Sugar and spice and everything false

The LA Times reports that DNA tests marketed for sex identification of fetuses in early pregnancy are being promoted with unsubstantiated claims: “The Federal Trade Commission, which protects consumers from false and misleading advertising, has warned buyers to be skeptical of at-home genetic tests, which are now unregulated.” But from the story’s reporting, the FTC has reason to do more than warn. More than 100 women have sued one company, Acu-Gen. “Acu-Gen's website lists dozens of clinical studies that it says corroborate its approach, though none of them involved the specific DNA sequence that Acu-Gen says it uses in Baby Gender Mentor and none reported accuracy as high as 99.9%.”

The companies may be relying both on probability – as one disappointed father says, you could flip a coin and refund the money every time you were wrong and still make money on a sex identification test – and on parents’ feelings of guilt in the case of a wrong prediction. It’s hard enough for people to admit they’ve been duped by scientific flimflam. Revisiting a desire for a child of a different sex may be especially psychologically difficult when an actual child is already present. These are exactly the vulnerable consumers that government regulators are best suited to protect – especially given that competitors have little incentive to question the scientific basis of their shared industry. In the consumer/competitor/regulator triangle, the regulator here is the obvious choice to rein in invalid claims.

Of course, that people who use the tests may be considering sex selective abortions adds a significant wrinkle: regulating for false advertising, rather than banning the practice entirely, may be part of the cultural acceptance of the desire to actively select a child’s sex, as this Slate piece suggests.

Lipitor campaign to end

The New York Times reports that Pfizer will end its Lipitor ads featuring Robert Jarvik as a spokesman; his contract was already set to expire next month.

The ads had been attacked for misleading consumers about Jarvik’s qualifications – a pioneer in making artificial hearts, he’s not a cardiologist and isn’t licensed to practice medicine – and about his athletic prowess, using a body double in an ad that implied he was a vigorous rower. Pfizer’s president of worldwide pharmaceutical operations, Ian Read, said: “The way in which we presented Dr. Jarvik in these ads has, unfortunately, led to misimpressions and distractions from our primary goal of encouraging patient and physician dialogue on the leading cause of death in the world — cardiovascular disease…. Going forward, we commit to ensuring there is greater clarity in our advertising regarding the presentation of spokespeople.”

To add in another issue, some of Dr. Jarvik’s former colleagues have complained that the ads wrongly attributed inventorship of the artificial heart to him. (This is unlikely to be material to consumers, but it’s very material to his former colleagues!) As the Times reports, at least one former colleague claims inventorship himself, while three former colleagues argued that credit should go to Dr. Jarvik’s mentor, Dr. Willem J. Kolff, and his associate, Dr. Tetsuzo Akutsu. Even in the brief account in the Times there are other contenders for credit: “a large team that worked on the heart,” and another former colleague, Dr. Clifford S. Kwan-Gett, who “stated that the Jarvik series of hearts were simply different versions of prototypes that Dr. Kwan-Gett had made more than a year earlier.” Dr. Jarvik’s company begs to differ. This reinforces my conviction that attribution problems are already hard enough when there’s no money at stake.

I Have a ... Xerox

Drew Hansen writes on plagiarism and orators in the Houston Chronicle, proposing that political oratory operates under different standards from academic writing. Oratorical reuses that are transformative, are done with consent, or are obvious quotations from near-universally known sources such as the Bible, he argues, are not plagiarism. (I'm a little dubious about the idea that the actual words of the King James Version are currently so well-known that quoting Isaiah will be immediately recognized as quotation by most of the intended American audience, but I'll go with it.)

It depends on what the meaning of "Made in Italy" is

Counterfeit Chic linked to a Consumerist post about this LA Times story: Goods labeled "Made in Italy" may well be made in sweatshops staffed by Chinese immigrants. Implicitly false despite its literal truth? As one owner of a small family business says, "'Made in Italy' ... means tradition, know-how and standards. . . . It means not only made in Italy, but made in the Italian way." Is it time for a certification mark for Italian goods?

New article on teaching IP with AV

Sight, Sound and Meaning: Teaching Intellectual Property with Audiovisual Materials, 52 St. Louis U. L.J. -- (2007).

This short article addresses my experience using audiovisual materials from the Georgetown Intellectual Property Teaching Resources database. I use audiovisual materials extensively in class to allow students to see the subject matter of the cases rather than just reading verbal descriptions and enable them to apply the principles they read about to new, concrete examples. Many students in IP courses have special interests in music, film, or the visual arts, and the database allows me—and other teachers—to present materials that engage them. I have found that students are more willing to speak up in class when they can see or hear for themselves and can point to specific aspects of the underlying materials. I also briefly address the copyright question: should teachers worry about using digital materials in class? Fortunately, the available statutory exceptions are supportive of in-class teaching. Using images and sounds to illustrate litigated cases and hypotheticals is pedagogically valuable and legally justified.

Thomas the Tank Engine of free expression

Schrock v. Learning Curve Intern., Inc., --- F.Supp.2d ----, 2008 WL 224280 (N.D.Ill.)

Plaintiff Schrock was hired to take pictures of toys (Thomas & Friends). These pictures were used on product packages and in catalogs. Schrock later sued, alleging that defendants’ use of his pictures beyond the two-year term specified in their contract was unauthorzied. The district court held that Schrock lacked any copyright in his photos because they were derivative works of the toys themselves and defendants had never granted authority to register any copyright interest in these derivative works.

Prof. Patry covered the question of whether a photograph of a three-dimensional object is a derivative work of that object (he says no; it may, however, be a reproduction, as well as possessing independent authorship in the creative decisions that go into taking a photo). What I don’t understand is why authority to register ought to matter. The derivative works – accepting for the moment that this is what they were – were made with the permission of the copyright owner in the original works. That is all that ought to be required. Of course there is a potential problem of blocking copyrights – but other cases have avoided this by finding no derivative work at all where a translation from two dimensions to three, or three to two, has taken place.

The court isn’t holding that the photos are unauthorized derivative works and that Schrock is an infringer. He’s obviously not. To say that the Copyright Act includes within it an implicit instruction that derivative works may not be registered without the original copyright owner’s consent – such that they’re copyrightable, but no remedy for their infringement is available – seems a stretch. (It’s the Seventh Circuit in Gracen v. Bradford Exchange that did much of the stretching, facing similarly embarrassing circumstances of an authorized derivative work that the original copyright owner commissioned without a contract.) The result is that, assuming Schrock can plead around copyright preemption, he has only contract remedies for the continued use of his photos, even though he alleges he deliberately retained his copyright in the photos.

It might cost Payless more to pay less

adidas America, Inc. v. Payless Shoesource, Inc., -- F. Supp. 2d --, 2007 WL 4482201 (D.Or.)

This product design trade dress infringement case resulted in several rulings of general applicability.

Surveys: Because so many different shoe designs allegedly copied by Payless were at issue, plaintiffs’ survey took only representative samples. Defendant argued that the survey results weren’t evidence of confusion as to the nontested shoes. But, the court held, “[w]here actually surveyed products and subsequently accused products share common and prominent features, a trademark infringement plaintiff need not create new likelihood of confusion surveys for each newly accused product.” In this case, each lot of accused shoes shared two or four parallel, equidistant and diagonal stripes that allegedly infringed the adidas three-stripe mark.

Willfulness: Payless argued that it acted in good faith because it followed the advice of counsel. But for advice of counsel to negate willfulness, it must be competent and it must be reasonable to rely on it. This depends on counsel’s background research; whether the opinions were written or oral; the objectivity of the opinions; whether the attorneys rendering the opinions were trademark lawyers; whether the opinions were detailed or merely conclusory; and whether material information was withheld from the attorney.

Payless obtained “risk assessments from outside counsel who specialized in trademark law. But there were questions of fact as to whether counsel actually reviewed each of the shoes at issue and whether the reviews were conducted before the lawsuit began – Payless can’t have relied in good faith on advice it didn’t have in hand.

Payless argued (in a mirror of the survey argument) that once a particular design had been approved, the approval carried over to similarly designed shoes. But the reviewed shoe lots were not “exactly the same” as the others. They were in different colors and materials, and marketed to different customers (men, women, or children). (Comment: it seems like this should also apply to the survey evidence, unless the surveys covered men, women, and children and different colors.) Some of the reviews also were conducted before the Ninth Circuit held that an earlier settlement between the parties didn’t bar adidas from suing over shoes that used straight-edged stripes, contrary to Payless’ interpretation of the settlement. After that opinion, the attorneys didn’t change their risk assessments, which is at best odd.

Further, there were genuine issues of material fact as to whether counsel’s advice was objective and based on all relevant information. Counsel made “little or no” effort to determine whether infringement or consumer confusion actually existed. They didn’t consider intent – the fact that the Payless shoes were “inspired” by the adidas shoes. They didn’t weigh the various other factors. The most “telling” feature of the opinion letters is that they were conclusory and superficial. In many cases, the opinions were a single phrase or sentence: “Low-Mod[erate]”; “Breaches Adidas Settlement. Mod. hi. Sole piece too close. Use opposing facing teeth.”; “Shoe in dispute, more you buy harder than dispute. Low to moderate risk, but will be in dispute. Change inside and outside away from parallel.”; “No [trademark] issues noted”; “Too close. Mod+ risk.... Already shipped.”; etc.

On the confusion analysis, the court found that adidas submitted “credible evidence of actual harm resulting from the alleged initial-interest and post-sale confusion.” This evidence was a declaration that Payless “directly benefits from initial interest confusion by receiving unearned consumer interest.” Consumers, the declarant continued, are likely to impute to Payless positive traits associated with adidas. Payless also gets business from consumers who want adidas prestige on the cheap. (In other words, Payless is free riding. This is perhaps dilution harm, but it’s not confusion harm; the district court nonetheless held that this was “credible evidence” of harm.)

adidas’s expert declared that the Payless knockoffs would harm adidas: “the presence of the knockoff Payless shoes in the mass market may cause adidas to appear overexposed and thereby lose its premium perception....” And consumers may attribute the inferior quality of Payless shoes to adidas; there is evidence that consumers don’t think highly of Payless shoes.

adidas also submitted consumer survey evidence indicating that 41% of prospective purchasers actually believed that the Payless four-stripe shoe was “made or authorized” by adidas.

Furthermore, adidas submitted sufficient evidence to show actual dilution under the FTDA (since its claim for damages predated the TDRA). Its expert declared that the Payless knockoffs diluted by: “(1) reducing brand equity within the footwear market; (2) negatively affecting the strength of the mark in the minds of consumers; (3) eviscerating the perception of the mark as signifying quality and a premium product; and (4) impacting consumer loyalty associated with the mark.”

However, the Oregon state law dilution claims were preempted by federal patent law. The rarely invoked Sears/Compco/Bonito Boats line of cases holds that states cannot bar the simple copying of an unpatented article. The federal patent bargain – exclusive rights in return for disclosure – depends on the existence of free competition in unpatented designs. So state dilution laws are preempted when they bar the copying of a potentially patentable but unpatented product design without any consumer confusion requirement. Applying state dilution protection to adidas shoe designs would allow adidas a perpetual monopoly on an unpatented product design.

Comment: Though I think this is the right result, it’s interesting that the court didn’t consider the relevance of the existence of federal dilution law in assessing whether dilution law really does conflict with the patent scheme – the Supreme Court has taken the Lanham Act into account in evaluating other preemption arguments.

The court then rejected an aesthetic functionality defense. The Ninth Circuit disfavors aesthetic functionality. If it survives, it’s limited to product features that don’t serve any source-identifying function. Since adidas is attempting to protect its distinctive trademark, the doctrine is inapplicable. (Comment: this is the same reasoning that the Supreme Court rejected in KP Permanent, another case from the Ninth Circuit. If aesthetic functionality is a legitimate defense – which it may not be – it can’t simply be a defense that applies when there’s no confusion, because then it’s not a defense at all, and it’s certainly not a functionality defense, since functionality trumps confusion.)

On plain old functionality, there was an interesting wrinkle: some elements of the adidas trade dress were “intended to be functional in 1969” when they were introduced. But subsequent developments in shoe science revealed that they weren’t functional, and in any event, functionality can change over time to nonfunctionality and then be a protected indicator of source. By modern standards, the flat heel on the adidas design decreases performance, and the stripes and colored heel patch increase the manufacturing cost. There’s no evidence that the combination of features, taken as a whole, serves a utilitarian purpose.

Copyright history conference announcement

By way of Lionel Bently: AHRC Primary Sources on Copyright History Project:

The conference will be Wednesday 19th and Thursday 20th March 2008 at Stationers' Hall, London; it's a comparative examination of copyright history. The conference is the culmination of a research project involving the creation of a digital resource concerning the history of copyright in five key jurisdictions; France, Germany, Italy, the UK and the US, for the period before 1900. The project involves the selection of certain key documents, their digitisation, transcription, and translation. The project will create a free electronic archive of primary sources from the invention of the printing press (ca1450) to the Berne Convention (1886): in facsimile and transcription, translated and key word searchable. The documents will include statutes, materials relating to legislative history, case law, tracts, and commentaries. Editorial headnotes will provide context. The project is entirely publicly-funded by the Arts and Humanities Research Council and benefits from an advisory board of internationally-recognised experts in relevant fields. When complete, the digital resource will be hugely valuable to scholars from all disciplines interested in the history of copyright. More information about the project is available at Primary Sources on Copyright History.

Keynote Speakers: Professor Mark Rose, University of California Santa Barbara, Professor Laurent Pfister, University of Versailles Saint-Quentin, and Professor Karl Nikolaus Peifer Köln University.

Preemption argument swims upstream to die

Farm Raised Salmon Cases, --- Cal. Rptr. 3d ----, 2008 WL 351637 (Cal.)

Plaintiffs’ purported class action alleged that various grocery stores violated state law by selling artificially colored farmed salmon without disclosing the artificial coloring. This allegedly deceived consumers into believing that the farmed salmon was wild salmon and/or partook of wild salmon’s superior quality, freshness, and flavor. Plaintiffs also allege that the additives pose health risks.

The claims were the standard California consumer protection claims: (1) unfair competition under the UCL; (2) unfair or deceptive trade practices under the CLRA; (3) false advertising; and (4) negligent misrepresentation. The predicate laws violated to make out the “unlawful” prong of the UCL claim included the state Sherman Food, Drug, and Cosmetic Law (Sherman Law).

Defendants successfully demurred on the ground that the suit was preempted by §337(a) of the FDCA, and the court of appeal affirmed. The California Supreme Court reversed.

In essence: the Sherman Law adopts federal standards as its own with respect to disclosure of artificial coloring. The FDCA states that food is misbranded if its labeling is false or misleading, and specifically if it contains artificial coloring without disclosure on the label. FDA regulations allow the use of coloring for salmon, but require disclosure of “Artificial Color,” “Color Added,” or a like phrase.

Federal law preempts state causes of action that aren’t identical to federal standards, but does nothing to interfere with identical state laws. Federal law also states that (with exceptions not relevant here) the FDCA can only be enforced by the United States. But, the court reasoned, that provision of the FDCA doesn’t bar private causes of action based on state laws that are identical to federal law. Plaintiffs’ claims are not based on violation of the FDCA, but rather on violation of state law that (not accidentally) is identical to federal law.

Defendants argued that the point of the federal provisions was to allow states to enforce their identical state laws, but not private parties; the court found no indication of that in the statutory scheme. Congress intended to allow state and federal regulation to coexist, and states are entitled to choose to allow private parties to enforce state laws. If Congress had meant to preempt private causes of action based on identical state law, it would have said so explicitly, especially given that food regulation is an area of traditional state police power. The relevant preemption provision deals with about 20 misbranding provisions and is extremely detailed – for example, it excludes maple syrup – and this is further evidence that Congress calibrated its preemption decision carefully. The Supreme Court’s Medtronic and Bates decisions, also refusing to preempt state-law claims based on state law identical to federal law, further supported the court’s conclusion.

In the end, plaintiffs are not seeking to enforce the FDCA, which they cannot do. They are seeking to enforce California law, which is separate in authority though identical in scope. Congress wanted state law to be identical to federal law in the food labeling area, but that’s all that it commanded – it didn’t try to cut back on state enforcement. As the court concluded, “while allowing private remedies based on violations of state laws identical to the FDCA may arguably result in actions that the FDA itself might not have pursued, Congress appears to have made a conscious choice not to preclude such actions.”

Recent reading: pastiche over parody

Zahr Said Stauffer, ‘Po-mo Karaoke’ or Postcolonial Pastiche? What Fair Use Analysis Could Draw from Literary Criticism, 31 Colum. J.L. & Arts 43 (2007):

Stauffer argues that rather than using the ill-fitting parody/satire distinction, courts should look at pastiche – “a genre composed of a number of mismatched or unusually combined elements, styles, or modes” – to assess transformativeness. The Wind Done Gone case reached the right result for the wrong reason:

The district court is right to refer to what Randall does in a few instances as “merely paraphras[ing] Gone With the Wind” and “adopt[ing] almost verbatim” some of the novel’s elements. The point of a postcolonial rewriting is to take the reins back in order to control the direction of cultural representations in the future and correct those representations deemed to be tarnishing or misrepresenting the past. One way to do so is to take the dominant figure’s language and use it, verbatim, in a context that channels power back to the previously oppressed figure.

…. [W]hen power relations over language choice are part of what a rewriting author seeks to challenge and reshape, it may be expected that more protected expression will be borrowed than would normally be allowed. The expression itself is the terrain to be recharted; it is not merely the substance or unprotected idea that the writer wishes to reshape.

…. With TWDG, we see that Randall’s thematization of this language problem has potential copyright implications. Mammy several times uses precisely the same words as she does in GWTW. Yet her saying those same lines in the changed context of the derivative work gives her old lines new, sometimes radicalized, meaning. Now, instead of Mammy being the lone African-American voice that does not speak ‘white’ English, her voice is embedded in a narrative that is dominated by a non-white voice. Mammy’s words take on a new significance and a new empowerment.

I'm not a rower, but I play one on TV

The New York Times has run several stories about Dr. Robert Jarvik’s role as spokesman for Pfizer’s Lipitor. See Drug Ads Raise Questions for Heart Pioneer, focusing on one specific ad:

The ads have depicted him, among other outdoorsy pursuits, rowing a one-man racing shell swiftly across a mountain lake. “When diet and exercise aren’t enough, adding Lipitor significantly lowers cholesterol,” Dr. Jarvik says in the ad.

There are two problems: First, though he is renowned for his work on the artificial heart, Dr. Jarvik is not a cardiologist and has no license to practice medicine, so his qualifications to recommend a heart drug are questionable. Second, he doesn’t row; a stunt double did the rowing. Dr. David J. Triggle, “a pharmacologist at the State University of New York at Buffalo who has written about drug advertising,” criticized the ad: “… I think it’s sending a rather dishonest message — that, he himself taking Lipitor is healthy enough to row up and down whatever stream he was rowing.”

More: Committee Investigates Ad Tactics for Lipitor. Congress wants information about payments to the stunt doubles in Jarvik’s ads, though I don’t understand what payment has to do with the ads’ potential for deception. What Congress is really interested in, it appears, is whether stunt doubles were used in ads other than the rowing ad on which the Times initially reported.

The FTC has acted against false demonstrations that aren’t disclosed as simulations, even when the simulation accurately reflects results that would be achieved in practice. See FTC v. Colgate-Palmolive Co., 380 U.S. 374 (1965). But not-Jarvik’s rowing isn’t really a result of Lipitor, nor would a reasonable person expect to be able to row after taking Lipitor, so the usual rule isn’t directly applicable. Still, the idea that Jarvik is active and athletic enough to row seems to testify to Lipitor’s merits, like a before/after picture in a weight-loss ad, and at a minimum disclosure that the ad used a body double would seem to be required.

The FTC Guides Concerning the Use of Testimonials and Endorsements in Advertising say, among other things, “the endorsement may neither be presented out of context nor reworded so as to distort in any way the endorser’s opinion or experience with the product,” §255.1(b), and showing Jarvik as a rower might be out of context. Likewise, §255.2(b) provides that “Advertisements presenting endorsements by what are represented, directly or by implication, to be ‘actual consumers’ should utilize actual consumers, in both the audio and video or clearly and conspicuously disclose that the persons in such advertisements are not actual consumers of the advertised product.” To the extent that consumers are likely to believe that Jarvik’s body double also uses Lipitor, the ad would seem to violate that provision.

On Jarvik’s credentials, independent of his athletic prowess, §255.3(a) states that “Whenever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser’s qualifications must in fact give him the expertise that he is represented as possessing with respect to the endorsement.” Indeed, the Lipitor ads may be analogous to §255.3(b)’s Example 1: “An endorsement of a particular automobile by one described as an ‘engineer’ implies that the endorser’s professional training and experience are such that he is well acquainted with the design and performance of automobiles. If the endorser’s field is, for example, chemical engineering, the endorsement would be deceptive."

Unfair competition triggers advertising injury coverage

Granutec, Inc. v. St. Paul Fire & Marine Ins. Co., 2008 WL 312146 (E.D.N.C.)

Granutec sells generic OTC medicines. In 1989, it began making a version of the Tylenol Gelcap, thus triggering negotiations with Tylenol’s maker, McNeil. They agreed that Granutec would use a color scheme that differed from Tylenol’s, but in 1994, Granutec changed the colors to mimic the Tylenol Gelcap. McNeil sued, alleging trade dress infringement and false advertising under the Lanham Act, unfair competition and unfair trade practices under state law, and breach of contract.

The court granted a preliminary injunction, and the parties settled, with defense costs over half a million dollars. Granutec sought recovery under insurance polices from Aetna and St. Paul, both of which insured it during the relevant times. Aetna’s policy covered advertising injury including “[m]isappropriation of advertising ideas or style of doing business.” St. Paul’s policy covered advertising injury, including “unauthorized taking or use of any advertising material, slogan or title of others.” The St. Paul policy specifically excluded breach of contract and intellectual property infringement, including “actual or alleged infringement or violation of ... trade dress, trade name, trade secrets, trademarks [or] other intellectual property rights or laws.”

Under North Carolina law, the duty to defend is measured by the facts as alleged in the pleadings. If there’s an arguable fit between the words of the policy and the complaint, the insurer’s duty to defend is triggered.

The court ruled that Aetna’s policy at least arguably covered the state-law unfair competition claim. State law goes beyond covering mere intellectual property infringements, including “false advertising [and] simulation of well known products or trade names.” It goes beyond passing off to cover “selling products which have been ‘mimicked’ in order to exploit a competitor’s reputation in the market.” (Comment: If so, state law seems likely to be preempted under Sears/Compco.) As to its state-law claims, McNeil alleged that Granutec wrongfully took its advertising idea – portraying two Gelcaps on the front of the box in red and yellow; that Granutec traded on its goodwill; and that Granutec’s adoption of the same color scheme was likely to cause confusion. This is arguably within the meaning of “misappropriation of advertising ideas or style of doing business.”

Likewise, the St. Paul policy also arguably covered the state-law unfair competition claim, because it used the functionally equivalent words “unauthorized taking … of any advertising material.” The court didn’t analyze the exclusion for intellectual property violations, though I’m not quite sure why – all the unfair competition alleged here seems to be based on infringement of trade dress, as clearly disclosed by the pleaded facts. Perhaps, to the extent the state law is read to cover dilution, it isn’t within the exclusion, but I’m not so sure about that.

In any event, having refused to defend, the insurers were now liable for the full costs of Granutec’s defense. Lesson: broadly written state causes of action can trigger insurance coverage despite the insurer’s best attempts to avoid same. “Advertising injury” as a term of art just doesn’t seem to be all that helpful, at least for trademark-type cases.

No second bite at federal apple for GlaxoSmithKline

Blue Cross Blue Shield v. GlaxoSmithKline, PLC, 2008 WL 304888 (D. Minn.)

Plaintiffs originally sued in federal district court, asserting state and federal antitrust claims as well as state-law deceptive trade practices and similar fraud claims. The basic allegation is that defendant GSK illegally obtained a monopoly on Paxil and charged supracompetitive prices for it, fraudulently interfering with the entry of generics into the market. The federal complaint was dismissed because plaintiffs, third-party payors, didn’t suffer a direct injury as required by federal antitrust law, and the court declined to exercise supplemental jurisdiction over the remaining claims.

Plaintiffs refiled in state court. GSK moved to dismiss, arguing that the state law claims were preempted by federal patent law, because their alleged basis involved patent misconduct. The state court rejected that argument, and found that plaintiffs’ false advertising and deceptive marketing allegations survived a motion to dismiss, rejecting GSK’s argument that the “learned intermediary” doctrine precluded them.

GSK removed the case and plaintiffs moved to remand. GSK argued that plaintiffs’ based on alleged false marketing and advertising of prescription drugs were preempted by federal law. Defenses like preemption don’t create federal question jurisdiction unless there’s complete preemption. But GSK didn’t argue complete preemption of false marketing claims. Instead, GSK argued that plaintiffs’ false advertising claims must necessarily fail on a variety of grounds. But (in the absence of complete preemption) federal jurisdiction must appear on the face of a well-pleaded complaint, so that argument is not properly addressed to the federal district court, and the motion to remand was granted.

Given the unique procedural history of the case, GSK had no objectively reasonable basis for removal, and plaintiffs were awarded fees and costs.

Gone in 60 Milliseconds

At long last: Gone in 60 Milliseconds: Trademark Law and Cognitive Science, 86 TEX. L. REV. 507 (2008) (PDF).

Abstract: Trademark dilution is a cause of action for interfering with the uniqueness of a trademark. For example, consumers would probably not think that “Kodak soap” was produced by the makers of Kodak cameras, but its presence in the market would diminish the uniqueness of the original Kodak mark. Trademark owners think dilution is harmful but have had difficulty explaining why. Many courts have therefore been reluctant to enforce dilution laws, even while legislatures have enacted more of them over the past half century. Courts and commentators have now begun to use psychological theories, drawing on associationist models of cognition, to explain how a trademark can be harmed by the existence of similar marks even when consumers can readily distinguish the marks from one another and thus are not confused.

Though the cognitive theory of dilution is internally consistent and appeals to the authority of science, it does not rest on sufficient empirical evidence to justify its adoption. Moreover, the harms it identifies do not generally come from commercial competitors but from free speech about trademarked products. As a result, even a limited dilution law should be held unconstitutional under current First Amendment commercial-speech doctrine. In the absence of constitutional invalidation, the cognitive explanation of dilution is likely to change the law for the worse. Rather than working like fingerprint evidence—which ideally produces more evidence about already-defined crimes—psychological explanations of dilution are more like economic theories in antitrust, which changed the definition of actionable restraints of trade. Given the empirical and normative flaws in the cognitive theory, using it to fill dilution’s theoretical vacuum would be a mistake.

Lanham Act claim ordered to arbitration

Oyler v. Financial Independence & Resource Education, 2008 WL 275729 (M.D. Pa.)

Plaintiff Oyler and defendant FIRE entered into a contract providing that FIRE would negotiate settlements from Oyler’s creditors in exchange for a fee. The contract provided for binding arbitration for any claim between the parties “arising from or relating in any way to this agreement.” Oyler later sued under the Lanham Act for false advertising. (Comment: Oyler seems like a consumer here, not a competitor.)

The Federal Arbitration Act (FAA) creates a strong pro-arbitration presumption. A court addressing a motion to compel arbitration must assess (1) whether there’s a valid agreement to arbitrate, and (2) whether the dispute at issue falls within the scope of that agreement.

Oyler argued that the agreement was invalid for unconscionability. The contract specified Florida law, and that choice was valid because FIRE is located in Florida and thus Florida law has a substantial relationship to the contract. Florida law requires both substantive and procedural unconscionability before declaring an arbitration provision unenforceable. Substantive unconscionability requires terms so outrageously unfair as to shock the judicial conscience, while procedural unconscionability relates to the parties’ relative bargaining power and their abilities to know and understand the disputed terms.

The fact that the contract was one of adhesion favored Oyler, but not dispositively, as long as the purchaser is free to obtain similar services elsewhere. Here, debt reduction services were available from other sources, so imbalance in bargaining position did not itself lead to unconscionability. There was no evidence Oyler was incapable of knowing and understanding the terms; in fact, Oyler discussed any contract terms he didn’t understand with FIRE’s representative. The arbitration provision was in the same type as the rest of the agreement and was on the front, and Oyler seperately initialed each paragraph. With no procedural unconscionability, substantive unconscionability was irrelevant.

Absent clear provision otherwise, the arbitrability of a dispute is a question of law. Under federal law, a court should compel arbitration unless the arbitration clause isn’t susceptible of an interpretation that covers the asserted dispute. FIRE’s arbitration clause, covering “any claim or dispute ... arising from or relating in any way” to the agreement between the parties was “a quintessentially broad provision,” as to which the presumption of arbitrability is particularly strong. The clause didn’t expressly exclude Lanham Act claims.

Oyler thus needed to show strong evidence of an intent to exclude Lanham Act claims. He argued that his claim – FIRE intentionally made false statements when promoting its debt reduction services in radio ads – related to conduct that predated the entry into the contract. A panel of the Ninth Circuit, as well as several district courts, have all rejected this argument as applied to arbitration of Lanham Act claims where the allegedly false claims led to the contract at issue. Thus, the court enforced the arbitration clause.

The benefits of singing together

One of the challenges in talking about noncommercial creativity is that people don’t often notice its value, both for individuals and for society. Shared Song, Communal Memory is a recent New York Times story about the merits of singalongs: shared performances not by professionals or experts, but people who like singing to each other. They don’t have to write the songs or even be particularly good singers to benefit from singalongs; the value is in the community.

If there is a natural opposite to gold-plated pop irony and faceless file sharing — music as the American majority knows it in 2008 — this is it. These meetings are earnest, participant directed and person to person: a slow-going, folkish appreciation of American vernacular culture.

Much of this impulse descends from Pete Seeger, who has championed the cause of group-singing for more than 60 years. “No one can prove a damn thing,” Mr. Seeger said in a recent interview, “but I think that singing together gives people some kind of a holy feeling. And it can happen whether they’re atheists, or whoever. You feel like, ‘Gee, we’re all together.’”

…. “A lot of the experience of music in our culture is listening to someone else sing,” [Peter Blood, a Quaker, political organizer, teacher and folk musician] said. “What I find exciting about community sings is that people feel they own the music.”

Transformativeness panel Q&A

Questions for the panel:

Ginsburg: Is there a difference between “purpose” and discursive communities?

Heymann: In the way we might approach the question, perhaps. A focus on purpose makes the author into a hero or a villain. It’s too easy to say we disbelieve an artist’s purpose, as in Koons v. Rogers.

Me: In the folk art/fan art tradition, creators are readers and vice versa – I wouldn’t separate the community from the artist in this case.

Reese: No distinction is apparent in the judicial decisions. Nuñez looked at the newspaper’s purpose, not the readers’ reactions.

Goldstein: All the Tushnet & Heymann examples were top-left corner examples (see Reese’s chart), which is Goldstein’s notion of fair use. Once you start talking about purpose, with no transformation within the four corners of the work, you’re in a dangerous place. If purpose is subjective rather than objective, anybody can win. Example: the superrealist identical copy, as Sherrie Levine makes. What if Alice Randall’s commentary was to copy the book? Different “purpose” just means different market, e.g. translating English to Japanese.

Me, to Goldstein: That view makes it hard to explain Sega, a case of pure copying. Goldstein: That’s a different pattern, reverse engineering.

Heymann: Market considerations can inform how readers react. Translation is supposed to engage readers the same way as the original. (Comment: “is supposed” papers over questions of who’s doing the supposing. Who would have thought that Larry Lessig’s work on translation would link up to his work on copyright?) There’s not enough interpretive distance between the two communities, at least for these purposes.

Ginsburg: What about CleanFlicks? The purpose was to allow viewers to engage with the work differently.

Heymann: The interpretive distance isn’t that great. Jeff Koons is creating a greater distance. (My own view: the difference is that, for CleanFlicks, the point is not to compare the altered version with the original. The interpretive communities with which Heymann is concerned are aware that there is an appropriation and the earlier link in the representational chain hasn’t been erased, whereas CleanFlicks wants to make the original film invisible to its audience. That might actually be okay – I’m not a fan of the CleanFlicks model, but I might still call it transformative, and Congress has endorsed the general project – but it’s not what Koons is doing.)

Reese: The CleanFlicks controversy comes because the Supreme Court did us the disservice of elevating transformativeness too much. The same thing happened before with the commercial/noncommercial distinction.

Q: Sony – same result today?

Goldstein: No. Wrong when decided, but decided within a high transactions cost framework. Thus, the Court used the noncommercial/commercial distinction to set the burden of proof on factor four. Harper & Row shifted the test. Campbell shifted it again, and transformativeness made a lot of sense for a parody case. If a TiVo case came up next, there should be liability.

Q: Courts have worried about allowing third parties to make aesthetic determinations. If we allow audiences to decide, doesn’t that inhibit the creative process?

Heymann: Her proposal is slightly different, though it’s hard to divorce the two in practice. She wants to assess not merit but distance from the original. Do audiences recognize two works as forming separate clusters? Are they engaging with the first work in the same way? It doesn’t matter whether the audience thinks the second work is good. If a second artist engenders no reaction, that could be a problem.

Follow-up: Then the initial creator has the value of the work judged for whether it can be taken by others.

Ginsburg: If Koons had talked the talk in Rogers, would he have won then?

Heymann: Maybe. Contemporary commentary could have helped Koons, but the court in Rogers focused on harm to the creator.

Q: Different audiences always exist. This would destroy ownership, because whoever takes the work into a different context first would win. How do you tell whether the second person has selected a new context the copyright owner wouldn’t have?

Heymann: This is where her theory butts up against the derivative works right. Her concept isn’t designed to answer all questions easily. Distance can mean criticism or commentary. When works are presenting critical approaches, that creates distance. A film version of a novel would have to be evaluated case by case. Some works are faithful and engage in the same way, others are not.

Goldstein: Easily overlooked is that Campbell ended in a remand on market harm. Campbell encourages Orbison to license rap derivatives at once instead of waiting.

Q for me: Are you advocating a system with no copyright enforcement? Should the original copyright owner be able to commercialize a fan novel?

A: Speaking only for myself: No, I’m not against copyright enforcement. One promising solution for enforcement is the EFF (and other organizations’) fair use principles for sites hosting user-generated video, which state that filters shouldn’t automatically filter out video where there’s an audio/video mismatch or where only small portions of the audio and video match; those circumstances indicate that fair use is at least possible and humans should review the matter. As for commercializing a fan novel, in the unlikely event a copyright owner wanted to reprint and sell the exact text of a fan novel (hard to imagine buyers since it’s probably available free online, but fine), I would think some form of revenue sharing could be appropriate, but if the copyright owner commissions someone else to use the same concept, no – that’s just a variant of the common situation that multiple people can use similar ideas.

Q: Are the Richard Prince photos of the Marlboro Man ads fair use?

Heymann: Yes. They recontextualize the ads, and the critical reception reveals they’re transformative.

Q: You can always get someone (say, an academic) to say that a use is transformative. How to implement Heymann’s proposal – a survey?

Heymann: The problem of manipulability exists in purpose inquiries too. An artist has an incentive to talk about purpose. She would look for evidence outside the litigation context, about reception. Look at how the people for whom the works are created are engaging with them. The court can play the role of the reasonable reader.

Q: How should we deal with the third-party infringer who is making money, like YouTube?

Me: The type of works you get when creators are creating for fun and not profit are different – often in socially valuable ways – from the types of works created within a commercial paradigm. The fact that a third party then makes money from running ads alongside those works doesn’t change the transformative nature of the works. As a result, YouTube is disseminating the kinds of works fair use doctrine should favor, and YouTube shouldn’t be liable just because it is a commercial entity. Especially in a commercialized society, commercialized venues may be the only practical ways to distribute new works – distributors don’t regularly have the same intrinsic motivations for creativity that initial authors do.

Reese: Secondary liability doctrine offers help with this answer.

Thanks to Jane Ginsburg, June Besek, the Kernochan Center, the Columbia Journal of Law & the Arts, and the participants at the conference for a rich and engaging day.

Transformativeness: my bit

Me: I don’t have a general theory of fair use. Like Paul Goldstein (and Michael Madison), I think of fair use as a series of practices that vary by circumstances. The concept of prototypes works here – fair use cases fall into categories, and some examples are central to the category while others are more peripheral but still fair, just as a robin is a “better” example of a bird than an ostrich. See George Lakoff’s Women, Fire, and Dangerous Things: What Categories Reveal About the Mind.

I’m interested here in what creators and readers say about fair use, not lawyers. Steven Brust said that he didn’t have any choice about writing an unauthorized Serenity novel. It’s been said that sculpting is a matter of carving a block of marble until the statue emerges; what was inside Brust’s block of marble this time around was a Firefly-class spaceship. The original work spoke to him; it seemed natural to speak back – maybe even rude not to do so. Alice Randall had a similar reaction to Gone With the Wind: the book consumed her, hurt her, made her want to speak back.

There may well be good reasons to limit commercialization of transformative uses to works that we don’t want copyright owners to have any control over – reviews, criticism, parody – but even works that don’t have those features can be transformative, creative responses to existing works. (A side note: I think this is a way to understand the Dr. Seuss case – the court simply didn’t believe that the authors had any desire to speak back to/speak about The Cat in the Hat.)

Connected to the idea of consulting creative communities to define fair use is the idea of user-generated fair use guidelines. The recent fair use guidelines for documentary filmmakers were not negotiated with large copyright owners. Negotiated rules would have been too restrictive – we saw that with the Classroom Guidelines – and, if a use is actually a fair use, the copyright owner has no right to control it anyway. Though the filmmakers have made the most progress in formalizing guidelines, I have focused on a different set of groups of people who create without attempting to get paid: fans.

It’s important to document fan creative practices even if individual creativity is spontaneous and unorganized. We can provide theories, frameworks, and histories to explain the importance of fair use. One example is the use of remixing and fanworks in education. Beginning with familiar texts is a great way to develop writing and other creative skills. It makes students more enthusiastic, gives them confidence to experiment, and offers them access to mentoring communities eager to help bring new members into the fold. This is my advocate hat: this is why I’m happy to be part of the Organization for Transformative Works.

What is different about the perspectives of noncommercially motivated creators? Fan ethics center around (1) adding new creative material, (2) providing credit, whether implicit or explicit, and (3) staying out of the commercial channels of mass media. Commerciality and transformativeness are not just two axes considered in factor-one fair use analysis, but they have a deep structural relation. Noncommercial motives lead people to create things you can’t get in the marketplace. Justice Souter unfortunately quoted “No man but a blockhead ever wrote but for money” in Campbell, but no one who ever made up a story for a child’s amusement should believe that.

But some analysis will claim that freely shared new works are commercial under §107 because they could be licensed. As some courts have said in other contexts, isn’t the fan creator getting something for free for which she ordinarily would have to pay? This formulation is odd with respect to new works because we’re dealing here not with a copy but with an abstract right to create derivative works. The fan isn’t getting something for which she’d ordinarily have to pay because she can’t pay for it; she has to make it. It’s odder still because the licensing schemes in the brave new world of user-generated content are royalty-free: the licensors hope to make money with ads. So the fan creator is getting for free something which … she would ordinarily get for free.

These conceptual oddities signal that the licensing argument is fundamentally flawed. The licensing argument’s circularity is well-known and I won’t belabor it; you can’t create a licensing market for parody by being willing to license. I want to make another point: today, blanket licenses come with holes. YouTube and other licensing deals in the “user-generated content” realm all allow the licensor to suppress any particular work it doesn’t like. It may generally be better to ask forgiveness than permission, but the new licenses offer permission without forgiveness.

Copyright law has never had a very good theory of where creativity comes from. Julie Cohen has suggested that this is because creativity is inherently unpredictable and emergent, inspired by a variety of fortuitous encounters. Tuggable “blankets” don’t support creativity because they require creators to guess what will be acceptable. There are thus normative and practical reasons to leave some reworkings out of copyright owners’ control.

In a commercial society, people perceive and deal with noncommercial works differently (“blockhead” being only one example). This is one reason fanworks don’t interfere with, and in fact support, official markets.

Columbia fair use conference: transformative use pt. 1

Panel 1: What is “Transformative” Use?

Moderator: Jane Ginsburg: This concept used to be known as productive use, and it concerned whether there was a second author or merely “a facile use of the scissors.” Productive use was pooh-poohed in Sony, but resurrected as transformative use by Judge Leval and Campbell. It’s now the favored statement of the first factor, but the concept of critical commentary has been stretched.

Laura Heymann: Courts approach transformativeness from the wrong direction. They focus on the user as author, asking how much the defendant contributed and what sort of artistic process she used. Instead, they should ask how the reader engaged with the defendant’s use. The current focus leads to judicial skepticism when the defendant hasn’t added much, but readers recognize change more readily.

When we try to assess artistic meaning – as opposed to merit – we need to keep in mind that meaning is contextual and dependent on readers’ interpretations. Magritte’s ceci n’est pas une pipe is a key work here – Magritte is right that it’s not a pipe, but a representation of a pipe. He’s trying to disrupt the conventions of connection between representation and reality. There is no original in art itself, but always a reference to something else, and it’s up to the reader to decode and interpret. Campbell transformed Leval: from adding value/yielding new insights to adding new material to the work. This has encouraged lower courts to focus on what the second author added, less on the meaning of the work.

Campbell asked whether the character of a parody may reasonably be perceived. This is consistent with Bleistein, but also with the idea that we should not be focused on the second author but on the reader. Everything is transformative to some extent – there’s no originality in art – so we need other concepts to help draw lines. Her proposal: discursive communities form around particular works, engaging with and commenting on them. We should see if separate discursive communities form around two works; if so, then the second is sufficiently transformative for fair use. This is something like looking for secondary meaning/consumer reaction in trademark.

Discursive communities need not be formal scholarly communities – commenters on a blog post can count. We should look at critical reception, context (art world/museum reactions); second authors’ statements about the work, especially if those authors have stature (e.g., Andy Warhol). Accounting for critical reception allows us to include more appropriation art as transformative. Appropriation art provides a different context or frame and generates a separate interpretive community, as with Duchamp’s urinal and Cage’s 4’33” of silence.

Reader focus could explain the difference between Rogers v. Koons and Blanch v. Koons – there was a shift in the latter decision’s analysis to the interpretive response to Koons. Koons and his lawyers perhaps knew that they had to educate the court about the shift in meaning. They brought the court into the new interpretive community. (Comment: in my reading of the cases, Koons said the same thing in all of them; he was just believed in Blanch.)

CleanFlicks: wouldn’t be transformative, because viewers would perceive the edited films pretty much the same as the originals.

Another effect of her test: could help authors feel that they need not distort their works to ramp up the explicitly parodic elements.

Her desire: shift the inquiry away from courts and materials created for litigation to actual reception – don’t ask who’s speaking, but who’s listening.

Comments: Heymann’s paper made me wonder about the Google cases – the possibility of asking new questions about history or literature because of the ability to search through large quantities of texts might indicate that what Google is doing is creating a separate or new interpretive community than those that form around the individual component texts in the database. Dan Cohen’s Digital History blog routinely addresses such issues.

On the other hand, it seems to me that Heymann’s proposal has some difficulty with performance rights. This is not a unique problem – copyright theory in general has a rough time understanding performance. Songs and plays will generate substantially different interpretive communities depending on the interpreter – e.g., Eminem’s Bonnie & Clyde ’97 versus Tori Amos’s cover of the same song. (The right is one to compensation, not control, with respect to records of song covers, perhaps giving some leeway to transforming covers, but the right to control public performance of dramatic works is the standard control right.) As attractive as I find her theory, the existence of a performance right suggests that the presence of a new interpretive community doesn’t, as a descriptive matter, exhaust the scope of a copyright owner’s rights.

Still working on my notes – more soon.

Tony Reese: He examines the relationship between transformativeness and the derivative works right. Whenever he teaches Campbell, some students say it guts the derivative works right. And the CleanFlicks court seemed to hold that if a use isn’t transformative for fair use purposes, then no derivative work is created. So he analyzed how courts have treated transformation in recent cases.

There are two obvious kinds of transformation: (1) change in the content of a work; and (2) change in purpose from what the copyright owner did/intended. Both appear in Campbell.

A lot of uses that transform the work would fall within the derivative works right, so if we weigh any transformation of the work in favor of fair use, that could swallow the derivative works right. Very few cases expressly attend to the question of derivative works even when it’s clear that the defendant has created one, e.g., a translation. It’s usually impossible to tell whether the court thinks the derivative works right has been infringed, but it is possible to tell whether there’s been change within the four corners of the work.

A descriptive chart showing the possibilities and their outcomes:

	Content transformed	Content not transformed
Transformative purpose	Favors fair use (e.g., Mattel v. Walking Mountain)	Nuñez, Bill Graham, Kelly, Perfect 10: favors fair use
No transformative purpose	Cat NOT in the Hat: disfavors fair use	Disfavors fair use (e.g., Worldwide Church of God)

The transformative purpose/no content transformed cases tend to be defendant victories, and make high-protectionists unhappy (like Paul Goldstein is unhappy). The transformed content/no transformative purpose cases tend to be plaintiff victories, and make low-protectionists unhappy.

What should we make of this focus on purpose? There’s no evidence in circuit court decisions that fair use is swallowing the derivative works right. The mere fact of preparing a derivative work doesn’t count in favor of fair use. Courts rarely even mention it.

The transformative purpose/no content transformed cases, however, may be a small subset category. They involve still visual images, whose content is often very hard to alter and which may need to be used in their entirety even for a transformative use. Quoting a review of a Grateful Dead concert tells you a lot about the entire review, whereas a few square inches of a Grateful Dead poster doesn’t tell you much about the poster; a Google text search excerpt tells you much more than 10% of an image result.

Courts should avoid the CleanFlicks view of the connection between fair-use transformativeness and the derivative works right. Asking whether the defendant prepared a derivative work would be a bad question. The boundaries are unclear: is a review with a 50-word quote a derivative work? Is a collage a derivative work of the photos it contains? (Comment: this echoes the orphan works problem of defining what works users should be able to continue using even if the owner reappears.) Infringement analysis often doesn’t require answering this question because of the overlap with the reproduction right. Courts shouldn’t buy trouble. Tying the two concepts together wouldn’t clarify our understanding of derivative works, especially if the inquiry is really about purpose. The court might be right in CleanFlicks that there’s no transformative purpose, but making an abridged version of a movie could still be a derivative work.

The circuit courts are doing the right thing on this aspect of transformativeness.

Columbia fair use conference: beyond fair use

Panel 3: Beyond Fair Use

Moderator: Clarisa Long

Jessica Litman: (See her article Lawful Personal Use.) Changes in fair use aren’t necessarily stretching or shrinking it, but just moving it. Copyright owners want expansions in rights, but are unwilling to countenance an expansion of fair use. In the time of Williams & Wilkins, the consensus was generally that personal copying wasn’t infringing, but also wasn’t fair; Sony yanked fair use to cover personal copying, but that led to trouble with commercial parodies, so Campbell yanked it back.

We’re asking fair use to do too much. If we think that unauthorized use of works is always infringing, we end up relying on fair use to get us out of any problems that arise. It’s hard for fair use to do what we ask it without expanding it, but if we want to confine its boundaries, we should redefine its tasks. The problem is not §107 but §106 – an essentially nonstatutory expansion, since Congress hasn’t revisited the key issues in 30 years, but judicial and business understandings of the rights have expanded.

Current fair use doctrine is not optimized for Google Book Search, no matter how you want it to turn out, or for individual personal consumptive uses, though it is optimized for The Wind Done Gone. Fair use dates from an era in which copyright didn’t cover individual personal uses (and in which there was no Google, not incidentally). It’s bad at distinguishing lawful and unlawful personal uses. Making that distinction should be understood as a §106 problem. Congress didn’t seem to think it was adopting laws that reached the ordinary behavior of listeners, readers, and viewers.

We need to reexamine our complicity in the sloppy and unbounded expansion of §106 into an unbounded use right.

The Copyright Act should be understand to grant rights to readers etc., not just copyright owners and their assignees. This is a currently unpopular claim. Copyright owners are afraid that even raising reader rights is an attack on the rights of authors and distributors. But authors and distributors are only some of the people that the copyright law is supposed to benefit. The fact that this claim raises hackles is a symptom of our intense polarization, and it’s keeping us from fixing things that are clearly broken.

Copyright has special protection from First Amendment scrutiny, because the freedom to read, listen and view are essential elements of human freedom to think. These are foundational liberties on which all copyright systems are built. So long as copyright leaves individual readers, listeners, and viewers alone, we don’t notice this. Recently, though, copyright owners have asserted more control over how readers read, listeners listen, and viewers view. The traditional contours of copyright law include its white spaces, copyright liberties that are implicit in the scheme and essential to the system’s design. These liberties shouldn’t be invaded without thought and sometimes there is good reason to expand them.

Copyright law was designed in a time when intermediating was expensive; we needed to direct many of the rewards to intermediaries so they’d buy the paper and build the towers. The rationale for reserving so much of the proceeds to distributors is, if not obsolete, at least optional. We could reallocate that surplus to authors or to readers, listeners, and viewers, or both.

This is an argument to make to Congress, but also a reason to think carefully before acquiescing in a construction of §106 rights that allows them to seep everywhere.

Tim Wu: Tolerated use: slightly different from fair use. One of the signal features of modern copyright law is the presence of what we would call technical infringements of copyright law that are not subject to enforcement action, but are tolerated. Maybe this is a consequence of the expansion of §106 as Litman says; you look at these uses and say “maybe fair, maybe infringing.”

Example: Lostpedia, a fan-created encyclopedia for Lost. The site is notable for sheer volume: 3 million changes. The details accumulated for one character, Kate Austen, involve a huge amount of work – and her entry is longer than the entries of most presidential candidates on Wikipedia. There are pages and pages of theories about Lost as well. And it would be hard to analyze Lostpedia for fair use – pictures seem possibly infringing, but there’s commentary that seems like traditional fair use. There are also transcripts for every show. Almost everyone would agree the transcript is a violation of the reproduction right of the underlying script. Yet there’s been no legal action against this site. Every once in a while, the show actually advertises on this site. Is this an implied license? Probably not, but definitely a tolerated use.

Another example: Guyz Nite’s video celebrating Die Hard. The lawyers for the studio sent a takedown notice, but then the marketing department wanted to pay Guyz Nite to put it back up because it was good promotion; the band says it has no formal license for the footage.

Three ways in which the law is or will be adapting to these mass quantities. (1) The rise of systems of opt-in copyright. To activate statutory rights, copyright owners have to give some type of notice to the putative infringer before that person actually becomes liable in some way. (Comment: What I’ve called informal formalities.) It’s like the exceptions for certain public performances that exist in the statute and allow nonprofit performances so long as the copyright owner doesn’t object. Section 512 is like that, pending the outcome of the Viacom case. Orphan works proposal: flip the duty to object to the rights owner. Google Book Search also has that pattern, where Google wants an opt-out system. (Wu suggests teaching a course called “Google,” which I’ve thought about too.)

His purpose here is not normative, but descriptive: the law seems to be dealing with these developments by establishing opt-in. The traditional answer to mass violations of copyrights, or claimed violations, was compulsory licensing. The alternative emerging solution to transactions costs is opt-in.

(2) In reaction to something like Lostpedia, there may be more pressure on interpretation of the adaptation right and perhaps a narrowing. There are two lines of cases, mostly unreconciled, about what counts as an adaptation. The Seventh Circuit has left more white space, in Litman’s terms – not everything you do with a work makes it a derivative work. A Beanie Baby guide is not a derivative work of a Beanie Baby.

(3) Perhaps companies like ABC want to encourage things like Lostpedia. They might consider clear No Action Policies about what they’re not going to act on. This is different from licensing because such policies could change. If they think it’s good for business – which Wu thinks it probably is – they could make the rules clearer. Since people are doing it anyway, that might not be all that important, but perhaps signalling makes a difference.

Randy Picker: There is no fair use right! It’s important to distinguish use and access rights. We understand the rules for owning a piece of paper. But composing a poem on a piece of paper doesn’t change the ownership regime for the piece of paper. Creating the poem doesn’t create an access right to it, and it’s hard to get to a use right without an access right. (Comment: I’m pretty sure I disagree, at least as to works that have been voluntarily disclosed. Wendy Gordon wrote about this extensively in her Yale piece.) Fair use doesn’t trump otherwise applicable law. The statute merely says that a fair use isn’t an infringement; other laws may apply, like obscenity. Also true with respect to the First Amendment: Cohen v. Cowles makes contract law applicable even when you seem to be in a speech situation.

It used to be true that disclosing a work necessarily involved surrendering control. But it’s now possible to distribute works digitally and still exercise control at a distance. So the question is what copyrighted work “locks” we are going to respect.

The Castaway: famous because of the Bobbs-Merrill case, an attempt to engage in retail price maintenance. The Supreme Court rejected this. The record companies tried to do the same thing: selling records labeled “not licensed for radio broadcast.” RCA v. Whiteman rejects this.

If legends fail, contracts don’t. The ProCD case allows the contract to be enforced. DRM is another option. Adding it on to an existing medium, like CDs, generally failed, but integrating it into a new product, as with DVDs and iTunes, has generally been successful.

Two types of use restrictions. The link between fair use and derivative works is exactly the place to be in our thinking. To think about fair use, we have to think about use generally.

The importance of incremental investment in copyrighted works: publisher won’t do the Mandarin translation until it’s seen whether the English version is a success. You get market feedback on the value of the work before you make more investments. Authors are overoptimistic about the commercial appeal of their works. If we force authors to compete with other translators, then the author will take advantage of initial monopoly access to release all versions at once. But that’s inefficient. Likewise, performance rights and printing rights for a play are separate and the author should be able to set different prices for them. He isn’t interested in creation incentives, but in inefficient over and underinvestment. Fair use is a kind of bundling: whenever you sell a CD, fair use rights are part of the bundle, and if you have to sell in a bundle you will increase the price and make consumers worse off. So unbundling is often a good idea for consumers.

Wu: Picker’s theory of derivative works is completely wrong. It’s not about incremental investment. That is part of the effect of the law. But why is the law involved in trying to discourage overinvestment in anything? It’s like the 1960s where we denied market entry because we thought it would encourage waste. If the adaptation right were fully enforced, there’d be no Lostpedia. But the original rightsholder may routinely be wrong about what the markets are. This is the basic problem with prospect theory.

Picker: This is a standard problem – tragedy of the commons, overfishing; you can’t answer the derivative works question without having a discussion about investment. Isn’t your assumption that if we assign the rights to ABC they’ll either agree or tolerate Lostpedia?

Wu: No, we’re lucky that we have lax enforcement. You believe we should eliminate the evils of competition. But competition is good.

Picker: It’s useful to have property rights to figure out what the entitlements are.

Wu: Yes. But I don’t want to assign the secondary market to the original rightsholder. Fair use and derivative works are both about who gets to control secondary markets. In most areas of the economy we don’t give secondary markets to the original rightsholder. Especially in telecom and patent, we’ve retreated from that.

Q: There is a whole lot of original material in Lostpedia from fans, including ideas and conjectures. Maybe what we’re talking about is the big unstated bargain: the law gives us a starting point, and we work from there, whether by license, laxity, or a wink and a nod. It’s hard for your writers to avoid access to all this stuff on the Web, whereas in the past controlling access to unsolicited works was usually a useful barrier to liability in copyright suits against successful Hollywood productions. But the other side of the bargain is: if you put your stuff out there on the web, don’t complain when your ideas show up in the series in the fourth season.

Wu: The question is whether the law should be so far out of step with what even most owners seem comfortable with. Even though Lostpedia is there, copyright is a sword of Damocles. That’s not an ideal outcome.

Q: ABC may have changed its mind about the site, but the law is fairly clear. The sword is there and should be there.

Wu: People who create these sites don’t have any idea whether what they’re doing is legal. And when Wu gave Lostpedia as an exam question, he got 90 different answers to the question of how much of that was infringing, fair use, impliedly licensed. The law is not clear. It’s also a funny situation to make illegal what people do on a regular basis, especially in the area of secondary creativity.

Q: How does JK Rowling’s reaction to the Harry Potter Lexicon fit into this?

Litman: JK Rowling said keep it noncommercial, online, and sexless and it’s okay; they’re suing over print publication of the Harry Potter Lexicon. This is different from what George Lucas does, which is to say “you can only do this on my website, and then I own it.”

Picker: Wu would say that the people creating the “dictionary of spells” are making a fair use and that the Seinfeld Aptitude Test case was wrongly decided.

Q: Lostpedia bears a Creative Commons license. What’s the impact of such licenses on how users/readers think of fair use?

Picker: It’s a powerful viral strategy for spreading a vision of how works should be used.

Q: What about giving fair users lesser rights?

Litman: Reminds her of how other countries treat “neighboring rights.” That doesn’t speak to the hardest fair use problem, which is whether you’re entitled to make the use in the first place, and lesser rights may not be any consolation to people who are unhappy with the idea that their works are being made use of without consent.

Picker: Anderson v. Stallone involved a Rocky sequel – someone who rights up a treatment without permission was denied copyright in that unpermitted derivative. It’s a twilight zone of the law, with uncertainty for the owner of the Rocky rights – what do they have if they use my treatment in their production?

Picker on “traditional contours”: Cohen is important to his analysis because control at a distance is an access question, and Eldred is a case about traditional uses.

Columbia Fair Use conference: Panel 2

Panel 1 was mine; notes on it later, when I've written them up.

Panel 2: The Statutory Factors Reconsidered

Moderator: June Besek

Barton Beebe: Beebe summarized his empirical study on the role of the factors. Reminder to us: transformativeness is probably overrated academically, given its less prominent position in the decided cases. He found no real relation between judicial ideology and fair use outcomes.

Robert Kasunic: Not giving us the official position of the Copyright Office; he took the day off to come here. He wants to find a normative purpose for copyright, which will help us with fair use, which isn’t an ancillary doctrine but an integral part of copyright. The Court has told us that copyright’s purpose is to incentivize authors to create and disseminate works to the public.

How can the second factor assist in this goal? Court cases suggest it’s not that important. Kasunic wants us to reevaluate its scope and purpose. It shouldn’t just be published/unpublished and factual/fictional. Harper & Row led to rigid, deterministic analysis for unpublished works; in published work cases, courts just looked at factual/fictional. We might ask what types of incentives this type of work needs to get created (that could also be a factor four inquiry). The Sega case involves close attention to the type of work – a computer program, which required a different kind of copyright analysis.

Next, after looking at the general, we could ask where a work falls within its category. We can learn more about customary and traditional markets, and the reasonable expectations of authors prior to their creation of a work – what was their incentive to create? Different classes of works are represented by different industries with varying practices and licensing mechanisms. We should ask about a fair return, a return that was enough to provide the incentive to create, not all possible returns. And we also can look at whether there’s a divergence of interests between the initial author and the current owner; if the incentive function is designed to get authors to create, then incentives for the transferee are only indirectly relevant.

Joseph Liu: Seeking modest improvements in predictability within the existing statutory structure. What if we just asked about the purpose and character of the use and the effect on the market, turning it into a two-dimensional balancing test? Kasunic wants to rehabilitate the second factor, and Liu to kill it off. Many cases already deemphasize the second and third factors; Beebe’s work confirms these factors rarely drive results. But expressly abandoning 2 and 3, which often serve to frame the analysis, might allow courts to consider user and copyright owner interests more directly and calibrate their intensity.

Perhaps this would also help intrafactor doctrine. To some extent, courts have looked at types of market harm, but factor one analysis could also be deepened, looking at the types of artforms at issue (documentary, rap) and the benefits of various uses.

Liu largely agrees with Kasunic about the diagnosis, but the remedy (get rid of factor two, removing information versus enhance it, adding information) is where they diverge.

June Besek: How should we be weighing predictability v. nuanced analysis? If you want clarity, you need guidelines. Would removing factors 2 and 3 be any help? People rarely get bogged down in 2 and 3.

Liu: You’ll always have to pick a point on the spectrum between flexibility and security. He admits that his proposal is a thought experiment. Indeterminacy, like the poor, will always be with us. His idea is that stripping out extraneous factors makes it less difficult to think about and predict fair use situations.

Besek: If you get rid of the unpublished nature of the work, you’ve reduced everything to an economic decision about when to publish.

Liu: Yes, and that’s my normative bias.

Beebe: There are a lot of close cases, but if you look at the reversal/appeal/dissent rates, fair use case law is exactly in line with every other area of law. So Beebe tentatively suggests that the case law is not the morass that it appears to be, at least the non-leading cases.

Tim Wu: A friendly question in an aggressive manner: Aren’t you all missing the point? If you believe that judges make up their minds first and give opinions later, then factor analysis is not that important. Then isn’t the real question the treatment of precedent, if we’re interested in predictability? That is, whether judges regard existing fair use cases as creating rules they have to follow in the specific, or the general – e.g., Campbell means that parody is fair use; Harper & Row means that scooping a soon-to-be-published book is unfair. This comes up in the Google cases: if a market emerges for something, can it change the result in Kelly?

Kasunic: Bias is a big problem, even if the judge has no intentions – people view copyright either as a property interest to be preserved or a more limited right that’s a means to an end. Predictability would require agreement on the purpose of copyright, which will always haunt the fair use analysis. Patterns and customs do matter – best practices in different categories of authorship may be the way to go, because you’re differentiating between types of works and uses.

Liu: Goldstein’s view is common-law lawmaking by the federal courts. If that’s right, precedent is key: how tight is the link between past and current cases?

Wu: It’s not clear that someone would be willing to bet the company on a two-factor test either. Predictability comes from precedent.

Ginsburg, for Kasunic: How do we look at markets and time? If the market didn’t exist at the time the work was created, then can the author ever claim a right to it? The market that didn’t exist in Kelly developed by Perfect 10. (Comment: I beg to differ; Perfect 10 didn’t show a general licensing market had developed, just that it had granted a license overseas.) Likewise, if an author writes a story because she feels a compulsion to write it, how do we take that into account if someone then wants to copy it?

Kasunic: It’s important to recognize if a work was created without reference to a market. If the market develops, that’s a windfall, which doesn’t cut in any necessary way but ought to be recognized. His analysis is a way of separating all possible markets, which is an unlimited category, from actual incentivizing markets. That may mean that a newly created work has a more expansive market expectation!

Jessica Litman: Kasunic’s reformulation lets us account for some things that we occasionally pull into factors one and four but shouldn’t. Barbie is an icon, 50 years old, and symbolizes a great deal about how we think about femininity and growing up in this country. She’s a much more appropriate target for commentary than one of the Bratz. Using Gone with the Wind or Barbie as your target is an important indicator for fair use (compare Koons’ use of an unknown photo).

Judge Leval: By the time judges come to discuss 2, they’ve already discussed 1, and they are already implicitly discussing both factors – transformativeness requires consideration of the nature, purpose and character of the first work in order to compare it to the accused work. So 1 and 2 together lead you to comparison.

Kasunic: That’s a reasonable way to approach it. The legislative history of 2 is scant, but some of the things Congress pointed to were the purpose and nature of the original work.

Beebe: His empirical numbers support this idea of merger between 1 and 2 taking place.

Matthew Sag: There’s fundamentally a limit to what we can deduce about fair use factors from litigated cases – the fact that a case didn’t settle makes it anonymous. Most of the impact of factor 2 may be felt somewhere else than the decided cases.

Q: In lots of publishing industries, people rely on factors 2 and 3 more than 1 and 4, so eliminating them would cause a lot of uncertainty!

Liu: good point, and he wants to consider that as part of his thought experiment. (Comment: transitions always cause problems! Just like a making available right would be a tough transition in the US where we’re used to dividing rights up.)

2 and 3 are more objective and less dependent on characterization by plaintiff and defendant. But do they help point us in the direction we want to go? Taking the entire work can be okay, if it’s a reverse engineering situation or Sony or Kelly. So you can get precision, but not accuracy, from using them.

Q: Richard Prince’s photos of Marlboro ads: How would they fit into this?

Liu: He believes that 1 and 4 provide almost all we need to know – market impact (which markets count?) and nature of the use (does the art-world reaction matter? Do we want to encourage appropriation art?). 2 and 3 don’t tell us very much – that the original work is an ad, but also a creative work, points in no particular direction, especially since appropriation art is generally going to appropriate creative works; likewise the fact that Prince copied the whole work doesn’t add much to 1 and 4.

Kasunic: He’d want to focus on the fact that the ad was an ad, to start with.