and APIs that are more attractive than others; Java was known for being well designed and intuitive which made it attractive to app developers. Better APIs have better expressions for the same function, which are not dictated by the functions themselves.

You can also write your own programs to provide the same functionality that wouldn’t have to use the same name, organization, design choices for what would be in the declaring code. [Which seems a lot like games and shorthand systems.]

Interoperability: there was no technical need to use the declaring code. Programs written for Java SE can’t be used on Android w/o modification and vice versa. Not all of the APIs are available in both. There wasn’t a need to use them to create a new Java platform. Google could have written its own declaring code but wanted the intuitive code and wanted to attract programmers to their own platform. Programmers want to protect expression in declaring code. If it’s protected, people might try to hold interfaces proprietary, but Java had a license that Google chose not to use.]

RT: (based on this amicus)

At its core, the fair use argument for Google is about why fair use is a multifactor test and why there are different kinds of fair uses. I will touch on deference to the jury though I have plenty of other thoughts on that for the question period.

Fair use has four nonexclusive statutory factors: the purpose of the use, the nature of the accusing work, the amount of the original work taken, and the effect on the market for the original work.

Beginning as usual with factor one: The extent to which a new work has a new meaning, message, or purpose—transformativeness—is often and rightly prioritized in the fair use analysis. But what constitutes transformativeness is often contentious. Here, the new purpose of Google’s new code implementing the declarations was the creation of a new computing environment in which Java programmers could readily create programs on multiple platforms, which required the use of limited portions of highly functional declarations. This “technical interchange,” is a specific kind of creativity-promoting transformativeness.  It’s about the programmers, not whether the program is “run once run anywhere,” which is a red herring. This type of purpose has been recognized as transformative because of its role in furthering competition and innovation. A computer interface supports the creation of other creative works, and in such situations, it is important to avoid locking in third parties to specific platforms.

By contrast, the Federal Circuit reasoned that factor one weighed against Google because the intrinsic purpose of the parties’ declarations was the same. But that reasoning creates a per se rule against copying any interface elements or code in a computer program, and fails to appreciate the interaction of factors two and three with transformativeness. The Federal Circuit’s simplistic rationale suggests that a law review article that quoted another law review article for support would infringe the earlier article, because they both had the same “intrinsic purpose.” Without assessing the role of the copied material in the parties’ works, this is a mistake.

Factors two and three of the fair use test help define the boundaries of technical interchange fair use. The highly functional nature of the copied declarations and the limited amount of the overall Java SE work used, consistent with industry practices, support the conclusion that Google’s use was a transformative use that served copyright’s basic goal of encouraging creation of new works.

As to the nature of the original work: The jury heard evidence that the declarations and classes of the Java SE API were functional, not merely in the way that all computer code performs a function, but specifically in that these particular declarations perform their mini-duties in noncreative ways. The Federal Circuit acknowledged the thinness of the copyright, but it failed to put this factor in proper context and thus to give it actual weight, instead reasoning that the second factor did not matter to fair use determinations generally, a proposition for which it cited only cases involving highly creative works like songs. But there are four factors because various fair uses can be fair for different reasons, and the factors may thus differ in relevance across types of cases.

Here, the reasons that factor two favored Google are highly relevant to the overall fair use analysis. No matter how much work and how many choices went into producing Java SE, the highly utilitarian nature of declarations means that copyright grants them thin scope at best. This thinner scope of protection naturally leads to a broader scope for fair use, especially in conjunction with factor three.

On factor three, amount, the question is not whether, in judicial hindsight, the defendant took more than absolutely necessary, but whether the amount taken was “reasonable in relation to the purpose of the copying.” As the jury heard and evidently credited, Google took an amount from Java SE considered in the industry to be reasonable in light of its purpose of developing new, compatible works.

One aspect of the Federal Circuit’s error was its emphasis on the 37 packages that Google copied in “entirety.” In a fair use analysis, it is vitally important to identify the allegedly infringed work or works. As the statute commands, the proper inquiry considers the amount taken “in relation to the copyrighted work as a whole.” Without careful attention to the boundaries of works, especially unfamiliar works such as software, plaintiffs can manipulate their claims to artificially increase the relative size of what was taken. As Justin Hughes has written, “If our goal is to create special incentives for the building of houses, we do not necessarily need special incentives for the making of bricks or the mixing of mortar. . . ..”

So what was the work at issue? Both the copyright registrations and industry practice were clear: the work is Java SE, which had about 5 million lines of code; Android was three times bigger. Google’s implementation expressing the declarations at issue totals about 11,500 lines. As a quantitative matter, what was copied was a rounding error. Yet the Federal Circuit characterized Google as “taking a copyrighted work verbatim,” as if the fractional part were the whole.

As the district court detailed, the jury could have found that Google used highly limited portions of Java SE’s APIs as part of an innovative mobile device platform. The jury heard testimony that portions of Java SE that Google reimplemented preserved consistency of use within the larger Java developer community. What’s more, a large number of books have been published that set forth the Java SE API, in whole or in part, including the declarations and class structures. Numerous witnesses, including Sun’s then-CEO who was there when it developed Java, testified that Google behaved according to industry practice: write your own implementing code but APIs are for everyone to use.

Where others were freely copying large parts or the entirety of the API, the jury could have found that Google’s far more limited copying strongly favored Google. In this way, the thinness of the copyright—factor two—interacts with factor three: even if APIs as a whole cross the line into copyrightability, Google should be able to use declarations (and the organization they necessarily reflected) that were reasonably necessary to pursue its legitimate goal of enabling the creation of an environment accessible to Java programmers.

Which leads to factor four: By downplaying the relevance of the nature of the work and the amount taken, the Federal Circuit fell into the well-known trap of circularity: reasoning that, because Oracle could have charged a license fee for this type of use if fair use were unavailable, Oracle therefore suffered cognizable market harm.

Because such claims can be made for any fair use, which by definition is not paid for, this reasoning cannot distinguish fair and unfair uses. In some situations involving traditional creative works with “thick” copyrights, experience and normative commitments to free speech break the circle: the markets for criticism, educational uses, and parody are not legitimate even if a specific copyright owner evinces a willingness to license particular instances.

When it comes to software, the benefits of interoperability and allowing third parties to avoid lock-in to particular platforms similarly explain why licensing interface reimplementation in newly written code is likewise not a legitimate copyright market.  Here, factors two and three can help identify when crediting claimed market harm would be inconsistent with copyright’s overall balance between past and future creators.

In reversing the jury’s verdict, the Federal Circuit wrongly relied on the circular claim that Google could have taken a license for the precise use it made and that this possibility established market harm. But the evidence did not establish harm to the market for “the work,” Java SE, or even the existence of a market for a limited number of highly functional declarations.

A thin copyright for software, including Java SE, provides software copyright owners with meaningful protection against copying of significant amounts of expression, but meaningful protection does not require the expansive rights that the Federal Circuit granted.

Elizabeth Brannen, Stris & Maher: Nothing is free. [Other than this webinar?]

What Google copied was expression that was popular with Java developers and that cost lots of resources to create. Those packages covered 6000 separate methods that Google didn’t have to write itself. Those packages are in executable form on countless Android devices.

Interfaces v implementation is a false dichotomy. We need to look at what was copied and was it expression. The haiku is a good analogy. Best interfaces are concise and intuitive, which are hallmarks of good writing in any context. Google copied b/c 6 million programmers knew and liked the Java interfaces to call the prewritten methods. It copied what it did because of the expressive value of that code. Most computer code is zeros and ones. Google copied what’s meaningful to developers, the expressive part. It didn’t copy for technical reasons. Wrote its own versions for many Android declarations. Copied not b/c of technical impossibility but b/c didn’t want to require Java developers to learn new calls, so it helped itself to the ones they already knew and liked. Google made a lucrative business decision. To call the © thin is to say functional works should receive second-class protection. [We have thin and thick © for a reason—of course it’s about scope. It’s not second-class to rece] Google didn’t transform. It’s not fair to replace and supersede the original.

Transformative use changes something about the message/content—parody, commentary. Google killed Java SE for mobile. There was unrebutted evidence that they designed Android to be incompatible w/Java. No court has found fair use where there was an incompatible software product. [Connectix found fair use where there wasn’t full compatibility, as here.] Google took a shortcut and made money. Fair use would undermine the incentive to create new works. People only take licenses because they have to. Expressive aspects of code need © to incentivize investment and making code available under unrestrictive licensing terms.

Ned Snow, South Carolina Law: The only Q the Supreme Court will care about: In the late 1700s, did the issue of fair use determine whether a defendant had infringed the legal right of copyright? The test isn’t which court was the first to decide, equity or law. Not whether fair use more frequently arose in a court of low or equity; that depends on what remedy is sought (injunctive relief or damages). Also not whether a ct of equity would have granted a D’s request for a court of law. Not whether a court of equity states that judges should detrmine the issue. He argues that two cases determine the answer. [This is no way to run a railroad, which is not Prof. Snow’s fault at all, but his explication trying to extract fair use from a pre-modern system convinces me of the disutility of the enterprise.]

Sayre v. Moore, Lord Mansfield, fourteen lines of legal analysis. Mansfield recognizes value in correcting errors in faulty sea charts. Charges the jury to find whether D corrected errors or servilely copying: value and purpose of D’s use. Points to allegation that alterations are “very material” which points to transformation. Also encourages jury to consider whether D’s work enables or worsens navigation, which points to nature of work.  If you think so, he tells the jury, you find for the D; if you find mere servile imitation, you should find for P. Shows that jury determined the infringement of the legal right. Neither Mansfield nor jury was concerned with independent creation, or fact/expression dichotomy. Lockean labor theory/no reason to think that factual works had less protection than expressive works. Even if we inferred that, the inference would support using fair use which considers fact/expression in factor two.

Next question: what is the review standard for mixed questions of law and fact. Descriptive argument: what’s going on? Take a raft of case-specific historical facts, balances them, and produces a result. That’s pretty factual sounding, per J. Kagan in US Bank v. Village at Lakeridge.  When an issue falls b/t pristine legal standard and simple historical fact, standard of reivew reflects which judicial actor is best positioned; juries have a variety of life experience, suggesting deference to them, though judges can issue general principles.

William Jay, Goodwin Procter: Bottom line: accepting Google’s argument in its strongest form, fair use is a four factor test and not only is each factor grounded in the facts, but the balancing is itself a factual question. That’s the key assertion here. If the Ct agreed, it would circumscribe JMOL review, but would also make summary judgment all but impossible even on an undisputed factual record. Skeptical the Court will go there in its strongest form. There was a jury trial! So this is a case about the appellate standard of review. Oracle does say there was no right to a jury trial anyway, so the 7th Amendment is irrelevant, but at the end of the day the Fed Cir was reviewing a JMOL verdict after a jury trial. Everyone pretty much agrees that the standard of review is in a sense de novo, but de novo review of what? Oracle’s position is grounded in Harper & Row, which was a bench trial; J. O’Connor said that the appellate court didn’t need to remand but could conclude no fair use as a matter of law.

How should that work here? At a minimum, jury’s job is to find historical facts: how much of the work was taken? Those historical facts need to be taken in the light most favorable to the prevailing party. But many Qs are Qs of degree, along with the final balancing of factors. Is that final balancing factual? Harper & Row didn’t remand for a new finding, but instead said that it was important to have historical facts determined and then the reviewing court could make its own determination. The remainder of the analysis is the province of the courts in a non-bench trial case.

If Google is right, there’s no work for judges to do after jury verdict, b/c it’s always possible that some kind of weighing favors the verdict. But the Court likely won’t reach that; Oracle agreed to a jury trial and there’s no need to decide how much of a right to a jury trial there is to decide the standard for JNOV.

Tomas Gomez-Arostegui, Lewis & Clark Law: 7th Amendment test is historical, turning on English authorities circa 1791. But Ct often not clear about what precisely it seeks from the record. Analogues work but how analogous they need to be is unclear. Feltner for example didn’t deal w/statutory damages. We’re looking for “established practice” but neither of those words are defined—Feltner cited two cases in which juries awarded nominal damages.

© litigation before 1800 was mostly in equity; ordinary damages were difficult to prove and even penalties were hard to obtain; there was no provision for discovery in law courts and P & D couldn’t even testify. Equity was easier! Chancellor could determine law and facts. Equity wasn’t obligated to send © suits to law. If Chancery did push a case to law, it was typically for a sticky legal interpretation Q. If they did go to law, there were lots of issues that were sent to the jury.

What about fair abridgement? 18th-c analogue to fair use? Oracle stresses it’s an equitable doctrine, w/no right to jury, and also argues that it’s not the same as fair use. Fair abridgement raised in equity from 1680s through 18th c, but no case at law before 1800 of which he was aware adjudicated fair abridgement. That doesn’t make it a purely equitable doctrine, esp. since it came from a statute that would apply equally at law and equity. One of the  most visible fair abridgement cases in 1870s, Lord Hardwick, influential, said that the doctrine was part of the Statute of Anne.  Fair abridgement = create a new book. Not an excuse: if fair abridgement, then no infringement. Amount taken; effect on market; added as developed. Not modern fair use but close in some respects. Considered this to be a Q of fact, though difficult for a common jury. He preferred to adjudicate the issue in chancery, aided by experts appointed by parties, but didn’t rule no jury could hear it. Partisan expert testimony became more common in courts of law just as he was leaving. He specifically said that his job was to interpret the statute in equity the same way it would be interpreted at law.

Elephant in the room: no known fair abridgement cases at law before 1800. So what do we do? In 1791, nothing prevented a P from raising the issue in law and having a jury determine it, since it came from the statute, was a component of the infringement analysis, and had been called an issue of fact. Maybe the law courts would have rejected Lord Hardwick’s interpretation, but they didn’t reject it in 1807 when they got the chance.

Discussion period

Samuelson: Haiku? Popularity? It’s not popularity, but use of your learning as a programmer v. having to learn a new language or dialect in order to write for the platform.

Compatibility: there are programs in Java that run on Android and vice versa. It’s true they’re not fully interoperable but that’s not necessary. Oracle is arguing that you have to copy the whole thing for interoperability and that’s not a sound analysis. The 83 software engineers’ brief is a really good explanation.

Capella: New languages are common; programmers are used to switching. That’s where a lot of innovation can come from. APIs are a tool/part of the overall system: would be more relevant to look at APIs themselves. [which is why these are highly functional!]

Samuelson: Fed Cir rejects six other appellate decisions that say interfaces are uncopyrightable to the extent they facilitate/enable interoperability. Fed Cir didn’t just distinguish those decisions as being about “true” compatibility (and Connectix is about replacing the other guy’s platform and is only partly compatible)—it’s a rejection of every other decision except Jaslow.

Capella: There’s different types of interfaces. APIs are tools that programmer can use. Interfaces to platforms are very different types. Declaring code isn’t just for APIs, but even for internal modules that can be called. Slippery slope.

Brannen: A lot of cases interpret 102(b) to codify idea/expression. Is there any way to give effect to the words of the statute w/o having the exception swallow the rule. Worried about second class citizenship for software. 102(b): should you just ask yourself, did they copy expression that had merged?

Samuelson: It’s correct that the Fed Cir said you can’t take 102(b) completely literally b/c it would prevent all (c) for computer programs. But it’s not correct to say that all the words in that statutory provision but “idea” should be ignored. There is a clean distinction b/t things that are the method/system versus explanation/expression. Not everything creative in a work is protectable by (c) law.

Q: size Q: 11,500 lines/less than .5% of code in Java and .1% in

RT: look at the work registered. APIs are tools; the whole work, Java SE, is protectable but parts of it aren’t.

Brannen: Qualitatively: they could have written it differently? They didn’t b/c what they copied was popular w/the developer base they wanted it to court

RT: That’s not what Fed Cir said; they said it was qualitatively important b/c Google took it which was circular/inherently anti-fair use.

Actually, some things are free: 107 says so! It even says that “multiple copies for classroom use” are examples of fair use, not just criticism.

Popularity is one way to say it; utility is another. QWERTY keyboard isn’t popular because people like the expression; it’s popular b/c it makes transferring between keyboards easy. If I can read your shorthand b/c we both trained on the same system, that’s different from both of us liking Harry Potter.

Cappella: it was popular because it was elegant and people used it.

Samuelson: if you read the lower court opinion, you can see that what this was about was that Java was originally developed for enterprise systems. Smartphone was going to be a different kind of computing environment; needed new APIs, but for things like comparing two numbers and seeing which was larger, those things needed to be done on both environments and should be kept together.

Brannen: there was expression; troubling if they could pick what they wanted w/o paying and kill Java for mobile.

Q: does the SCt need to understand all this to resolve it? Google describes it as functional and Oracle as expressive.

Samuelson: that’s one reason many of us are nervous about this case. By comparison w/Lotus v Borland, this is more technically complicated.  Some of the big players really want the copyrightability issue decided so they’re doing the best they can to explain what’s at stake. Only Breyer has followed the issues; would expect him to try to take the lead on that.

Capella: Q of who should evaluate this—it’s important to look at it from the audience’s viewpoint, which is the app developers. Trying to evaluate expressivity in a foreign language, which is difficult.

RT: There was testimony that both the trial judge and the jury relied on about what professionals thought about protectability—which is one reason this case may be tempting for the Court to see as a standard of review case. This could be another Inwood v. Ives, which is an important TM case but at the Court is decided as standard of review. And the Court may be better at getting that right, given what it knows, than at evaluating the technical details of ©ability [or, as Jay suggests, at evaluating the history].

Brennan: does gov’t’s position matter?

Jay: Maybe, but has been more pro-© claimant in a number of cases than the Court has been. The fact the gov’t thinks it’s © eligible is not going to be institutionally persuasive.

Samuelson: SG’s position in Georgia v. PublicResource was rejected; doesn’t think it’s hugely impactful.

Q: standard of review/7th Amendment?

Gomez-Arogstegui: The appellate standard of review is de novo; that’s easy. The rule 50(b) standard the trial court is supposed to apply is also easy—it’s deferential. What’s tricky is that 50(b) assumes that an issue of fact has been properly assigned to the jury, which is in doubt given Harper & Row.  You can’t call fair use a mixed Q of fact and law if it turns out you have a constitutional right to all issues relating to fair use—would have to either overrule Harper & Row or distinguish it as involving a bench trial.

Snow: Harper & Row is the final twist in this unusual case. History until H&R rarely involved SJ in fair use cases; 9th Circuit starts to in the early 1980s, and H&R then produces Fisher v. Dees in which 9th Cir. says it’s pure law. 2d Circuit stays reluctant, but in 1990s everyone starts granting SJ, including Second Circuit in Castle Rock (Sotomayor). Key Q: Does the court want to go back to when fair use couldn’t be decided on SJ? May seem like lesser evil v. wading into the tech, but then all these cases have to go to trial. It’s a bit silly to have so much turn on 14 sentences from hundreds of years ago in one case. But it could be good to clarify that Harper & Row’s language was referring to a bench trial; jury verdicts post Harper & Row are still reviewed on a deferential standard.

Jay: review of jury verdicts is deferential, but as to what? If a pure legal Q surrounds why the issue goes to the jury, everyone agrees that in the JNOV decision the judge can reexamine the legal Q and decide it wasn’t legally sufficient to go to the jury. Might be able to avoid judge/jury issue if they resolve the law/fact issue in certain ways; not all mixed Qs are alike.

Snow: we can’t dodge the constitutional issue if the inferences from the facts have historically been sent to the jury and so history shows there’s a right to have the jury make the inferences.

Samuelson: most unsatisfactory about the fair use reasoning: it said there are only 2 facts we’re willing to recognize—whether there was good/bad faith and whether it was more functional than expression. If you look at Alsup’s opinion, there were a number of other factual issues where the jury was presented with evidence on the parties’ positions. If the SCt goes in the fair use direction, hopes they’ll broaden the set of issues considered “fact” issues. How you can possibly say market harm is a purely legal issue is a Q!

RT: slightly different take b/c there are areas of normative/legal concern where, for example, we just don’t consider the © owner’s claim that it was willing to license parodies as evidence of market harm. So for each factor there can be normative components and factual components.

Josh Sarnoff: hard to reach fair use w/o finding protectability of what was copied [and yet courts do it regularly by using thinness of © in the fair use factors; that’s treated an amicus I filed in the pending 2d Cir. Warhol case]. US Bank is fundamentally incoherent: the mixed Q is “does the law apply to these facts?” But giving the overall fair use Q to juries makes no sense at all. The Court could explain this properly, though it wouldn’t solve “what conduct is fair or not fair?” The Q of what conduct is illegal under the statute—that’s a judge question.

Snow: thinks it’s more like negligence/reasonability of conduct.

Sarnoff: thinks it’s more like obviousness in patent; among other things was always a statutory question and not a common law question.

Q re arguments

Jay: J. Thomas has historically written IP opinions but not asked questions; the new format allows him to ask questions that can be agenda-setting, while J. Breyer will have a time limit which is also new.

Q: there were 60 amicus briefs filed, many focused on innovation/software industry. We’ve seen Court punt on policy issues to Congress and say it was just applying the statute. Will the Court engage w/arguments about innovation?

Samuelson: thinks Court will care about industry structure, but it’s hard to get attention for one particular brief if there are so many. Clerks will try to identify a relatively small number of briefs for Justices to read. Microsoft/IBM briefs are likely to get attention, and computer science briefs on both sides. Comparison to eBay v. MercExchange, where innovation was something the Court took seriously.

Brennan: even if they don’t address it explicitly, hopefully they’re thinking about it given the outpouring of concern. Some of the companies on Google’s side have shifted to a nonproprietary model where they give software to people for “free,” but remember that nothing’s really free. Proprietary software still matters and we shouldn’t destroy that model.

Q: For Capella: how does she think about the patent/© interface for software, as a former software programmer? Patent trolls have been a problem, but © lasts so long.

A: Original expression should be protected; there wasn’t a lot of open source when she was practicing, but even open source involves tradeoffs depending on the license. You’re not getting something for free. If you use and build on innovation of others, many licenses have obligation to give back. Some companies have chosen to go that direction. Have to abide by the law.