An Antitrust Framework for False Advertising, out now

Michael A. Carrier & Rebecca Tushnet, An Antitrust Framework for False Advertising, 106 Iowa L. Rev. 1841 (2021)

From the introduction:

 

Federal law presumes that false advertising harms competition. Federal law also presumes that false advertising is harmless or even helpful to competition. Contradiction is not unknown to the law, of course. This contradiction, though, is acute. For not only are both the regimes at issue designed to protect competition, but they are both enforced by the same agency: the Federal Trade Commission (“FTC”), which targets “unfair competition” through antitrust and consumer protection enforcement.

Anticompetitive conduct, the focus of antitrust law, increases price and reduces quality. False advertising, the focus of much consumer protection law, deceives consumers and distorts markets. Both types of conduct harm consumers. Despite this overlap, nearly all courts have dismissed private antitrust claims based on false advertising. They have concluded that the conduct cannot violate antitrust law. Or they have presumed that the harm is de minimis. This makes no sense. As the Supreme Court has long established, “false or misleading advertising has an anticompetitive effect.”

Courts’ concerns stem from the reasonable notion that not every instance of false advertising violates antitrust law. And (usually implicitly) they have worried about applying antitrust’s robust remedies of treble damages and attorneys’ fees. These courts fear that antitrust liability will disincentivize companies from engaging in advertising that is merely questionable and that might provide useful information to some consumers. But false advertising law preserves a robust space for puffery and debatable opinions; overdeterrence concerns don’t justify analysis that is inconsistent with both the economics and psychology of advertising and that, at a minimum, essentially makes it impossible to bring a successful antitrust case based on false advertising. Nor do the Lanham Act’s remedies for false advertising fully address harms to competition. Reasoning that conduct that is already illegal on other grounds need not concern antitrust law ignores the multiple other contexts in which breaches of non-antitrust laws are considered to be potential antitrust violations.

We begin by introducing the laws of antitrust and false advertising, explaining the regimes’ objectives and methods. We then survey the antitrust caselaw, critiquing three approaches courts considering false advertising claims have taken. Finally, we introduce our antitrust framework for false advertising claims. At the heart of the framework is a presumption that monopolists engaging in false advertising violate antitrust law, with that presumption rebuttable if the defendant can show that the false advertising was ineffective. The framework also applies to cases of attempted monopolization by incorporating factors (falsity, materiality, and harm) inherent in false advertising law, along with competition-centered issues on targeting new market entrants and entrenching barriers to entry. To illustrate how our framework should work, we apply it to an important area: advertising for biosimilars, which are pharmaceutical products with a substantial and growing role in treating numerous diseases.

False advertising that exacerbates monopoly power has been dismissed by antitrust law for too long. This Essay seeks to resolve the contradiction in the law by showing how false advertising threatens the proper functioning of markets.

Reading list: Discrimination is Unfair: Interpreting UDA(A)P to Prohibit Discrimination

Stephen Hayes & Kali Schellenberg, Discrimination is "Unfair": Interpreting UDA(A)P to Prohibit Discrimination

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3832022

This Article explores a theory that discrimination is a type of “unfair” practice covered by federal and state laws prohibiting unfair, deceptive (and sometimes abusive) acts and practices (“UDA(A)Ps”). An “unfair” practice is defined by statute as something “(1) likely to cause substantial injury to consumers; (2) which is not reasonably avoidable; and (3) that is not outweighed by countervailing benefits to consumers or competition.” Discrimination fits neatly within this statutory language, and its incorporation as an unfair practice is consistent with the purposes and traditional guardrails around application of UDA(A)P law, as well as general principles in civil rights jurisprudence

 

Applying the “unfairness-discrimination” theory would fill important gaps in the existing patchwork of antidiscrimination laws, which currently leave large swaths of the economy unregulated and unprotected from a variety of discriminatory practices, including those with a disparate impact. By taking seriously the plain language of UDA(A)P law, federal entities like the CFPB and FTC, state attorneys general and agencies, and in some cases private individuals, could make great strides towards ensuring that entire markets and industries are not free to discriminate.

Reading list: The Kids Don’t Stand a Chance: Unfair and Deceptive Advertising in Children’s Apps

 Mary Kate Fernandez,  The Kids Don’t Stand a Chance: Unfair and Deceptive Advertising in Children’s Apps, 66 Loy. L. Rev. 211 (2020)

Intro: 

The University of Michigan released a startling study (“the Michigan Study”) in October 2018 which unveiled that “manipulative and disruptive” advertisements are deceptively built into phone applications (“apps”) designed for children. The results of this study led members of the United States Senate and several public interest groups to petition the Federal Trade Commission (“FTC”) to investigate apps marketed specifically to children. The current federal administrative regime for regulating deceptive advertising targeted at children, however, falls far short of what is necessary to enable the FTC or any other federal agency to respond to the revelations in the Michigan Study with meaningful protections for children.

A striking passage on host selling:

This advertising practice, illegal during children’s television programming, is fundamentally unfair to child consumers. Yet, multiple apps designed for children heavily employ host-selling.

 For example, in PAW Patrol: Air and Sea Adventures, the commercial characters are not only the object of gameplay but also have interactions with the user. Characters make faces indicating feelings of disappointment when the user does not click on locked items that require payment. App characters also show disapproval when the player is unable to accomplish a certain mission because he did not make a required purchase. The Michigan Study stated that such tactics “could be characterized as social pressure or validation” and “may also lead children to feel an emotionally charged need to make purchases.” In Doctor Kids, the main character bursts into tears if the player does not make an inapp  purchase. In Barbie Magical Fashion, Barbie narrates and specifically encourages users to use “locked” items that require making a purchase. 

Most problematic of the host-selling examples was Strawberry Shortcake Puppy Palace. In this app, Strawberry Shortcake instructs users to choose a puppy to play with, but only one out of eight puppies can be played with for free. Every other puppy is locked. If the child selects a locked puppy, Strawberry Shortcake says, “Oops. To play with [name of puppy], you’ll need to get the puppy pack. Or you can unlock everything and get the best deal.” Throughout the game, Strawberry Shortcake has thought bubbles. Some tell the user that the puppy is sad, and the user should give the puppy what it wants. But oftentimes the item that the puppy “wants” is locked, and when the child selects it, Strawberry Shortcake tells the child to buy “the activities pack to keep the puppy happy.”

Misinformation, Disinformation, and Media Literacy in a Less-Centralized Social Media Universe

Knight First Amendment Institute, Reimagine the Internet 

Great panel today; more to come the rest of the week and they will shortly post the video. 

Francesca Tripodi (UNC) shared her amazing research about how conservatives use textual interpretation techniques to interpret information and reject journalistic interventions. Conservatives then use and trust Google’s top results, believing that Google top results reflect reality, which seems a bit contradictory to me. The problem is that our keywords are ideological, so Google searches confirm one’s worldview: searching for “illegal aliens” gets you right-wing sites that confirm what they already believe, while “undocumented workers” produces very different results. And it’s not just Google—DuckDuckGo is better for your privacy but returns the same type of results based on ideological keywords. Google suggestions create the possibility of parallel internets that are invisible to outsiders. “Data void”: limited/no content is available, so it’s easy to coordinate around keywords to guarantee that future searches are directed to content that includes these terms—this is what happened to “crisis actor.” Search engines are not designed to guide us through existential crises or challenge our beliefs—the notion of relevance is subjective and idiosyncratic as well as unstable and exploitable. Knowing/understanding audience concerns and amplifying key phrases allows conservative media to drive users to search where their beliefs will be reinforced. Like Council of Conservative Citizens reaching Dylann Root in his searches for black on white crime. They encourage viewers to “do the research” while highlighting phrases that lead to the preferred sources. So Google started autofilling “Russian collusion” with “delusion,” a phrase promoted by Roger Stone. In impeachment proceedings, Rep. Nunes used his opening remarks to repeat a few names/phrases and tell us that we should be paying attention to those—which, when searched in Google, linked to Fox, Daily Caller, and even more right-wing sources. Urged constituents to do their own research. Nelly Ohr: a perfect data void/litmus test. She used to work for Fusion GPS and is part of a conspiracy theory about Russia investigation—the search exists in a vacuum and was curated by conservatives as a dogwhistle about election fraud.

What can we do? How can Google fix this? It’s important to stop thinking about a fix and focusing on Google. Misinformation is not a bug in the code but a sociological issue. The only way to circumvent misinformation traps is knowing the kinds of Qs people seek answers to, knowing how they interpret information, and knowing how political actors exploit those things. [Easy-peasy!]

Barbara Fister, Gustavus Adolphus College: In practice, students are treated as information consumers who need to be educated to examine claims. At universities, they are often treated as needing help finding information in the walled garden of the library, focusing on information that will help them satisfy professors. Libraries have felt compelled to emulate Google and create single-search boxes. But the results don’t help you navigate the results, so it’s no wonder that students come up with workarounds. Students have trouble getting themselves situated. They adopt a strategy and stick to it; look for “safe” sources; often don’t really care about the topic because it’s been assigned. Follow the news, but don’t trust it; don’t think college does much to prepare them to ask questions of their own. Feel both indignation and resignation about algorithmic systems invading their privacy. Students feel that they’re in a very different place than professors; they’re used to different sources. “We grew up with untrustworthy sources and it’s drilled into us you need to do the research because it can’t be trusted.” Students are already being taught “media literacy” but more of the same won’t necessarily help, because people who believe misinformation are actually quite “media literate” in that they understand how these systems work and are good at manipulating them. Qanons understand how media/info systems work; they interpret media messages critically; they feel passion for discovery and enjoy the research b/c they feel like they’re saving the world. Alternate authority structure: trust yourself and trust Trump/“the Plan.”

What is to be done? Deep-seated epistemological differences: if we can’t agree on how we know what’s true, hard to see common ground. So what’s next? Recognize the importance of learning to trust, not just to be skeptical; get at why to trust rather than what to trust—saying “peer-reviewed research” doesn’t help; explore underlying values of knowledge systems, institutions, and practices such as journalism’s values; frame learning about info systems as education for democracy: you have a role to play; you should have an ethics of what it is that you will share. Peer-to-peer learning: students are learning from each other how to protect privacy etc. Students are concerned about their grandparents and about their younger siblings—interested in helping other age groups understand information.

Ethan Zuckerman, moderator.

Fister: Further reading: Information Literacy in the Age of Algorithms—what students are interested in that doesn’t come up in class: knowing that Google works by using the words we use rather than as a neutral broker would be very important! Alison J. Head (January 5, 2016), Staying smart: How today’s graduates continue to learn once they complete college; Project Information Literacy Research Institute, Alison J. Head, John Wihbey, P. Takis Metaxas, Margy MacMillan, and Dan Cohen (October 16, 2018), How Students Engage with News: Five Takeaways for Educators, Journalists, and Librarians, Project Information Literacy Research Institute.

Tripodi: People would say “I don’t trust the news” and she’d ask where they got candidate info; they say “Google,” without acknowledging that Google is an aggregator of news/taking content directly from Wikipedia. We’re not in a new time of epistemological fissures or polarization—we have always been in a place of big differences in how we seek truth, what are sources of knowledge, how we validate knowledge. What’s changed: we can connect from further away and we have an immediate ability to determine what we think is right. Focus on keywords is something that work on filter bubbles hasn’t yet considered—it’s not the tech that keeps us in the filter bubbles; we are the starting point for that closure.

Zuckerman: the people who find hate speech on YouTube are the people with hateful racial attitudes—so the polarization argument may not work the way we thought.

Fister: the power to amplify and segment market messages is way more pronounced now. But it was deliberate fissure with the rise of Fox News, talk radio. Amplified by platforms that like this content b/c controversy drives attention. Far right white supremacists have always been good at tech—used film early, used radio; they are persuasion machines designed to sell stuff. They are earning money while using the platforms, which has changed the velocity/amplitude of the most hateful speech.

Tripodi: There may be ways to figure out the keywords that resonate with people’s deep stories, to find the data voids, by doing more ethnographic work. The narrative that conservatism is being silenced: trying to reshape objectivity as “equal balance.” Rebranding of objective to mean “both sides.” If your return doesn’t show equal weight, it’s somehow flawed/biased/manipulated [at least if your side isn’t dominant]—that’s leveraged in the rightwing media ecosystem to say “don’t use these platforms, use these curated platforms that won’t ‘suppress’ you.” That’s complicating notions of media literacy, which sometimes uses “look for both sides” as an indicator of bias. Propaganda campaigns are now leveraging the idea of “lateral reading”—looking for relevant phrases around the target of interest in a new window—these systems are being deliberately exploited. Thinking about keyword curation may help: you could put a bunch of “Nelly Ohr” all over mainstream coverage of the impeachment. Old fashioned SEO manipulation in a new light.

Fister: discussion of the tautology underneath this: you trust the sources you trust b/c you trust them. People create self-reinforcing webs of trust by consulting multiple sources of the same bent. Students are also interested in talking about how algorithms work, including for sentencing people to prison; tie that to traditional values/understanding of how we make knowledge.

Tripodi: in response to comment on similar dynamic on doctor/patient relations: when people search “autism treatment” they are more likely to see non-evidence-based treatments, because doctors with evidence-based treatments are not using YouTube. Has a student who is trying to create a lexicon for doctors to tell people “research these treatments”—you can’t tell them not to search, but you can give them phrases that will return good quality content. Also important to make good quality content for evidence-based treatments. People are looking on YT; have to be there.

Zuckerman: that requires auditing the platform; YT is not that hard to audit, but FB is when it directs you to content.

 

Today's IP artifact: Cuervo bottle with dripping red wax seal

 This decision remains one of my least favorite, but perhaps I will nonetheless get a bottle of Maker's Mark to pose beside it.

Tootsie Pups

 Acquired from a seller before the inevitable shutoff. The rare occasion where I see the harm story, since Tootsie Pops theoretically contain chocolate, which one would not want to give a dog.

Does Gordon v. Drape really mean what it says about explicit misleadingness?

Testing Gordon v. Drape with the paintings of Tom Sachs, some of which reproduce famous product labels in their entirety (or nearly so). The introduction to the coffee table book I just bought says,

From Reese’s Peanut Butter Cups and Snickers bars to images of American flags and Air Force One, Sachs takes familiar brands, symbols, and commodities as his subjects. He represents these iconic images in his deliberately imperfect and conspicuously handmade aesthetic, wanting us to see the uneven brushstrokes and roughly hewn surfaces that distinguish his “handmade paintings.” By drawing attention to how his objects are made, he deconstructs the formidable and complex systems that powerful logos and brands represent. In Tom’s words, “When I look at these paintings, to me they all speak about power. There is power in logos and there is power in good advertising.”

On Artsy, the description says:

Critiquing the speed and regularity with which a materialistic society replaces commodities, Sachs uses both a profusion of commercial icons in his work and builds his own functioning versions of consumer goods using re-purposed items, such as the glossy, black Prada Toilet (1997), a workable toilet constructed out of Prada’s up-market packaging, with the company’s logo prominently displayed on the sculpture. Sachs’s works are emphatically process-oriented, an expression of the artist’s DIY spirit, divulging even the flaws of his complex and labor-intensive projects.

So, are his works explicitly misleading? See below for some examples:

 

Note the detail on this painting:

If you think the "Tom Sachs" signature on the side helps, what about this one?

Reading list: race and GIs

Reading list:

Mathilde Cohen, The Whiteness of French Food: Law, Race, and Eating Culture in France (forthcoming in French Politics, Culture, and Society, 2021)

English Abstract:

Food is fundamental to French identity. So too is the denial of structural racism and racial identity. Both tenets are central to the nation’s self-definition, making them difficult, yet all the more important to think about together. This article purports to identify a form of French food Whiteness (blanchité alimentaire), that is, the use of food and eating practices to reify and reinforce Whiteness as the dominant racial identity. To do so, it develops four case studies of how law elevates a fiction of homogeneous French/White food as superior and normative at the expense of alternative ways of eating and their eaters—the law of geographical indications, school lunches, citizenship, and cultural heritage.

Really interesting perspective on GIs; if you believe that they were born in sin (racism/colonialism), do you think that they can be redeemed?

Amicus brief in rehearing petition for Warhol v. Goldsmith

 With Christine Farley and Pam Samuelson: our brief addresses the effect of Google v. Oracle, which the Second Circuit has explicitly asked for more briefing about. I would expect other amicus interest, including on Goldsmith's side, given the stakes of whether Gv.O is a software case or a fair use case at heart.

Nominative fair use (maybe) and Amazon

 I've recently seen two examples of the following phenomenon: off of Amazon, an advertiser uses images of its product with another well-known product, and they do go together, but on Amazon, the advertising is different. Anyone know if there's an Amazon policy driving this? For those circuits that require the advertiser to have a good reason to refer to the trademark owner in order to justify nominative fair use, the Amazon ads would seem to show it's possible to advertise without using the other mark. Special kudos to the Angelus paint for using an all-red shoe on Amazon, which isn’t a “use” of the Louboutin mark according to the 2d Circuit. Clever!

Angelus shoe paint off Amazon (and from some third party sellers on Amazon): 

Amazon product image:

Ka'Chava off Amazon (note Ball jars used to display product): 

Ka'Chava on Amazon:

DoorDash invites users to get their grub on

Screenshot of mobile search results for "Grubhub." Note also "Great Grubs" in the DoorDash blurb. I don't think it's unlawful, but it's kind of tacky:

2020-2021 Georgetown Law Technology Review Student Writing Competition

 From the site:

2020-2021 TOPIC

Students are invited to submit papers addressing a legal or public policy question relating to emerging and sustained challenges to legal and political structures created by online platforms, digital services, and other emerging technologies. 

Example topics include: questions relating to the adequacy of federal and state agency regulatory and adjudication structures to address current and emerging technologies; the scope of current agency jurisdiction over digital technologies and practices; whether current legal structures effectively protect consumers and vulnerable populations. Students are invited to submit papers that examine proposed or newly-enacted laws related to these questions, or to propose novel legal structures to engage with current gaps. 

Preference will be given to papers that are relevant to current legal and public policy debates around technology or present an original perspective.

PRIZE

Up to three winners will be selected, with a First Prize of $4,000, a Second Prize of $2,000, and a Third Prize of $1,000.

Winning papers may be selected for publication in The Georgetown Law Technology Review.

COMPETITION RULES

Papers will be accepted from students enrolled at any ABA-accredited law school in the United States during the 2020-2021 academic year. The paper must be the author’s own work, although students may incorporate feedback received as part of an academic course or supervised writing project.

The paper must not have been published or committed for publication in another journal; The Georgetown Law Technology Review must have the first right of publication for any winning essay.

Papers will be evaluated based on thoroughness of research and analysis, relevance to the competition topic, relevance to current legal and/ or public policy debates, originality of thought, and clarity of expression.

Papers must be 4,000-7,500 words (not including footnotes) and be submitted in Times New Roman Size 12 font, double spaced. Footnotes must conform to the 20th edition of The Bluebook: A Uniform System of Citation. Papers must be in English.

COMPETITION DEADLINE

The deadline for submissions is 11:59 p.m. EST on May 31, 2021.

Papers must be submitted via email to TechInstitute@law.georgetown.edu with the email subject line “Writing Competition”.

The file must be submitted in Word format, with the file named in the format “LastName_FirstName_WritingCompetition”.

Papers must be preceded by a cover page (included in the same Word file) containing the following information:

• Full Name of Author

• Name of ABA-accredited Law School

• Graduation Year

• Email Address

• Phone Number

• Word Count

• The following affirmation: “I affirm that this paper is an original work of scholarship authored by me. The paper (or any variation thereof authored by me) has not been published, or committed for publication, in any other publication. If this paper is selected as a winner, I grant The Georgetown Law Technology Review the right of first publication of the paper. I have read and agree to the Competition Rules set forth at www.georgetowntech.org/writingcompetition.”

Entrant’s name and law school shall only appear on the cover page. Papers shall contain no identifying information.

NOTIFICATION OF WINNER

The winner will be notified by phone or email on or before August 31, 2021.

FINE PRINT

The judges’ decisions are final.

Winners will be required to submit a completed W-9, affidavit of eligibility, tax acknowledgment and liability release for tax purposes as a condition to receiving the cash prize. All forms must be completed and returned via email within 14 days of receipt, or prizes will be considered forfeited and another winner may be named.

The authors of papers that are selected for publication will be required to sign an agreement warranting the entry’s originality and granting the GLTR first publication rights.

If a potential winner does not respond within 14 days of the first attempt to contact him or her, or if the contact is returned as non-deliverable, the potential winner forfeits all rights to be named as a winner or receive a prize, and an alternate winner may be chosen.

Entrants may submit multiple entries per year. Jointly authored papers are eligible, provided all authors meet the eligibility requirements for the competition. If a winning paper has more than one author, the prize will be split equally among the co-authors.

Winners will be solely responsible for all federal, state, local or other taxes, if any such taxes apply. Cash prizes will only be paid in US Dollars by way of check or bank transfer. Any fees that may be charged from time to time by the relevant bank will be deducted from the prize money.

Georgetown Law’s Institute for Technology Law & Policy, the Georgetown Technology Law Review and BSA | The Software Alliance (together “the Organizers”) are not responsible for incorrect or inaccurate entry information, late, lost or misdirected entries, or for computer errors or technical failures, including by reason of any bug, computer virus or other failure.

In the unlikely event that no entries are of sufficient quality to merit an award, the Organizers reserve the right not to award any prizes.

The Writing Competition is governed by U.S. law and all relevant federal, state and local rules and regulations apply. By entering, all entrants agree that the competition shall be governed by the laws of the District of Columbia and that the courts of the District of Columbia shall have exclusive jurisdiction for any dispute or litigation relating to or arising from the competition. Void where prohibited by law.

By participating, each entrant agrees to the rules of the Writing Competition and the decisions of the Organizers and releases, discharges and holds harmless the Organizers and each of their respective officers, directors, members, employees, independent contractors, agents, representatives, successors and assigns from any and all liability whatsoever in connection with the Writing Competition, including without limitation legal claims, costs, injuries, loss or damages, demands or actions of any kind.

This Writing Competition may be cancelled, modified or terminated for any reason.

Questions?

Email TechInstitute@law.georgetown.edu

The 4th Circuit makes trademark use more contextual

Combe Inc. v. Dr. August Wolff Gmbh & Co. Kg Arzneimittel, No. 19-1674 (4^th Cir. Apr. 13, 2021)

Not only is this case a good demonstration that courts are willing to give broad rights to marks based on similarities in descriptive elements (here the VAGI- formative in VAGISIL for preparations for use in the vagina), it also has relevance for the current discussion of “use as a mark.” As Grace McLaughlin argues in her recent Fanciful Failures, there are situations where putting something in the trademark “spot” for a product doesn’t necessarily mean that consumers will understand it as a mark. Perhaps surprisingly, the district court and the court of appeals endorse precisely that view here:

Further, the district court appropriately gave little weight to generic Vagicaine products sold by big-box retailers because consumers do not associate them “as a source-identifying brand,” but instead recognize them as the “generic product seek[ing] to imitate VAGISIL’s anti-itch cream.”

ICANN working group report on TM rights protection mechanisms in all gTLDs now open for comment

Link to report and comment mechanisms. The Working Group did not recommend expanding trademark claimants' preemptive/pre-registration notice rights to include broad matching or algorithmically generated close variants (misses a match by one letter, for example), but I expect that's still on the agenda for some proponents. One of the things that we found out in the process was that the most-searched-for "trademarks," of the set entered into the database maintained for the purpose of simplifying rights claims, were, in descending order: smart, forex, hotel, one, love, cloud, nyc, london, abc, luxury. That doesn't make the database all junk, but it does highlight that new rights protection mechanisms are always also new pathways to abusive claims, and those tradeoffs should be confronted head-on rather than assumed not to exist. The fact that the database is secret doesn't help (though much of its content could be inferred from registration attempts that receive claims notices).

Michael Jordan's ROP claims against ads in the SI special issue on him

 I just heard this discussed on a GALA (Global Advertising Lawyers Alliance, recommended for international updates) event, and fortuitously I'd decided to get my hands on a copy of the actual special issue. One thing I hadn't realized from the cases is that there were only three ads in the entire special issue. The carmaker must feel good about its choices, but I have to say that if I were the other advertisers I might feel betrayed by SI and the supposed special sponsorship opportunity offered. It must be a percentage-of-ads-triggering-lawsuits record!

cover

ad #1, inside front cover

ad #2, opposite table of contents

ad #3, inside back cover