The magistrate began by characterizing this case as a
high-stakes dispute involving “the First Amendment rights of a university and
one of its faculty to publish research,” making the outcome clear. Pellegrini sued Northeastern and Dr. Sun,
alleging that a paper Sun wrote, and the university posted on its public
digital archive, contained false and misleading information about Pellegrini’s
patented technology in violation of the Lanham Act (and related state laws).
Pellegrini commercializes his IP and solicits funding for it
through research grants and investments.
Northeastern also commercializes IP on a large scale. Sun is an Associate Professor of Electrical
Engineering who solicited private research grants to the University from
Pellegrini.
Pellegrini alleged: Fundamental to Pellegrini’s patent is
the idea that a 20% discrepancy exists in the coupling coefficients of a
certain substance, Metglas, which if true would violate standard thermodynamic
laws. Sun allegedly agreed that such a
discrepancy existed and told Pellegrini he was going to publish this finding,
including its effect on accepted thermodynamics. His draft paper named
Pellegrini as co-author. He allegedly
told Pellegrini that these discrepancies allowed a “self-sustaining” energy
generator to be built, which he intended to do.
In reliance on these assertions, Pellegrini allegedly sold an interest
in his patent to a third party and used the money to finance a research grant
to Northeastern, then took an unpaid research position with Northeastern to
further the development and commercialization of his IP.
However, Pellegrini alleged, Sun submitted a very different
paper to Applied Physics Letters,
with a different title. The paper
asserted that the coupling coefficients of Metglas were equal, necessarily
implying that no discrepancy existed. Though Pellegrini was listed as a co-author,
Sun allegedly never consulted Pellegrini about the changes. Northeastern posted the paper as published on
its publicly-accessible digital archive “to showcase its facilities and
personnel to funding sources.”
Pellegrini alleged that the falsehoods in the article would harm the
value of his patent to investors.
The magistrate judge found that there was no commercial
speech and therefore no commercial advertising or promotion. Pellegrini largely conceded that the journal
publication wasn’t commercial speech, but argued that Northeastern’s use of the
paper, plus its alleged purpose of promoting Northeastern’s facilities and
personnel as grant recipients, was commercial advertising or promotion.
Commercial speech is generally defined as speech that does
no more than propose a commercial transaction, or expression related solely to
the economic interests of the speaker and its audience. The paper didn’t propose a commercial
transaction. Nor was it aimed at
dissuading consumers from buying Pellegrini’s goods or services. It might imply that no discrepancy in
coefficients existed, and thus might influence investors adversely with respect
to the patent, but that didn’t satisfy the core requirement of either proposing
a commercial transaction or relating solely to the economic interests of the speaker and its audience.
Pellegrini argued, however, that the use of the speech
transformed it into commercial speech.
The case law recognizes that this can happen: secondary uses of First
Amendment-protected speech in advertising or promotion can be subjected to the
Lanham Act, as in Gordon & Breach,
when the competitor employs the speech for the express purpose of influencing
purchases/proposing transactions. For
example, “a restaurant clearly engages in commercial speech when it posts the
New York Times review in its window, and General Motors engages in commercial
speech when it announces in a television commercial that its car was ranked
first by Consumer Reports.” To find
otherwise would risk leaving too much misleading speech unregulated.
Pellegrini thus contended that Northeastern commercialized
the scientific paper by posting it to a “publicly accessible digital archive”
that “has as its expressed [sic] purpose to ‘showcase’ NU’s facilities and personnel
to ‘funding sources.’” However,
Northeastern didn’t alter the paper in any way, as other speakers found to have
been engaged in commercial speech did when they summarized or otherwise altered the underlying
scientific research for promotional purposes.
And Northeastern didn’t post the paper to propose a commercial
transaction, even if the purpose of the archive as a whole is to showcase
Northeastern’s personnel and facilities.
Although the posting might result in a funder’s decision to give
research money to Northeastern, that’s not enough to make the speech
commercial, given the importance of avoiding the chill of nonprofits’
participation in public discourse.
Anyway, there was no allegation that the posting targeted sources of
research grants or some other relevant consumer group; instead it was open to
the public. That’s different than
posting a favorable review in a restaurant window, which “targets consumers
making dining decisions.” This and other
examples involved “an express appeal to buy the speaker’s product” (comment: or
at least a necessary implication of an appeal).
Even accepting Pellegrini’s disputed allegation that he
competed with Northeastern, this wasn’t like other cases that found commercial
speech, where the use of scientific papers occurred in the context of a
full-scale marketing plan to compete with the relevant plaintiffs. Given that the dissemination here wasn’t
targeted at consumers, and given that defendants were “in the ‘business’ of
academia, which is a much more protected field than the business of publishing
that was involved in Gordon & Breach,”
this case was much more clearly protected than others.
Moreover, the use was not one that related solely to the
economic interests of the speaker and its audience. Even accepting that Northeastern had an
economic motive to post the paper, that wasn’t enough. First, Northeastern is an educational
institution, with “substantial, non-commercial purposes for the posting of its
academic output: to educate the public, stimulate debate among teachers and
students, and promote testing and experimentation. Non-profits and universities
are presumed to have a non-commercial purpose for their speech, and are
therefore afforded broad protection from regulation.” This protects academic
freedom.
Second, the paper’s content was itself noncommercial. Its subject matter was constitutionally
protected, unlike painkillers or motor oil.
(This is kind of nonsensical. An academic paper on painkillers would
also be constitutionally protected; it’s not really the subject matter that
makes the difference.)
Third, the paper
related to non-economic interests of the audience. Given its openness, the audience could be
presumed to include individuals who were just interested and had no economic
motive. (Note that “relate solely to the
economic interests of the speaker and its audience” has a more sensible meaning
here than some other courts have given it—of course there will always be reasons for those economic interests,
and that shouldn’t convert commercial speech into noncommercial speech. But a large noncommercially interested
audience is a different matter.)
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