Intelligent Design as false advertising

Kitzmiller v. Dover Area School District, -- F. Supp. 2d -- (M.D. Pa. 2005): with all the reporting on this case, I thought I might offer specific commentary on Kitzmiller as a case about false representations.

The court’s analysis of the statement required to be read to Dover high school biology students, or “disclaimer,” resembled inquiries into other arguably misleading statements. One notable feature of the case, in contrast to commercial misrepresentation cases, is that the objective reasonable observer standard used to evaluate whether an establishment violation has occurred assumes an awful lot more knowledge and analytic sophistication than even the most rigorous reasonable consumer standard. I would argue that consumer protection law has the better of the argument – if we’re going to have an endorsement test for establishment clause violations, it should look to ordinary, median observers rather than observers who’ve undertaken extensive political, social and religious inquiries into the situation. Be that as it may, in this case every iota of information known to an observer pointed to the religious intent behind the disclaimer.

The disclaimer begins: “The Pennsylvania Academic Standards require students to learn about Darwin's Theory of Evolution and eventually to take a standardized test of which evolution is a part.” The court points out that the standards require students to learn a lot of things, only one of which is singled out for special attention. This is a type of framing; like an ad that calls attention to a product feature, it is a message that this feature of the curriculum matters more than other aspects. Here, the message is “we’d rather not teach you this, but we have to do so.”

The disclaimer continues: “Because Darwin's Theory is a theory, it continues to be tested as new evidence is discovered. The Theory is not a fact. Gaps in the Theory exist for which there is [sic] no evidence. A theory is defined as a well-tested explanation that unifies a broad range of observations.” The court pointed out that this set of statements singles out evolution, unlike everything else on the curriculum, as “just a theory,” and plays on the popular definition of “theory” as something unproven. This is akin to implicit falsity, or perhaps falsity by necessary implication: Though “theory” has several possible meanings, by singling out evolution alone for designation as theory, the disclaimer conveys that it is untrustworthy, unlike other aspects of the biology course. The reference to “gaps,” without any suggestion that other scientific theories have gaps, further solidifies this intended meaning. (Compare also the statement “Gaps in the Theory exist for which there is no evidence” to the proposal of one science teacher, recruited to draft the disclaimer, to say “there are gaps in Darwin’s theory for which there is yet no evidence” (emphasis added); the teacher also proposed to say that there was a “significant amount of evidence” supporting evolution, and a draft description of evolution as the “dominant” scientific theory was eliminated. These changes also supported the court’s conclusion that there was a deliberate attempt to denigrate evolution by comparison to supernatural explanations).

The message about evolution’s exceptional status is even more blatant because, when science teachers refused to read the disclaimer to their classes, administrators came in especially to do so. And the administrators then told students not to discuss the matter further and not to ask the teacher questions, which is surely more effective than buzz marketing in getting students to pay attention. As if that weren’t enough to ensure that the message was received as highly salient, the school also sent home an opt-out form so that students could leave while the disclaimer was read, which itself served to highlight the intended message.

The court accepts plaintiffs’ expert’s characterization of the statements in the disclaimer as misleading about the scientific status of evolutionary theory: evolution is not on particularly shaky ground; to the contrary, it is widely accepted, and students hearing the disclaimer will be confused about the level of support for evolution. (I note that all the experts were experts in their substantive fields, whether biology or theology; there does not appear to have been expert testimony on message reception, though the various professors did have pedagogical experience.) Is there an analogy to materiality here, the way “ceremonial deism” on our money, proclamations and buildings has been treated as too trivial to constitute an establishment clause violation? If there is, the confusion is probably still material, precisely because so much attention has been paid to the disclaimer – deliberate dissemination of a message and foregrounding it in advertising is often held to create a presumption of materiality.

But wait, there’s more to the disclaimer: “Intelligent Design is an explanation of the origin of life that differs from Darwin's view. The reference book, Of Pandas and People, is available for students who might be interested in gaining an understanding of what Intelligent Design actually involves.” This follows a rather traditional advertising model: problem (evolution is just a theory), followed by solution (ID is an explanation). As the court notes, the disclaimer contrasts a shaky “theory”/“view” with an “explanation,” with its implication of greater coherence and objectivity. There’s no disclaimer about the unconfirmed status of ID. Like the comparison in Tambrands, Inc. v. Warner-Lambert Co., 673 F.Supp. 1190 (S.D.N.Y. 1987), between a “one-step” pregnancy test and a “multi-step” test that used different standards to count steps for each test, the disclaimer doesn’t even offer evolution a level playing field. The juxtaposition confirms that the disclaimer operates to disparage evolution in favor of religious ideas.

The final paragraph of the disclaimer is: “With respect to any theory, students are encouraged to keep an open mind. The school leaves the discussion of the Origins of Life to individual students and their families. As a Standards-driven district, class instruction focuses upon preparing students to achieve proficiency on Standards-based assessments.”

Again, the court sees a problem of framing: Though the disclaimer encourages an open mind, the only alternative to evolution offered is ID, which the court finds to be inherently religious. One wonders whether the Flying Spaghetti Monster is an alternative the Dover board wanted students to consider.

A deeper question is to what extent the definition of “science” is up for debate, or whether it is an already-settled concept against which claims to scientific validity, like ID’s, must be tested. Advertising law tends to reject the idea that individual market participants can take non-trademark terms and make them mean something idiosyncratic – one example is “low tar,” a concept I’ll take up when I get around to blogging last week’s big false advertising case rejecting consumer fraud claims against tobacco companies. But if meaning is a matter of social consensus, as ID’s Wedge Strategy insists, then a sufficiently successful campaign should be able to redefine a term, even if purists object. For an ordinary language example, consider the change in the pronouns for an unknown person from “him/his” to “their” over the last generation. The question whether a single company can take a generic term (Thermos, Singer, Opry) out of the language by adding enough secondary meaning may be conceptually the same as whether anti-evolution forces can redefine science so that it doesn’t require natural explanations for natural phenomena, as they’ve done in Kansas.

One final point: the decision emphatically finds one particular belief “utterly false,” to wit, the belief that commitment to the truth of evolution conflicts with commitment to the existence of a divine being. That’s not exactly the same as a belief that shark cartilage cures cancer, but rejecting that belief is necessary to defeat the claim that there’s no neutral baseline – that teaching evolution is as hostile to religion as teaching ID is hostile to those who believe that science can explain natural phenomena without reference to an interventionist God.

The history of a geographical indication

In light of persistent international debates over whether and how nations should protect geographical indications, I found Kolleen M. Guy, When Champagne Became French: Wine and the Making of a National Identity (Johns Hopkins 2003), a useful read. Guy tells the story of the nineteenth- and early twentieth-century conflicts over the definition of champagne and, in part, the definition of Frenchness as something connected to but distinct from the different parts of France.

The concept of terroir, something like the soul of the soil, that supposedly gives certain foodstuffs their unique qualities was much up for debate during the period, whereas currently the EU and France in particular give unquestioned legal protection to terms like “champagne.” Guy points out that, although often understood as a fight between capital and labor, the at-times violent disputes between vine-growers and winemakers in the Champagne region were more complicated than that. Vine-growers in the core areas of the Marne were opposed both to bottlers who wanted to use grapes from other places to make champagne and to fellow vine-growers in those other places who benefited from that practice. Meanwhile, Marne bottlers also argued that the designation champagne should be legally protected, but they wanted to limit the definition to sparkling wine bottled in the area, regardless of the source of grapes.

Guy’s story thus highlights champagne as an industrial product – not just because it requires a second processing to add the famous bubbles, but also because its production and consumption were profoundly affected by changes in transportation and modern advertising that helped make champagne the beverage of celebration and of Frenchness. The book is marred by repetitions of phrases, as if a series of journal articles had been simply stitched together, though I don’t think these chapters were in fact published elsewhere. Nonetheless, I learned a fair amount about the social construction of terroir, a concept that supposedly represents a natural and immutable connection among an area of land, its inhabitants, and the products they produce.

False statements about trademark license are actionable

Enesco Group Inc. v. Jim Shore Designs, Inc., 2005 WL 3334436 (N.D. Ill.), concerns false advertising claims related to a trademark license. Jim Shore designs the Heartland collection of figurines, garden ornaments and other decorative goods for Enesco; they generally feature quilt-like styles on Americana themes cast in resin. Enesco alleges that it is the exclusive licensee for all Jim Shore designs except bolt fabric. Recently, under a license from Jim Shore, defendant Sunshine Products, Inc. began offering Jim Shore ties, scarves and jewelry. Sunshine then entered into an agreement with defendant Department 56, Inc. (D56) to distribute its Shore products. Enesco alleges that D56 has been disseminating marketing materials that give the impression that D56 has the exclusive right to sell the Jim Shore line of scarves, neckties and jewelry. Enesco further alleges that at trade shows and in sales calls, D56 has been making representations to Enesco customers that gives the impression that D56 is an exclusive licensee of Jim Shore and that Enesco no longer has exclusive rights under the Agreement – in fact, D56 has been telling members of the trade that it will in the future be expanding the Shore line (so to speak) to include items such as Shore figurines, on an exclusive basis.

Some of Enesco’s allegations sound in trademark (or copyright), raising questions of the extent to which an exclusive licensee can assert rights against a licensor. In particular, Enesco complains of Sunshine products that are derivative works of Enesco products. (The upper left image in this post is an Enesco figurine; upper right is a Sunshine cat pin.) Moreover, Enesco has received customer inquiries asking whether Enesco still has the Shore line and customer comments about the products’ similarity. In addition, Enesco believes that the inferior quality of the Sunshine products will harm Enesco’s investment in the brand.

The district court’s opinion does not deal with the trademark/licensing aspects of the case (there is also a breach of contract claim against Shore and a tortious interference with contract claim against Sunshine). The opinion concerns D56’s motion to dismiss Enesco’s state and federal false advertising claims. The court rejects D56’s argument that the alleged oral statements by its employees aren’t sufficient to constitute “advertising or promotion” under the Lanham Act. Though other cases have held that scattered oral statements by employees aren't enough, broad-based statements made to trade show customers are more like print advertising than like isolated person-to-person sales pitches and thus suffice to trigger the Lanham Act.

Probably the most important feature of the case is that it adds to the small but entertaining body of case law interpeting the Lanham Act’s prohibition on misrepresenting the “nature, characteristics, [or] qualities” of a party’s “commercial activities,” a term added in the 1988 revision. The court holds that Enesco’s allegations state a claim for false advertising because licensee status relates to the parties’ commercial activities. (The court does not analyze whether variations in the wording of Illinois’s Uniform Deceptive Trade Practice Act and Consumer Fraud and Deceptive Business Practices Act could lead to a different result; I always wonder why people bring state-law claims in cases like this, and the defendant probably should have made some argument.)

The most notable “commercial activities” case is Proctor & Gamble Co. v. Haugen, 222 F.3d 1262 (10th Cir. 2000), which held that false statements that P&G’s profits were donated to the church of Satan were actionable under 43(a). The harm to P&G’s goodwill was obvious even if the claim didn’t concern the objective characteristics of P&G’s goods or services, and it was the kind of harm with which Congress was concerned, according to the Haugen court.

I’ve long despised the claim of Nike and various of its amici in Nike v. Kasky that consumer protection law is properly only concerned with physical characteristics of goods and services, rather than their conditions of production. That position offers a repulsive view of the consumer as a selfish, short-term-oriented being, not to mention it’s empirically obtuse as to things consumers care about. Douglas Kysar’s excellent article on the product/process distinction goes into the empirical and moral shortcomings of the product/process distinction in detail, but one thing Kysar doesn’t mention is that the 1988 revision of the Lanham Act shows a congressional recognition in the false advertising context that what a company stands for can be as or more important to consumers as whether its shoes are made of plastic or leather.

What Roe v. Wade Should Have Said

This is actually a post about copyright and attribution, no matter what the title might have made you think. Recently, NYU Press published What Roe v. Wade Should Have Said, edited by Jack Balkin. The idea, also expressed in Balkin's earlier volume What Brown v. Board of Education Should Have Said, is to have current scholars, using only materials available at the time of decision, write opinions that improve upon or at least add insight to the original opinions. My father, Mark Tushnet, chose as his contribution a slightly edited version of Justice Douglas's concurrence.

This is unproblematic as a matter of copyright law, though only because the U.S., somewhat unusually, denies copyright to federal government works. It's not plagiarism, because he says he's using Douglas's concurrence as his contribution, and even if he didn't say so, no one reading the book could be unaware of its origin. But in what sense is it, then, "his contribution"? I think it's a very important one: By selecting Douglas's words and arguments, he makes the claim that the Justices then did the best they could have done, being who they were when they were. In a sense, he argues against Balkin's project from within. David Garrow's review treats this as a serious and worthy part of the book. It's yet another illustration of how using someone else's words, copying their expression, can serve important communicative and persuasive functions.

(On the substantive point, I read a decent essay on the question of "What Would Buffy Do?" by Jason Kawal in Buffy the Vampire Slayer and Philosophy: Fear and Trembling in Sunnydale. Kawal's argument, illustrated by that question, is that counterfactuals of this sort always involve picking a level of generality which itself largely determines the answer. That is, if I'm locked in a room and ask "What would Buffy do?" the answer is "Kick the door down." But that's because Buffy has powers unavailable to me. If the question is "What would Buffy do if she had my powers, knowledge, habits and inclinations?" we are essentially asking "What would I do?" Balkin's project asks participants to act like Justices, but Justices with thirty years of post-Roe experience, and my father's contribution suggests that asking Justice Balkin to produce an opinion in 2005 will never produce results comparable to asking Justice Blackmun to produce one in 1973. So it may be a cool way to package a book of essays about Roe, but it's not really a historical project in the sense the title suggests.)

Using correct password doesn't violate DMCA

The second district court to weigh in on the subject has held that a person who obtains a correct username and password to access a website, even if unauthorized, does not violate the DMCA's anticircumvention prohibition because using a password does not "circumvent" the password control. The case is Egilman v. Keller & Heckman, No. 2004-0876 (D.D.C. Nov. 10, 2005). What's particularly interesting is the extension of the previous case, I.M.S. Inquiry Mgmt. Sys., Ltd. v. Berkshire Info. Sys., Inc., 307 F. Supp. 2d 521 (S.D.N.Y. 2004), which involved a third party who wrongfully disclosed a legitimate username and password. Here, by contrast, there's no evidence that a third party disclosed the information; rather, Egilman's login was easily guessed.

I only wish someone would explain to me how this is different from obtaining the "secret handshake" in StreamBox or the CSS key in the DeCSS case. In those cases too, the code used is in fact the correct, actual key -- otherwise it wouldn't work. (At the very least, I want a better explanation of the difference between "decrypting" and, say, "guessing." What if the password wasn't guessed on the first try? What if it took ten tries? What distinguishes that from a basic computerized password attack? Cf. the great 1980s movie Wargames, in which Matthew Broderick's character substitutes a social-engineering attack, logging in as the computer's creator, for his slower programmed assault on what he thinks is a gaming computer.)

Congratulations to Jeffrey P. Cunard of Debevoise & Plimpton, who helped represent Keller & Heckman.

Federal court interprets new limits on Cal. false advertising law

Anunziato v. eMachines, Inc., --- F.Supp.2d ----, 2005 WL 3263892 (C.D. Cal.), is a putative class action alleging that certain eMachines laptops are defective and thus overheat. Along with warranty claims, plaintiff asserts California law false advertising claims. The case offered the district court an opportunity to interpret the newly enacted limit on standing under California’s Unfair Competition Law and False Advertising Law, and it ruled that, although plaintiffs must now suffer harm to have standing, they need not show reliance on the allegedly false statements.

California’s UCL/FAL was amended in one of California’s many voter propositions to address the problem of lawyers filing lawsuits on behalf of people who hadn’t suffered any real harm in order to collect a large fee. The new statutory language allows only claims brought "by any person who has suffered an injury in fact and has lost money or property as a result of such unfair competition." The court found that, though the “as a result of” language in the Consumer Legal Remedies Act has been held to impose a reliance requirement, the UCL/FAL offer public-oriented remedies (such as injunctive relief) rather than actual or punitive damages as the CLRA allows, and thus the amendment should not be interpreted to add a reliance requirement. Reliance and causation are imporant when the plaintiff seeks money damages, but not so important when the plaintiff is enforcing the public interest in truth and fairness in other ways. The court also found significant the fact that the language of the amending proposition made no mention of a reliance requirement, only a harm requirement. (The court’s other distinction, that the CLRA has a list of banned practices while the UCL/FAL are broad bans on unfair, untrue or misleading claims, seems to me one without a difference.)

Moreover, a reliance requirement would limit plaintiffs too much, since the court could see many ways in which consumer deceptions could be harmful without traditional reliance. For example: “One common form of UCL or FAL claim is a ‘short weight’ or ‘short count’ claim. For example, a box of cookies may indicate that it weighs sixteen ounces and contains twenty-four cookies, but actually be short. Even in this day of increased consumer awareness, not every consumer reads every label. If actual reliance were required, a consumer who did not read the label and rely on the count and weight representations would be barred from proceeding under the UCL or the FAL because he or she could not claim reliance on the representation in making his or her purchase. Yet the consumer would be harmed as a result of the falsity of the representation.” Worse, many Californians are functionally illiterate or not literate in English; a reliance requirement might leave them without redress. “The goal of consumer protection is not advanced by eliminating large segments of the public from coverage under the UCL or the FAL where they suffer actual harm merely because they were inattentive or for one reason or another lacked the language skills to appreciate the particular unfair or false representation in issue.”

My comment: it seems that most of what the court fears could be solved with a sufficiently broad understanding of reliance – that is, “I don’t think about this claim that the box has 24 cookies specifically, but I assume that it’s honest; I rely generally on packages having the amounts stated.” I’m reminded of the dispute in the Kraft v. FTC case over whether the difference between the calcium in five ounces of milk and the calcium in cheese slices made with five ounces of milk would be material to consumers. If you cut the cheese finely enough, the difference isn’t material, but consumers don’t often make their decisions in such delicate increments. Also, I would think that injunctive relief would cover everybody, literate or not, so even under the defendant’s interpretation of the law, once a literate/reliant class plaintiff had been found, she could represent the rest.

As for the actual false advertising claims based on the language of the laptops' user manual and a press release, the court found that most were puffery: the words "quality," "reliability," "latest technology," and "performance" were non-actionable because no reasonable consumer would rely on them. (Side note: isn't it odd to reject a reliance requirement and then go straight to puffery analysis, which is all about reliance or the inadvisability thereof?) Representations that the laptops passed "most stringent quality control tests" and were made with "brand-name components" were capable of falsification and thus could be actionable. Query whether claims made in the user manual count as advertising at all -- even without a reliance requirement, information available only postpurchase might not be actionable, as at least one Lanham Act case has held.

ISO a False Advertising Verdict

Bridging the Gap links to a story reporting that First Act Inc. has prevailed against Brook Mays Music Co. in its false advertising claims. The only reported decision in the case, First Act, Inc. v. Brook Mays Music Co., 311 F. Supp. 2d 258 (D. Mass. 2004), concerns the propriety of long-arm jurisdiction over the Texas defendant, whose 60 ISO Alerts sent to individuals with Massachusetts addresses, as well as other contacts, were held sufficient for both statutory and constitutional purposes.

The parties make, among other things, musical instruments for children. The case concerns an "ISO Alert" sent out by Brook Mays; ISO stands for "instrument-shaped object," and the point of the alert, which was sent by email, was that First Act's instruments were not real instruments but only ISOs. (Dismissing an inferior product as an "instrument-shaped object" is a cute concept, by the way; kudos to whoever came up with it.) Despite the lawsuit, I have found what appears to be a copy or adapted version of the Alert here. It reads:

I.S.O. ALERT!

Instrument Shaped Object

Please be Alerted… there are a number of discount stores, Sam’s, Wal-Mart, Costco and Hastings, (to name a few) that are selling beginner "instruments", or "Instrument Shaped Objects" under the name brands of First Act Concert Series, SIMBA, Bluebird, Jean Baptiste and others.

After careful examination of these instruments, we have determined that they will not play for the long term (if even the short term)! The ISO’s break and parts are NOT available. The unfortunate fact is that the students that will be playing these instruments will likely not survive the first few months of band because of the design and quality. We are all aware that the dropout rate for beginning students is too high. Why would we, in good conscience, allow a student to begin on an instrument that dooms them for failure?

Because of the design and quality, or lack there of, we must respectfully decline to work on these or similar instruments. The liability is too great and we do not wish to be a part in the failure of a student in you schools instrumental music program.

We sincerely would like to suggest, that for the sake of the child’s future in music, these instruments be returned to the "big box" retailer for a refund and another option sought.

Given that the jury awarded $21 million in damages (including returns and lost goodwill), it seems that some customers followed the alert's advice.

I found a few other discussions of ISOs on the web, including one with a funny drawing of an ISO monster. Most of the statements I found came from band teachers and the like, who wouldn't count as First Act's competitors for purposes of Lanham Act liability. (Of course, there are other torts, though most would be subject to similar limitations.) Nonetheless, this discussion among band-loving types illustrates how laypeople can be concerned by the prospect of legal liability and understandably unaware of what actually might trigger such liability -- causing a real chill in their ability to discuss what instruments students ought to buy. I don't know if this story of a band leader being sued by a manufacturer for making a list of good and bad brands of instruments is true (the more likely scenario is a probably overreaching cease and desist letter), but it doesn't need to be in order to do harm. Sadly, most of the advice the band folks offer each other has little to do with the law on the books. Prefacing a statement with "in my opinion," for example, is probably pretty useless -- if I said "In my opinion, Diet Coke [my beverage of choice] is made with toxic chemicals," I've still made a representation of verifiable fact; if I said "Diet Coke sucks," no one needs a prefatory statement to understand that this is just what I think. Likewise, avoiding mention of brand names is not necessarily good enough if the class of "instruments sold in retail stores that feature clothing and other household equipment" is in practice made up of First Act's instruments, just as references to "the leading brand" in comparative advertising are understood to be direct comparisons. And this interview with First Act's CEO suggests that statements about musical instruments sold at big box retailers must refer to First Act, since it's almost alone in using that sales channel.

Credit card solicitations

People v. Applied Card Systems, Inc., --- N.Y.S.2d ----, 2005 WL 3204376 (N.Y.A.D. 3 Dept.)

Though better-known for pursuing investigations against Wall Street and major record companies, Attorney General Eliot Spitzer also goes after more run-of-the-mill violations of New York’s consumer protection laws. Cross Country Bank offers credit cards to consumers who have difficulty getting credit; Applied Card Systems services the bank’s accounts and collects from delinquent accounts. The state alleged that the respondents engaged in deceptive representations about how much credit would be available (representing that the credit limit would be up to $2500 when often the limits were less than $400); charged $150 in fees immediately on opening the account (further decreasing the available credit); led consumers into a downward spiral of interest, late fees and over-limit penalties; enrolled consumers into virtually useless third-party membership programs for additional fees without properly letting them know that they didn’t have to enroll to get the credit card and that the programs didn’t offer many of the described benefits to New Yorkers; and harassed consumers with delinquent accounts by, among other things, lying about callers’ identities to get consumers on the phone, calling consumers at work after having been told not to do so, using obscene and abusive language, and making unauthorized debits from consumers’ checking accounts.

The appellate court upheld an injunction against these activities. The ruling on the advertised credit limits is a standard application of the principle that advertising should reflect likely or ordinary results rather than unusual results, at least in the absence of disclosure that results are unusual. Cross Country Bank’s attempt to solve the problem with disclosure was unavailing since the disclosure was on the second page of its terms and conditions, in the same (presumably teensy) typeface as the rest of the text, and in any event respondent’s telemarketers deliberately obfuscated in their pitches to consumers. Respondents submitted an affidavit a private consultant who reviewed the terms of the solicitation from December 2001, categorizing the disclosure as "unsurpassed in the industry," but the court was unimpressed by the industry’s standards, since reasonable consumers would be misled to believe that the “up to $2500” prominently displayed on the solicitation was representative of what consumers would receive.

The most interesting aspect of the case to me is the claim that the Federal Truth-in-Lending Act (see 15 USC § 1601 et seq.) preempts consumer protection claims because the adequacy of Cross Country Bank’s disclosures is within the exclusive province of TILA. The implementing regulations state that state-law disclosure requirements are preempted to the extent inconsistent with TILA, see 12 C.F.R. 226.28[d], except that state laws prohibiting unfair or deceptive acts or practices aren’t preempted. Does that mean that any characterization of a disclosure as unfair or deceptive is enough to avoid preemption? In that case, why can’t states just put their inconsistent disclosure requirements in their UCLs? Or would preemption only be avoided if the state proceeded under the general “unfair or deceptive” provision and not under a law conclusively finding that specified disclosures/failures to disclose are unfair and deceptive? In any event, the court found that the deceptive conduct here fell under the UCL, which was not preempted.

Recent press

Ludz claims Apple didn't 'think different' (MacNewsWorld)

Artist, 'Bama Collide over Trademark Issues (NPR)

Then again, California law is still pretty expansive

Aral v. Earthlink, Inc., --- Cal.Rptr.3d ----, 2005 WL 3164258 (Cal.App. 2 Dist.), affirmed an order denying Earthlink’s petition to compel arbitration of a putative statewide class action claim for violation of state ufair competition law. The UCL claim was based on Earthlink’s practice of charging for DSL service from the time service was ordered, even though the necessary equipment to start service didn’t arrive for some time (in the named plaintiff’s case, five weeks). The court held that, based on general principles of California law, provisions in adhesion contacts that preclude class actions are unconscionable where the case involves allegations that a large number of consumers have been cheated out of a small sum of money. Moreover, EarthLink sought an order specifying that arbitration of a minor monetary claim by a California resident take place in Georgia, and the court separately held that the forum selection clause discouraged legitimate claims by imposing unreasonable geographical barriers and was unenforceable.

Read about a just-argued Supreme Court case relevant to California courts' interpretation of the FAA here.

California unfair competition law: not quite as expansive as all that

Bivens v. Gallery Corp., 2005 WL 3114167 (Cal.App. 4 Dist.), shows that there are limits even of a very expansive state UCL. According to the complaint, the defendant published an ad in the L.A. Times advertising mattresses with “'PRICING STARTING AS LOW AS ... $48' in large type. In smaller print it states 'TWIN EA. PC.' In substantially smaller type, in parenthesis, it states 'SOLD IN SETS ONLY.'” The plaintiff allged that failure to give the total price for a set was likely to mislead consumers, especially because the ad didn’t define “set.”

In addition to determining that the plaintiff’s claims were barred by the newly added standing requirement of actual injury (substantially limiting plaintiffs’ ability to allege claims acting as private attorneys general, as in Nike v. Kasky), the court found that plaintiff’s claims were unsustainable because the defendant’s actions didn’t violate California law. Plaintiff’s first claim was that the ad violated a specific provision of California law stating that, if an ad lists a price for items only sold in multiple units, it has to also clearly state the minimum price – that is, if oranges are twenty cents each but only if you buy at least five, the ad has to say something like “minimum purchase $1.00” or “5 for $1.00.” The court determined that mattress sets aren’t identical goods sold in multiple units, so that provision didn’t apply. As for the more general false advertising claim (that innumerate consumers, of whom there are apparently many in California, would be fooled by the failure to display the price of the set), the court determined as a matter of law that no reasonable consumer would be deceived, since mattresses are generally sold in sets and the set requirement was clearly disclosed.

Of potential interest: the case illustrates the limited application of carefully delineated bans on particular acts, as often found in state unfair competition law. But more suggestively, if no reasonable consumer would be fooled by a price for a component when the component is only sold in a set, why would a reasonable consumer be fooled by a price for an item when the item is only sold in multiples? To reverse the question, doesn’t the specific provision, even if inapplicable by its terms, demonstrate that the legislature intended to protect consumers from this type of manipulation of numbers?

Massive Digitization Projects

Earlier this week I went to a talk sponsored by George Mason University's Center for History and New Media on massive digitization projects and their long-term implications. The speakers, Clifford Lynch (Executive Director, Coalition for Networked Information) and attorney Jonathan Band, were engaging and informative; the audience seemed to be library-oriented rather than lawyer-packed. My notes here do not necessarily reflect what was said, only what the speakers made me think about.

Lynch pointed out that different classes of works (books, photographs, etc.) have very different histories and patterns of use, but all are now grist for large-scale digitization projects. This clearly has some relationship to the change in humanities scholarship, which is increasingly looking for non-text sources of evidence such as images and music. The harder sciences also can stand to gain a lot from digitization of things like hand-written/typed temperature logs; once the information is scanned and manipulable in large-scale data analysis, previously unaskable questions can be answered.

Highly concentrated copyright ownership made digitization easier for journals (e.g., JSTOR) than for books, where rights tend to revert to the author after some time. This connects with Jonathan Band's later argument, which I think deserves close attention, that the very fact that both publishers and authors are suing Google for its library project supports Google's fair use case. That is, like the perfomers and record companies in Napster, the plaintiffs can't agree on who owns the rights to authorize digitization, and to the extent that individual authors do (or even may) own the rights, the claim that asking permission would be easy and thus a market could be formed is less persuasive, supporting Google's argument on the fourth fair use factor. Compare this to the Tasini litigation and other Authors' Guild suits against content delivery companies whose contracts with publishers turned out not to protect them from copyright claims.

Lynch emphasized that there are a lot of things we don't know about Google's plans, except its contract with the University of Michigan (apparently Stanford also plans to let Google go comprehensively through the monograph collection, including in-copyright works, but I haven't found anything from Stanford that definitively says so). Harvard, Oxford and the NYPL have agreed to experimental digitization of public domain materials, extensible by mutual agreement. (Lynch noted the irony that the protesting publishers' groups include as members the respective university presses, and suggested that greater press-university coordination might have been in order.) Google has been coy about what it will allow people to do with the public domain works; there is a difference between letting you read a book online, letting you download a book, and letting you download the corpus of scanned books. Of course, non-copyright controls on public domain works are nothing new, as museums have been using physical control to manage copies for decades.

Lynch closed by offering what he considered a bizarre prospect: that students and other searchers would have easy access to a lavishly documented world before 1923, which would then just sort of stop (at least with respect to high-investment content), with later material behind digital locks. Researchers might justly consider this an arbitrary division between the commercialized and the shared world. Will the 20th century be 80% missing from digital life? My comment: this of course assumes that pay-for-access digitization will be prohibitively priced; for many university students, at least, the commercialized digital world will be available, if their libraries can afford it.

Jonathan Band then spoke about the legal issues in the Google controversy, expanding on his previously published analysis to argue that Google is engaging in fair use. According to him, Google has recognized that, for certain reference works such as dictionaries, even a snippet might substitute for access to the work, so Google Book Search might give you a result listing for a term found in a dictionary but no text at all. As noted above, he emphasized the difficulty of finding the proper rights owners of all the relevant books; many are essentially orphan works, and an opt-in rather than opt-out arrangement would gut the project even if rights owners were generally willing to opt in once contacted.

As he pointed out, Google's web search business depends on opt-out, and if Google Book Search isn't fair use, then its web search seems vulnerable as well (a fact that may help Google more than hurt it, since web search is so important to the internet as it has developed). Of course a properly configured robot exclusion header doesn't require the author to keep up with who's doing search these days the way Google's opt-out for books does. On the other hand, as a practical matter only Google (and maybe Microsoft and Yahoo!) is likely to engage in large-scale digitization. I think this cuts both ways: maybe Google uniquely has the resources to seek permission or maybe this means that letting Google do this does not threaten any other likely market and it will be easy to opt out from digitization by telling Google. Band also emphasized the economic benefit to Google from Book Search: if it makes Google's search engine more attractive, suddenly there's a billion-dollar barrier to entry that can't be overcome just by writing a better search spider.

Ultimately, I don't think Google's size or uniqueness should be central to the fair use inquiry. Either an intermediary should be able to make a digital copy for the purpose of returning small segments to searchers, analogous to the software reverse engineering cases, or it shouldn't. This is especially important given that Google plans to give a complete digital copy to the library whose book was digitized; the library will then be in a similar position to Google. If it also restricts uses the way Google does (or some other way, for example by locking up the physical copy for preservation purposes and then allowing one electronic check-out at a time, the way some ebook lending works now), then the fair use analysis should be similar, with the exception of the commercial/noncommercial factor. The conceptual difficulty here is that there are a number of interrelated, arguably fair uses: Google gets to make a digital copy for itself in consideration for digitizing the book for the library; the library gets a digital copy back in consideration for lending the book to Google; these copies may never be accessible in full to any end-user.

I, for one, am very interested to see what's going to happen next.

Copyright and the FDA: Unconstitutional takings?

I recently read Lawrence Cunningham’s Michigan Law Review article, Private Standards in Public Law: Copyright, Lawmaking and the Case of Accounting, 104 Mich. L. Rev. 291 (2005), which uses Veeck v. Southern Building Code Congress Int’l, Inc., 293 F.3d 791 (5th Cir. 2002) (en banc), to explore when privately created codes and standards adopted into law should be held to lose copyright protection, at least as against copiers who copy in order to comply with the law. It’s an interesting question; what I didn’t realize until I was preparing for my advertising law class was that a similar issue has come up with respect to the FDA, which doesn’t adopt drug labels as law but does sometimes require them to be copied.

In SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharmaceuticals, Inc.,
211 F.3d 21 (2d Cir. 2000), the defendants obtained approval from the FDA to sell a generic nicotine gum product that compteted with plaintiff’s Nicorette and were directed by the FDA to use labeling almost identical to the plaintiff's copyrighted guide and audio tape. SmithKline filed a copyright action, and the court found that its labeling was creative and that copying by a direct competitor would ordinarily support an injunction. In this case, however, the FDA reported to the court that its requirement of nearly identical labelling was consistent with the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act, see Drug Price Competition and Patent Term Restoration Act of 1984 § 101, 21 U.S.C. § 355(j). The court accepted the FDA’s position and held that therefore the Copyright Act conflicted with Hatch-Waxman, and Hatch-Waxman controlled. Complying with both laws would have been possible, but only by entirely foregoing the production of generic drugs under Hatch-Waxman’s expedited approval process for generics, which Congress could not have intended. Also, though the court explicitly declined to rely on this, it’s plain that copyright is not needed as an incentive to produce drug labels (and that SmithKline’s concern was not to protect the commercial value of its copyright but the commercial value of its exclusive marketing rights for Nicorette).

Like Veeck, the case has not generated a substantial body of case law. It was later distinguished by FMC Corp. v. Control Solutions, Inc., 369 F. Supp. 2d 539 (E.D. Pa. 2005), on the ground that EPA regulations, unlike FDA regulations, do not require identical (or substantially similar) labels for me-too pesticides. Schwarz Pharma, Inc. v. Breckenridge Pharmaceutical, Inc., 388 F. Supp. 2d 967 (E.D. Wis. 2005), also distinguished SmithKline, on the grounds that the defendant’s copying of a prescription drug label was not undertaken pursuant to Hatch-Waxman; the court denied the defendant’s motion for summary judgment on the copyright claims absent further information about what, if anything, the FDA required for me-too labeling of generics more generally.

Only one law review article discusses SmithKline extensively (and unfavorably), John C. O'Quinn, Protecting Private Intellectual Property from Government Intrusion: Revisiting SmithKline and the Case for Just Compensation, 29 Pepp. L. Rev. 435 (2002). Given the case’s relevance to the question of when expressive works should be treated as unprotected facts, I think copyright minimalists like me should mention SmithKline more often. Alicia Ryan’s Contract, Copyright, and the Future of Digital Preservation, 10 B.U. J. Sci. & Tech. L. 152, 176 (2004), does mention SmithKline as support for other limited revocations of copyright rights – using the case to refute takings-type arguments, whereas O’Quinn thinks the case is a blatant instance of an uncompensated taking.

Kinetic Concepts, Inc. v. Bluesky Medical Group Inc., 2005 WL 3068223 (W.D. Tex.), involves a variety of claims by one maker of wound treatment products against another. In a series of decisions, the court refused to grant summary judgment to the defendant on these claims; this opinion discusses trademark infringement and dilution as well as false advertising. (Notably, the court is careful to make clear that a dilution by tarnishment claim can only be based on consumers' imputation of the shoddy quality of defendant's product to plaintiff; it is not enough that the defendant's advertising says mean things about plaintiff's product.)

Plaintiff claims that defendant’s advertising campaign falsely compares the parties’ products, plaintiff’s V.A.C. wound drainage system and defendant’s V1. In particular, the ads claim that the V1 performs the same function as the V.A.C., but at lower cost, even though defendant has not conducted any clinical comparison studies. Defendant also stated that the V.A.C. is approved specifically for wound drainage, whereas the V1 performs a variety of functions, implying that the V.A.C. is unidimensional. (Is this material? Is it another variant of a cost-effectiveness claim?)

Notable features of the case: Defendant’s ads state that a hospital can save between $100,000 and $500,000 using the V1, based on product and supply costs. But $500,000 apparently exceeds the maximum savings in defendant’s actual calculations, which claim $342,000 in savings. Is this enough to make the range “$100,000 to $500,000” not false or misleading? The court does not offer an answer.

Plaintiff also offers a survey to show that cost effectiveness, as understood by healthcare professionals, includes the effectiveness of the total treatment regime, including the costs of poor wound healing, and adds anecdotal evidence that defendant’s product sometimes hasn’t healed wounds as well (or as cost-effectively) as the V.A.C. For purposes of denying summary judgment, the court accepts this anecdotal evidence, despite defendant’s evidence that many factors influence wound healing and thus plaintiff’s evidence couldn’t show that the V1 was the cause of poor wound healing. Even if plaintiff's evidence is correct, I'd want to know a lot more about that survey: while doctors and nurses in general may define cost effectiveness broadly -- indeed, it seems natural for them to do so -- I'm not sure that they'd interpret a claim of cost-effectiveness in an ad for a particular product that way; I would think that consumers can be expected to understand that an ad is claiming direct cost benefits and not necessarily assessing total direct and indirect costs, especially if the ad specifically states that its claims are based on "product and supply costs." The plaintiff also has a survey that purports to show that the ads are generally deceptive, but it's not described in the opinion.

Another part of the case raises issues of using the Lanham Act to enforce other federal statutes: the V1 doesn’t qualify for the designation “Negative Pressure Wound Therapy” under Medicare’s definition, but plaintiff uses the term in advertising to describe the V1 anyway. Likewise, though defendant has FDA clearance to market the V1 as “may promote wound healing,” one of its promotions allegedly implies that the V1 affirmatively promotes healing, a claim the FDA hasn’t cleared. (My assessment of the case law is that the FDA claim is shaky – while a straight-up false claim of FDA approval is actionable under the Lanham Act, a statement that merely implies something within the FDA’s jurisdiction and that would require the court to interpret FDA rules is probably not suitable for private enforcement under the Lanham Act.)

Defendant’s ads use the slogan “Consider a better alternative,” and under the Fifth Circuit’s jurisprudence, this could be misleading in combination with specific claims, but the court notes that there’s no evidence that consumers associate the slogan with the ad’s cost-benefit analysis. Nonetheless, the court did not specifically rule out plaintiff’s ability to show that the slogan was misleading.

In a related opinion denying summary judgment against business disparagement claims, the court focused on an ad asking, “Is tearing out healthy tissue part of your negative pressure protocol?” Plaintiff offered evidence that tissue removal was actually a positive sign of healing; thus, the implication that such removal was undesirable could constitute disparagement. The facts may be true, but the "gist" is false, which is actionable under Texas law. Compare this result to claims of "aluminum-free" for deodorant or "rBGH-free" for dairy products, both of which have triggered litigation, with aluminum- and rBGH-using plaintiffs claiming that the defendants falsely implied that plaintiffs' products were dangerous.

The court also found an issue of fact on malice, another necessary element of a common-law business disparagement claim. Likewise, plaintiff’s claim of libel survived, since the defendant’s ad’s rhetorical question “Are you getting VACuumed by your wound drainage company?” could be defamatory. Because plaintiff isn’t a public figure, only negligent falsehood is required to succeed on a libel claim. (One might wonder why plaintiff is bothering with the business disparagement claims, which seem to duplicate the false advertising claims; the libel claim is useful because damages are generally presumed in libel cases, whereas they'd need to be proved for false advertising and business disparagement.)

Google Book Search: still some issues

First Google wouldn't show full pages from a congressional hearing because it thought the hearing was under copyright. Then I discovered this beauty, Larry Lessig's Free Culture, which is available under a CC license -- but not from Google!

Yes, it's certainly simple to check the status of a work and ask permission from the copyright owner every time you want to use one, isn't it?

Photoshop contests

The site Worth1000.com has a number of graphics contests, including some that are worth money; it also hosts ads. When it runs a contest for images of superheroes Photoshopped into well-known artworks, is it engaging in copyright or trademark infringement? Contributory copyright or trademark infringement? Does the answer differ if the underlying artwork is still in copyright? In other words, even if the resulting work is transformative and critical with respect to the superhero, is it necessarily transformative and critical with respect to the original painting? My favorites include Spiderman in Norman Rockwell (note that the site hosts an image of the original Rockwell for comparison purposes: what result there?) and American Goblin, both of which would allow two sets of rights claimants to object. Also good, but potentially riling only one copyright owner at a time, are the Annunciation with Dalek, Henry Incredible, Jack Jack Madonna, and Wonder Woman.

Likewise, there are potential right of publicity issues with the Celebrity Cyborgs and Celebrity Time Travel contests (not to mention copyright issues with the specific photos used as the bases for these entries), and I'm not even sure what to say about the Racial Profiling series, which is pictures of celebrities manipulated to give them different racial markers, variously interpreted by the entrants to include skin tone, other facial/hair features, and cultural markers (bindi, dreadlocks, etc.). It's a popular topic, with many more entries than most of the other topics I browsed.

Finally, there is a rather charming gallery, Factory Fresh Plants, which would be useful for anyone interested in biological patents, showing images of machines melded into plants. Plug&Grow, Think Pink, and Circuitry Evolved are my favorites.

It is perhaps ironic, given the likely sources of most of the original images, that there are prominent warnings at the top of gallery pages indicating that Worth1000 claims copyright in the galleries and stating, "You may NOT repost any of the entries inside this gallery on external sites (including messageboards and non-profit sites) without Worth1000's express permission."

Julie Cohen on The Place of the User in Copyright Law

I participated in Randy Picker's MobBlog on Julie Cohen's recent paper advocating looking at copyright law from the perspective of a situated user rather than an economic or romantic user. (Want to know what she means? Read the paper, it's fun.) My posts are here and here.

The best rhetorical move by anti-DRM folks to date

... was to call Sony's DRM-protected CDs "infected." Denotationally, the use seems wrong, but the connotation is rhetorically perfect and memetically powerful (48,200 results for "sony 'infected cds'").

False statements in business-to-business contexts

Allsup, Inc. v. Advantage 2000 Consultants, Inc., -- F.3d --, 2005 WL 3054130 (8th Cir. 2005), was a slightly unusual Lanham Act case. The defendant A2K had been formed by former employees of the plaintiff. Basically, plaintiff offers services to insurance carriers, helping them reclaim benefits overpaid to insureds. In 2001/2002, three insurance carriers asked A2K to bid on their overpayment recovery business; A2K did so, representing that it would be capable of providing overpayment recovery services in time to fulfill any contracts that it won. Allsup claimed that it was in the process of patenting its automated overpayment recovery system and threatened to sue; A2K withdrew its bids.

Not satisfied, Allsup sued for reverse passing off, false advertising, and state common-law claims. The district court dismissed all claims and Allsup appealed on the false advertising count. (I didn't go back and check, but I'm guessing Dastar had something to do with the failure of the reverse passing off claim.) The allegedly false claims dealt with A2K's claims that it would, in the future, enter the overpayment recovery market and be able to serve insurers.

Though there are many possible issues -- whether statements to only three companies can constitute "advertising or promotion" within the meaning of the Lanham Act; whether the statements of future intent constituted representations of fact or opinion; whether the highly sophisticated targets of A2K's claims should understand the difference between an operational business and a planned business; and so on -- the court of appeals found it sufficient to address simple falsity. Though A2K ultimately didn't enter the overpayment recovery market, Allsup put forth no evidence that A2K lacked either capacity or intent to do so at the time it made the representations. (Here is an unusual instance where intent is directly relevant to a Lanham Act claim, much as it is relevant in a bait-and-switch claim.)

The court did bobble a bit on implied falsity, simply reiterating that A2K's statements about intent and capacity were true, as if that were the end of the matter. Some true claims can, of course, be misleading; the court may have meant that Allsup identified no potentially misleading implications of these particular true statements, and in any event offered no evidence that a reasonable insurance company might have been misled. Interestingly, the court contrasted "literally false" statements with statements that are "false in context," which is not quite the same thing as implicitly false statements, though there is doubtless some overlap. I'm reminded of the Avis/Hertz case, which held that claims about how many cars a rental company "has" were not literally false when they were true of the available rental fleet though not true of the total cars owned by the companies; the context of an ad for rental cars made the claim literally true.

Cultural environmentalism conference

From the organizers:

Cultural Environmentalism at 10
A Center for Internet and Society Symposium
Stanford Law School
March 11-12, 2006
http://cyberlaw.stanford.edu/conferences/cultural/

Ten years ago, Duke Law Professor Jamie Boyle suggested that the history of the environmental movement offered powerful theoretical and practical lessons to those who sought to recognize the importance of the public domain, and to expose the harms caused by a relentlessly maximalist program of intellectual property expansion.

On March 11-12, 2006, Stanford Law School's Center for Internet and Society will host a symposium to explore the development and expansion of the metaphor of "cultural environmentalism" over the course of ten busy years for intellectual property law. We've invited four scholars to present original papers on the topic, and a dozen intellectual property experts to comment and expand on their works.

Molly Van Houweling explores voluntary manipulation of intellectual property rights as a tool for cultural environmentalism. Susan Crawford extends Boyle's analysis to the age of networks. Rebecca Tushnet looks at the ways in which the law's impulse to generalize complicates the project of cultural environmentalism, and Madhavi Sunder looks at how the metaphor affects traditional knowledge. Professor Boyle will also offer some remarks, as will Stanford Law School's Professor Lawrence Lessig.

Comments on the papers by: Terry Fisher, Harvard Law School, Jack Balkin, Yale Law School, Arti Rai, Duke Law School, Pam Samuelson, UC Berkeley School of Law: Boalt Hall, Neil Netanel, UCLA Law School, Julie Cohen, Georgetown University Law Center, Jesica Litman, Wayne University, Mark Lemley, Stanford Law School, Peggy Radin, Stanford Law School, Yochai Benkler, Yale Law School, Siva Vaidhyanathan, NYU School of Law

The event is free, but registration is required. We look forward to seeing you.

Mickey Mouse and the Boy Thursday

My mother-in-law brought over some old books for Leonard, and included, for our mocking pleasure, Walt Disney's Mickey Mouse and the Boy Thursday, published in 1948, a book so offensive that, as she says, it makes Little Sambo look like an anti-racist training manual. You can find the complete scanned text & pictures a few places around the web, including a self-proclaimed "sick" site and a white supremacist site. Google them if you must. I checked Gutenberg's renewal list and found that the book had indeed been properly renewed. How do we copyright minimalists feel about the possibility of Disney using its copyright to suppress these reproductions?

Rulings Kevin Trudeau Doesn't Want You To Know About

Kevin Trudeau, infomercial king, convicted credit-card fraudster, and repeated head-butter with the FTC, lost a battle in the Court of Claims recently in Trudeau v. United States, 68 Fed.Cl. 121 (2005). Trudeau's move from infomercials making false and unsubstantiated claims about potential health benefits to a best-selling book making similar claims, the latter of which gets substantially more First Amendment protection, is detailed in a good Salon article. After settling the latest FTC action against him, Trudeau filed suit against the FTC for breaching an implied covenant of good faith and fair dealing by announcing in the press release that he had admitted wrongdoing, while the settlement agreement recites that Trudeau denies any wrongdoing. Because the government was acting in its sovereign capacity, protecting the public interest, the Court of Claims found that it lacked subject matter jurisdiction under the Tucker Act.

Of course, Mr. Trudeau is still laughing all the way to the bank, since his book (I have rarely been more tempted to use scare quotes) continues to sell, despite the fact that it apparently offers little but assertions, phrases in all caps, and exhortations to sign up for a $499 service that will give you real health tips.

Shark cartilage

United States v. Lane Labs-USA, Inc., 427 F.3d 219 (3d Cir. 2005), deepened a fifty-year-old circuit split. The district court found that a seller of the supposed cancer treatments BeneFin (shark cartilage) and SkinAnswer (glycoalkaloid) had committed misbranding and false advertising in violation of the Food, Drug and Cosmetic Act (FDCA). The court of appeals upheld the district court's equitable power to order restitution to consumers, despite the absence of explicit authorization for restitution in the text of the FDCA.

Calcium supplement class action

For some reason, West apparently just added Folbaum v. Rexall Sundown, Inc., 2004 WL 3574116 (N.J.Super.A.D.), a case upholding an individual claim against the defendant for false advertising of "Calcium 900," a supplement which only delivered 900 mg of calcium if you took three pills. Though the back of the bottle advised taking "three (3)" for the suggested adult usage of 900 mg, the plaintiff testified she didn't read the back and believed that she was taking 900 mg in each pill. Though the court upheld a jury verdict under the New Jersey Consumer Fraud Act, it reversed the class certification on the ground that class members were only united by a state of mind (the state of having been fooled by the supplement's name). Although a NJCFA plaintiff need not prove reliance, she must prove causation linking the false claim to some harm suffered; those who purchased the supplement understanding that each pill had 300 mg suffered no ascertainable loss and thus could not properly be part of the class.

My calcium supplement is called "Calcium 1000," and requires 4 pills to get to the 1000 mg level; a bottle of 180 therefore lasts 45 days. Apparently Folbaum's limited success was not enough to get supplement manufacturers to change their ways.

Pleading requirements and Lanham Act claims

Is a false advertising claim under the Lanham Act subject to the heightened pleading requirements for fraud under the Federal Rules? Judge Joyner of the Eastern District of Pennsylvania considered this surprisingly unlitigated question in H.H. Fluourescent Parts, Inc. v. DM Technology & Energy, Inc., 2005 WL 2972986. Citing a handful of other cases, Judge Joyner ruled that Lanham Act false advertising counterclaims are not purely fraud claims and thus need only satisfy the "short and plain statement" requirement of Rule 8, rather than the heightened pleading requirement of Rule 9.

Drug pricing

A new decision in Pennsylvania's case against drug makers for inflating prices, Commonwealth ex rel. Pappert v. TAP Pharmaceutical Products, Inc., PDF here, 2005 WL 2875116 (Pa. Cmwlth. 2005), rejects the drug companies' arguments (with a minor exception for six drugs) and allows the state's case to proceed.

Pennsylvania's claims are based on allegedly inflated prices charged by the drug companies to various state purchasers, including Medicaid. The state argues that the companies used a published "Average Wholesale Price" (AWP) that was up to hundreds of times what an actual average wholesale price was, and that the state relied on the representation of AWP. State reimbursement rates to physicians are based on the AWP; if there is a difference between the AWP and the price the physician actually pays for the drug, s/he can pocket the difference. Inflated AWP thus provides physicians an incentive to prescribe the drugs with the greatest "spread." In addition, the companies provided free samples to physicians, and the state alleges that the companies knew that physicians were charging the state as if they had paid. The companies are accused of unjust enrichment, misrepresentation or fraud, violations of the Unfair Trade Practice and Consumer Protection Law (UTPCPL), and civil conspiracy. This is one of several similar lawsuits (Pennsylvania has even already settled some of its Medicaid claims).

Yesterday's decision upheld the sufficiency of an amended complaint, which had been amended to satisfy Pennsylvania's pleading requirements for fraud-type claims. Among the arguments of interest: the companies claimed that they never made any representations that the published AWP was factually the average wholesale price. What, they didn't pinky swear that something called the "average wholesale price" was in fact the average wholesale price? The court had little difficulty finding that the complaint sufficiently alleges that "persons for whom this information is relevant would have a reasonable basis to rely on the reported AWP as being something more substantial than a number selected arbitrarily." With respect to the misrepresentation/fraud claims, the companies claimed they had no duty to disclose the fact that the AWP was not the average wholesale price, thus characterizing the state's claim as one for non-disclosure. The court rejected this position, agreeing that the evidence could establish that no one expected AWP to really mean average wholesale price, but finding that the complaint sufficiently alleged that submission of figures called "AWP" to publishers was a representation of something like the actual average wholesale price. Relatedly, though there is evidence that the state should have known that AWP wasn't in fact average, factual disputes exist about whether the state justifiably relied on the published AWPs.

Illustrating some of the differences between the statutory and common-law bases for consumer protection claims, the state's UTPCPL claims differed from simple misrepresentation -- the state alleged, inter alia, false representations of source or sponsorship; advertising goods with intent not to sell them as advertised; and making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions -- the latter two being specifically prohibited types of conduct. Advertising with intent not to sell as advertised presumably targets "bait and switch" tactics, but on its face covers the allegations here as well. The price reductions provision of the statute presumably targets fake "going out of business" or "50% off" claims.

The court upheld the state's "source confusion" claim on the theory that the companies' conduct "created confusion or misunderstanding as to the source of the drugs, such as when a doctor uses a sample drug he received at no cost to himself and administers the drug to a patient who assumes that 'the source of the drug is Defendants' commercial sales channels.'" I'm not sure how this states a claim, since a causal connection between that confusion and any harm the state suffered when paying patients' claims seems lacking -- and I'm not sure a patient would find the channels of commerce material, either.

Given the amounts at stake, these drug pricing cases are surely far from over.

New mission; new false advertising case: Listerine

I am going to try to blog recent false advertising cases, in the fashion of the TTABlog and similar sources of topic-specific updates.

Today's entry is Whalen v. Pfizer, Inc., 2005 WL 2875291 (N.Y. Sup. 2005), a follow-up to the successful Lanham Act suit against Pfizer by McNeil-PPC, the largest seller of floss, for PFizer's ads claiming that Listerine is as effective as floss at controlling plaque between the teeth. While the court enjoined the ads at McNeil's behest, the consumer class action so far fared less well. The New York state court rejected class certification, reasoning that commonality was lacking because there was no one message that the members of the class all saw; indeed, the class plaintiff couldn't remember a specific Listerine ad she saw.

According to McNeil v. Pfizer, the consumer ad campaign was limited (I believe to three TV ads and a shoulder tag), all of which made the challenged claim, so it's hard to see why the class doesn't define itself. It's not as if this was a 20-year campaign, interspersed with other campaigns. The class plaintiff's faulty memory is more important. The decision indicates that she was very poorly selected and had no memory or knowledge of the basic claims of Pfizer's ads: "during her deposition, Whalen, the proposed representative of the class, admitted that she could not identify any commercial which influenced her to purchase Listerine. Furthermore, in open court, she admitted that she could not recall seeing any of Pfizer's alleged deceptive marketing ads, and that she was unfamiliar with the actual suit pending before this court."

In addition, proof of harm would have to be shown for each individual, making certification inappropriate. The putative class representative, for example, used Listerine before and after the ads ran, and also continued to use floss, suggesting she wasn't damaged by any falsity but was just being loyal to her brand. Even though plaintiffs need not show reliance on the false representations under NY consumer protection law, they must show harm. (Presumably this means they must show that the overall ads, if not specifically the false parts of the ads, caused a purchase, or in this case caused them to forego flossing.)

Furthermore, since the claim in this case is that consumers could be harmed if they switched from flossing to Listerine, only those consumers who did floss regularly could be harmed -- non-flossing consumers who believed the Listerine message wouldn't suffer the same damage. As to consumers whose only harm was economic -- they bought the product as a result of the false ads -- it would be hard to prove this harm because they probably didn't keep receipts. (This reasoning strikes me as contrary to the purpose of consumer class actions generally, which is to aggregate claims that in the individual case are too small to worry about but together are more substantial and market-distorting; by their nature, these claims are ones for which consumers are unlikely to keep records.)

Just as the consumer protection claims failed for want of commonality, so with plaintiff's unjust enrichment claims. Plaintiff failed to adequately explain her theory of damages, and she herself continues to buy and use Listerine, which makes her claim of damage hard to understand. Interestingly, the court suggests that it is the continued use of Listerine that defeats commonality, since the court would have to conduct an individual inquiry to see whether consumers continued to use Listerine even after they knew of Pfizer's misrepresentations. This seems a dangerous line of thought to me -- it suggests that a popular product, which many people are already using, can make misrepresentations with near impunity, since it will be very hard to show a change in market share, and since the advertiser can rely on habit to continue sales even when the challenged campaign goes off the market.

Finally, for the reasons mentioned above, plaintiff flunked the typicality requirement, and the court did not believe that she was a representative who'd fairly and adequately represent the claims of the class. The court agreed that a class action would be superior to other forms of litigation had the plaintiff shown commonality, but she didn't.

Consider the more general tension between the class certification standards -- which require proof "that each plaintiff was reasonably deceived by the defendant's misrepresentations and was injured by reason thereof" -- and the Lanham Act standard, which allows competitor standing by showing a general likelihood that the competitor is harmed by the advertising. A competitor gets probabilistic standing, but not a class. Is this the right way to go?

Two great tastes that taste great together

Two of my enthusiasms, plastination and copyright, meet. It is an interesting, possibly exam-worthy question: if I skin and preserve a body in the same pose as my rival plastinator, have I infringed his copyright in a sculptural work? I am inclined to think that the pose is the idea and using a different body prevents infringement, but the case law is far from certain -- the case about taxidermy forms, in particular, would seem to provide my rival with a colorable claim. (Side note: the body would be a useful article, I think, but its precise configuration might be conceptually separable from its utility. Ah, the puzzles of copyright law.)

Terry Pratchett on free speech theory

Terry Pratchett, the great fantasist, has just released another Discworld book, Thud!, about immigration and racial tension as played out among the trolls and dwarfs of Ankh-Morpork. In the process, he has a character restate one of the great problems of free speech theory -- a sort of concise Kent Greenawalt moment.

Lord Vetinari, ruler of Ankh-Morpork, begins: "'... A wise ruler thinks twice before directing violence against someone because he does not approve of what they say.'"

Watch Commander Sam Vimes thinks, in response, "He himself directed violence daily and with a certain amount of enthusiasm against people, because he didn't approve of them saying things like 'Give me all your money' or 'What are you going to do about it, copper?' But perhaps rulers had to think differently."

You should read the book because it's good; Pratchett is perceptive and humane as well as darned funny.

Mattel Toys, infringement inducer?

So Mattel is coming out with this videocamera for kids, the Vidster, allowing them to shoot digital video, presumably including video in a movie theater. Given what the Supreme Court said about the evidentiary effect of Grokster's choice of name, was Vidster really a smart branding choice?

Wertham is unsurprised

Gay Batman watercolors served with cease & desist letter. The pictures are still on the Artnet site for now -- some are not work-safe. These are all apparently "Gay Batman watercolors," though most of the pictures are simply "nude Batman watercolors" -- the kiss/snuggling, both of which are portrayed clothed, make the solo nude portraits gay, I guess. Understandable in headline shorthand, of course, and consistent with the usual meaning of male nudes/males tantalizingly half-clothed, but still interesting to me.

Thanks to Eve Tushnet for the link.

Picker's Mobblog

I'm participating in this week's discussion of Fred von Lohmann's Measuring the DMCA Against the Darknet. My contribution so far, discussing media fans as part of the Darknet, is here.

Indefinitely Renewable Copyright: Batman versus the Utility Monster

I recently read a draft of a forthcoming article by Dennis Karjala on congestion externalities as a justification for extending copyright terms indefinitely, at least as long as their owners assert an interest in controlling them. The argument advanced by Judge Richard Posner & Professor William Landes, sketched out here, is that there is a relevant sense in which a copyrighted work is subject to scarcity: if people are overexposed to it, they may get sick of it and it will lose its value, like an overgrazed plot of land. Karjala does an admirable job of debunking this theory, explaining both why this is unlikely to be a common scenario (Santa, anyone?) and why, even if the theory were true as to individual works, it would not suggest that society was in any way worse off when consumer preferences shifted from overexposed works.

My own interest is specific to a particular way in which Posner and Landes suggest a work may lose value, which might be called confusion or dilution rather than simple congestion or overexposure. The value-loss mechanism involves characters who can appear in multiple contexts, like Harry Potter or Superman; it has very little application to many types of copyrightable works. As Justin Hughes argued before them, Landes and Posner assert that, absent a single owner, different versions of Harry Potter will spring up, and his image will be diffused and/or tarnished, so people will no longer be as interested in him, even in the original format. Just as someone who’s seen L’HOOQ can no longer look at the Mona Lisa with untainted eyes, someone who’s read about Harry Potter and the Mary Sue Bloodbath can’t enjoy the original in the same way. Crucially, this is not just a harm to the copyright owner, but a harm to the class of readers who really did like Harry Potter the way Rowling wrote him.

I’m fascinated by this class of readers, who I concede exist (at least for some works). I think of them as J. Geils readers, from the 80s hit “Centerfold” – “My blood runs cold/My memories have just been sold/My angel is a centerfold.” The memories of the original work are retroactively tainted by exposure to the new work. This characterization of “originalist” readers may be unfair of me, because though the J. Geils song expresses real anguish, it’s also the anguish of a jerk – he’s upset that a girl he had a crush on, who owed him nothing, has apparently changed.

And that, of course, is one of the big problems with using copyright owners’ rights to protect the interests of originalist readers – copyright owners have visions of their own about how best to exploit the copyrighted work, and even about what the real Harry Potter would do. DC Comics authorized the Batman TV show and all the varied Batman movies, at least one of which would have to give a Batman purist fits. Anne Rice and J.K. Rowling are prominent examples of individual authors whose artistic visions have diverged with some fans’, leaving the fans feeling betrayed and violated. (Let’s not even start talking about the later seasons of The X-Files or Buffy the Vampire Slayer.)

Another way I think of originalist readers – again, without much sympathy, even though their anguish is concededly genuine – is as utility monsters. There are a couple of ways to define utility monsters – one example is a person who gets so much pleasure from hurting other people that, if we just want to maximize utility, we should let him hurt those people. But a utility monster can also be someone who gets so much pleasure from monopolizing resources that we should let him have those resources even though that means other people will starve. He might be indifferent to the starvation rather than actively pleased by it, but again pure utility maximization gives everything to him and nothing to everybody else. If it is in fact true that originalist readers get enormous utility out of having just one Harry Potter and no others, then Harry Potter is a scarce resource because of their preferences and they may be utility monsters, even if they don’t wish to harm people who like multiple ways of looking at Harry Potter.

Defining the class of originalist readers this way raises the issue of whether their preferences are really likely to outweigh the preferences of others who like or tolerate variety. Utility monsters are often more theoretical than real – your preference for torture probably doesn’t outweigh my preference for not being tortured. I strongly suspect that the same is true with variation-intolerant readers versus variation-tolerant readers. Most of us are happier being able to pick the Batman we like even though we’re aware of the existence of other Batman versions. Even people who are originalist in the sense of thinking that Miller’s Dark Knight is the only worthwhile one usually don’t suffer so greatly from the mere existence of Bat-Mite and Bizarro Batman (or fan-fictional versions of Batman having an affair with Superman) that their pleasure in the “real” Batman is destroyed. Thus, I think Hughes, Landes and Posner are wrong empirically (as well as theoretically, in that I’m not sure we should give any weight to someone’s preferences about what other people should read – another classic problem of utilitarianism).

Same planet, different worlds

I guess I have some sympathy for the nostalgia for physical books expressed by this type of article. After all, I not only label and file my nonfiction books using Library of Congress categorization, I surround myself with fiction alphabetized by author, and I have a rationale for so distinguishing fiction from nonfiction. But then I get to something like this:

Computers are helpful, but the stacks cultivate intuitive bookish instincts. Those instincts may not be quantifiable, but they produce discoveries that the rational structure of electronic databases almost inevitably preclude. It's like in Star Wars when the ghost of Obi-Wan Kenobi tells Luke Skywalker to turn off his computerized targeting system and "use the Force" instead.

And I have to wonder how "Professor Benton" thinks the stacks got organized in the first place -- perhaps by the (presumably intuitive) library fairies? What makes the LoC catalogers (or, in the case of old Widener holdings, Harvard catalogers) better at making serendipitous connections than Google's algorithms, which I've also known to produce fascinating juxtapositions for various searches? This sort of sentimental rubbish makes me turn more and more to Clay Shirky's "Ontology is Overrated," about the kind of multiple-user-generated information that can be used to organize digital information in interesting and useful -- yes, even serendipitious -- ways.

Steve Burt pointed me to the following story, in which the Edgar Rice Burroughs estate threatens to sue a New Zealand publisher over a novel in which Tarzan grows up to become Elvis. New Zealand's term is life plus fifty and Burroughs passed away in 1950, so fair use is unnecessary as a defense of the novel in New Zealand -- but the estate has nonetheless threatened suit if the publisher reprints the novel in New Zealand (or sells it in other countries). I wish I knew what was the basis, other than unmitigated gall, for the threat against reprints in New Zealand. Perhaps trademark?

I've been trying to follow the Grokster commentary, though I'm sure I've missed a lot. I was moved to respond by Tim Wu's confidence that iTunes would have nothing to worry about if it came out with "Rip. Mix. Burn." today. As I understand it, he sees iTunes as safe-harbored by Grokster because it uses encryption to avoid infinite filesharing and has a deal with the music industry, which presumably shows good faith as well as making a lawsuit unlikely in the first instance.

Basically, though Tim's analysis, as always, makes interesting reading, I think he's conflating iTunes with the iTunes store. As others have pointed out, one fills one's iPod mostly with music that isn't purchased from the iTunes store -- I am a heavy iTunes store user, I suspect, and I have slightly under 300 songs in my "Purchased Music" sublibrary, out of a total collection of over 6700 songs.

"Rip, Mix, Burn" promoted iTunes, not the iTunes store. "Rip" only matters if you have CDs, since purchased iTunes files come preformatted for iTunes. Purchased, DRM-protected music can't be shared without either circumvention or quality-diminishing re-encoding, but iTunes does nothing to limit massive distribution of all those mp3s it encourages you to rip from your own collection (or download from others' to fill that nice big iPod). There is no encryption on ripped files, no deal with the record industry on ripping, and I just don't see which "safe harbor" helps immunize "Rip, Mix, Burn" in particular. This is not important for iTunes, since as a business matter Apple is unlikely to get sued. It's important for the next music player startup that doesn't happen to have music deals in place already, that maybe wants to make money just through the player without having an associated music store.

This really matters, though, for the next industry; we know a lot more about what the digital music industry will look like in the future than we do about digital video.

Of course if anticircumvention technologies are deployed successfully, it might not matter much at all, since they provide an easy workaround for all this kerfuffle about contributory infringement.

This is a copy of what I posted at SCOTUSBlog's Grokster discussion:

While I was not involved in Grokster, I do have a clear bias: Justice Souter, for whom I clerked, is the very model of a thoughtful, committed and careful jurist, and thus I am inclined to support any proposition he endorses. (Though maybe not his apparent appreciation for Modest Mouse.)

That said, I am concerned that not every court is as careful as Justice Souter – this was a problem with his opinion in Campbell v. Acuff-Rose, which quite clearly says that satire can be fair use (though it has comparatively less advantage in the fair use analysis than parody does) but which has widely been overread to say that parodies win fair use defenses, but satires don’t. I fear that similar uncertainties will follow the Grokster ruling. In fairness, though, I can’t imagine a plausible majority opinion that wouldn’t leave many thorny questions.

The previous posts have made a number of excellent points which I’ll try not to reiterate, though I adore Kathleen Sullivan’s image of “strangling little iPods in their cradles.” I don’t quite get Charlie Petit’s idea that the Betamax involved “authorized source material and authorized distribution channels” whereas Grokster doesn’t. Except for unreleased pilots such as “Global Frequency” and bootlegs, the music and TV shows available through peer-to-peer networks came from authorized source material and authorized distribution channels (CD stores and broadcasts). Then they got moved to forms the copyright owners didn’t authorize and couldn’t control – a lot like TV shows got moved to blank videotapes.

This leads into my big questions: What would this opinion really have meant for the VCR? Would “See any TV show you want to, anytime you want to see it” or “build a library” count as enough obvious encouragement of librarying – which was not found to be fair use – to justify a finding of contributory infringement? (I’m still looking for a copy of the “build a library” ad, unfortunately.) What about “any TV show” in the context of pay cable, which again was not analyzed as fair use when the Court looked at time-shifting free broadcast TV?



Moving onward, what would a responsible lawyer tell Apple about “Rip. Mix. Burn.” after today? Does that clearly promote infringement?



How about Sourceforge, which distributes Azureus, a major BitTorrent client? Let me make clear that Sourceforge offers BitTorrent software, not torrents or files – it seems to me trivial even in the pre-reversal 9th Circuit to establish that sites hosting unauthorized torrents are contributory infringers. Sourceforge is not such a site. It offers only the peer-to-peer technology, naked and pure. Except: drill down into the description on the site a bit, and you get this: “The RSS Feed Scanner is an automatic RSS feed parser which is highly configurable and allows unnattended operation via its advanced filtering capabilities. .... The filter strings can be easily edited via the graphical configuration tool, and each filter can also support targeting of specific episodes within a series of the same titles (for example in downloading episodes of shows).” So maybe not so pure after all. Maybe this means that Sourceforge is a black hat, despite initial appearances, or that this particular plugin is inherently infringement-promoting. I would definitely not rest easy tonight if I ran Sourceforge.

Another question is whether the decision, which is explicitly targeted at “devices” including software, will have spillover effects on non-device-related conduct. Already in the Napster/venture capitalist litigation and in the Canadian P2P litigation questions have been raised about whether someone who enables sharing of files on her computer is encouraging infringement by those who download those files. If all she does is enable (or fail to disable, depending on how her file-sharing software is configured) uploading, has she done enough to be liable for others’ infringement? This may not be all that important if the copyright owner’s right of distribution is broadly defined, but the scope of the distribution right remains unsettled.

Relatedly, I’ve long wondered whether this PBS lesson plan, which encourages the creation of unauthorized derivative works and even their dissemination on the Internet, constitutes contributory infringement. That page has plenty of “solicitation that broadcasts a message designed to stimulate others” to create unauthorized copies (slip op. at 20). Many people will, of course, think that most or all of the resultant art is fair use – but fair use is not usually what people want to rely on when copyright owners’ lawyers come around. If I encourage you to create mash-ups of existing songs, believing that at least some of the time the results will be fair use, have I induced infringement if, some of the time, the results are infringing?

Justice Souter doesn’t get into this question, because Grokster conceded that unauthorized copying using its software would be infringement, but it could become important for other technologies, including a future “Rip. Mix. Burn.” campaign.