Disclaimer requirement for pregnancy centers is unconstitutional

O'Brien v. Mayor and City Council of Baltimore, 2011 WL 572324 (D. Md.)

The Greater Baltimore Center for Pregnancy Concerns, Inc. provides pregnancy-related counseling, but for religious reasons it refuses to provide or refer for abortions or birth control (other than rhythm). It gets rent-free space from Archbishop O’Brien and St. Brigid’s Roman Catholic Congregation, Inc.

Baltimore enacted an ordinance requiring any organization that provides pregnancy related services but does not provide or refer for abortions or nondirective and comprehensive methods of birth control must post a conspicuous sign in its waiting room disclosing this. The court held that this violated the First Amendment.

Defendants argued that they should be allowed to conduct discovery on the harm the ordinance seeks to address, the commercial nature of plaintiffs’ activities, and evidence of deceptive advertising. The court disagreed, because all this would be after-acquired justification, and the First Amendment requires a proper basis for the ordinance at the time of enactment. (It cited a case holding that the government’s justification can’t be invented post-hoc in response to litigation; I think this is a mistake, since the justification for the ordinance is exactly what Baltimore always said it was; the question is whether it can look for more evidence for that consistent justification.)

The Archbishop and St. Brigid’s lacked standing, since all they did was let the Center use their facilities free of charge and weren’t subject to liability for their tenant’s failure to post the required sign. Nor would the signs posted by a tenant be attributed to them. They were noetheless allowed to participate as amici.

The disclaimer sign was compelled speech, and regulated the Center’s speech by mandating the timing and content of the introduction of the subjects of abortion and birth control.

Was the Center’s speech commercial? Defendants argued that it was because the Center offers valuable goods and services (pregnancy tests, sonograms, and options counseling) to pregnant women. However, the overall purpose of the Center’s ads and other communications was not to propose a commercial transaction, nor was it related to the Center’s economic interests. Rather, the Center engaged in speech related to abortion and birth control based on religious and political beliefs rather than commercial interests or profit motives. The Center’s services had value in the commercial marketplace, but that didn’t mean that offering them freely was engaging in a commercial transaction, any more than offering congregants sacramental wine or communion wafers would be. Nonprofit status isn’t the key; the key is the nature of the transaction proposed by the speaker. Anyway, even if the speech had some commercial elements, it was inextricably intertwined with fully protected speech, and the disclaimer couldn’t target only the commercial elements.

The disclaimer would alter the dialogue “between a limited-service pregnancy center and an expectant mother,” which “begins when the client or prospective client enters the waiting room of the center.” This triggered strict scrutiny.

The ordinance was also viewpoint-based, regulating only those who speak about pregnancy-related services from a particular disfavored viewpoint: those providers who will never provide or refer for abortion or birth control services, thus limiting the ordinance’s application primarily, if not exclusively, to those with qualms regarding abortion and birth control. Under the First Amendment, a government cannot "impose special prohibitions on those speakers who express views on [governmentally] disfavored subjects” (quoting R.A.V. v. City of St. Paul, 505 U.S. 377, 391 (1992)). (Query: how does this analysis apply to requirements that abortion clinics disclose various “facts” to women seeking abortions?)

Defendants argued that the ordinance’s purpose was to mitigate deceptive advertising, not to express disagreement with a viewpoint. The legislative record showed that certain pregnancy centers engaged in deceptive advertising, and then proceeded to employ delay tactics to dissuade women from accessing abortions and birth control. A statute isn’t viewpoint-based simply because its enactment was motivated by the conduct of partisans on one side. Hill v. Colorado, 530 U.S. 703, 724 (2000). However, unlike in Hill, the ordinance here doesn’t apply to every health care facility but only to limited-service pregnancy centers.

The ordinance then failed strict scrutiny. The court found that the record contained only sporadic instances of deceptive advertising. Even assuming this was a compelling government interest, the ordinance was not narrowly tailored. (As a side note, the Center argued that the disclaimer forced it to state untruthfully that it doesn’t provide birth control services, when they promote abstinence and natural family planning. Defendants argued that the ordinance allowed flexibility: the Center could state the methods they do promote. But this, the court concluded, would increase the effect on free speech “by highlighting (in a negative manner) those birth-control methods the center supports.”)

A disclaimer was not the least restrictive means of combating false advertising. It had no carve-out for centers that weren’t engaging in deceptive practices. Instead, the city could use or modify existing regulations governing false advertising. Although the present regulations only cover entities that sell goods or services, that could be changed with a content-neutral advertising ordinance applicable to noncommercial entities.

Note that this alternative may assume that it is constitutional to punish mere lying, something that’s not entirely clear.

Barking up the wrong tree: local sign ordinance upheld

Wag More Dogs, LLC v. Artman, 2011 WL 652473 (E.D.Va.)

Wag More is a canine daycare, boarding and grooming business founded by Kim Houghton. Its rear wall abuts an Arlington County (my home county!) park where residents often take their dogs, known colloquially as the Shirlington Dog Park. In July 2009, Houghton began substantial renovations of her building, including commissioning a local artist to paint a mural of dogs, dog bones, and paw prints on the rear wall. The mural, which is 16 feet by 60 feet, faces the Shirlington Dog Park. Arlington County determined that the mural was an improperly large business sign under its Zoning Ordinance. Wag More claimed a violation of its First Amendment rights.

Wag More admitted in its complaint that the mural was commissioned at least in part to “create goodwill with the people who frequented the [Shirlington] dog park, many of whom were potential Wag More Dogs customers.” The artist who designed and painted the artwork explicitly incorporated “some of the cartoon dogs in Wag More Dogs' logo” into the piece, and the court found that the dogs in the mural bear a striking resemblance to the cartoon dogs on the Wag More website.

Arlington’s zoning ordinance strictly regulates the use of signs, defined as “[a]ny word, numeral, figure, design, ... [or] display ... [which] is used to direct, identify, or inform the public while viewing the same from outdoors.” First, a sign permit is required before any sign or advertising is erected, displayed, or altered. In M-1 or light industrial districts such as the one in which Wag More is located, a tenant is limited to three commercial advertising signs up to a maximum of 60 square feet. Commercial advertising signs are defined as “[b]usiness signs identifying the products or services available on the premises or advertising a use conducted thereon.” Businesses that wish to exceed the size limit must apply for a special exception permit, which requires a nonrefundable fee of nearly $1800. The request may be granted or denied based on an assessment of whether the proposed sign will “adversely affect the health or safety of persons residing or working in the neighborhood” or “be detrimental to the public welfare or injurious to property.” There are various escalating penalties for violating the ordinance.

Defendant Artman, the Arlington County Zoning Administrator, determined that the mural violated the zoning ordinance and “locked” Wag More’s building permit, preventing any final inspection of the renovated facility. She offered Wag More the options of painting over the artwork, changing the mural to something other than dog images, applying for a special exception permit, adding lettering to the mural saying “Welcome to Shirlington Park's Community Canine Area,” and/or covering the mural with a tarp until the County Board could act on Wag More’s application for a special use permit. Wag More elected the tarp option, and received a certificate of occupancy that was valid as long as the tarp stayed in place.

Wag More sued, arguing that the definition of “sign” was invalid.

The court first held that intermediate scrutiny applied. Wag More argued that the mural was ex-pressive and that the zoning ordinance was impermissibly content-based. The content neutrality question is whether the government adopted a speech regulation because of disagreement with the message of the speech. Here, the restrictions on signs applied based on size and location as well as whether the signs were commercial. This is content-neutral. Comment: this is why “content neutrality” is not very helpful in current First Amendment jurisprudence. Really, distinguishing between commercial and noncommercial speech is clearly content-based, unlike size and placement limitations; it’s just that the commercial/noncommercial distinction is not suspect under current jurisprudence and thus the government just needs a reasonable justification for doing so.

Thus, the court went on to acknowledge that determining whether any particular display is a regulable “business sign” requires “a general inquiry into the nature of the display and its relationship to the business on which it is displayed.” But this is still only aimed at identifying a general category, rather than at targeting speech because of governmental disagreement with the message. (Yes, because the former is content-based or speaker-based and the latter is viewpoint-based, which really would be a problem.) The County didn’t object to the “happy cartoon dogs” message, but neutrally applied its regulations of business signs.

The nub of the problem was to hold that any government effort to classify speech as a business sign rather than as a non-business-related artwork was content-based discrimination triggering strict scrutiny would nullify the Central Hudson line of cases, which apply lesser scrutiny to restrictions on commercial speech. “Arlington County's regulations are therefore content-neutral as a matter of law ….” Indeed, the county’s size restrictions were quintessential commercial speech regulations, and the mural was itself a classic example of commercial speech, as Wag More itself admitted that one primary purpose was to engender goodwill with potential customers. “Furthermore, it simply cannot be a coincidence that the cartoon dogs on the mural are so strikingly similar in appearance to the cartoon dogs in Wag More Dogs' logo, which it prominently displays on its website and in a small sign displayed over its front door.” On this record, the mural was a business sign as a matter of law.

So, did the zoning ordinance survive intermediate/Central Hudson scrutiny? To do so, the ordinance needed to serve a substantial governmental interest, in a manner in proportion to that interest and not more restrictive than necessary to achieve it. The ordinance set out its purposes: to reduce traffic hazards caused by unregulated signs, ensure the effectiveness of public traffic signs and signals, protect property values by insuring the compatibility of property with that surrounding it, provide an attractive visual environment throughout the County, and protect the character and appearance of the various neighborhoods in the County. Such interests in aesthetics and traffic safety have repeatedly been found to be substantial.

The ordinance was also properly tailored. It didn’t ban commercial signs, but restricted their size in designated areas. “The existence of large, obtrusive advertising signs is the very evil sought to be eradicated, and the accumulation of such signs would create the very traffic hazards and visual clutter with which the County was concerned.”

Admittedly, the ordinance was underinclusive, because people can erect some large noncommercial signs, including a mural on Wag More’s building “that depicted generic images of waterfalls, meadows, flowers, or some other object or scenery entirely unrelated to Wag More Dogs' ‘doggy daycare’ business” or “a County informational mural that included images of dogs but said ‘Welcome to Shirlington Park's Community Canine Area.’” In fact, other buildings in the same district have generic artwork painted on them, and the County was not concerned with them. Wag More argued that the county’s interests in safety and visual clutter were therefore not genuine.

The court disagreed. A single informational sign or generic mural might be just as unsightly or distracting as a large business sign. “But the crucial distinction is that there are far greater economic incentives for businesses to erect advertising signs on their exterior walls than for those same businesses to spend their own money commissioning generic murals on their buildings merely to beautify the surrounding areas.” Commercial speech is much more durable and resistant to chill. “Meanwhile, there is every risk that if large commercial advertising murals like Wag More Dogs' were permitted, other business might well emblazon the sides of their buildings with such paintings. The result, in the aggregate, could be a virtual cacophony of competing commercial signs, with substantially adverse effects on traffic safety and visual aesthetics.”

Wag More next challenged the county’s definition of a “sign” as unconstitutionally vague and standardless. The court disagreed. Recall the definition: a “sign” is “any word, numeral, [or] figure ... [that] is used to direct, identify, or inform the public ...” To prevail on its facial challenge, Wag More had to show that no set of circumstances exists under which the law would be valid, but all it argued was that there were some limited, hypothetical circumstances in which those words might be unclear. In fact, Wag More admitted that in many circumstances, the County's definition of a “sign” was perfectly clear.

Moreover, many cases hold that common words, when given their plain and ordinary meanings, do not need to be exhaustively defined, or even defined at all within a given regulation, to survive a challenge for vagueness. Rather, a statute need only be set out in terms that the ordinary person exercising ordinary common sense can sufficiently understand and comply with. The county’s ordinance satisfied that basic requirement, especially since it adds clarity by spelling out the def-inition of “business signs” as signs identifying the products or services available on the premises or advertising a use conducted thereon. The statutory scheme as a whole therefore gave adequate notice of the types of signs subject to regulation.

Wag More’s argument that it didn’t realize its mural was barred by the ordinance was belied by the facts alleged in the complaint: the nature of its business and the fact that the huge mural features the same dogs in its logo. The mural was “a classic form of branding and advertising, and it plainly ‘directs ... and informs’ the public, ‘identif[ies] the products or services available on the premises, [and] advertis[es] a use conducted thereon.’” Its ignorance doesn’t mean that the mural doesn’t meet the definition of a sign, or wasn’t clearly barred by the 60-square-foot sign limit.

Wag More also challenged Artman’s interpretation of the ordinance in an informal email exchange, when Houghton asked what correction would be needed to change the sign into a mural. Artman wrote:

[For] the mural to NOT be considered a sign, it may depict anything you like EX-CEPT something to do with dogs, bones, paw prints, pets, people walking their dogs, etc. In other word [sic], the mural cannot show anything that has any relationship with your business. If it does, then it becomes a sign.

First, Wag More didn’t plausibly allege that the county used the “any relationship” test to make formal zoning decisions. Virginia law makes clear that informal statements by Zoning Administrators are not official interpretations. Assuming arguendo that this was an official interpretation, it was adequately squared with the ordinance itself. “It is entirely appropriate for the County to draw such distinctions between signs that bear a relationship to the business and those that are unrelated to the business; after all, the former are commercial advertising signs, and as explained above, the government may validly impose greater restrictions on them than on noncommercial speech.” Nor is that standardless or vague because “a reasonable person could easily understand and apply that very basic test.” Nor was it substantially overbroad, judged in relation to the ordinance’s plainly legitimate sweep in regulating potentially harmful commercial speech.

Wag More next challenged the county’s proffered alternatives. First, Wag More argued that the requirement for a special exception permit was an unconstitutional prior restraint. Next, it argued that the proposal to paint “Welcome to Shirlington Park's Community Canine Area” below the artwork would be compelled speech. The court disagreed.

Content-neutral licensing and permitting regulations are not unconstitutional prior restraints as long as they have adequate standards to cabin official discretion and a fair opportunity for judicial review. These existed.

The most interesting part for me is the “Welcome” message. The court found that there was no unconstitutional compulsion given the multiple options offered by the county. “In its discretion … the County offered plaintiff an alternative that would respect its professed desire to retain its ‘happy cartoon dog’ artwork, which the Complaint alleges beautifies the neighborhood, while simultaneously ensuring that the mural complies with the Zoning Ordinance and does not invite other businesses to skirt the 60-square-foot sign limitation with similar paintings.” This offer in the interest of reaching a mutually acceptable compromise did not constitute a First Amendment violation. (Suppose the county now offers to grant the exception if Wag More adds the message—would that be an unconstitutional exaction under Nollan/Dolan?)

Betty Boop as a Material Girl

Fleischer Studios, Inc. v. A.V.E.L.A., INC., No. 09-56317 (9th Cir. Feb. 23, 2011)

Prominent among the many interesting features of this case is its revitalization of International Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980), which found that trademarks were not being used as marks, but were aesthetically functional, where consumers wanted to display the marks as signs of allegiance rather than using them as indicators of source. So here with images of Betty Boop.

Unpacking this a bit, a product feature is functional when the feature is what consumers seek to purchase, regardless of source. To put it in the way I favor, the source is not material to a reasonable consumer of defendants’ goods, as long as those goods actually portray Betty Boop, which is something that is almost tautologically true (or, in economic lingo, is a search attribute, easily confirmed before purchase). I was particularly struck by the court’s citation of Dastar in further support of its conclusion, because Dastar itself involved one of the few modern applications of materiality reasoning to a §43(a)(1)(A) case. (All the more notably so because, as the Court acknowledged, authorship of expressive works is one of the few situations where creative input is likely to be material to consumers; but, in setting a general rule, the Court appealed to the intuition that the source of the idea behind a product isn’t usually material.) As I argue in my forthcoming piece on the Lanham Act understanding Dastar and Job’s Daughters as materiality cases and rediscovering materiality in trademark cases would be a really good idea, not least because it would help reconnect §43(a)(1)(A) to its sister §43(a)(1)(B).

insurer not entitled to reimbursement for defense of non-covered claims

Welch Foods Inc. v. National Union Fire Insurance Co., 2011 WL 576600 (D. Mass.)

The Pom subfield breeds insurance litigation: Pom and a consumer class sued Welch in 2009 for unfair competition/false advertising. Welch tendered its demand for indemnification and defense to all three of its insurers, two of whom refused to defend. The third, Axis, agreed to defend under its 2008 policy subject to an express reservation of rights. The court granted declaratory judgment in favor of each of the companies, and Axis moved to alter or amend the judgment to include reimbursement of the amount it paid Welch in defense costs. (So, basically, advertising injury insurance is kind of like health insurance in this country, in that it doesn’t actually pay for most of the stuff that happens? Nice work if you can get it!)

The remaining question was whether Axis was entitled to reimbursement of over $300,000 in defense costs it paid before the court determined that it had no duty to defend. California holds that an insurer that reserves its right to reimbursement is entitled to the same when it is ultimately determined that the policy at issue never afforded any coverage, which avoids unjust enrichment. If no claims are even potentially covered by the policy, then there was never any duty to defend. There are cases where claims are potentially covered but not actually covered; an easy example would be when a claim could be made out without showing intentional conduct, and then the plaintiff ultimately shows intentional conduct. In such a case, the exclusion for intentional conduct would apply, so the insurer would have had a duty to defend but no duty to indemnify. By contrast, where there was never any duty to defend, the duty to defend was not extinguished: it never existed.

Other courts, including the Pennsylvania Supreme Court, hold the contrary: the insurer has an absolute duty to defend claims that are potentially covered, and this duty is not extinguished by a court's later determination that the claims are not covered. Thus, the insurer is not entitled to reimbursement for advanced defense costs. The duty to determine potential coverage is on the insurer when it receives notice of the complaint from the insured.

The policy here was “notably silent” on the question of reimbursement, providing only that Axis had a duty to defend claims arising under the policy.

The court began with “the principles that the duty to defend is broader than the duty to indemnify, and that it is triggered by the potential of liability, not an adjudication that the claims are covered.” When allegations are reasonably susceptible to an interpretation that states a covered claim, “the insurer has a duty to defend that is not extinguished by a court or jury's determination that the facts did not bear out a proper claim.” While the determination of claim coverage may be difficult, exposing the insurer to a risk of suit if it wrongfully denies coverage, it’s the insurer’s duty (not to mention its business) to make the decision. Thus, the court concluded, “the insurer bears the responsibility for making this determination, and the concomitant risk if its decision to advance fees is wrong.” Reimbursement denied.

Spot the IP Issues

It's actually pretty impressive.

Guest Post: David Fagundes on Keller v. EA

RT: I'm very pleased to offer a summary of the arguments in this important right of publicity case provided by David Fagundes of Southwestern Law, who attended the argument.  I'll let David take it from here:

Today, the Ninth Circuit heard argument in Keller v. Electronic Arts., Inc.  Keller, a college football player, had filed a complaint in the Northern District of California against a number of defendants including Electronic Arts (“EA”) on a several theories, including a violation of his rights of publicity under California statutory and common law.  EA filed a number of responsive motions, including a motion to strike the complaint pursuant to California’s anti-SLAPP statute.  The District Court (Judge Wilken) denied the motion last February, concluding that Keller had shown a sufficient likelihood of success in overcoming EA’s First Amendment defense to his right of publicity claims.  EA appealed that denial, leading to this morning’s oral argument before a panel of Rymer, Bybee, and Quist (W.D. Mich., sitting by designation). 

            Appellant’s opening argument

            Kelli Sager argued for appellant EA.  Sager began by stressing the transformative character of the video games in which Keller and other college athletes’ likenesses appears.  Resisting Keller’s argument that the exactness of EA’s depiction of athletes should be dispositive, Sager urged the court to look beyond EA’s accurate portrayal of players themselves, and instead to consider the player avatars in the overall context of the video game medium.

            A colloquy about two related cases, ETW Corp. v. Jireh Publishing, Inc. (6th Cir. 2003) and Hilton v. Hallmark Cards (9th Cir. 2009) ensued.  Sager argued that ETW in particular favored EA’s position because it regarded a relatively accurate depiction of Tiger Woods as transformative when viewed in the context of a poster featuring numerous other elements.  Sager also analogized video games to film, and cited Gugliemi v. Spelling-Goldberg Prods. (Cal. 1979) as one case in which filmmakers’ rights to accurately depict celebrities were held protected by the First Amendment against celebrities’ asserted rights of publicity. 

            The court inquired about the relevance of video games’ interactivity, and Sager argued that their interactivity increased rather than diminished the force of EA’s First Amendment defense, noting recent Ninth Circuit precedent that tattoos (which involve substantial user input as part of the creative process) constitute protected First Amendment expression (Anderson v. Hermosa Beach, 9th Cir. 2010).  Sager pointed out that EA video games allowed player avatars such as Keller to be modified dramatically, so they may not end up even being recognizable as the actual player on which they were originally based.

            Sager urged the court to apply the test articulated in Rogers v. Grimaldi (2d Cir. 1989), claiming that the use of player identities is artistically necessary to EA’s video games, and that the use of those identities is not explicitly misleading.  Sager suggested that a contrary holding would put in jeopardy the legality of many films, including recent Academy Award nominees The Social Network and The King’s Speech.

            Finally, the court inquired about the public interest test for First Amendment defenses to right of publicity claims, and Sager suggested that EA would prevail if this test were applied as well, observing that federal courts had upheld the use of player statistics in fantasy leagues on similar theories.

            Appellee argument

            Steve Berman argued for appellee Samuel Michael Keller.  Berman began by citing Zacchini v. Scripps-Howard Broadcasting (U.S. 1977) in order to stress that the First Amendment does not provide a limitless defense to individuals having their identities financially exploited without their consent.  Judge Rymer asked what financial interests amateur athletes can have, and Berman responded that by monetizing their identities in the context of a lucrative video game, EA had created that financial interest.

            Turning to transformative use, Berman stressed that the purpose of EA’s game is to achieve realism, quoting EA’s slogan, “If it’s in the game, it’s in the game.”  Berman suggested that Winter v. DC Comics (Cal. 2003) provided more appropriate benchmark to transformativeness, and that it required the court to focus on whether EA had transformed Keller’s image itself, rather than just placing Keller’s image in a context that is itself transformative.  Berman also dismissed the relevance of EA’s point that player avatars can be modified by users, pointing out that the possibility of future modification does not change the fact that EA’s initial depiction of players is nearly verbatim.  Berman pointed out that the unprotected T-shirt images of the Three Stooges found to be unprotected by the First Amendment in Comedy III v. Saderup (Cal. 2001), could also have been modified by wearers so that the images ended up being unrecognizable.

            In terms of the public interest test, Berman distinguished cases upholding First Amendment defenses to sports fantasy leagues’ using player statistics without permission on two theories, arguing that player statistics are newsworthy facts of public interest, while EA’s player avatars are simply exact (and not particularly newsworthy) depictions of college athletes. 

            Berman also resisted application of the Rogers test, pointing out that it was a case exclusively about the titles of artistic works, and also that Comedy III provides a much more apt way to balance First Amendment concerns when unauthorized uses of images are at issue.  Berman also urged application of the “predominant use” test developed in Doe v. TCI Cablevision (Mo. 2003), whereby the right of publicity trumps First Amendment concerns if the predominant use at issue is commercial exploitation rather than expression.  Berman illustrated the point by saying that the unauthorized depiction of a person on a Wheaties box was predominantly commercial (and therefore invalid despite the First Amendment), while the unauthorized depiction of a person in a film was predominantly expressive (and therefore protected under the First Amendment).

            Appellant rebuttal

            Sager began by responding to Keller’s invocation of the predominant use test, pointing out that it had only ever been embraced by the Missouri Supreme Court, and then arguing that if the predominant use test applied, it would favor EA, because video games are—like film—a predominantly expressive medium.  Sager cited, inter alia, ESS Entertainment v. Rockstar Videos (9th Cir. 2008), to illustrate that courts have treated video games as expressive works.

            Sager also pushed back against Keller’s reliance on Zacchini, pointing out that while that case involved a use of identity certain to cause the plaintiff economic harm, the replications of Keller’s likeness here were not harmful to him at all.  Indeed, Sager went on, the increasing popularity of interactive sports video games such as EA’s football titles has correlated with increases in the popularity of the sports they replicate.

            This account is based on notes I took contemporaneously with the oral argument, and is necessarily imperfect.  Full audio and video of the argument will be available at the Ninth Circuit’s website later this week.

Misleadingness caused by plaintiff's own actions doesn't violate Lanham Act

U.S. Pharmaceutical Corp. v. Trigen Laboratories, Inc., 2011 WL 446148 (N.D. Ga.)

USPC sells patented, prescription-only prenatal nutritional supplements containing iron and Vitamin C (which enhances absorption of iron); insufficient iron is a risk factor for various adverse pregnancy outcomes. Trigen, a generic manufacturer, developed a competing supplement. USPC sued for false advertising and unfair competition because Trigen allegedly falsely advertised its supplements as functional equivalents of USPC’s.

USPC’s supplements are the only prescription supplements that contain ProAscorb C, USPC's trademarked name for its patented mixture of Vitamin C components and other ingredients. ProAscorb C is patented and USPC is the exclusive licensee. Vitamin C may be introduced to the diet in various ways, and manufacturers sometimes claim that certain formulations of ascorbic acid increase its effectiveness. The patent claims that administration of Vitamin C initially causes a period of reduced immune system activity, followed by enhancement, and further claims to prevent or reduce the initial suppression of immune system activity with a unique formulation of ascorbic acid that is a mixture of water and fat soluble forms. The patent further claims that its formulation causes ascorbic acid to be absorbed more quickly and retained longer by the body, and that the oil soluble ester form of ascorbic acid aids in the absorption of the ascorbic acid and enhances the effect of Vitamin E.

Unlike USPC, Trigen doesn’t use a sales force to market its supplements. Instead, it relies on being linked to targeted competitors' supplements in drug information databases, so that when healthcare providers or pharmacists search for a supplement, the results include both the competitor's and Trigen's.

Trigen looked at the USPC labels to identify the ingredients and examined the relevant patent to determine the amount and type of Vitamin C. Trigen chose a mixture of ascorbic acid and the ascorbic acid salts preferred by the Patent, and several of the metabolites and amino acids preferred by the Patent. However, Trigen did not include the oil-soluble ascorbyl ester (present in very small amounts), which Trigen claimed it did because oil-soluble ascorbyl ester is broken down into ascorbic acid before it is absorbed by the body, and thus its omission would not impact the overall effectiveness of the Vitamin C in the formulation. This also had the helpful effect of avoiding patent infringement.

Trigen then applied to have its supplements listed in the drug databases. The list of active ingredients for each of its supplements matched the list of active ingredients for the targeted USPC supplements. The amount of Vitamin C was the same, but where USPC's Supplements said "Vitamin C (from ProAscorb C)," Trigen's Supplements said "Vitamin C (compare to ProAscorb)" with a footnote: "Compare to ProAscorb, a patented pharmaceutical grade material consisting of ascorbic acid plus Ascorbic Acid Precursors …." In the applications for the drug databases, Trigen specifically listed USPC's supplements as "reference" drugs to which Trigen's supplements should be linked.

Trigen succeeded with one database, and then had to change the iron formulation to get another database to link the parties’ supplements, changing the label to reflect this. After the PI hearing at which the court expressed reservations about “Compare to,” Trigen removed that language from its labels and sent the revised labels to the drug databases, which continued to link the supplements.

Healthcare providers rely on the databases when deciding which prescribed items to dispense. The databases provide information on active ingredients, price, pharmaceutical equivalence, and potentially therapeutic equivalence. Pharmaceutical equivalence is generally understood to mean the FDA definition, “drug products in identical dosage forms that contain identical amounts of the identical active drug ingredient." Pharmaceutical alternatives, however, "contain the identical therapeutic moiety [essentially, the part of the molecule or ion responsible for the physiological or pharmacological action of the drug substance], or its precursor, but not necessarily in the same amount or dosage form or as the same salt or ester."

The database companies rely on the information provided by drug manufacturers to classify drugs based on pharmaceutical equivalence. The companies do not independently verify the accuracy of the information. They classify drugs based on active ingredient, strength, dosage, and route of administration. “If two drugs are identical across those four attributes then their generic alphanumeric identifiers will also be the same, indicating that they are pharmaceutically equivalent.” Such drugs, and only such drugs, will be linked, so searching for one drug in the database will retrieve information on both drugs. Pharmaceutical equivalence does not necessarily mean therapeutic equivalence, which includes the additional requirement that the drugs "can be expected to have the same clinical effect and safety profile when administered." This requires bioequivalence, in that there is no "significant difference in the rate and extent to which the active ingredient ... becomes available at the site of drug action."

According to the FDA’s industry standard Orange Book, "[d]ifferent salts and esters of the same therapeutic moiety are regarded as pharmaceutical alternatives ..., [and] are not considered to be therapeutically equivalent." The Orange Book lists generics that have been determined by the FDA to be therapeutically equivalent to a name-brand drug. These equivalences are reported in the drug databases. However, the supplements here contain ingredients that were grandfathered in to the current FDCA, and thus the FDA has not made a determination about their safety and effectiveness. They are therefore also not included in the Orange Book, and the FDA does not check for therapeutic equivalence.

The databases don’t represent that the supplements are therapeutically equivalent. To the contrary, they explicitly warn that drugs that are listed together as pharmaceutically equivalent may have different efficacies. Pharmacists sometimes substitute drugs based on the information in the databases; state law governs how and when substitutions may or must be made. Some states ban substitution unless the Orange Book shows therapeutic equivalence. Others, including Georgia, only require pharmaceutical equivalence. There are other variations as well.

After USPC failed to get a database to delink the parties’ supplements, it sued on a theory of implicit falsity: Trigen’s statements misled pharmacists, healthcare providers, and consumers into thinking that the parties’ supplements are equivalent or substitutable. The question was not end consumer confusion. The relevant entities were the database companies, which relied on Trigen’s statements to link the supplements, and pharmacists (and other healthcare providers), who rely on the information in the databases to substitute Trigen’s products for USPC’s, where allowed.

The court found that it was not credible to argue that the database companies had been misled by the “compare to” statement, the statement that USPC supplements were reference drugs, or the request for linkage. (The court earlier noted that companies sometimes request linkage and are denied unless the four key attributes match.)

“At first blush it may seem that the ‘compare to’ language is misleading.” This was because it used a footnote listing the components of Trigen’s formulation, which could give the impression that the compounds in Trigen's Vitamin C were the same even though ProAscorb contains additional compounds. However, the evidence showed that the “compare to” language and footnote were irrelevant to the database companies’ linking decisions. Representatives from two major database companies testified that the “compare to” language was irrelevant to the linking decision. USPC’s label has a parenthetical note that the Vitamin C in its supplements was “from ProAscorb C,” which one representative said “doesn't actually represent the ingredient. It appears to represent a product name that's trademarked.” Thus, it wouldn’t have affected the decision; the other representative testified similarly. Anyway, that language is gone, even if it might have deceived consumers or healthcare providers; the only ongoing injury is the linkage in the databases, and the “compare to” language was not a cause of that linkage.

What about listing USPC supplements as reference drugs? The court concluded that the reference didn’t materially affect the database companies’ linking decisions. Both representatives testified that they independently analyze label information from the manufacturer. The classification is based solely on the quantity of active ingredients, the dosage form, and the route of administration. Because the parties’ products share the four unities, they would have been linked even if Trigen hadn’t listed USPC’s supplements as references. Indeed, despite the reference, one database initially did not link two Trigen supplements to USPC supplements because of a small difference in iron content, later changed.

USPC argued that database companies don’t perform independent analyses of equivalence, instead relying on manufacturers’ representations. But the evidence was that they only rely on representations about those four characteristics, none of which USPC challenged as false. “USPC argues that the linking is inaccurate, not the label, and the evidence shows that the drug database companies make the decision to link two drugs and that decision is made independent of a manufacturer's recommendation.”

Is it misleading for Trigen to continue to allow the linkage, when Trigen admits its products don’t contain the same Vitamin C ingredients? USPC argued that Trigen manipulated the database companies’ policies of not distinguishing between different sources of Vitamin C, linking the products despite an absence of proof of equivalent effectiveness. The court was unsure whether the databases would unlink the drugs in response to a manufacturer’s classification request as long as the four unities were present, so it wasn’t clear whether USPC could get a real remedy unless Trigen changed its formulation. The companies might resist any delinkage otherwise; one representative testified that customers value having pharmaceutical equivalents linked to a common identifier. The court stated that it wouldn’t order relief that would mandate potentially adverse action on part of nonparties.

But the more fundamental problem was that linkage didn’t seem to be misleading. The supplements might not be equally effective, but that goes to therapeutic equivalence, and neither Trigen nor the databases make any representation about therapeutic equivalence. “The drug database companies only list drugs as therapeutically equivalent if the FDA publishes a finding of therapeutic equivalence in the Orange Book. The database link therefore implies only what the evidence shows to be true, and nothing more: that the two companies' supplements have the same active ingredients, strength, dosage, and route of administration.” If USPC wants the databases to opine on therapeutic equivalence, it needs to convince the database companies, regulators, or someone else.

The court also concluded that

to the extent the linking could be considered confusing, the confusion appears to arise not from Trigen's actions but from USPC's decision to conceal relevant information about its Vitamin C formulation on its supplement label and in the application to the drug database companies. If, as USPC argues, it is misleading to link the supplements as pharmaceutically equivalent, it is because the link misleadingly obscures important differences in the sources of ascorbic acid. But it would have been difficult if not impossible for the database companies to consider those differences because USPC chose not to disclose that information. USPC says that it is not required by the FDA to disclose the sources of its Vitamin C, but that is immaterial to deciding whether the implication of pharmaceutical equivalence is misleading due to USPC's actions rather than Trigen's actions. The evidence does not show whether more detailed information would have changed the database companies' classification of USPC's Supplements, but even if it would have changed the classification, the evidence shows that the current classification exists in significant part because of USPC's omission of information on its supplement's labels and drug listing applications.

One might say that the defendant was not the proximate cause of the harm.  Can this be distinguished from a case in which the plaintiff changes the formula of its national brand and then says that a competitor's comparative advertising is now false, since the new formula is better than (or at least distinct from) the old one?  In that case, I think the competitor is definitely at risk if it continues to make the old claims, and should be, even though it's the plaintiff's acts that made the defendant's ads misleading.  I am not sure any distinction can be found between my hypothetical and the USPS case that is not in some sense moral: in my hypothetical, the plaintiff is entitled to change its formula (unless its conduct is otherwise wrongful, for example violating the antitrust laws) and may be promoting competition/product improvement by doing so, whereas, while USPS may not be violating any laws in its practices, its failure to disclose is not the kind of baseline to which we should give moral force.

One could also argue that this is the unusual case in which the plaintiff is the least cost avoider.  The trouble with that is that it's easy to argue (in fact, it's a feature of the anti-consumer-protection-law literature) that competitors are almost always least cost avoiders: among other things, they should just engage in counteradvertising self-help as a more efficient way of dealing with bad information in the marketplace.  In order to make the case at bar different, you'd have to say that the Lanham Act incorporates a general (nonrebuttable) presumption that counteradvertising won't work, and then provides for liability when the defendant is the least cost avoider; I don't think that makes more sense than saying that the court here is using a fundamentally moral baseline.

Anyway: As the court further noted, even if the database companies looked at the patent, the patent itself discusses numerous alternative formulations of Vitamin C so that it would still be impossible to figure out the precise content of USPC’s supplements. The court even commented that USPC seemed to be violating FDA labeling regulations. For these purposes, “dietary ingredients” are nutrients being supplemented, and “ingredients” are the actual compounds used to manufacture the supplement. The FDA provides that ingredients that are the sources of dietary ingredients may be listed in the Supplemental Facts panel—e.g., “Calcium (as calcium carbonate)”—and that when ingredients are listed this way, they don’t have to be listed again in the ingredient statement. But USPC, the court said, hasn’t listed the ingredients it used as a source of its Vitamin C in the Supplement Facts panel, and thus should list them in the ingredient list. “This is sensible, because patients concerned about intake of, for example, sodium, calcium, or potassium, may care to know that a supplement provides those in the form of sodium ascorbate, calcium ascorbate, or potassium ascorbate.” (I don’t know what if anything the regulations provide about using a TM instead of a scientific name for the ingredient, though it really seems like one would want the scientific name, for precisely the reasons the court articulates.)

Piling on, USPC failed to prove that the “presence or absence of a small amount of oil soluble ascorbic acid ester has a material effect on … decisions” of database companies or pharmacists. The evidence was that the databases considered the supplements to be pharmaceutically equivalent in spite of the absence of oil soluble ester in Trigen’s product; the databases don’t distinguish between sources of Vitamin C.

The court noted that it had focused on the database companies, but USPC also failed to produce evidence that pharmacists were misled; its affidavit from a pharmacist did not show that the pharmacist believed that linked products were pharmaceutically equivalent. The software programs he used to purchase and dispense drugs listed USPC’s and Trigen’s supplements as “generic equivalents.” This was an ambiguous term, “but it is being used by software companies two steps removed from Trigen and one step removed from the database companies. USPC has failed to show whether the term ‘generic’ is misleading in these circumstances and has not argued what relationship Trigen has with these separate companies that would cause Trigen to be liable under the Lanham Act for their decision to classify the drugs as equivalent.”

The relevant decision makers didn’t consider the differences between the parties’ formulation to be material to pharmaceutical equivalence. Thus, USPC was unlikely to succeed. Preliminary injunction denied.

WIPIP at BU session 7

David A. Simon, Culture, Creativity and Copyright

Poppies and Nazis: Both take advantage of human brain to reproduce themselves. Humans began to cultivate poppy plants; made poppy plants more successful at spreading their genome, even though poppies are probably pretty bad for people—wars, death. Same for Nazi ideology: became successful at using people’s brains to produce more of itself.

Richard Dawkins, The Selfish Gene: what genes “want” to do is replicate. A replicator has 3 defining characteristics: (1) heredity/retention—thing replicated can be passed from host to host; (2) variation; and (3) selection—environment puts pressure on replicators so some will be more and some less successful. Replicators are substrate-neutral; genes operate on amino acid substrate, but memes operate on the neuronal substrate.

Fairey’s Hope poster as a meme/memeplex (as genes work together to form an organism, memes work together to form bigger cultural products). Yes, it can be transmitted from host to host. Variation: plenty of plays on it exist. Finally, selection: the original (that is, Fairey’s) poster was the one selected for. (Might be more interesting to go back to Garcia’s photo in this account.)

This fills a gap in creativity research. Dispositionism and situationism: classic debate. Memes might influence our subconscious creativity. Oliver Wendell Holmes Jr. thought that imitation was a necessity of human nature: most of the things we do, we do for no better reason than that our fathers did them.

Application to copyright: Deemphasize role of creative individual/conscious choice in the creative process; conscious choices are being made, but not to the full extent one might think. Options: we could discount the author as not playing much of a role, and emphasize rights that would honor collaboration and group theory. Other option: don’t trace; don’t change laws to reflect memes. Or: identify the conscious parts of the creative process and try to incentivize them.

Moral rights: the author imbues work with personality. Memetic idea: author’s creation is one in a line of many.

Comment: think about memes that replicate themselves without conferring social utility—can we define them well enough to deny them protection? Good salesmen are not in themselves valuable.

Boyden: any way to use memes to deal with things that become standard in the field? Could draw attention to the fact that the audience is responsible for the success of the meme.

Samson Vermont, Undue Multiplication of Doctrine in Copyright

Things that strike a novice as quite puzzling: Baker v. Selden gets no copyright protection; image of Skyy vodka bottle gets thin copyright protection; random photo snapped candidly gets broad copyright protection. But the first two were the product of much more judgment and effort! Also puzzling: the enormous overlap between limiting doctrines—hard to figure out which ones apply. Is it idea/expression or merger or useful articles? Blank forms, scenes a faire, single words and short phrases/familiar symbols or designs/individual design elements in architecture—all sorts of ways of talking about limits. Most limit cases can be redescribed as a different limit. Suggests there may be a deeper underlying principle they reduce to.

Compare to patent: It’s often the case that independent creators converge on patented devices—majority of suits are against people who invented on their own. If not the Wright Brothers, it wouldn’t have been that long before we got airplanes. But had we not had Lewis Carroll, we would never have gotten Alice in Wonderland. External constraints drive different inventors to converge on the same things. This isn’t true of copyrightable works, which are marked by divergence.

Innumerable works can achieve the same effect that comedy is supposed to achieve; no one will ever write the same comedic novel that you will. This principle of avoidability—that independent creators will avoid making the same work—is underneath these rules. This accounts for the line between utility patents and copyright, as well as for the line between what’s copyrightable and what’s not.

Compare lists of 100 best movies and 100 most financially successful movies. The former: different people will have different lists, and copyright will protect them. Copyright will not protect the latter, no matter how hard I work to independently gather the data. Baker v. Selden: only a finite number of ways to come up with a bookkeeping system.

Photo is protected because it captures an event in time that can never again be captured by anyone else. But product photos get thin copyright, and in Meshwerks fidelity to the original car is not copyrightable because if somebody else were to digitize the cars they’d get the same thing, and if someone were to take a photo they’d get something very similar.

Morrisey v. Procter & Gamble: sweepstakes rules, very straightforward. (Anachronistic horror: Entering the contest required you to send in your Social Security number!) Unprotectable. It’s plausible that someone could independently come up with rules very similar to this.

Degree of protection: Mickey Mouse gets broad protection because he’s so distinct—unlikely to be created independently. Medium protection for cases where there’s a common theme. Thin protection: Rosenthal v. Grossbardt (defendant used a mold to produce bee pins like Rosenthal’s) and Rosenthal v. Kalpakian (defendant made its own mold). No liability in the second case. The pin looks like a real bee—an external constraint.

Can also explain useful article cases. Would someone making a buckle make this buckle if they’d never seen it before, or one close to it? No. Pivot Point mannequin head Mara had a “hungry” look: if someone else made a mannequin head for beauty schools and didn’t know about Mara, would they have made a dead ringer for Mara? Probably not. At least thin protection. No protection for Carol Barnhart nameless generic torsos, basically anatomically correct. Anatomical correctness is an external constraint. Ribbon rack: the shape is very basic and confers lots of benefits that no other confers. (I am not sure that there was much evidence about the functionality issue before the court. Just because the rack doesn’t require welding doesn’t mean that it’s overall the cheapest/best way to make a bicycle rack.)

Idea/expression boils down to the same thing. Unprotected: boy meets girl at dance. Protected expression: prairie dog meets seahorse on Pluto. Similarity in pattern would mean borrowing something protectable. Maybe the taking wouldn’t be substantial enough/fair use, but still qualifies as protectable. (That doesn’t make sense to me. If only copying that summary, without copying anything else, is not infringing, then definitionally that summary is not protectable expression.) Unprotected factual work: list of face values of US currency in circulation today. Protectable expression: list of estimated values of Confederate currency. The difference is because people won’t converge on the same values.

Separability should mean avoidability: do you have to use the plaintiff’s design to achieve the intended effect?

Uncreative photo of event captured by bystander or planted camera is protected, because while not creative it’s avoidable. Uncreative photo of stable object accessible to others is not avoidable and thus not protected. Creative cartoon character is avoidable and protected. Creative, dominant software menu is not avoidable given the market structure, and thus is not protected.

What does the work here: independent creators will avoid this work. But he wants to leave room for cases in which honest creators have to copy in order to pursue some socially beneficial enterprise. “Indispensable” as a practical matter; creator has been rewarded out of proportion to social benefit—as in the Lotus v. Borland case. Borland acted in good faith, offering the menu only as an emulator.

Q: Heard two different definitions of avoidability here. (1) independent creation; (2) whether the work is dictated by external factors. These are two different things. My fingerprints are dictated by external factors, but chance of independent creation is nil. Under your theory we should protect them broadly, no?

There was consensus from that the fingerprint example foundered on authorship, but the point is also applicable to, say, a key cut in a particular pattern, which is unlikely to be replicated without copying. The teeth of a key are integral to its functionality, given the lock shape.

A: depends on whether that specific pattern conveys benefits that others wouldn’t. (This is why I think his analysis of Brandir is wrong; this is a TM functionality analysis, and a pretty cabined one at that.) Can competitors make locks that function just as well without that pattern? (But this depends on deciding that they’re not entitled to make keys for the locks that the initial keymaker makes.)

My (extensive) thoughts: This theory is very static, but copyright is also interested in dynamic incentives and effects. What the theory calls indispensable I might call path dependence (as per Wendy Gordon—works may change the environment that the next creator encounters); this theory seems to start with the proposition that the proper scope of copyright is any benefit causally related to it, subject to then arguing for each strikeout/limitation. I’d call this a mistake.

Look at the separability stuff: we have to agree how broadly to define the “effect” at issue before we can decide what the external constraints are. And this also occurs with comedies: you may say that there are lots of comedies, but I know that I’ve only laughed at Better Off Ted and I flee the room when other comedies are on.

But maybe we do need more discussion about proximate cause v. cause in fact—in many of these cases of lack of protection the plaintiff’s work is the cause in fact of the defendant’s—Meshwerks, for example. Why isn’t it also a proximate cause? (He says that proximate cause does a better job of explaining a case like Seinfeld than substantial similarity, since the show isn’t anything like a trivia book.)

His argument that “boy meets girl” is an unprotected idea; “prairie dog meets seahorse” is protected expression. This seems wrong to me (on the order of the error examined by Justin Hughes in his criticism of “microworks”): consider the Jurassic Park case, where “island of resurrected dinosaurs” is an idea, or in Hoehling “a pre-departure scene set in a German beer hall.” Ask you and me both to write the prairie dog story; I guarantee we’ll get very different results. Wendy Gordon made this point in comments: unexpected doesn’t mean protectable. (Believe in it? Hell, I’ve seen it! SF/fantasy, both pro and fannish, has a long tradition of giving people prompts of this nature and getting back stories of wild variety.)

His examples: List of 100 top grossing movies v. unique in time photo. But both seem inevitable once a decision has been made about what facts you are reporting. His analysis is using a counterfactual (if you’d done your own work you’d have produced the same work) in one case and not the other, even if copier lacks capacity to do the work in both cases. If you’d been there you could have taken the same picture; but you weren’t. If I interview someone about the Hindenberg who then dies, then no one can recreate my interview, but I shouldn’t get rights in the facts reported therein. (My suggestion: the philosophical literature on counterfactuals provides from tools to sort good counterfactuals from bad ones.) Can see this uncertainty about the role of counterfactuals also in discussion of the contest rules case—“plausible” that someone “could have” come up with rules “substantially” like these ones. But in fact the defendant gets to copy exactly these rules as the result of a finding of unprotectability. Likewise with useful articles: we have no reason to think that someone else would have come up with the ribbon rack within a couple of years, but the idea is that someone could have.

Honest creators: honesty is doing a lot of work here, probably too much. At the very least, have to deal with the acceptance of “unconscious copying” as infringing by the courts, which seems to make honesty a very odd concept.

Gordon: very unlikely combination creates evidence of causation, even without copyright infringement. Trying to rule out coincidence can explain a lot, serving an evidentiary role.

Simon: multiple definitions at work—whether people will converge on the same idea.

A: Avoidable means that it’s not plausible that people would independently create the same thing.

Eva Subotnik: Provide more evidence of what goes into typical product photo. Decide whether you want to look at existing cases v. coming up with a theory of what should be. Notice that there are very few cases where a photo is found to be uncopyrightable. Maybe this is about different media more than it is about anything else.

A: sound recordings—just a bit of a sound recording triggers infringement, because no one ever accidentally puts your sound recording on their song (unless they’re filming a documentary—which he says would be taken care of by an indispensability/honest filmmaker principle).

WIPIP at BU session 6

H. Tomás Gómez-Arostegui, Copyright at “Common Law” Before 1710

Common law copyright has two historical meanings: right of first publication, and right to control further printing. His paper is about copyright after publication.

Why should we care? We care now because it plays a role in present debates over normative scope of copyright—a natural right or a privilege created by statute. Sets the default of copyright: at the creation of copyright, what was its primary rationale? To protect authors and assigns, or promote authorship for public benefit? Traditional view: origin was a common law right predating the statute, from Millar v. Taylor (K.B. 1769); Donaldson v. Becket (H.L. 1774) (traditionally read to agree with Millar that copyright in unpublished works predated the statute). But both relied mostly on post-1710 cases.

Howard Abrams argued that this was misinterpreted: House of Lords thought copyright never existed at copyright law. Donaldson is reported in many places, years apart, inconsistently, and thus subject to many interpretations. Additional original research by Ronan Deazley supporting this relies on post-1710 cases. This modified account has been successful: Patry says there’s never been a common law copyright in published works.

All these cases relied on by scholars assume (with one exception) that there were no pertinent pre-1710 cases, but that’s not true. The thought was that previous cases were filed based on letters patent; cases filed on common law copyright were only brought after the Statute of Anne’s legacy clause expired.

Justice Willes in Millar believed this: before the statute of Anne, proprietors of copies had no idea a bill of equity could be entertained other than by way of letters patent. Justice Manfield said the same thing.

But he found 17 equity cases along with one previously known case from 1680. None was ever formally mentioned/reported, but that was routine, and unreported cases were routinely cited, but this accounts for why they were forgotten at the time of Millar and Donaldson. He excluded cases filed during periods where a different form of copyright existed under statute, Printing Act of 1662, which was largely about censorship but also supported the Stationers’ copyright registration scheme by making it a statutory violation for someone other than the registrant to print a book.

Some of the cases base their claims on the customs of the trade, or a claim of “property,” or a claim of right at common law.

Importance? Opponents of common law copyright in Millar and Donaldson made much of the fact that such suits weren’t filed, but 17 people thought they had a nonfrivolous claim. In many instances the defendant acquiesced to the claim of right. In many of the suits the defendants were not members of the Stationers’ Company (and thus not bound by the Stationers’ internal rules). One case: court refused to grant remedy of accounting at law, because injury to plaintiff should be the measure of damage, not profit to defendant. Court was not willing to allow this especially since the recently acted Statute of Anne had just granted another remedy—“another,” not “new” right.

Our current understanding of the origin of copyright is at best incomplete and at worst incorrect. What we’ve taken to be true for centuries is false, and the consequences of that fact need to be addressed.

Michael Carroll: Privileges were still being granted in the gap years, at least to music publishers. The underlying sources of law were in flux and not always given careful attention in the courts of chancery; he doesn’t find it surprising that careful attention to the underlying source of law was not granted. Also, chancery and law courts were in competition for business, so they had institutional reasons to want to accept the argument independent of what they thought about the existence of a common law right. We also need to understand why people sought privileges if there was a common law right.

A: privileges to music: seen as a different subject matter, so booksellers feared it was not covered by common law copyright. Books: Deazley has analyzed book patents, and they often covered abridgements, which the common law likely didn’t.

Mary LaFrance, From Whether to How: The Challenges of Implementing a Full Public Performance Right in Sound Recordings

Current sound recording performance royalties are limited; don’t cover terrestrial radio, restaurants, stores, theatrical, or television films (need license to incorporate songs into derivative work, but when performed publicly need no separate license). Negotiated license for interactive digital services; statutory licenses for satellite radio, digital satellite and cable TV music services, and noninteractive music streaming/webcasting. Allocation to record companies, featured performers, and a trickle to the nonfeatured performers handled through the musicians’ unions.

2010 bill didn’t get very far, but there is positive momentum towards change. What if we did expand the performance right?

Reciprocity: collect foreign royalties for US record companies and performers, satisfying other countries’ reciprocity requirements, creating a net inflow due to worldwide popularity of US recordings. (Numbers that get bandied around are produced by various interested parties and are not necessarily reliable.) Increase income of US performers and record companies: costs shared by foreign and US consumers, and possibly songwriters/musical publishers. Might be more acceptable if we can figure out some way to prevent the performers from bargaining away their rights to the record companies. Record companies may also fall apart so that we no longer have four major labels but multiple smaller companies; entrepreneurial performers. So even if we don’t care about the labels now, as they start to look more like performers we might think increasing their income is good. Replace mechanical royalties lost to unauthorized downloads.

Broader royalty base could lower individual royalty rates: right now the royalty base is tiny, so for the royalties to be of any benefit the rates have to be very high, leading to numerous complaints. Part of the justification is also to level the playing field between digital and terrestrial.

Objections: Broadcasters say, don’t take my cake. Songwriters/publishers: don’t take my cake. That money has to come from somewhere. Broadcaster etc. says: I’m paying all I possibly can now.

Gatekeeper concerns: producer/performer veto over licenses will block royalty opportunities for songwriters. Equitable remuneration v. exclusive right?

These objections are as old as the Rome Convention itself.

Gatekeeper concern is addressed by making it a statutory license; 114(i) addresses the cake problem—Congress intends that royalties payable to copyright owners of musical works shall not be diminished in any respect; royalties for sound recordings shall not be taken into account in setting royalties for musical works in any governmental proceeding. This is a big barrier to change and needs to be fixed; shows the influence of songwriters and music publishers through ASCAP/BMI. Means that the broadcasters lose. Current proposals include this language, though, and even purport to extend it beyond governmental proceedings to “otherwise” taking musical works royalties into account, which is mysterious.

How should rates be set? Joint mechanism of negotiation for performance royalties for sound recordings and musical works (likely to end up before government body anyway, whether court or copyright tribunal), or administrative proceeding (as in Canada)? Separate mechanisms so that one body doesn’t think about both? (Note that §114(i) goes only one way; doesn’t say you can’t think about musical work royalties when setting royalties for sound recordings.) Without coordinated proceedings, you end up with inefficiency.

Complete independence of rate settings: risk of unreasonably high cumulative royalty burden.

Arguments that songwriter/publisher rate should be higher because new musical compositions are more valuable/important than new performances and thus deserves a greater incentive; it’s harder to write new music than to perform, so the composer’s share should be higher.

Record companies say the opposite: public listens more because of performers than because of underlying composition. Costs/risks of producing a recording are higher than costs/risks of producing and marketing a song. Royalties for recording have to be split more ways (record company, performers)—except that most winds up in record company’s hands anyway. Recording has shorter commercial life. Performer’s career tends to be shorter than the writer’s career. But note that writers aren’t in demand for tours and T-shirts. Also argued in hearings: Cable companies pay 41.5% of gross revenues to show films; we want that much!

Implementation will require database of rightsholders: all record producers and featured performers; music unions disperse nonfeatured performers royalty widely so don’t need that recordkeeping. Foreign databases reflect a shorter term: life plus 50—they’ll need to change their ways so that their rightsholders have a chance of getting royalties from the US. Sound recording copyrights restored under 104A—a new class of orphan works? Also, termination of transfers by performers: how will this be done and tracked, if they aren’t works for hire? Pre-1972 recordings also at issue: older rightsholders need to be identified.

Tracking usage will also be at issue. Currently terrestrial radio doesn’t have much of a burden; how much burden can we place on users? Can we require interested parties to use monitoring services as ASCAP/BMI do and use extrapolation where data unavailable?

Rate setting: percentage of gross revenues? Can’t do that for all types of users (clubs v. grocery stores). Square footage of establishment? (UK does that for sound recordings and musical works both, though they use different increments of footage for each.)

Derivative works: newly created ones will need public performance license as well as master use license (which they need now). What about preexisting works? Do they need to stop performing until there’s a new license, or some grandfathering? What about existing licenses? (That was my q: an issue of previously granted licenses, e.g. filmmaker to broadcaster: who’s responsible for clearing newly granted rights?)

110(5) for sound recordings? We violated TRIPS before, why not again? Would upset our WTO partners and be grounds for countries to fail to give us reciprocity.

Heymann: what do you think?

LaFrance: she’s persuaded by the argument for bringing additional money from overseas, and by the argument that there’s no principled distinction. We don’t just award benefits to screenwriters of movies; filmmakers get a public performance right. Horizontal equity.

Boyden: sympathetic to broadcasters’ cake argument. Maybe if we were designing from the ground up we’d do it differently.

LaFrance: but every other kind of artist has a public performance right.

Peter K. Yu, Five Ways to Make the Entertainment Industry's Enforcement Strategies More Convincing

Stop comparing downloading music to stealing a car. No one can download a car.

People only go on to YouTube to listen to studio music. They are missing out on new opportunities/business models on social networks.

Music communities also make unconvincing arguments. Herbie Hancock: Just because record companies give artists a bad deal doesn’t mean that everyone else can go and do worse.

1. Show the human face. MPAA did it later on, but not very successful because it was last-ditch. Focus on the people working hard on the film crew, etc. A lot of us get interested in copyright because of an interest in helping authors. Not because of an interest in helping investors. A lot of times authors sign away their rights. We don’t hate copyright, but we don’t like the current system that keeps authors from getting much. Even maximalists focus on authors; they aren’t interested in the industry as such.
2. Provide more credible empirical evidence. Some of the figures are ridiculous: $600-900 billion in losses? Look at that range, not just its size. Don’t assume that one copy is one sale. New figures look at “retail value” of pirated sales. But a person who buys at $1 may not buy at $10. GAO points out that copying also benefits other sectors, especially tech. Industry argues that its data is still better than those of the Chinese government—but (1) that’s a terrible baseline, given how ridiculous it would be to trust the Chinese government and (2) that is not a very good argument if we want to go to a WTO panel.
3. Focus on bad guys. Commercial piracy is a different matter, even for most restrictionists. Much more different to talk about students as criminals. (I think Lawrence Liang poses some interesting challenges to that argument.) Leads to the response of the EFF: “When you go trawling with a net, you catch a few dolphins.” Standard principle: Better that ten guilty persons escape than that one innocent suffer.
4. Develop a generally accepted sense of priority. “Human rights issues have misdirected our engagement on IP issues!” If we are asked to pick free speech, free press, privacy, and fair use or pick the industry’s bottom line, plenty of people will pick the former. ACTA is a good example.
5. Don’t use foreign policy as an excuse. ACTA is also a good example here. Also note that digital/online piracy is distinct from that involving optical disks. Government officials in Asia say pirates are now complaining they can’t compete with digital piracy.

Q: Cultural arguments on copyright: similar to arguments people make in China or India that our country needs stricter speech laws because of our culture?

A: Copyright provides a pretext for a lot of governments who want strong control of speech to go after others. E.g., Russian authorities using alleged piracy of Microsoft software to go after environmental activists—seized all computers and records. Exposes donors and blocks activism. Neil Netanel made this point: copyright as engine of censorship.

My q: about point 3 above.

A: you can buy dolphin-free tuna; but the industry is not willing to work out simple ways to avoid sacrificing dolphins. Maybe we need to look at other business models that, for example, don’t involve catching tuna but go after other fish. W/r/t Liang: Yu’s reaction has been historically that we should instead adopt open source software. He thinks also that we can’t take Liang’s position when we’re engaging with the industry because they simply won’t give any credibility to someone who takes that position. That cuts off the possibility of dialogue over access/digital divide. (There’s an interesting question over who gets written off as not worth engaging with here! Apparently (I think this is probably true) we have to pick one or the other, and maybe we end up picking the industry because of its raw political power; but then again the populations of China and India have some too.)

In dialogue with Heymann: Enforcement strategies can affect business models. Problem: established players are not that enthusiastic about new models.

Boyden: these arguments don’t fit on bumper stickers: can they be persuasive to the public or to Congress? And why not pay investors back?

A: This is difficult. But talking about artists in the middle is important, because the top ones will always get paid. There is no alternative: otherwise the industry has already lost the war of ideas.

WIPIP at BU session 5

Brad Abruzzi, Copyright and the Vagueness Doctrine

A vague law is offensive because it provides inadequate notice; traps the risk-seeking and risk-neutral; delegates excessive enforcement authority to the government, including courts; chills the risk-averse from lawful conduct. Ordinarily a law is vague for saying too little—“disturbing the peace” as applied to wearing a jacket with an offensive patch. Laws may also be vague because they say too much and are too complicated—Citizens United & Wisconsin Right to Life. Court there found vagueness because a multifactor test with its open-ended rough & tumble of factors virtually guarantees an appeal. If vagueness by prolixity applies to political speech, no reason it wouldn’t apply elsewhere. Remains to be seen where if anywhere this doctrine will go.

Collateral factors: does the law burden key rights (speech), impose criminal or quasi-criminal remedies, and/or have a mens rea requirement? Those are factors that increase the need for clear laws.

Copyright: even at a microlevel, doctrines are vague—substantial similarity and fair use, which are the doctrines that supposedly rescue copyright from First Amendment overbreadth. Substantial similarity applies idea/expression at the point of determining orginality. Courts have been very clear that the test is vague and that results in one case are not helpful in determining results in the next case.

Same with fair use: invites factor-specific review at which the SCt has looked askance recently.

Given the collateral factors—copyright burdens speech, has criminal and quasi-criminal penalties (statutory damages, which courts say serve punitive purposes), and has no mens rea requirement.

One judge, responding to a wholesale copier of software, wrote that copyright is vague, but that’s okay. Time to try again with a more sympathetic plaintiff?

What can we do to provide more notice? Courts have tried to add definition to substantial similarity, but have only added complications. Bright lines in fair use are probably also a bad idea because open-endedness is speech protection—don’t want to trade vagueness for overbreadth. Hard to imagine what to do to fix copyright, given the tradeoffs. So he proposes a 3-tiered remedy structure keyed to defendant’s level of fault, at least when plaintiff’s use is expressive. Injunction could be available on a strict liability basis. Actual damages should require some level of fault, at least negligence—defamation law is an analogue; Gertz held that some level of fault is required for defamation. Statutory damages should require wilfullness.

Conclusion: makes this argument on theoretical and practical basis. Has to grapple with fair use issues all the time in practice; vagueness imposes real costs. Invoking vagueness lends constitutional weight to reform arguments.

Gordon: Gertz?

A: Private figure defamation—did not require specific test beyond a fault requirement.

My questions: what’s your response to the strategic/interpretive claim that fair use is not as uncertain as all that, made by the Best Practices folks and by people like Pam Samuelson who group cases, or even in Beebe and Sag’s empirical research?

A: there are core fair uses in the case law; systematizing case law can allow us to draw conclusions, but open-endedness—e.g., Google cases involving indexing content for search engines was unanticipated by the drafters—law had to figure it out. We can extrapolate, but it’s really difficult for a speaker.

Silbey: say more about why bright lines won’t work.

A: we can’t agree on them; efforts to date haven’t worked. We have some outright exceptions already, like §110. But they’re largely incomprehensible. We don’t call them fair use, but maybe we should.

Boyden: suggestion that punitive/deterrence purposes of statutory damages makes them quasi-criminal—has that law been applied elsewhere? Any cause of action with punitive damages would therefore raise vagueness concerns.

A: we’ve increasingly seen scrutiny of procedural safeguards for punitive damages, if not outright full criminal protections.

Boyden: are criminal copyright prosecutions unconstitutional then? That’s worth a lot.

A: criminal copyright law puts so much weight on scienter that willfulness requirement does do a lot of the constitutional work of saving us from vagueness. They usually focus on exact copying.

Q: why are you comfortable with strict liability for injunctions?

A: Can work more harm than damages if you’re ordered to withdraw a book; if anything, settling on strict liability had to more with incrementalism and not being too disruptive. In practice, we see this anyway with the DMCA; everyone seems happy with ceasing the activity w/out damages. Will be rarely invoked.

Jim Gibson: depends on context. Political speech/documentary/etc.—classic situation in which property rule allows owner more leverage than actual damages.

A: true, if your interest is censorious, that might not be the right answer.

Gibson: not just censorious—if you catch them at the right time, they’ve already invested and you can extract extra value.

A: true, was looking to ways to keep the existing system.

Another question from me: Why commit to substantial similarity—why not say, pure or near-identical reproduction, plus a clearly defined derivative works right?

A: Hand’s black-letter rule—must protect against more than literal infringement. But we could say that literal plus de minimis changes are what’s covered, not more; it expanded over time. First Amendment history: Hand was able to throw around the world “vague” in a way that didn’t invite the constitutional claim; copyright has been grandfathered in. Wants copyright to provide more notice, but the question is whether we can do enough. (My thoughts: Look at Citizens United: some groups get to use the First Amendment to explode decades of regulation. If that’s going to happen, why don’t we demand that the First Amendment get used to explode other regulations?)

Zoe Argento, The Scope of the Trafficking Provision in the Digital Millennium Copyright Act

Issues in circumvention remain even after the recent exemption rulings: trafficking. Does manufacture cover making something for one’s own personal use? Definitions include production by hand. Legislative history repeatedly says that the legislation was designed to target “black boxes.” A device used to get around the law. Since the manufacture of these black boxes was industrial enterprise, it does seem more large scale manufacture was what they had in mind. Should “manufacture” be interpreted alongside the other words in the statute with it—noscitur a sociis?

“Trafficking”—generally involves both transfer and commercial gain, as per Black’s Law and other sources. Legislative history suggests concern with commercial transfer.

What about noncommercial transfer, then? Remeirdes: Corley posted DeCSS on his website. Court used a 30-year-old compact dictionary and interpreted “traffic” as “engage in dealing,” which involves awareness of nature of subject, but interpreted “otherwise trafficking” as being like offering to the public/providing, so that making available the tech for the purpose of allowing others to acquire it was the prohibited action.

She thinks Corley’s conduct was not good, it’s just that Congress wasn’t thinking about it; commercial purpose should not be an absolute requirement.

Child pornography cases also bar trafficking: courts have been asked whether filesharing counts. Court’s conclusion: Definition of trafficking also includes bartering; this can satisfy the financial gain element. Reasoned that using filesharing was a form of bartering because one shares files in return for receiving others; also looked at legislative intent, where Congress found that child pornography leads to revictimization with each viewing.

But not all uses of anticircumvention technology are harmful. Rather, the exemptions for various groups show that circumvention can be expressly allowed. Comparisons indicate that some forms of filesharing shouldn’t be considered trafficking.

Gordon: consider that the documentary filmmaker may want to download tech not just make it him/herself. Should also group people overcoming rights protections, who have the right to do so by statute—how can they do that if they can’t make or even copy from the internet? You end with saying, if the statute allows you to bypass (as it does via exemption and for everyone who is bypassing a rights protection), that must imply you have the tools to do so—that has to be in the very beginning.

Matwyshyn: look at DeCSS t-shirts—are they prohibited? There is a commercial purpose in transferring the code on the t-shirts, but not the same type of intended conduct.

My suggestion: also rely on the statutory exclusions as well as the exemptions to show that not all uses are bad. (Check DMCA hearings—it is an open secret that the exemptions rely on the wide availability of circumvention technology; it’s basically a joke.)

Q: are these other words in the statute instances of trafficking? Providing and offering to the public are instances of trafficking, even without commercial elements.

Abruzzi: what about telling people who are entitled to use the exemption about how they might circumvent? That is communicative; how can we distinguish software code from that kind of activity?

A: that’s actually in one of the cases (RT: as I recall, this was taken up in cases about exporting code).

Bruce E. Boyden, Distinguishing Red Flags from Fuchsia Flags: The Tort Law Roots of Section 512

512(c)(1)(A) requires ISP not to have actual knowledge of infringement, not to be aware of facts or circumstnaces from which infringing activity is apparent, and, upon obtaining such notice or awareness, must act expeditiously to remove or disable access to the material. (Also needs not to receive financial benefit directly attributable to the activity when it has the right and ability to control it, and to have a notice and takedown procedure.)

Wants to steer a path between extreme interpretations on both sides. Statutory parts of interest basically parallel test for contributory liability, as in the canonical statement from Gershwin that one who with knowledge of infringement induces, causes, or materially contributes to the infringement can be held liable. Causes/materially contributes is duplicated in the requirement of “material that resides on a system or network controlled or operated by or for the service provider.”

Tort law guidance from the Restatement of Torts: “acting in concert” with a tortfeasor means that you know the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself. Concept of tortiously allowing someone else to use your land/chattels—if you allow this knowing that they’ll be used to commit a tort, you’re contributorily liable—lines up well with Gershwin.

Knowledge: should be understood as credible evidence of genuine existence; constructive knowledge is included to address the situation where the actor has all the info a reasonable person would need but unreasonably fails to form the natural conclusion—the ordinary reasoning process has gone awry.

“Reason to know”: a term of art in tort law: the person has no duty to go out and figure out whether the facts in question exist; different from “should know.”

Looking at Restatement 877c, which gives the elements for liability for permitting conduct—comments say that this liability is subject to general rules of negligence and proximate cause—you weigh the costs of imposing liability versus the benefits of making people take precautions.

In a typical tort case where there’s a single, high probability event, the obvious choice is not to do the dangerous/permitting thing; not much spillover and not much reason to inquire whether the burdens of taking precautions outweigh the benefits of same. Not so with mass activity—multiple people, each with low probability of doing something that harms the plaintiff; secondary actor could predict that one of them would do harm but not which one.

Courts are thus trying to grapple with the knowledge requirement. General knowledge is not enough; must be specific. He concludes that this is too blunt of an instrument for weighing the costs on either side for a certain precaution or different behavior. In typical “general knowledge” case, the costs of not supplying the entire population with the service is very high, as are the costs of searching the pool to find infringement. But it’s not necessarily always high-cost. We should read balancing costs back up into contributory liability and thence into 512(c)—if you have certain knowledge that one of the people will engage in harmful conduct, and there is an easy fix, then you should be obligated to do it. So maybe if you have a filter working already, you have to add plaintiff’s works to it, and if it’s easy to block further uploads of the same material, then you have to do so.

Heymann: knowledge of what? Even if it’s a complete and exact duplicate, might be fair use, or authorized (see: Viacom!). So when we think about 512, we need to consider that as well—not just the evidence, but what the evidence tells you. We’re not talking about knowledge so much as prediction: what are the odds of what a court would say about this material; this is not quite the same.

A: should drill down on technical details. When a reasonable person would conclude that there’s infringement. He knows that’s mushy. (And, now knowing what we know about underground promotions by Viacom etc., what does a reasonable person conclude about content with no apparent ties to the producer?)

Gordon: reading the statute raw, one way to interpret these sections is a general statement instantiated by takedown. If you have info you should act; now we tell you when you have info, which is essentially: when you have a takedown notice. Rather than as seeing this as setting out a large ground for potential liability.

A: 512(c)(1)(C) addresses liability for failing to comply with takedown; if that was intended, why would you even need the other stuff? (For the same reason that there’s a provision explaining that you can’t dodge if you have constructive knowledge, I would say.)

Gordon: copyright statute in particular is not without surplusage; tells you one way and then tells you again. This is a structure for setting up notice and takedown.

A: but (A) is about contributory liability and (B) vicarious (me: but then 512 does nothing that the common law didn’t, right?). He thinks Congress was attempting to alter the contours of vicarious liability—there’s some suggestion about direct financial benefit in the legislative history. (But to me, that has implications for the methodology of borrowing from tort law generally.) He thinks that that doesn’t affect the idea of passing through tort theory, including the limits on liability imposed by negligence/causation principles. Doesn’t like the idea that the only way to get content down is through notice and takedown. (Gordon adds: or in the extraordinary case!)