Saturday, May 31, 2008

Louis Vuitton loses, verily

Louis Vuitton Malletier v. Dooney & Bourke, Inc., SDNY (May 30, 2008) – thanks to Sarah Trombley for the copy of the opinion.

In the latest ruling in this “seemingly endless and often contentious litigation,” the district court ruled once again in favor of D&B on LV’s claim that DB infringed and diluted its multicolor trade dress. (Other phrases from the intro: “shamefully long,” “painfully thin distinctions,” “immature posturing.” Also, Susan Scafidi will presumably be interested to see that the court uses “fashionista” as a noun not requiring any definition.)

LV’s Multicolore bags earned it $145 million in the US as of November 2006, while D&B’s multicolored “It Bags” earned $100 million. LV sued D&B; the court denied relief, but the Second Circuit reversed, holding that it had been error for the court to subject the marks to a side-by-side comparison. Notably, the court appointed special masters to deal with the large volume of expert testimony, and adopted the special masters’ report and recommendations with some modifications.

Because LV sought damages and began the suit in 2004, the court applied the FTDA standards (requiring proof of actual dilution, and, under Second Circuit precedent, both inherent and acquired distinctiveness for fame) rather than the newer TDRA standards.

The court expressed some exasperation that LV continued to tinker with its definition of the mark at issue (a classic problem in trade dress litigation, though also a classic benefit to the plaintiff in terms of tailoring the definition to what the defendant did). The court defined the mark as the LV monogram in 33 colors set against a white or black background. The Second Circuit had already held that the mark is inherently distinctive and has secondary meaning. (I would have thought this was product design, since the mark is a repeated pattern that’s inseparable from the product being sold, and Wal-Mart seems on point. That is, LV isn’t really complaining about a single use of the DB monogram in LV-like colors; its objection is precisely that the whole handbag is covered with monograms, so this isn’t an ordinary case in which a mark is affixed once or in a couple of places to the product. Rather, the design as a whole is what consumers recognize. Sounds like trade dress to me. However, the parties apparently agreed that this was not a trade dress case—and I can see why D&B, a trademark owner with its own powerful interests in enhanced fashion protection, would go along with that.)

In any event, despite strength and proximity favoring LV, D&B prevailed. On similarity, there was no evidence that the similarity was enough to cause a likelihood of confusion among ordinary consumers, whether through initial interest, pre-sale, post-sale, or at sale. The differences between the marks are memorable enough to dispel any likely confusion. The different monograms, and their different positions on the bags, particularly the LV bags’ use of geometric shapes as well as letters, distinguish the bags even “from a distince, in a store window, from across a room, from a passing car,” etc. While all LV monograms use the same color for both letters, the D&B monogram uses different colors. D&B creates a “softer, unfocused” effect, while LV uses “crisp, bold, individual colors that appear more as a collection of distinct colors.”

LV claimed that it had actual confusion evidence; D&B replied that LV had failed to produce a single actually confused consumer, and that after 4 years and hundreds of millions of dollars in sales, such an absence pointed towards no likelihood of confusion. The court agreed with D&B. A “very generous[]” reading of the evidence revealed de minimis confusion at best. Rather, what the evidence suggested was that D&B’s bags were capable of calling LV bags to mind. One young girl, for example, reportedly held her D&B bag up to a LV display and said, “Look, my bag looks almost identical to the Louis Vuitton!” (As smoking guns go, it’s no “Chicken step on Barney.”) The court held that the fact that consumers thought D&B copied LV favored D&B, because it showed that they were distinguishing the two sources. LV may hate being associated with D&B, but association isn’t confusion.

The next key factor was intent. The court had previously found no deliberate fraud by D&B, but LV argued that there was bad faith, including in the creation of a fake “waiting list” for It Bags imitating the actual waiting list for LV Multicolore bags. In addition, LV submitted expert testimony that 6 of the 7 DB monogram colors were similar to LV colors, which allegedly showed bad faith because of the thousands of possible colors D&B might have used. Awareness of the plaintiff’s mark isn’t bad faith if there’s no evidence of intent to deceive. The court held that, while the evidence was thin, a jury could conclude that D&B was “inspired” by the LV mark; however, it went no further than that.

On consumer sophistication, D&B argued that its fashion-conscious consumers were likely to make clear brand distinctions. LV contended that this wouldn’t affect post-sale consumers, and that D&B’s It Bags were targeted at teenagers, who “are presumptively not sophisticated.” (Comment: Hah! The common denigration, in trademark law, of the sophistication of younger consumers just baffles me. The teens targeted by D&B may give out personal information on MySpace and Facebook inappropriately—they are certainly not “sophisticated” for all purposes—but they are board-certified forensic investigators when it comes to fashion.) The court said that it couldn’t “reasonably be disputed” that both parties’ consumers are sophisticated and discerning. In fact, they are “sophisticated, hyper fashion-conscious, and are not likely to be easily confused regardless of their youth.” Even if these factors are diminished in the post-sale context, most cases finding post-sale confusion involve counterfeits.

In the end, the factors pointed towards summary judgment for D&B. Mark strength plus product proximity couldn’t suffice when the other factors tilted against LV.

On dilution, Second Circuit precedent made clear that a dilution claim can’t succeed unless the marks are “very” or “substantially” similar. The differences discussed in the confusion analysis made the marks too dissimilar for a dilution finding, as well. Nonetheless, and doubtless anticipating yet another appeal, the court reviewed the other elements of a FTDA claim. Though LV established fame as of the time D&B entered the market, LV’s evidence of actual dilution was still insufficient as a matter of law. Moseley was clear that evidence of mental association—which was present—was not sufficient to show actual dilution. There was no evidence of impact on the ability of the LV mark to identify and distinguish LV’s products; in fact, much of the evidence of association suggested that consumers thought less of D&B for copying. LV’s market share has only grown since the It Bags were introduced.

As for state dilution, LV’s mark was distinctive, but, using the Mead Data six-factor test for blurring under state law, no reasonable juror could find a likelihood of dilution. Dissimilarity, again, was key. Consumer sophistication favored D&B. Though there was some evidence of intent to associate the D&B bags with LV, that evidence was de minimis and insufficient to outweigh the other key factors. Here, product proximity and renown of the senior mark, while favoring LV, were also insufficient. Renown of the senior mark is only important to the extent that there’s similarity between the marks. No amount of fame can create actionable dilution in itself; fame can lead to dominance in a category, so that people will almost always think of Coke when they think of soda, and even when they think of Pepsi—but that doesn’t mean that Pepsi dilutes Coke.

Secret sharer: Moseley and V's Secret are still at it

V Secret Catalogue, Inc. v. Moseley, 2008 WL 2152189 (W.D. Ky.)

It’s baaaaack! And it has a surprise twist. The Supreme Court reversed the Sixth Circuit and remanded on April 3, 2003. Six days later, the Moseleys filed a motion to vacate the injunction. Sixteen days after that, V Secret replied.

On July 26, 2007, the Sixth Circuit remanded the case to the district court for proceedings “consistent with” Moseley. In the interim, of course, came the TDRA and its new likelihood of dilution standard. Because the case was pending when the TDRA was enacted, and because V Secret didn’t seek damages, the district court correctly determined that the TDRA (and not, in fact, Moseley) applied, as is plain from the statute itself. In other words: the dilatoriness of the court of appeals in carrying out its ministerial task negated the Supreme Court’s ruling as to the Moseleys. And then, when the court of appeals did manage to issue its one-line order, it was blatantly wrong.

Because Moseley no longer governed, the court looked at the Sixth Circuit’s original holding that consumers would “link” a store called “Victor’s Little Secret” to Victoria’s Secret and would likely “automatically” think of the latter after seeing the former. This, the court of appeals had held, was a “classic” tarnishing use. But then again, that was FTDA analysis; the district court determined to start over with the TDRA.

There was no dispute over the fame of Victoria’s Secret. As you may recall, under the TDRA’s blurring factors, the court is invited to consider (1) mark similarity; (2) the distinctiveness of the famous mark; (3) substantially exclusive use of the famous mark; (4) the degree of recognition of the famous mark; (5) intentional association with the famous mark; and (6) actual association.

On similarity, the marks must be “identical” or “nearly identical” or “substantially similar” for dilution to apply at all. The original name, Victor’s Secret, was nearly identical, and the addition of “Little” in small type was not much of a change. Substantial similarity was present.

On distinctiveness, the court adopted the analysis of the court of appeals, which looked to the Abercrombie spectrum to analyze distinctiveness apart from fame (secondary meaning). Victoria’s Secret is arbitrary and thus highly distinctive. The company is engaged in substantially exclusive use of the mark. There is also a high degree of consumer recognition, as shown by the brand’s marketplace success.

The court had previously held that the Moseleys’ innocent explanation for choosing the name—that they were referring to Victor Moseley’s decision to keep his plans to open a store secret from his previous employer—was not credible, and that they intended to create an association in consumers’ minds. The court relied on “the notable similarity between the two marks alone” to discredit this explanation, but also pointed out that Moseley testified that he was unemployed before he opened the store.
The similarities in font (I'm not sure I see those) and the fact that both stores sell lingerie “is too remarkable a coincidence” to accept the claim that the Moseleys didn’t know about Victoria’s Secret.

What, then, of actual association? An army colonel complained to Victoria’s Secret about Victor’s Secret, which was evidence of one person’s actual association. As Moseley said, association is not necessarily blurring, but in assessing likely dilution rather than actual dilution it is still probative. (When does association make dilution more likely, and when doesn’t it matter? Sadly and predictably, courts use the “likelihood” standard to ignore questions about what the heck dilution actually would be, if it existed.)

Given that the only evidence of association came from one offended army colonel (why do discussions of Moseley always talk about his profession? Is it because he’s a man? If the person who complained had been a woman, do you think she’d be a “consumer”?), the court concluded that the association between the marks had not been shown to be likely to impair the distinctiveness of Victoria’s Secret. Though the colonel “readily associated” the two marks, he didn’t “link” Victor’s Secret to the Victoria’s Secret brand. There was “no question in his mind” that Victoria’s Secret was not Victor’s Secret. His outrage was evidence of tarnishment, but not blurring.

Thus, though the factors mostly favored blurring, the evidence of actual reception showed no blurring of the mark’s distinctiveness. Victoria’s Secret chose not to submit any other evidence of actual blurring (and, as a large corporation, could readily have done so if such evidence existed). Victoria’s Secret argued that the court of appeals found dilution by blurring when it concluded that consumers would “automatically” link the two. But the district court concluded that the old court of appeals opinion lacked any factual analysis, and was inconsistent with the Supreme Court’s holding that association could be distinguished from blurring, because association doesn’t necessarily reduce the capacity of a famous mark to identify the trademark owner.

But it wasn’t over: The court also considered tarnishment, which is defined as “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” Tarnishment generally occurs when the plaintiff’s trademark is linked to shoddy products or is portrayed in an unwholesome or unsavory context. And here, Victoria’s Secret finally won. The brand “scrupulously avoids” sexually explicit goods, limiting itself to a “sexy and playful” image, and Victor’s Little Secret sold “unwholesome, tawdry merchandise.” (This has to be the one instance in which someone looked at Victoria’s Secret and thought “Hey, that’s a wholesome mark!”)

Bonus link: What is Victoria's Secret parody (images of bulimia).

Friday, May 30, 2008


A marketing fellow at Frankfurt Kurnit Klein & Selz, a media and entertainment law firm, sent me a nice note about the firm’s new blog focusing on advertising to children—CARU, COPPA, lawsuits involving toymakers, cereal advertising restrictions in the UK, and so on, mostly pretty straight reporting. There are a few months’ worth of posts up now, so if it sounds plausible to any of my readers, they can check it out. My blogroll policy is not so much a policy as it is entirely undefined; once in a while I add or remove links of possible interest to my imagined audience. Anyone is welcome to nominate candidates, but I’ll probably be most receptive to advertising law-related sites, and secondarily trademark law-related sites, because of their relative rarity.

While I'm linking, though, I should really tout, accurately billed as "a webcomic of romance, sarcasm, math and language." Though "programming" should probably have been in there too. One of the folks in the registrar's office at Georgetown law has Exploits of a Mom up on the wall; even if you don't know what "drop table" does, I bet you can figure it out from context. My current favorite is Action Movies--side note, River Tam and I have the same initials! Sadly, I can't kill you with my brain. Anyway, if you check out xkcd, don't miss the little text boxes that pop up when you mouse over the images, either.

Riders on the Storm: Doors members can't use pictures of Jim Morrison at concerts

Densmore v. Manzarek, 2008 WL 2209993 (Cal.App. 2 Dist.)

Raymond Manzarek, Robert Krieger, and John Densmore met in a meditation class in LA in 1965. At Manzarek’s suggestion, they formed a band with Manzarek’s acquaintance Jim Morrison. Over forty years later, the trial court enjoined Manzarek and Krieger from holding themselves out as the band The Doors, and awarded over $3.2 million to Densmore and his partnership with Jim Morrison’s heirs. The court found that defendants had engaged in false advertising and enjoined various forms of advertising of “The New Doors” or “The 21st Century Doors” that deemphasized everything but the “Doors” and that incorporated the classic Doors logo.

Most of the claims in the case focused on the partnership agreements in operation before and after Morrison’s death. I will skip over large portions of the legal analysis, focusing on the overlap between trademark and false advertising claims and on the injunction granted to redress violations of the right of publicity.

A jury found that both sides had breached various agreements, and that defendants had violated the Morrison Estate’s California statutory publicity rights, but rejected the state and federal unfair competition claims submitted to it. The jury also awarded zero damages for breach, but the trial court determined that it could still award lost profits to the plaintiffs, a conclusion upheld on appeal.

The publicity rights claims stemmed from the display of Jim Morrison’s image to the audience at about 30 concerts; the image was shown from 30 to 90 seconds at the beginning of Manzarek’s band’s set. In several cities, ads for the band used Morrison’s voice singing Doors songs, and merchandise used words and phrases associated with Morrison.

The advertising/trademark issues on appeal focused on the fact that the jury found that there had been no trademark infringement or unfair competition. But the court determined that false advertising was an equitable issue and entered judgment for plaintiffs. (Because the jury awarded zero monetary damages for the right of publicity claim, the court awarded $750, the statutory minimum.) On appeal, defendants argued that the court’s false advertising ruling was inconsistent with the jury’s findings on the trademark/unfair competition issues. The jury instructions provided that they should find for plaintiffs if use of the names “The Doors” or “The Doors of the 21st Century” was likely to cause confusion or was likely to deceive people into thinking that use of the names was authorized or constituted unfair business practices or false advertising.

The court of appeals held that the jury verdict wasn’t necessarily inconsistent with the false advertising claim. On the first argument, the false advertising claim requires untrue or misleading advertising, and an ad can be untrue or misleading without causing confusion about source. Comment: true but entirely irrelevant, since the court discusses no element of the advertising that is misleading for any other reason but source identification. The court continued that, under California law, false advertising has slightly different elements than unfair competition; though case law holds that a false advertising violation necessarily violates the unfair competition statute, this is only true as an “abstract proposition,” and a jury might find one without the other, for example if there is no “business practice” for purposes of the unfair competition law. Comment: Again, the court offers no reason to think any relevant element of an unfair competition claim might have been missing here. The court also discounted the jury instructions specifically mentioning false advertising because the jury wasn’t instructed on the elements of false advertising. So, though it was a “close question,” the unfair competition and false advertising claims weren’t duplicates, and the court could find false advertising without defying the jury verdict.

Anyway, the jury’s verdict was only advisory, and the trial court could disregard it, because this was an equitable claim. The trial court found that the advertising was false in that it stated that defendants’ band was The Doors. But the band was not The Doors. It’s true enough that no one seeing the ads would expect to see Jim Morrison perform. But the ad wasn’t for Jim Morrison. It was for the band known as The Doors. (This is, I think, slicing the salami rather fine. What is The Doors, once we admit that consumers know that it’s not a group that includes Jim Morrison? The court implicitly holds, for reasons known best to itself, that a band that includes two of the three surviving original members is not The Doors.)

Defendants can continue to identify themselves as founding or original members of The Doors, subject to limits on placement, wording, and font size, and a ban on using the classic Doors logo or any font similar in style to the classic Doors logo.

The court further sustained an injunction against using Morrison’s name, likeness, voice or image to promote defendants’ band. Here the court turned performance critic: “From an artistic or musical perspective, briefly displaying a photograph of Morrison during or immediately prior to a concert adds nothing to the performance and is, in fact, not a part of the performance.” I suspect most rock critics and performance theorists would disagree; combining audio and visual is a primary reason to attend a live performance. But, the court continued, “[t]he only reason to display a photograph of the iconic Morrison is to suggest that the band is a continuation of his work and artistry--in short, to add Morrison’s luster to the band and thus to profit from his name and likeness,” and that’s what the right of publicity statute bans.

Under the injunction, defendants can use Morrison’s likeness for any “legitimate” purpose, “such as an account of the history of The Doors, or in telling the story of 20th century rock and roll. The only act it prohibits is using Morrison’s name and likeness to promote appellants’ band or their concerts.” When you’re at the concert already, how does using the image “promote” the band? What if the original band members begin the show with reminiscences of “the history of The Doors”? Though the ruling with respect to actual ads makes some sense, the court should have drawn the line at conventional commercial speech. (Note that the ruling for ads only makes sense because concerts aren’t excluded from the California right of publicity statute by the provision that protects ads for “a play, book, magazine, newspaper, musical composition, audiovisual work, radio or television program, single and original work of art, [or] work of political or newsworthy value.”)

The dissent began by pointing out that “[t]he members of our community who diligently served as trial jurors in this case for nearly fourteen weeks would be startled to learn that their months of work counted for nothing.” There was a major screw-up in trial management—a month into trial, plaintiffs informed everyone that their claims were largely equitable, not legal, and the parties continued to fight over the legal/equitable line for months after the trial ended. Under the circumstances, the dissent would have bound the plaintiffs to the jury’s findings, allowing an injunction against further breach of the contract, but not damages.

As the dissent explained in a footnote, the jury apparently thought that everybody involved had behaved badly, justifying findings of liability on all sides without transfer of money. This, the dissent thought, was quite consistent with the evidence: “Densmore was unable or unwilling to tour; but, rather than giving Manzarek and Krieger the go-ahead with his blessing, he blocked them from performing with other musicians as The Doors of the 21st Century. Manzarek and Krieger knew that the rule of the partnership was unanimity, but when Densmore acted unreasonably, they just went ahead in a ‘to-heck-with-him’ manner. The Estates consist of people who have never touched a musical instrument or a microphone but want to take money from Morrison's former band-mates who - in their mid-60s - are out working.”

However, the dissent would have held that the false advertising claim failed. The trial court’s finding of false advertising based on the use of the name The Doors, a photo of Jim Morrison, and the logo/font associated with The Doors was inconsistent with the jury’s finding of no liability on the trademark and unfair competition claims. Moreover, the majority didn’t explain what was false or misleading: “Surely no one buying a ticket in the 21st century to see The Doors in concert would expect to see Jim Morrison perform. He has been dead for some 37 years. Indeed, Morrison vies with Janis Joplin, Jimi Hendrix, and John Lennon for the title of world’s most famous rock musician to have died young.” (The dissent’s obvious correctness on this point was blunted by its introduction of this problem as a question of the line between falsity and misleadingness, which allowed the majority to respond by parsing doctrine instead of explaining what a reasonable consumer viewing the ad might mistakenly think.)

In any event, the dissent would have held that plaintiffs lacked standing to sue for false advertising, because they had not suffered an injury in fact, nor had they lost money or property as a result of the unfair competition. The jury awarded zero dollars to the plaintiffs on their claims, and the plaintiffs conceded at the start of trial that they were not claiming any harm to their catalogue.

Thursday, May 29, 2008

False advertising with a side order of dilution

The LA Times features a story on Mt. Shasta Brewing Co.'s legal troubles. It's beer, but the federal government argues that the bottle cap's reference to marijuana, "Try LEGAL Weed," is false and misleading. (Remember the controversy over Cocaine energy drink? There's also Blow energy powder, with a similar shtick but less publicity.) Here, though, the brewer is actually in Weed, California, so the matter is at least more debatable than the Cocaine issue. But not much more: as the LAT notes, "Weed has a tradition of exploiting the double-entendre of its name. A pithy placard on the way out of town announces 'Temporarily Out of Weed.' Gas stations sell 'High on Weed' T-shirts. (The town, after all, is at an elevation of 3,500 feet.)"

The brewer also gets in a dig at a competitor: "While stomping on him, Dillmann says, the government treats Budweiser with kid gloves, despite the fact that 'This Bud's for You also could be mistaken for marijuana slang.

'They sell Bud. We sell Weed,' he said. 'What's the difference?'"

Wednesday, May 28, 2008

Lawyer in the Dell: bait and switch ads enjoined

AP: New York judge says Dell misled customers

A New York judge concluded today that Dell engaged in repeated false and deceptive advertising of its promotional credit financing and warranties.

State Supreme Court Justice Joseph Teresi ordered the computer retailer to more clearly disclose that most customers don't qualify for free financing or get "next day" repair service.

…"For too long at Dell the promise of customer service was a bait and switch that left thousands of people paying for essentially no service at all," [New York Attorney General Andrew] Cuomo said. "This decision sends an important message that all corporations will be held accountable for the promises they make to consumers."

… The company noted earlier that it had 6 million transactions in New York between 2003 and 2006, with alleged complaints representing only a tiny fraction. Dell also told the court that it has started selective recording and auditing of sales representatives to avoid misrepresentations and has invested millions of dollars in customer service and technical support, significantly reducing customer waiting times on the phone.

According to the judge, Dell ads offered promotions like free flat-panel monitors, additional memory, rebates, instant discounts and financing with no interest or no payments for a period to "well qualified" or "best qualified" customers. However, Cuomo's submissions indicated as few as 7 percent of New York applicants qualified for some promotions.

"Most applicants, if approved for credit, were offered very high interest rate revolving credit accounts ranging from approximately 16 percent up to almost 30 percent interest without the prominently advertised promotional interest deferral," Teresi wrote. …

"Dell certainly has knowledge of the relative numbers of customers who qualify for various promotions," Teresi wrote. "It is therefore determined that Dell has engaged in prominently advertising the financing promotions in order to attract prospective customers with no intention of actually providing the advertised financing to the great majority of such customers. Such conduct is deceptive and constitutes improper 'bait advertising."'

Many customers applied for credit thinking they would get the promotional rate, Teresi wrote. He enjoined Dell from advertising promotional rates without prominently disclosing how many applicants are likely to qualify, as well as the usual credit terms.

Sunday, May 25, 2008

Starving and copying

Virginia Heffernan's NYT column today focuses on thinspiration videos--some of which, at least, can be read as both pro- and anti-anorexia, depending on the audience. They involve a lot of copying and repurposing of existing images in ways that the originals did not intend and might violently reject, and yet one might argue that they also expose truths about mainstream culture and its demands to regulate female bodies. They are transformative, even without explicit commentary explaining their relationship to the original; they also use copying in order to speak in the videomaker's own voice, however disturbing that voice sounds. Some relevant bits:

Thinspo videos profess a range of ideologies, often pressing morbid images into double service, as both goads and deterrents to anorexia.

Thinspiration videos are a cryptic art with rigid rules, as much a formula as a form. As listless, pounding or archly chipper music plays, still photos of one wraith after another surface and fade. ... The soundtracks to thinspiration videos, some of which feature songs explicitly about starvation, are not subtle. Skeleton, you are my friend. I will sacrifice all I have in life. Bones are beautiful. Hey, baby, can you bleed like me?

Filmmakers are reticent with commentary. If they explain their images in any way, it’s with oddly peppy title cards (“Enjoy!” “Thanks for watching!”) or a series of unsigned quotations, compiled as if for a commonplace book. A thinspiration auteur makes her voice heard almost exclusively through these cards .... I’ve never seen a thinspo video with a voice-over or even moving images.

Shooting photos just for a video is also rare. Instead, thinspiration consists of personal, archival and file photos (some taken from Photobucket and other photo-sharing sites) that have been inventively sequenced and edited, often using the so-called Ken Burns effect of pressing in on significant details. ...

[M]any thinspo sites make explicit their opposition to popular culture, approvingly offering images of women deemed “too skinny by media standards.”

.... The second influence [along with women's confessional literature] ... is the so-called recuts: videos that take existing photography and film and use music and new juxtapositions to create a story that’s at odds with a master narrative. (An example: the fictional trailers that tease out a gay, “Brokeback Mountain” plot from virtually every mainstream blockbuster.) Film of runway shows, as it appears on fashion Web sites, presents the models as confident, beautiful, “fierce,” where the same roll, in the hands of a thinspo filmmaker, can make them look disfigured and diseased.

... [W]hat seems most significant about the thinspiration videos is that they’re not propaganda or even entertainment, but an effort, however misguided, at art. One thinspiration filmmaker whose YouTube screen name is “hungryhell,” and who spoke on condition of anonymity to keep her struggles with bulimia private from people who know her, emphasized to me in an e-mail message that her work “represents what I have been feeling at that time in particular.” She added, “The songs I use . . . say exactly what I need to but can’t figure out how.”

Hungryhell’s films are intricate, many of them augmenting the thinspo formula with collage, typography, still lifes, art photography and even painting. I asked her how she does it. “Putting it together is not hard,” she wrote back, explaining that she uses Windows Movie Maker software. “When I am feeling something, it just all comes together.”

When Shirley Manson wrote "Bleed Like Me," she was offering a message about human universals and empathy. But that's not the message that everyone received; some who fetishize suffering saw in it a reflection of their own commitments, and that's how they used it. I can't say that I'm happy that pop culture can so easily be put in the service of thinspiration. But that's a problem with the culture at large, not confined to the people who make the videos.

Saturday, May 24, 2008

Attribution: not always a great idea

Music exam taken by 15,000 students reveals answers in copyright information printed on back.

More on copyright and tanning products

Bill Patry has also posted on the copyright side of the Designer Skin case. As my comment there didn’t show up for some reason, and as it’s actually a point of general interest that I drafted some thoughts on but omitted from my initial post, I thought I’d recreate the comment here. Patry argues that §113(c) is the obvious barrier to the copyright claims—“In the case of a work lawfully reproduced in useful articles that have been offered for sale or other distribution to the public, copyright does not include any right to prevent the making, distribution, or display of pictures or photographs of such articles in connection with advertisements or commentaries related to the distribution or display of such articles, or in connection with news reports.”

But one reading, and perhaps the best one, is that §113(c) allows anyone to take their own pictures of a useful article for ads or news, but not to copy the copyright owner’s pictures of same. I say “perhaps” because I think the text is ambiguous—the use of “making” instead of “reproduction” could be read to mean something other than “reproduction,” i.e., something that required the copier to start out by making its own pictures or photographs, but “making” has to encompass some sort of reproduction or the exception is pretty useless, especially given the breadth of reproduction in the digital age. The restrictive reading of §113(c) imposes some costs on copiers/resellers/newspapers/etc., but not huge ones; on the other hand, it doesn’t do much to benefit copyright owners with legitimate claims either, and does empower anticompetitive claims of the type at issue in the Designer Skin case. (The one thing it does is make clear that Andy Warhol’s Campbell’s Soup cans aren’t fair game just because the lithographs are pictures of useful articles—with Warhol, there is a separate “work” at issue that goes beyond the work reproduced in useful articles.)

Anyway, if the restrictive view of §113(c) is right, it’s no defense to the claim that defendants copied plaintiff’s own “electronic renderings,” whatever that means. But the copyright at issue would then be that in the image, and the creative choices made to render the image, not in the creative elements of the label. And it seems quite possible that there isn’t sufficient originality to justify a copyright in the “electronic renderings” apart from the creative choices shown in the label. From the very fact that the court couldn’t tell whether defendant copied plaintiff’s “electronic renderings,” it’s clear that no Warhol-level creativity (which was pretty low as a matter of artistry, if not as a matter of marketing) is at issue. Especially given the pro-competitive policy underlying §113(c), competitors should only be unable to use photos of useful articles when those photos evince some creativity that is of value independent of the portrayal of the useful article.

In the end, the issue makes good discussion fodder, but Patry and I agree that the court was still wrong on fair use.

Friday, May 23, 2008

False advertising, hubris edition

Lifelock is being sued over its claims to protect consumers' personal information from fraudulent misuses, and part of the plaintiffs' story is that the founder ought to have known his service didn't work because people had successfully used his Social Security number, which he advertises to show the effectiveness of the service, to obtain drivers' licenses and, in one case, a $500 payday loan.

Another interesting point about the dispute is that there are multiple consumer lawsuits (putative class actions) and one lawsuit by Experian, the credit bureau, which alleges that Lifelock "deceiv[es] consumers about the breadth of its protection and abus[es] the system for attaching fraud alerts to credit reports." Experian takes the position that Lifelock is repeatedly "crying wolf" and fraudulently putting fraud alerts on credit reports whether there's been any attempt at fraud or not. As I understand it, the underlying problem is that, in most states, consumers aren't legally entitled to tell the credit bureaus that they don't want any credit offers approved--so if you want to preempt the possibility of identity theft, a fraud alert is the only way to do it. Naturally, concerned consumers--and third-party services relying on economies of scale--use fraud alerts to partially compensate for the inability to put a freeze on their credit.

Experian claims that Lifelock's strategy violates the Fair Credit Reporting Act, which requires consumers to place fraud alerts themselves, and only when they believe they're at imminent risk of identity theft. More on Experian's claims:
Experian alleges that these services can be obtained for free by any consumer, and that Lifelock misleads its customers by implying that one must pay for them. Experian also questions whether LifeLock even has the legal right to request the fraud alerts, which Experian maintains are meant to be placed only by individuals who have a reasonable suspicion that fraudulent activity has occurred on their accounts. Experian also complains that the hundreds of thousands of fraud alerts which Lifelock has placed on behalf of customers have caused enormous damage by requiring Experian to send mandatory written communications to each and every one of those customers.

According to Experian's lawsuit, at least one Lifelock ad claims that the company's services make it virtually impossible for identity thieves to strike, but that fraud alerts are only effective against those particular types of fraud that require accessing a credit report. In other words, says Experian, Lifelock cannot protect against such forms of identity theft as an undocumented worker using someone's Social Security number to obtain a job; or against unauthorized use of a credit card.
Does Experian have standing to make all these claims, which may harm consumers but don't necessarily damage Experian directly? (It has alleged both Lanham Act and California unfair trade practices counts.) Since Lifelock argues that Experian is just suing in order to harm a competitor in the market for credit monitoring services, it would seem to fall within the Lanham Act's standing requirements, at least if we limit Phoenix of Broward to its facts.

See also: a skeptical take on the benefits of Lifelock in the context of this lawsuit.

Anticompetitive copyright claim survives; anticompetitive trademark claim does not

Designer Skin, LLC v. S & L Vitamins, Inc., No. CV 05-3699-PHX-JAT (D. Ariz.)

The court’s order does an admirable job making short work of the ridiculous claim that using keywords to truthfully indicate that one has a trademark owner’s product for sale causes initial interest confusion. The court emphasizes that confusion requires deception, and even if consumers who search using plaintiff’s trademark for indoor tanning products go to the defendant’s resale site first instead of the plaintiff’s, once there they are offered exactly what they were looking for, along with alternatives; there’s nothing confusing there. Plaintiff’s alternate argument that there was initial interest confusion as to source or sponsorship failed for lack of any evidence, which is the right result because plaintiffs can always claim that consumers perceive that any use of a mark must be authorized; this theory swallows up every exception and limitation on trademark law, and they exist for good reasons. The court wisely rejected Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006), which had found initial interest confusion on nearly identical facts.

Unfortunately, the court’s wisdom deserted it when it came to the copyright infringement claims, similarly anticompetitive in that they were plainly asserted to interfere with defendant’s lawful resale of plaintiff’s products. Since plaintiff had only registered the “dimensional artwork” related to its products, the court refused to consider any claim unrelated to the “electronic renderings that appear on [plaintiff’s] website and in its marketing materials.” (As an initial matter, it’s not clear to me that “dimensional artwork” is the same thing as “electronic renderings”—if the plaintiff registered the label, the creative elements of a photo or drawing of the label wouldn’t be covered by the registration, and §113(c) would allow defendant to reproduce images of the label.)

Defendant argued that it didn’t copy, just took photos of the underlying products, but the court found that was a genuine issue of material fact, so it turned to the fair use defense. The court found: (1) defendant’s use was indirectly commercial and “minimally transformative at best,” weighing slightly against fair use; (2) the “electronic renderings” created by plaintiff’s graphic designer, were creative, though they were produced for functional, advertising purposes and were published on the internet, with the net result that this factor also weighed slightly against fair use; (3) the use involved copying of the entire image, which weighed against fair use; and (4) the most important factor weighed heavily in favor of fair use, because there was no market for images of the tanning products, only a market for the tanning products themselves—the defendant’s use “has not caused any market harm, and nor could it, regardless of how widespread its use might be.”

Barton Beebe has found that courts rarely engage in a mechanical tallying of the fair use factors, but this case is an exception: “with three factors weighing against fair use (although two only slightly) and only one weighing in favor of it (albeit the most important one),” the court rejected the fair use doctrine—not even leaving it as a matter for the jury, which I find quite surprising. Instead, the jury would only be asked to consider whether there was actual copying. (If plaintiff isn’t entitled to statutory damages, query what the appropriate measure of damages might be—a reasonable licensing fee? In a world without a market for the images, the reasonable licensing fee is a phantom. I suppose the cost of having new photos taken would represent defendant’s gain from copying, so that’s what I’d go with.)

Matthew Sag discusses a better analysis in another case by the same plaintiff here.

Compounding the error, the court allowed plaintiff’s unfair competition claim to proceed. Though it had dismissed the trademark claims, because plaintiff’s unfair competition count was “based on the alleged infringements of its intellectual property rights,” and because the copyright claim survived, the court also preserved the unfair competition claim. But this is plain error; a state-law cause of action based on copyright infringement is exactly what §301 preempts.

Thursday, May 22, 2008

We built this empire for you

Tom the Dancing Bug gives us the League of Public Domain Properties, on the model of the League of Extraordinary Gentleman, but with a little more Larry Lessig.

Wednesday, May 21, 2008

AdWords Daily Budget is actually monthly budget: false advertising claim proceeds

CLRB Hanson Industries, LLC v. Google Inc., 2008 WL 2079200 (N.D. Cal.)

This putative class action centers on AdWords. Google moved for partial summary judgment on its practice of charging AdWords customers up to 120% of their “Daily Budget,” when the average “Daily Budget” was never exceeded over the course of a month. Google’s statements about AdWords included:

(1) Customers can “[f]ully control [their] ad budget”;

(2) If an AdWords customer accrues clicks that would result in charges of more than 20 percent above a customer’s Daily Budget in a single day, the AdWords system provides an overdelivery credit;

(3) If an ad campaign accrues clicks that would result in charges exceeding more than the number of days in the month multiplied by the customer’s Daily Budget, the AdWords system provides an overdelivery credit at the end of the month.

The court had previously determined that the AdWords agreement was a valid contract. Though “Daily Budget” might imply a daily limit, Google makes clear that the daily budget is not the daily limit in a variety of ways. Daily Budget is the first definition in the AdWords Glossary, and it says:

On any single day, the AdWords system may deliver up to 20% more ads than your daily budget calls for. This helps make up for other days in which your daily budget is not reached. However, you’ll never be charged more than your average daily budget over the course of a month. For example: if your daily budget is $10 and the month has 30 days, you might be charged up to $12 on any single day but your monthly charges will never exceed $300.

Google’s FAQs said the same thing in several logical places. Any customer who investigated the meaning of “Daily Budget” would quickly figure it out. Google disclosed its practice of charging up to 120% of a “Daily Budget” in a way that was “equally as prominent and accessible” as its definition of “Daily Budget.” Thus, the 120% charge is not, in and of itself, a breach of contract, at least when done to make up a prior shortfall.

The court noted in a footnote, however, that it might be a breach of contract for Google to over-serve and charge 120% on one day and then “intentionally” under-serve and undercharge a customer on another day. Google explains the practice as a way of smoothing out uneven search demand across different days, so if it tinkers with the supply that might be a breach.

The court found that triable fact issues remained on whether Google breaches the AdWords contract for “(1) customers running short-term ad campaigns, for less than one month; (2) customers running longer ad campaigns, where the final month of their campaign is a partial month; and (3) customers who pause their campaigns.” There might be a breach if those customers were charged more than their Daily Budget multiplied by the number of days in the campaign. (The implication here is that, absent a change in the contract, Google can’t start off strong and count every delivery—Google only gets to count an overdelivery if there’s been a previous underdelivery.)

Plaintiff also brought California Unfair Competition Law claims based on Google’s practice of calculating charges using a monthly budget, while advertising a daily budget. The standard is whether a reasonable consumer would be misled, even if a statement is true. “A clearly disclosed term or practice is not likely to deceive a consumer,” though there may be unfair competition even without a breach of contract.

Google’s evidence of disclosure included a screen shot showing the “Specify your daily budget” screen from AdWords from “the 2002 period,” which clearly stated: “Your actual daily charges may fluctuate by 20% because of changing search volume, but the maximum you will spend in a 30-day calendar month should be no more than 30 times your daily budget.” But Google didn’t provide the exact dates, nor evidence that plaintiffs actually saw that signup page. Plaintiff’s representative testified that plaintiff first signed on to AdWords in 2002, and that Google’s practice wasn’t clear to it until it received emails in March 2005.

So, the question was whether a reasonable consumer would have been misled into suffering injury by being charged up to 120% of her Daily Budget on a single day. Plaintiffs’ evidence suggested that “Daily Budget” could reasonably be interpreted as a daily maximum. Google has said: “You have complete control over how long you participate in AdWords, and you control the maximum you want to spend per day”; “You have complete control over how much you spend and how you spend it. You choose the maximum cost-per-click (CPC) and the daily budget that fit your advertising goals”; “You also control your overall spending by setting a daily budget (how much you want to pay per day). ... If your daily budget is lower than the recommended amount, Google will deliver your ads evenly throughout the day to keep your clicks at or below your daily budget.” A reasonable consumer could have been misled into thinking that the Daily Budget was the maximum charge for any given day, unless Google’s practice would have been apparent to an ordinary consumer. Google didn’t have enough evidence that its disclosure was “so prominent that a reasonable consumer would necessarily view it. Instead, the disclosure is located well within the AdWords Agreement, a document over 100 pages long.”

There were also triable issues of fact on actual injury from relying on the alleged misrepresentation. One argument is that the system could result in “overexposure” on certain days, which could create difficulties in “meeting demand and maintainting customer satisfaction.” (Comment: Really? Do people run the same search so many times per day that they’d see the same ad and be “overexposed”? And the meeting demand/customer satisfaction argument may look good now, but if I were Google, I’d grab onto this as one reason why class treatment is inappropriate, since that’s absolutely the kind of individualized issue that courts like to use to deny certification.)

Reverse passing off claim fails as false advertising

Landrau v. Solis-Betancourt, -- F.Supp.2d --, 2008 WL 2091125 (D.Puerto Rico)

Some background here. The court found that the homeowners initially contracted with Solis-Betancourt to design a renovation, then decided to build a new house. The homeowners gave defendant Solis a “rough conceptual sketch” of the configuration of the new house, and then they worked together to refine it. After that was done, the homeowners hired Landrau and her firm. The homeowners gave Landrau a sketch of the new home, though there’s a factual dispute over whether Landrau was aware of Solis-Betancourt’s involvement at this point.

More basically, the parties disputed who was the “creative force” behind the architectural design. Solis maintained that Landrau was only hired to provide “technical working drawings” necessary to get building permits. There was evidence that Solis reviewed and modified Landrau’s drafts; modified the building authority-approved plan; and continued working on the project after the permits were issued, whereas Landrau did not. Landrau, however, introduced evidence that both she and the construction manager believed that Solis was only responsible for interior design or decoration, not architecture, and that the design changes during construction were merely “cosmetic.” (These details of the factual dispute make clear that Dastar precludes this claim under §43(a)(1)(A). The “creative force” question is precisely the kind of reverse passing off claim the Court meant to preclude unless it could successfully be pled as a false advertising claim.)

As is often the case, the practicalities of business trumped legal certainty: Landrau didn’t have a signed written contract. She sent the homeowners a letter with a fee proposal and an attached American Institute of Architects form contract which discussed architectural services. But the homeowners didn’t sign the fee proposal or the form contract. The parties dispute whether there was an oral agreement to the contract.

The court first asked whether this was a §43(a)(1)(A) or §43(a)(1)(B) claim, because the plaintiffs’ arguments were ambiguous. (a)(1)(A) covers “false representations concerning the origin, association or endorsement of goods or services (‘false association’ or ‘false designation of origin’); and (a)(1)(B) covers false advertising. Plaintiffs didn’t specify, but did call their claim one for “reverse palming off.” This, the court concluded, occurs “almost exclusively” under (a)(1)(A). In addition, plaintiffs failed to allege that the reverse passing off occurred in commercial advertising or promotion, as required for (a)(1)(B). The court declined to credit plaintiffs’ “revisionist history” in which they’d implicitly alleged that the Architectural Digest article was commercial advertising. Nonetheless, it analyzed the false advertising claim on the merits, as plaintiffs desired (plaintiffs having presumably realized their unsurmountable Dastar problem with respect to (a)(1)(A)).

The unsurmountable problem with a false advertising claim here was different: commercial advertising or promotion. The Architectural Digest article was not commercial speech. It proposed no commercial transaction. Solis-Betancourt didn’t pay AD for the article. Though a partner in Solis-Betancourt proposed that AD do an article on the house, and Solis-Betancourt may have hoped to attract clients (and may have succeeded in doing so) as a result of the article, that’s not enough to make the article commercial speech. The court quoted Croton Watch Co., Inc. v. National Jeweler, 2006 WL 2254818 (S.D.N.Y. Aug.7, 2006): “A plaintiff cannot adequately plead a violation of the Lanham Act by simply alleging that defendant caused a journalist to write the article, the content of which plaintiff finds objectionable.”

Tuesday, May 20, 2008

Architecture and Morality

Interesting case from last year I just happened upon:

Landrau v. Solis Betancourt, --- F.Supp.2d ----, 2007 WL 5173642 (D. Puerto Rico)

In every issue, Architectural Digest profiles several design projects, heavily illustrated. “Each article credits its author, the photographer whose images illustrate it, and the architect and/or interior designer of the featured property.” Paul Sherrill, a partner at the architecture and design firm bearing the name of Solis-Betancourt, wrote to AD describing the firm’s work at the Puerto Rico home of two of the defendants, Ramirez-de-Arellano and Del Valle. Sherrill stated that the firm had developed the architecture and interiors.

AD picked the house and sent Sherrill its standard Design Credit Information form and an Authorization for Publication letter for the homeowners. Solis-Betancourt completed the forms, stating that it was the designer and architect, and that Sherrill should also be credited. The authorization from the homeowners specifically stated they were authorized to allow the magazine to publish photos of the house. When AD’s photographer took more pictures, AD asked Solis-Betancourt to complete fact and credit sheets for each photo indicating the authorship and source of the artwork and furniture shown. The article ultimately included 9 photos, 7 of them interior shots. It didn’t include the architectural plans or discuss the architectural design in great detail. It credited Solis-Betancourt as the architect and interior designer.

Landrau then wrote to AD claiming that her firm, Garcia & Landrau, was the actual architect. Solis-Betancourt responded that Garcia & Landrau had been contracted to expedite working drawings in order to obtain building permits, but “only after he and the client had firmly developed a program, design, and aesthetic direction for the project.” He stated that Garcia & Landrau had been hired for technical skills, and was not consulted on aesthetics and design. Thus, AD declined to print a retraction.

The court refused to dismiss the Lanham Act claims against Solis-Betancourt. The first argument was standing: Solis-Betancourt claimed there was no direct competition between architecture and interior design. But precedent doesn’t require direct competition, only a reasonable interest in being protected against false advertising. (The court didn’t distinguish between claims under §43(a)(1)(A) and (a)(1)(B), which is par for the course in false attribution claims.) In any event, the allegation that Solis-Betancourt holds himself out as an architect would be sufficient to establish competition.

The court relied on Smith v. Montoro, 648 F.2d 602 (9th Cir.1981) (“[I]t is clear that appellant, as one in the business of providing his talents for use in the creation of an entertainment product, is uniquely situated to complain of injury resulting from a film distributor’s misidentification of appellant’s contribution to the product.”). (Side note: has a lot of court cases, which is making linking easier!) The interesting thing about that is that Smith can’t possibly survive Dastar, and the opinion doesn’t discuss Dastar. On the other hand, the instant case may be the kind of reverse passing off case that does survive Dastar, if the physical origin of the architecture is misattributed. But is this case really about physical origin?

For similar reasons, the court rejected Solis-Betancourt’s argument that plaintiffs hadn’t shown any protectable interest or secondary meaning in their work, and thus there could be no likely confusion. The old Smith rule is that improper credit is a false designation of origin, full stop. The only relevant consumer confusion is confusion about who’s responsible; consumers don’t need to care or recognize either of the parties’ names as having trademark meaning. Thus, it was sufficient for plaintiffs to allege that they actually created the architectural design; that Solis-Betancourt falsely designated the design’s origin (this is what makes it sound like a Dastar-barred claim, because it’s the physical embodiment of the design that the AD article covered; on the other hand, as we’ll see, there’s no allegation of copying here); that the designation confused consumers who would then seek out Solis-Betancourt instead of plaintiffs; and that plaintiffs therefore suffered harm.

The copyright claims against Solis-Betancourt, however, failed. Plaintiffs made an obviously frivolous Visual Artists Rights Act (VARA) claim; the Architectural Works Copyright Protection Act (AWCPA) allows photos of a building; and in any event there was no allegation that Solis-Betancourt took any pictures or copied the plans or the design. But what the court referred to as “state law copyright claims” were not preempted. This is entirely mysterious—of course state law copyright claims are preempted. What it seems to have meant is that state law moral rights claims aren’t preempted to the extent they cover subject matter that isn’t covered by VARA. Once again, Dastar throws that reasoning into question, given that the Dastar Court reasoned that allowing a reverse passing off claim for attribution would conflict with the Copyright Act.

AD was more successful in fending off plaintiffs’ claims. Solis-Betancourt is the one who (allegedly) engaged in reverse passing off. AD relied on his representations, but didn’t advertise the project as its own. There was therefore no infringing conduct, not even a possibility of contributory infringement, because AD lacked any knowledge of the infringement. The court rejected plaintiffs’ claim that AD had a duty to investigate who was the architect on the project.

The Copyright Act claims also failed because the AWCPA, as noted above, specifically allows photos of architectural works taken if the building is located in or visible from a public place, and there was no allegations that the building was not in a public place.

Get the lawsuit started: Farm-raised pink salmon case continues

Farm Raised Salmon Cases, 2008 WL 2070612 (Cal. App. 2 Dist.)

This class action alleges that defendants sold artificially colored farm-raised salmon to consumers without disclosing the artificial coloring. The California Supreme Court held that the FDCA didn’t preempt the claims. The case was remanded for consideration of whether plaintiffs stated a claim and whether the primary jurisdiction doctrine applied: did the FDA or the California Department of Health Services get the first crack at the dispute, as the trial court had held?

Under the primary jurisdiction doctrine, a claim may be stayed to allow an agency the chance to resolve some or all of the issues. It’s appropriate when the claim requires resolution of issues within the special competence of an administrative body. The doctrine is best applied when administrative action would allow courts to take advantage of administrative expertise and would ensure uniform application of regulatory laws. Courts should also consider the adequacy of an administrative remedy and the cost and delay to litigants from using the doctrine. If the issues are of a type ordinarily resolved by courts, an administrative agency has no particular expertise, and the applicable regulations aren’t complex, the doctrine doesn’t apply.

The court of appeals concluded that applying the doctrine was an abuse of discretion. The applicable regulations “expressly and unequivocally” require the disclosure of artificial coloring agents. Determining whether the salmon contained artificial colors and whether the labels failed to disclose that fact is not complex and doesn’t require administrative expertise. To the contrary, those are ordinary fact questions. Nor does the FDA provide an administrative procedure to deal with these precise questions; in fact, the FDA itself can only enforce its misbranding authority by filing suit in court.

Further, the court of appeals concluded that plaintiffs alleged a violation of the CLRA (Consumer Legal Remedies Act), which prohibits unfair or deceptive acts or practices and is, by statute, to be liberally construed. The CLRA specifically prohibits “Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have.” Liberally construed, displaying farm-raised salmon that was artificially colored to resemble wild salmon without disclosing the artificial coloring amounts to a “represent[ation]” that the salmon had the same origin and characteristics as wild salmon.

Monday, May 19, 2008

Contract doesn't defeat consumer protection claim

DeAngelis v. Timberpeg East, Inc., -- N.Y.S.2d --, 2008 WL 1969676 (N.Y.A.D. 3 Dept.)

Timberpeg advertised “Timber Frame Homes.” After plaintiffs attended a Timberpeg open house, they met John S. Shafer and John H. Shafer. Both Shafers and a Timberpeg manager told plaintiffs that the Shafers were authorized Timberpeg representatives, and experienced and specially trained Timberpeg builders. Plaintiffs were led to believe that Timberpeg would be involved in the design and construction of their home, supervising the Shafers. Based on these statements, plaintiffs signed an order form containing a limited warranty. The form stated that Timberpeg was merely a supplier of design plans and didn’t guarantee the Shafers’ work. However, plaintiffs claimed that even after they signed, Timberpeg assured them that it would conduct on-site visits and otherwise monitor the construction.

As you can guess, things didn’t work out so well. Plaintiffs ultimately fired the Shafers and hired another contractor to complete the construction.

Plaintiffs’ claims for deceptive practices and false advertising under New York’s General Business Law required allegations of consumer-oriented acts or practices that were materially deceptive or misleading and that caused injury. The test was whether defendants’ representations or omissions were likely to mislead a reasonable consumer under the circumstances. The court found that plaintiffs’ allegations satisfied those requirements. Timberpeg’s ads in a regional magazine, flyers, and open houses touted a “package” of products and services that would produce a completed Timberpeg home. This was consumer-oriented conduct, and Timberpeg’s representations were adequately alleged to be false and misleading.

Timberpeg argued that the contract plaintiffs signed contained a merger clause and specifically disclaimed liability for the performance of the representative who assembled the home. But that doesn’t defeat claims under the General Business Law based on deceptive business practices or false advertising. Moreover, the standard for misleadingness takes into account the reactions of “the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions” (citations and quotations omitted).

The court agreed, however, that plaintiffs’ common-law fraud claim failed. The Timberpeg order form, though insufficient to defeat the statutory claims, disclaimed any agency relationship with Timberpeg representatives and contained a merger clause as well as other limiting language. This prevented any claim of justifiable reliance, as required for fraud.

Once again, we see that statutory consumer protection law is powerful, and quite distinct from the common-law fraud actions with which commercial speech absolutists reassure us when arguing for eliminating the 20th century’s consumer protection measures.

Incomplete FDA records doom Lanham Act claim

Alpharma, Inc. v. Pennfield Oil Co., 2008 WL 1990783 (D. Neb.)

Alpharma alleged that Pennfield falsely advertised that its animal antibiotic (a feed additive), which contained bacitracin methylene disalicyclate and was marketed as Pennitracin MD 50-G, was approved by the FDA for various uses. In earlier proceedings, the court dismissed Alpharma’s complaint on the ground that the FDA was the proper forum, but the Eighth Circuit reversed. Whether Pennitracin had been approved by the FDA for particular indications is a question courts can resolve by interpreting agency publications in the Federal Register and the CFR, whereas whether it should be approved is for the FDA to decide.

The facts are, to put it mildly, complicated. A summary that skims over numerous details and proceedings: the FDA has long worried about the effects on humans of antibiotics added to animal feed to improve productivity. Because the FDA’s records are incomplete, it’s not entirely clear that Pennitracin (under a different name) was approved under the rules that sort of govern the situation. (Sort of, because the regulations have been halfway updated since 1976, the last major revision, but the crossreferences haven’t, leading to some incoherence, and because the FDA is considering changing everything again.)

Pennfield submitted 1969 labels and other evidence to the court and to the FDA that strongly suggested, but did not establish beyond peradventure, that FDA had approved the drug. (The label essentially tracks the labeling of approved drugs from that time.) Pennfield’s predecessor engaged in extensive negotiations with the FDA, which allowed it to market the drug using the claims that were then approved for bacitracin methylene. As a result of an earlier Alpharma lawsuit against the FDA, the FDA opened a notice-and-comment procedure based on the confused factual and regulatory situation, in which Alpharma participated, but the FDA ultimately declined to act on Pennfield in particular, though it suggested that the entire animal-feed antibiotic field would soon face some broad regulatory changes.

The court found that these facts entitled Pennfield to judgment as a matter of law. Given that the FDA itself admits “there exists considerable confusion with respect to the historical facts of Pennfield’s or its predecessors’ approval,” the fact that the FDA may now consider its prior approval may have been erroneous or improvident was not relevant. The FDA, “properly or not,” approved Pennitracin by the time Pennfield put it on the market. The FDA’s use of a notice and rulemaking procedure showed that the FDA believed that Pennfield had an expectation “deserving of due process protection.” Moreover, through all this, the FDA never told Pennfield to stop marketing Pennitracin. Even if Pennfield didn’t have real approval, it was entitled to rely on the FDA’s representations during the 1990s that Pennitracin was approved.

Thus, Alpharma’s falsity and misleadingness claims failed.

Sunday, May 18, 2008

good fences make good lawsuits?

Futuristic Fences, Inc. v. Illusion Fence Corp., 2008 WL 1908471 (S.D. Fla.)

The plaintiffs compete in the market for ornamental fence panels. A former ornamental fence panel maker, Jova, sold Illusion panels of a certain design. Jova sold Futuristic its manufacturing equipment, allowing Futuristic to make the Jova design. Illusion owns a design patent. Illusion fence panels are only sold in Florida, while Futuristic panels are sold in Florida and, through distributors, nationally and internationally.

Illusion sent four C&D notices to Futuristic distributors alleging infringement of the design patent. Futuristic responded by suing. The court granted summary judgment on noninfringement. The remaining claims were unfair competition and false advertising.

Illusion argued that it hadn’t taken any action affecting interstate commerce. The court handily rejected that claim. Nonetheless, the Lanham Act claims failed. They were based on Futuristic’s argument that Illusion’s C&D letters contained knowingly false misrepresentations of patent infringement. The court applied the ever-popular Gordon & Breach test to see whether Illusion’s letters were advertising or promotion covered by the Lanham Act.

The court was guided by Avery Dennison Corp. v. ACCO Brands, Inc., Case No. 99-1877, 2000 WL 986995 (C.D.Ca. Feb.22, 2000), which involved a false advertising counterclaim to a trademark infringement suit. In that case, the court found that the plaintiff’s C&D letter was not commercial advertising or promotion. In particular, “(1) the central message of the letters was the plaintiffs belief that its legal rights were being violated and that it did not want the recipients to continue that violation; and, (2) the purpose of the letter was not to influence the recipients to only buy the company’s goods; rather, the letter sought to inform customers of the alleged infringement and to stop the recipients from promoting or publishing the other company’s goods.”

Futuristic argued that this case was different because Illusion sent its C&Ds before filing suit and threatened to sue the recipients. The court found that these distinctions didn’t matter. The letters were not marketing and sales tools, but an attempt to protect perceived legal rights. Though Illusion was wrong, it wasn’t trying to sell Illusion products. The court found this reasoning particularly applicable because Illusion held an issued patent. The court analogized to the rule that C&D letters don’t confer personal jurisdiction over the sender; they serve an important social purpose in resolving disputes without litigation, and principles of fair play allow a patentee to inform others of its patent rights without subjecting itself to a foreign jurisdiction. Moreover, a warning is required to alleged infringers in order to receive a damage award.

Thus, the court concluded, a patentee has an apparently absolute “right to send cease and desist letters for the purpose of discontinuing allegedly infringing activity without subjecting the patentee to liability under the Lanham Act,” though the court said that its holding was not that a C&D could never be commercial speech. The court noted that there was no evidence that Illusion “asked its attorneys to send the letter for the purpose of discouraging the recipients from buying [Futuristic] fence panels or to encourage the recipients to purchase the fence panels only from [Illusion].” (One must wonder, however, what other purpose the letter would serve than to “discourag[e]” the recipients from buying Futuristic fence panels.)

Art, copying, and YouTube

Virginia Heffernan’s column in the New York Times Magazine has many, many fascinating elements. Pixels at an Exhibition is about a curated exhibit of videos from YouTube. Artists were asked to select pieces from YouTube to illustrate the potential of internet video for art. So here’s the first IP note: the artistry here was in selecting works—choosing what to copy. As Heffernan puts it, the idea is that “artists could use YouTube, like a supply store, slag heap or rag-and-bone shop.” (Did the exhibit get the clip creators’ permission to publicly perform the works? There’s no indication it did.) There’s a bunch of art-world condescension here—a distinction between the raw and the cooked that denies the possibility that art is already on YouTube—but it’s coupled with the thought that selection alone is enough to convert the raw materials into art, which seems like a step beyond Duchamp’s Ready-Mades (which were not conventionally understood to be expressive works before selection) and Pop Art (which generally involved some sort of creation of a new copyrightable work, even if the techniques employed were not necessarily advanced).

But there’s more. Here’s Heffernan’s description of what she considers the best selections:

The shrewdest contributor to the show is the video artist Sue de Beer. De Beer’s first choice of clip is inspired: the final scene from “The American Soldier,” Rainer Werner Fassbinder’s 1970 film. ...

The person who originally uploaded the Fassbinder clip to YouTube was evidently drawn to the song on the soundtrack (“So Much Tenderness”) and framed the clip as a music video. But de Beer finds other significance in it. The threadbare print, the (mostly) immobile camera and the institutional quality of the set suggest a surveillance video. Indeed, one of de Beer’s other YouTube selections shows actual surveillance footage from the 1999 shooting at Columbine High School. She’s pressing the connection. Taken together, the Fassbinder and Columbine images are a good reminder that since 1970, when “The American Soldier” appeared, documentary audiences have had considerable practice reading surveillance and evidentiary images. With Columbine scenes and murders of all kinds playing on thousands of screens in the YouTube googolplex — the Saddam Hussein execution, the shooting of a police officer in New Hampshire — the Fassbinder scene comes to seem like one of them. Just as primitive artifacts placed in the context of high modernism seem to anticipate it, or interpret it, so a vintage film clip set online amid the YouTube flotsam can take on entirely new meaning.

Sounds a lot like transformative purpose, doesn’t it? I’ve been a harsh critic of the use of “transformative” to mean “fair” in fair use cases, but I will admit I’ve lost that battle, and courts have decided that it’s transformation of purpose rather than transformation within the four corners of the work that matters. So here, the Fassbinder clip becomes, within the YouTube context, something other than it was originally. But wasn’t it transformative compared to the original work, then, before De Beer plucked it out and gave it her imprimatur?


De Beer also chose a video that shows the fashion designer Coco Chanel pricklishly fielding interview questions in unsubtitled French while smoking in the middle of her ornate drawing room. It’s moving and even unnerving to see a clip like this liberated from commentary. Even five years ago, you’d never have encountered it except in a documentary about fashion or feminism, where its significance would be assigned by pedantic talking heads. On YouTube, the strange tableau takes on a life of its own. Chanel can’t settle down; she fairly squirms and won’t take a seat in her own house. Similarly uncomfortable-looking is the dancer in de Beer’s final choice, “Footworkin,” an amateur video that shows a living-room dancer flapping and kicking to “My Funny Valentine.” Behind the dancer is a wilted bouquet of foil balloons, whose muted shine recalls the gilded mirror behind Chanel. De Beer draws bright lines with her curatorial choices, proposing connections between disparate images and showing how video clips are reincarnated by the format and community of YouTube.

Courts have often spoken of transformative purpose as proven by the commentary surrounding a copied work. Here, Heffernan suggests, the absence of commentary itself invites the audience to interpret the clip in new ways, especially juxtaposed to other fragments that are not formally part of the same work but are experienced in the same time and place (or “place,” if you will). Later, Heffernan insists that one must watch the entire set of De Beer’s selections, not just choose from them.

Heffernan’s logic makes sense to me, but it does suggest that transformative purpose faces the same tensions that transformativeness did when it meant transformation of the work itself—in the latter case, the tension is embodied in the derivative works right, which allows copyright owners control of (certain) transformations of their works, while here we will be fighting over the “purpose” of the original. Fassbinder, for example, might have an argument that his film already participated in a cultural dialogue over surveillance, violence, and performance.

And Heffernan, writing from a nonlegal perspective, has a limit to what she’ll accept as transformative:

Ronay is … a victim of YouTube. Unlike de Beer, whose rarefied selections make heavy demands on the viewer, Ronay approaches video through search terms, which means he encounters only videos that have been rigged to be found by someone with his interests. What’s more, the videos are prepackaged as proof of a paranormal realm, and that’s no different from how he employs them; he offers no new purpose for the clips.

A final note about IP practice: despite the statement in the print edition that the videos can be watched at the NYT site, the links from Heffernan’s article go straight to YouTube. Under Remeirdes, I’m not sure that gets the Times off the hook for contributory infringement (inducement, anyone?), but then again the Times has a pretty good fair use-squared case—reporting on art that at least purports to transform the underlying works.