Friday, March 30, 2018

YouTube's claims about allowing free speech are merely puffery, court holds

Prager University v. Google LLC, No. 17-CV-06064, 2018 WL 1471939 (N.D. Cal. Mar. 26, 2018)

Prager’s “mission” is to “provide conservative viewpoints and perspectives on public issues that it believes are often overlooked or ignored” by creating educational videos, though, despite its name, Prager “is not an academic institution and does not offer certifications or diplomas.”

Google allegedly “hold[s] YouTube out to the public as a forum intended to defend and protect free speech where members of the general public may speak, express, and exchange their ideas.” However, Google allegedly discriminated against Prager’s viewpoint by censoring certain videos that it uploaded on YouTube by putting age restrictions on some of Plaintiff’s videos and/or excluding them from YouTube’s “Restricted Mode” setting, which helps schools and other content-screeners by keeping out content that violates YouTube’s guidelines.  Although YouTube has insisted in the past that Restricted Mode and age restriction filtering aren’t supposed to filter out content based on political viewpoints, Google allegedly restricted access to some of Prager’s videos “based on [Defendants’] animus towards [Plaintiff’s] political identity and viewpoint.” Additionally, Google allegedly “demonetized” some of Plaintiff’s videos—by preventing advertisements from running on those videos—in a viewpoint-discriminatory manner.  For example, Prager’s “Are 1 in 5 women in college raped?” has been restricted by YouTube, but “Author Jon Krakauer on new book ‘Missoula’ and college rape epidemic” uploaded by “CBS This Morning” has no such restriction. Prager further alleged that content from some of its restricted videos “was not restricted after it was copied and posted by other content providers or vloggers.”

Prager asserted violations of the First Amendment, the California Constitution, the California Unruh Civil Rights Act, the UCL, and the Lanham Act, as well as breach of the implied covenant of good faith and fair dealing.  The court kicked out the federal claims and declined to exercise supplemental jurisdiction over the state claims.

First Amendment: Google isn’t a state actor. Marsh v. Alabama “plainly did not go so far as to hold that any private property owner ‘who operates its property as a public forum for speech’ automatically becomes a state actor who must comply with the First Amendment.”

Lanham Act: The alleged implication that Prager’s videos were “inappropriate” was, first, pure implication; Prager didn’t identify any Google statements about YT’s classification of those videos. The mere implications arising from decisions to restrict access couldn’t constitute “commercial advertising or promotion” within the meaning of the Lanham Act. Prager alleged no facts that remotely suggested that Google restricted access to Prager’s videos for any “promotional purpose” or “as part of an organized campaign to penetrate the relevant market,” or that the implications of Google’s restriction decisions regarding Prager’s videos was “disseminated sufficiently to the relevant purchasing public to constitute ‘advertising’ or ‘promotion.’ ”

YT’s policies and guidelines setting forth what videos will be restricted also didn’t constitute commercial advertising or promotion. They were more akin to instruction manuals for physical products, which “are not advertisements or promotions.”

Nor did Prager sufficiently allege harm resulting from the allegedly false policies and guidelines. Although Prager alleged decreased viewership, ad revenue, and advertiser relationships, nothing suggested that this harm flowed from Google’s publication of its guidelines, as opposed to the decision to restrict Prager’s videos.

Google’s allegedly false statements about its viewpoint neutrality (“voices matter” and YouTube is “committed to fostering a community where everyone’s voice can be heard,” YouTube’s “mission” is to “give people a voice” in a “place to express yourself” and in a “community where everyone’s voice can be heard,” and YouTube is “one of the largest and most diverse collections of self-expression in history” that gives “people opportunities to share their voice and talent no matter where they are from or what their age or point of view”) were all puffery.  They weren’t quantifiable or specific enough to be measurable.  Thus these statements were neither “[ ]likely to induce consumer reliance,” nor “capable of being proved false.”

In addition, Prager didn’t sufficiently allege harm from these statements, for the reasons given above.

Prager also alleged that it relied on false representations contained in the parties’ agreements: YT’s representations that Google endeavors to “help you grow,” “discover what works best for you,” and “giv[e] you tools, insights and best practices for using your voice and videos.” First, these claims were no more than puffery. Second, Prager lacked standing under the Lanham Act as a consumer.

Open legal question doesn't preclude fees award where manner of litigating is exceptional

Tobinick v. Novella, 884 F.3d 1110 (11th Cir. 2018)

The court of appeals held that the Octane Fitness standard for “exceptional cases” applied to Lanham Act cases, and that the District Court here didn’t abuse its discretion in awarding attorney’s fees to Novella.  As you may recall, Tobinick claimed that a treatment he created works for spinal pain, neurological dysfunction, and Alzheimer’s disease.  Novella, a neurologist at Yale New Haven Hospital, wrote a blog post criticizing Tobinick’s treatment as unsupported by medical evidence, so Tobinick sued for (1) false advertising under the Lanham Act, and (2) unfair competition, trade libel, libel per se, and tortious interference with business relationships, all under state law.  After pretrial motions, the district court granted summary judgment to Novella, holding that the blog posts weren’t commercial speech as required by the Lanham Act.

Previously, the court of appeals had said that an exceptional case under the Lanham Act was one “where the infringing party acts in a malicious, fraudulent, deliberate or willful manner.” The District Court initially denied a motion for fees by one defendant (a nonprofit associated with Novella), determining that Tobinick had not pursued his Lanham Act claim maliciously or fraudulently. Novella also successfully brought a special motion to strike the state law claims under California’s anti-SLAPP statute, which was granted, entitling him to fees and costs as to those claims.  The district court held that this was now an exceptional case, since a showing of subjective bad faith or fraud was no longer required under Octane Fitness. The court noted that it had twice before ruled against the plaintiffs on the issue of commercial speech, and even after this, plaintiffs repeatedly sought to multiply the proceedings by adding new parties and claims, moving for sanctions, and accusing Novella of perjury. The court awarded fees as to those expenses incurred after the order granting summary judgment for the nonprofit, over $220,000 (added to a smaller amount for the anti-SLAPP claims for a total of almost $260,000).

Unsurprisingly, the court of appeals joined its fellows in holding that Octane Fitness’s interpretation of the identical patent statutory language applied equally to the Lanham Act. An “exceptional case” under the Lanham Act thus requires only that a case “stands out from others,” either based on the strength of the litigating positions or the manner in which the case was litigated.

The court of appeals held that the district court didn’t abuse its discretion.  That court had ruled against Tobinick in three separate orders, and “[p]laintiffs repeatedly failed to produce new arguments or evidence to distinguish the Court’s prior rulings.” After two adverse rulings on commercial speech, and more than eleven months, plaintiffs “repeatedly sought to multiply the proceedings by adding new parties and claims,” creating 131 new docket entries in 6 ½ months after that summary judgment, and bringing what the trial court viewed as baseless motions for sanctions and accusations of perjury.  The court of appeals, however, didn’t place much weight on the fact that Tobinick continued litigating his case even in the face of a number of adverse rulings on whether the blog posts qualified as “commercial speech,” because that was an open question in this circuit, resolved by a published decision on the merits in this case. Even so, Tobinick’s manner of litigating his suit was enough to make it an exceptional case.

Walmart's allegedly secret customer return blacklist could be misleading, unfair

Maestas v. Wal-Mart Stores, Inc., No. 16-cv-02597-KJM-KJN, 2018 WL 1518762 (E.D. Cal. Mar. 28, 2018)

Maestas allegedly bought a car battery from Wal-Mart that purportedly came with a replacement and refund warranty. When the battery malfunctioned and he tried to return it, Wal-Mart allegedly refused to give plaintiff a replacement or refund because his name appeared on an internal fraud database (based on allegations that he tried to use a bad check at a Colorado Wal-Mart in 2000, thirteen years before his purchase).  Because he wasn’t warned of his ineligibility for the warranty, he sued under the usual California statutory claims on behalf of two putative classes of California consumers whose names also appear in Wal-Mart’s fraud database. The court denied a motion to dismiss. 

Maestas adequately alleged an unfair business practice under Rule 8(a). He explained how the alleged unlawful business act or conduct was “immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.” The applicable test asks whether “the consumer injury is substantial, is not outweighed by any countervailing benefits to consumers or to competition, and is not an injury the consumers themselves could reasonably have avoided.”  Maestas clearly identified the practice at issue: Consumers on the fraud database buy products in reliance on express replacement and refund warranties without any warning that the policies do not apply to them, then Wal-Mart refuses to honor the agreements when the consumers try to use those policies. He alleged that this practice of profiting from false promises didn’t benefit consumers, and that consumers cannot reasonably discover and avoid the injury because only Wal-Mart knows the information that will lead it to reject warranty claims.

For alleged fraudulent practices, Maestas also satisfied Rule 9(b). The question was whether the public was likely to be deceived. Maestas identified what specific misrepresentations and omissions allegedly deceived him: his ineligibility for the warranties was omitted from all receipts and contracts, and he bought in reliance on the warranties.  When he tried to return the battery, a Wal-Mart employee allegedly told him his ineligibility covered “any products” for as long as he remained in the fraud database.

Wal-Mart also argued that, because the proposed class entitled to refunds included consumers who bought products other than the battery Maestas purchased, he hadn’t suffered an injury similar enough to his proposed class members to confer class standing. The court disagreed: the injury wasn’t based on the battery, it was based on the list and allegedly covered all product lines. Nor would the court strike class allegations; the certification stage was the more appropriate time to do that if appropriate.

reasonable consumers might not know just how big Apple iOS 8 is

Orshan v. Apple Inc. 2018 WL 1510202, No. 14-cv-05659-EJD (N.D. Cal. Mar. 27, 2018)

The plaintiffs bought iPhones and iPads with 16 GB capacity running earlier versions of iOS, which they later upgraded to iOS 8, which used anywhere from 18.1%-23.1% (2.9-3.7 GB) of the capacity and made it unavailable for personal storage. They alleged that, had they known this, they “would not have upgraded to iOS 8,” “would not have purchased the 16 GB of storage capacity or would not have been willing to pay the same price for it.” Further, Apple allegedly exploits this discrepancy between represented and available capacity by selling iCloud storage subscriptions and not allowing users to use cloud storage from other vendors. They brought the usual statutory California claims.

The court found plaintiffs failed to state a claim, though one theory might be repleadable.  First, it wasn’t reasonable to think that all advertised storage capacity would be available for personal use.  In all its materials, Apple clarified that the “actual formatted capacity” of these devices would be “less” than the full 16 GB. Also,

iPhones and iPads are not hard drives; they are fully functional devices that come pre-installed with an operating system and applications. Consumers know and expect this. No reasonable consumer would buy an iPhone or iPad and not expect that it would not already include this software. Although an average consumer is not an engineer, software and computers are pervasive enough in the modern world that a reasonable consumer would at least expect that software would require some storage space.

Second, a reasonable consumer might not have thought that iOS 8 would be so bulky.  Apple didn’t make specific statements about its size either absolutely or in comparison to iOS 7.  “In addition, a reasonable consumer is not a software engineer and would not be expected to know, as a matter of common knowledge, how much space iOS consumes or the relative size differences between iOS 7 and iOS 8.” However, plaintiffs didn’t sufficiently plead their claims with particularity. Their general statements about deceptiveness didn’t let Apple pinpoint which of its statements, or its materials containing omissions, gave rise to plaintiffs’ alleged expectations.

Thursday, March 29, 2018

reading list: parody takedowns on Google

Erickson, K. & Kretschmer, M. (2018) ‘This Video is Unavailable’: Analyzing Copyright Takedown of User-Generated Content on YouTube. Journal of Intellectual Property, Information Technology and ECommerce Law (JIPITEC), 9(1).

From the abstract:

This research investigates factors that motivate takedown of user-generated content by
copyright owners. We study takedowns within an original dataset of 1,839 YouTube music video parodies observed between January 2012 and December 2016. We find an overall rate of takedowns within the sample of 32.9% across the 4-year period. … The variables analysed include commercial substitution, artistic/moral concerns, cultural differences between firms and YouTube uploader practices. The main finding is that policy concerns frequently raised by rightholders are not associated with statistically significant patterns of action. For example, the potential for reputational harm from parodic use does not appear to predict takedown behavior. Neither does commercial popularity of the original music track trigger a systematic response from rightholders. Instead, music genre and production values emerge as significant factors.

In particular, lower production values increase the risk of takedowns, contrary to the hypothesis that substitution would be a more-feared risk for higher-production-value parodies.  A clear intent either to target the song itself or to use the parody to target some other entity both decrease the risk of takedowns, showing again that the satire/parody distinction is not a legally helpful one.  From the conclusion: “The central finding is that rightholders appear to make complex choices that are assisted by automatic detection mechanisms, with little concern for the artistic integrity of the creative works they represent. The significant difference between musical genres suggests that rightholders, even in the same medium, behave quite differently from their peers.

Tuesday, March 27, 2018

Supplement review guide not disguised advertising despite cozy relationship with one manufacturer

Ariix, LLC v. Nutrisearch Corp., No. 17CV320, 2018 WL 1456928 (S.D. Cal. Mar. 23, 2018)

Ariix competes with Usana Health Sciences in the nutritional supplement market.  NutriSearch publishes the NutriSearch Comparative Guide to Nutritional Supplements, “a guide to nutritional products that is relied on by consumers and professionals.” The Guide’s Gold Medal of Achievement has gone to four different companies:

Ariix made a vigorous effort to qualify for the Gold Medal, but was denied. According to the complaint, NutriSearch admitted Ariix had met the standard, but refused to award the company the Gold Medal because it was reworking its criteria for the distinction. The existing Gold Medal holders, including Usana, were “grandfathered” in during this period.

The allegedly false representations were (1) that Ariix or its products are not as good as Usana or its products and (2) that NutriSearch claims to be objective and neutral but is actually a shill for Usana.

However, “the legislative history of the Lanham Act suggests Congress’ intent to avoid trying to regulate consumer reports or consumer protection groups that review products,” and the benefit of the doubt must go to “protecting rather than stifling speech” about “matters of public concern.” “The Court therefore holds that the Lanham Act doesn’t apply to reviews of consumer products, even if they are alleged to be biased, inaccurate, or tainted by favoritism.”

But not every soi-disant “review” is actually a review.  “Caselaw is replete with examples of people and entities positioning themselves as reviewers who were actually engaged in some form of commercial product promotion.” Nor did the court’s holding apply to other statutes, such as the FTC Act, which have their own requirements. [Though given the First Amendment reasoning, it’s not clear why.]  But an actual consumer product review “falls outside the scope of the Lanham Act’s false advertising provision.”

The court referred to, but didn’t exactly rely on, the Lanham Act’s “commercial advertising or promotion” requirement.  The Ninth Circuit has adopted the Gordon & Breach test: 1) commercial speech; 2) by a defendant who is in commercial competition with plaintiff; 3) for the purpose of influencing consumers to buy defendant’s goods or services, 4)  disseminated sufficiently to the relevant purchasing public to constitute ‘advertising’ or ‘promotion’ within that industry.  As the court noted, Lexmark requires tweaks to 3), such as construing this element to require that the statements be made for the purpose of influencing consumers to buy particular goods or services—whether those are the defendant’s goods and services or someone else’s. But 1) and 4) remain good law.
But the first and fourth elements were not implicated by Lexmark’s holding.

Books and articles can sometimes be commercial speech, but if their main purpose was not the proposal of a commercial transaction, that’s not going to be commercial speech, even if parts promote sale of a product by the author. “Where the general purpose of a book is not the promotion of a commercial transaction, the book may nevertheless contain commercial speech”; the question then is whether the  commercial and non-commercial components are inextricably intertwined. Companies are not allowed to “mask” the commercial nature of a publication “merely by adding informational content.”

The court found that, based on the allegations of the complaint, the Guide was noncommercial speech, with any arguably commercial elements inextricably intertwined with the Guide’s “overriding noncommercial purpose.” “NutriSearch itself does not sell any of the nutritional products reviewed in the Guide, and does not have an ownership interest in the companies that produce them…. [T]here is no allegation that NutriSearch solicits or accepts paid advertising or that it was paid in any direct fashion for promoting Usana’s or any other company’s products or disparaging Ariix’s.”  However, in case Ariix could allege additional facts showing that at least some of the allegedly false or misleading commercial statements were separable from the noncommercial ones, the Court continued.

Statements about NutriSearch’s neutrality applied to the entire Guide as a whole:

This guide was not commissioned by any public sector or private sector interest, or by any company whose products may be represented herein. The research, development, and findings are the sole creative effort of the author and NutriSearch Corporation, neither of whom is associated with any manufacturer or product represented in this guide.

These statements were arguably commercial speech only insofar as they encouraged people to buy the Guide. There was no allegation that the statements appeared anywhere other than inside the Guide itself, and thus they weren’t sufficiently disseminated to the relevant purchasing public to constitute advertising or promotion within the publishing or bookselling industry. Moreover, the court didn’t think they were commercial speech. Furthermore, the Guide’s statements touting its neutrality and reliability could only plausibly be connected with any harm to Ariix in connection with statements about Usana and Ariix, so Ariix’s claim could only succeed if the other statements were actionable.

The complaint didn’t plead facts plausibly suggesting that the statements about Usana and Ariix were commercial speech, or even that they were false or misleading. The sheer numbers of companies reviewed suggested that the Guide was mainly in the business of reviewing a large number of different products, rather than promoting the purchase of a particular product or even one company’s products. The complaint plausibly suggested that the Guide was biased, but not that it was commercial advertising or promotion.

The alleged ties between the Guide and Usana were that the author and NutriSearch’s current CEO were former Usana employees, and that the author originally conceived the Guide as a way to promote Usana’s products. “Given that the Guide is now on its fifth edition, facts surrounding its genesis years ago are not particularly suggestive of any current financial arrangement with Usana.”  Favorability to Usana didn’t mean they were being paid to advertise Usana.

The complaint alleged that Usana compensated NutriSearch indirectly, because it heavily promotes the Guide and “encourage[es] its representatives and consumers” to buy it. “In some circumstances, this might plausibly point to some kind of quid pro quo, but here it does not. It is entirely normal for a company whose products have been favorably reviewed in a particular publication to seek to publicize that fact as widely as possible.”  In addition, the complaint alleged that the author accepted paid speaking engagements for Usana, but has at least once declined to speak at an Ariix convention.  This could suggest some economic motive, but there were no factual allegations suggesting that the speaking fees were under-the-table payments for advertising, and so this suggested at most an indirect economic motive.  In fact, the author’s decision to decline an opportunity to speak with Ariix indicated that he gave up money, which was inconsistent with using speaking fees as payment for advertising; Ariix implied that some kind of exclusivity arrangement existed, but didn’t adequately allege such an agreement.

The court cautioned that unpaid advertising could be commercial speech or constitute commercial advertising or promotion. But without plausible allegations of payment or of some other kind of quid pro quo, these were noncommercial product reviews.  “[A]ny alleged economic motive is too indirect to transform what would otherwise be noncommercial product reviews into commercial speech or disguised commercial advertising. Even if the Guide is biased or its evaluations unfair, or Defendants’ objectivity is tainted by the alleged economic relationships with Usana, there are no plausible allegations that Defendants are engaged in commercial speech.”

Finally, some of the challenged claims were opinion, not fact.  The complaint alleged that the Guide’s ratings system was objective, but said almost nothing specific about NutriSearch’s ratings process or criteria for the Gold Medal award.  “[T]he Guide’s role appears to be that of an evaluator that awards ratings up to five ‘stars.’” Although the plaintiff might not need to allege the exact way ratings were arrived at, without at least some allegations, it wasn’t plausible that the decisions about how rating criteria were selected and weighed were objective, making the ratings just opinion.

Feud lawsuit foiled, but questions about transformativeness remain

De Havilland v. FX Networks, LLC, No. B285629 (Cal. Ct. App. Mar. 26, 2018)

Reversing the trial court’s refusal to dismiss Olivia de Havilland’s right of publicity and false light claims against FX’s show Feud, the California court of appeals reasons, “[t]he First Amendment does not require authors, filmmakers, playwrights, and television producers to provide their creations to the public at no charge.”  [Now ask about sketch artists and video game designers!]  Real people portrayed in expressive works—at least “[b]ooks, films, plays, and television shows”--don’t “have the legal right to control, dictate, approve, disapprove, or veto the creator’s portrayal of actual people.”

Feud is a docudrama about film stars Bette Davis and Joan Crawford, in which Academy Award-winning actress Catherine Zeta-Jones plays de Havilland, a close friend of Davis.  The trial court found that the portrayal was realistic and therefore not transformative.  Noting that “this reasoning would render actionable all books, films, plays, and television programs that accurately portray real people,” the court of appeals reversed.

The de Havilland role takes up less than 17 minutes of the 392-minute, eight-episode miniseries. It’s mostly: (1) a fictitious interview in which Zeta- Jones talks to an interviewer about Hollywood, its treatment of women, and the Crawford/Davis rivalry; and (2) scenes in which Zeta-Jones interacts with Susan Sarandon playing Bette Davis, her close friend.  De Havilland’s expert calculated the fair market value of FX’s “use” in Feud of de Havilland’s “rights” to be between $1.38 and 2.1 million, or $84,000 and $127,000 per minute of screen time.  De Havilland also submitted declarations from two men with “many years of experience in the entertainment business” claiming that “standard practice” in the film and television industry is to obtain consent from any “well-known living person” before her or his “name, identity, character[,] or image” can be used in a film or television program.  FX contested these declarations, including with a declaration from Casey LaLonde, Joan Crawford’s grandson, who is portrayed in Feud although he neither granted consent nor received any compensation for this portrayal.

The trial court said de Havilland had met her burden under California’s anti-SLAPP law to show a likelihood of prevailing on her right of publicity claims “because no compensation was given despite using her name and likeness.” There was “nothing transformative about [Feud]” because FX admitted it “wanted to make the appearance of [de Havilland] as real as possible.”  On de Havilland’s false light claim, the court noted de Havilland asserted (1) she had not given an interview at the 1978 Academy Awards; (2) she had not referred to her sister Joan Fontaine as “my bitch sister”; (3) she never told a director she didn’t “play bitches” and he should call her sister; and (4) when asked where the alcohol in Frank Sinatra’s dressing room had gone, she never said “Frank must have drunk it all.” A viewer “may think [de Havilland] to be a gossip who uses vulgar terms about other individuals, including her sister.” The court stated, “For a celebrity, this could have a significant economic impact.”

Generally, only minimal merit is required to survive an anti-SLAPP motion. But when the plaintiff is a public figure, as de Havilland conceded she was, her prima facie case requires clear and convincing evidence that the defendant acted with “actual malice.”  [It wasn’t clear to me that the court meant to apply this to the right of publicity claims too, but it does come as part of the introductory discussion.]

Right of publicity: First, the court of appeals expressed uncertainty whether a docudrama constituted a “product or merchandise” within the meaning of the statutory right of publicity. “Many of the cases in this area involve products and merchandise such as T-shirts and lithographs, greeting cards, and video games, or advertisements for products and merchandise.”  [Images on T-shirts, lithographs, greeting cards, and video games, of course, are not protected by the First Amendment any more than beer and cars … oh wait, they are, my bad.]  In the recent Hurt Locker case, the Ninth Circuit noted that the movie was “not speech proposing a commercial transaction.”  [You know, not like T-shirts, lithographs, greeting cards, and video games.] 

But the court here didn’t need to decide the issue, because Feud was constitutionally protected in any event, both for the statutory cause of action and the misappropriation tort.  “Our courts have often observed that entertainment is entitled to the same constitutional protection as the exposition of ideas.” FX didn’t have to buy the rights to use de Havilland’s name or likeness.  Producers can buy such rights “for a variety of reasons, including access to the person’s recollections or ‘story’ the producers would not otherwise have, or a desire to avoid litigation for a reasonable fee. But the First Amendment simply does not require such acquisition agreements.”

 De Havilland relied on Eastwood v. Superior Court, a 1983 California appellate case “which arose from an unusual set of facts,” in which a tabloid  published an article about the supposed involvement of famous actor Clint Eastwood in a “love triangle.” Eastwood alleged the article was entirely false, and the court of appeals allowed him to proceed with his right of publicity claims. “Here, by contrast, the expressive work at issue is an eight-hour docudrama of which the de Havilland character is but a small part. Moreover, as discussed below, the scenes and lines of which de Havilland complains are permissible literary license and, in any event, not highly offensive to a reasonable person. Unlike Eastwood, Feud’s creators did not make out of whole cloth an entirely false ‘article’ for economic gain.”  This is a beautiful example of a set of statements that identify factual differences between the cases, but do not explain why the differences matter to whether the right of publicity (a distinct tort from defamation/false light) can be violated.  After all, Eastwood was also brought by a man, not a woman, and against a tabloid, not a TV show—but so what?  This discussion further strengthens my discomfort with the court’s later treatment of transformativeness, which suggests that a character who is the focus of a narrative may have a right of publicity claim even if de Havilland doesn’t.

De Havilland also argued that the fictitious interview “is structured as an endorsement of [Feud].” The court of appeals disagreed, based on the content of the miniseries itself. The court found no authority to support the reasoning that “whenever a filmmaker includes a character based on a real person, that inclusion implies an ‘endorsement’ of the film or program by that real person.” Nor did the use of de Havilland’s name and photographs of Zeta-Jones in advertising for the miniseries support a right of publicity claim, since the constitutional protection of a publication extends to advertising for the publication.

Anyway, the portrayal of de Havilland was transformativeness.  Now here comes some real nonsense: “Comedy III’s ‘transformative’ test makes sense when applied to products and merchandise – ‘tangible personal property,’ in the Supreme Court’s words. Lower courts have struggled mightily, however, to figure out how to apply it to expressive works such as films, plays, and television programs.”  [Which, as we know, are never instantiated in tangible personal property, and cannot be reduced to mere merchandise such as books and DVDs, thus making them unlike the nonexpressive images found on T-shirts and lithographs.  OK, just imagine me making Charlie Brown aaaargh noises, because if the court can’t write a meaningful sentence than neither can I.]  In a footnote, the court notes our amicus brief expressing doubts about the transformativeness test.

Still, the court of appeals finds that here, the struggle is not real. The trial court focused on the show’s attempt to create realism as nontransformative, but the court of appeals found the “imagined” interview in which Zeta-Jones talks about Hollywood’s treatment of women and the Crawford/Davis rivalry to be “a far cry from T-shirts depicting a representational, pedestrian, uncreative drawing of The Three Stooges.”  [On behalf of visual artists and by extension photographers, not to mention copyright law, let me express my dismay at this characterization.] 

The court of appeals focused on the fact that the de Havilland role constituted only about 4.2% of Feud and noted the many other stories the show told, making the likeness of de Havilland  “one of the ‘raw materials from which [the] original work [Feud] is synthesized.” The show’s “marketability and economic value” does not “derive primarily from [de Havilland’s] fame” but rather “comes principally from . . . the creativity, skill, and reputation” of Feud’s creators and actors.  The court concludes that, “While viewers may have ‘tuned in’ to see these actors and watch this Hollywood tale, there is no evidence that de Havilland as a character was a significant draw.” By implication, it seems, the analysis of Davis and Crawford’s publicity claims would have to have proceeded differently, and a biopic focusing on a single person ought to worry, which just goes to show that transformativeness is not a good test.

The false light claim also failed; false light requires that the falsity be highly offensive to a reasonable person.  “In light of the actual docudrama itself -- which we have viewed in its entirety -- de Havilland cannot meet her burden.” First, the court questioned whether a reasonable viewer would interpret a docudrama as entirely factual, rather than as a form in which “scenes, conversations, and even characters are fictionalized and imagined.” But even assuming the scenes would be seen as literal statements of actual fact, Feud’s depiction wasn’t defamatory nor would it “highly offend” a reasonable person.

“Granting an interview at the Academy Awards is not conduct that would subject a person to hatred, contempt, ridicule, or obloquy.”  Generally, “Zeta-Jones acts as a guide for the viewer through the tale, a Beatrice to the viewer’s Dante. Zeta-Jones plays de Havilland as a wise, witty, sometimes playful woman,” characteristics de Havilland displayed in actual interviews. “Taken in its entirety and in context, Zeta-Jones’s portrayal of de Havilland is overwhelmingly positive….The work itself belies de Havilland’s contention that Zeta-Jones portrays de Havilland as a ‘vulgar gossip’ and ‘hypocrite.’” An offhand remark to de Havilland’s good friend Bette Davis while they are alone in Sinatra’s dressing room that he must have drunk the liquor wouldn’t be defamatory or highly offensive to a reasonable person, given that Sinatra’s fondness for alcohol was well known.

As for the “bitch” remarks, given that de Havilland actually described her sister as a “dragon lady,” they wouldn’t be highly offensive to a reasonable person and they were also substantially truthful characterizations of her actual words.  A statement is not considered false unless it “would have a different effect on the mind of the reader from that which the . . . truth would have produced.” The writers submitted declarations that they used “bitch” instead of “dragon lady” because the terms had the same meaning but “bitch” would be more recognizable to the target audience.  The court found that the effect on the mind of the audience was the same. “We must not permit juries to dissect the creative process in order to determine what was necessary to achieve the final product and what was not, and to impose liability . . . for that portion deemed unnecessary. Creativity is, by its nature, creative.”

Nor could de Havilland prove by clear and convincing evidence that Feud’s creators acted with actual malice, as required given her public figure status. De Havilland argued that, because she did not grant an interview at the 1978 Academy Awards or make the “bitch sister” or “Sinatra drank the alcohol” remarks to Bette Davis, Feud’s creators acted with actual malice. “But fiction is by definition untrue. … Publishing a fictitious work about a real person cannot mean the author, by virtue of writing fiction, has acted with actual malice.”  Thus, courts require plaintiffs in cases like this to show that the defendant intended to convey the defamatory impression, which de Havilland could not do, especially since liability cannot be imposed for an implication that merely should have been foreseen. In his sworn declaration, the main creator stated that he intended Zeta-Jones’s portrayal of de Havilland to be that of “a wise, respectful friend and counselor to Bette Davis, and a Hollywood icon with a unique perspective on the past.”

In conclusion, the court of appeals summarized the Catch-22 created by the trial court’s ruling: “If [creators] portray a real person in an expressive work accurately and realistically without paying that person, they face a right of publicity lawsuit. [This part of the dilemma is apparently ok for people who work in static representational art, per Saderup.] If they portray a real person in an expressive work in a fanciful, imaginative -- even fictitious and therefore ‘false’ -- way, they face a false light lawsuit if the person portrayed does not like the portrayal.”  The trial court was ordered to grant the anti-SLAPP motion and award defendants their attorney fees and costs.

Monday, March 26, 2018

Crackers don't matter? Goldfish v. whale

I bought these for a party and had a student indicate that she experienced initial misrecognition in the bowl (hard to say "interest" because she wasn't the purchaser).  Would any orange cracker that isn't square risk confusion with Goldfish crackers?  PS if you got the title reference, you are my people.

Transformative work of the day, admissions edition

An eagle-eyed (no pun intended) student spotted this admissions video from Boston College with a distinctly Harry Potter flavor.  Or maybe that ought to be Hermione Granger.

Reading list: consumer search parsimony

More evidence, if more were needed, in the keyword wars: given that consumers prefer shorter queries, and that they may assume that some attributes need more search than others, we should expect that at least some searches using trademarks are from consumers not actually looking for trademark-only results.  This research about strategic search behavior reinforces that conclusion.  Using examples from frequently-searched food-related terms, for example, the authors explain that:

[A] consumer who is looking for information on Kitchenaid and/or Cuisinart food processors[] may be better off using the query “Kitchenaid food processor” rather than a longer query that includes “Cuisinart.” This is because Cuisinart food processors are often compared to Kitchenaid, and the shorter query will retrieve at least one search result that contains all relevant terms. Including “Cuisinart” into the query greatly increases the proportion of results that contain this term, but this comes at the expense of other terms, in particular “Kitchenaid.” The shorter query already performs better under our simple implementation of the “Compensatory-Average” metric that weighs all terms equally, but the difference would be more pronounced if the consumer were primarily interested in Kitchenaid over Cuisinart. In that case, omitting “Cuisinart” from the query would ensure that most results mention “Kitchenaid,” while some results still mention “Cuisinart.”
In sum, our field data suggest that consumers indeed stand to benefit from being strategic in query formation, as shorter queries may be at least as effective at retrieving desired content, compared to queries that contain all the terms the consumer is searching for. The fact that consumers tend to prefer shorter queries makes these shorter queries even more attractive….

But do consumers actually engage in strategic searching?  They also run some experiments:

To sum up, the behavior we observe suggests that participants are able to strategically leverage activation probabilities between words, at least to some extent. Because our study uses a somewhat  artificial lab setting, we do not claim that the extent to which consumers leverage activation probabilities in the real world is the same as in our study. Instead, we view our results as proof of existence that consumers have some ability to strategically formulate queries that contain only a subset of the terms they are interested in, but that are effective at retrieving the other terms….
Our fndings suggest that the content that is of interest to consumers is not simply the content mentioned in their search queries, but also the content retrieved by their search queries.

Friday, March 23, 2018

Reminder that materiality is a matter of likely effect, not certainty

E-Imagedata Corp. v. Digital Check Corp., No. 15-CV-658, 2018 WL 1411226 (E.D. Wis. Mar. 21, 2018)

The parties compete in the market for hardware/software systems used to view microform on a screen and convert it into digital files. [Microform!  Good to know some things are still around.] The systems cost thousands of dollars and are sold to institutions like libraries, universities, and businesses. Each party uses resellers who compete directly for many sales through a process that often includes bidding, in-person product demonstrations, and hands-on customer testing.Plaintiff e-Image sells the ScanPro and defendant ST Imaging sells the ViewScan, allegedly falsely advertising its optical zoom capabilities and camera megapixel capabilities, as well as its UL certification; “UL did not certify any of the ViewScan devices until December 2015—when it certified the ViewScan III—but brochures for all 3 devices, published months and years earlier, indicate UL certification.”  e-Image also alleged that ST Imaging falsely or deceptively equated its ViewScan devices with e-Image’s competing ScanPro devices.

e-Image also asserted claims arising out of a failed bid protest that it lodged with the GAO after the National Park Service awarded a contract for “one camera microfilm scanner” to an ST Imaging reseller. e-Image argued that ST Imaging’s product did not meet the terms of the government’s solicitation, which required that the scanner’s “camera have a ‘minimum 25 megapixels.’ ” The GAO rejected e-Image’s proposed interpretation as unachievable by any commercially available product. The GAO made two relevant published findings: (1) e-Image “knew that the ordinary convention in the industry was to represent camera megapixels in terms of the camera sensor itself” and, thus, (2) the “camera sensor resolution” for the ScanPro 3000 is “6.6 megapixels,” not “26 megapixel[s],” as e-Image continues to assert. ST Imaging then emailed its authorized resellers: “If you are in a bid and your prospect says that the competition has a 26 megapixel camera, please use [the GAO’s decision] to show that they only use a 6.6 megapixel image sensor.” e-Image alleged that ST Imaging attacked its reputation by claiming that e-Image lies about its own products’ specifications.

Materiality: e-Image was not required to “prove that a specific commercial statement by ST Imaging actually affected a specific purchasing decision by a specific customer.” Courts “generally only require a likely, as opposed to an actual, effect on consumer choice.” A reasonable jury could find materiality, given record evidence that institutions looking to purchase microform systems commonly set requirements for bids, including minimum requirements for a scanner’s “optical zoom lens” and “camera megapixels,” and that the proposed product be certified as meeting applicable product safety standards, like UL’s. ST Imaging’s resellers represented compliance with these standards, at least in part, by submitting prefabricated marketing materials from ST Imaging. This raised a genuine dispute on materiality.

Injury: the only customers deposed testified that price was “a significant, and perhaps the dominant, factor in many of the purchasing decisions at issue here,” while ease of use also mattered. But “a reasonable jury could find that ST Imaging was able to adopt lower prices by falsely claiming that its products were certified by UL and had capabilities that they lacked without incurring the usual costs of certification or product development. Similarly, a reasonable jury could find that by deceptively equating its products with e-Image’s products, ST Imaging was able, in many cases, to mislead potential customers into making purchasing decisions based on price alone.”  

e-Image sought partial summary judgment on liability for literally false representations, such as ST Imaging’s claims that its ViewScan devices were certified by UL. But materiality and injury could also be found against e-Image.  “[T]he record suggests that a substantial majority of the parties’ customers make their purchasing decisions after in-person product demonstrations that typically last one to two hours, which may mitigate or eliminate whatever influence ST Imaging’s promotional statements might otherwise have on customers’ purchasing decisions.”  [I wonder if the court will let e-Image make a bait and switch argument, which would be consistent with the reasoning above: if ST Imaging only got in the door by falsely representing that its products met the bid standards, then its ultimate persuasiveness—especially if the initial falsehoods were never corrected—probably shouldn’t break the causal chain.]

Monday, March 19, 2018

Truthful identification of performance defeats Illinois publicity claim

Martin v. Wendy’s Int’l, Inc., --- Fed.Appx. ----, 2018 WL 1225470, No. 17-2043 (7th Cir. Mar. 9, 2018)

“Guinness World Records lists Johannes “Ted” Martin as the record holder for consecutive kicks of a footbag.” He sued Wendy’s International and Guinness for urging families to play together and challenge world records like Martin’s in a promotion.  Each promotional kids’ meal, Guinness’s website explained, “will come with one of six Guinness World Records record-breaking toys” that “provides fun challenges and a chance for parents and kids to outdo each other for the title of family’s best.” One of the toys was a footbag. Each kids’ meal also included a link to a free Guinness World Records eBook, which provided “an exclusive guide to records” for families to use.  The words “Guinness World Records” were printed on the footbag and its packaging. An in-store display showed the footbag, alongside the five other toys, under the heading “Kids v. Parents” and the logos for Wendy’s and Guinness. The text on the kids’ meal bag also referred to the six toys as “record-breaking.” An instructional card with Guinness and Wendy’s logos asked “Can You Break The Record?” The instructions included: “How many times in a row can you kick this footbag without it hitting the ground? Back in 1997, Ted Martin made his world record of 63,326 kicks in a little less than nine hours!”

Martin didn’t plausibly allege false endorsement:

No reasonable consumer would think that Martin endorsed the footbags. The appearance of “Guinness World Records” on the footbag might prompt a reasonable consumer to conclude that Guinness—not Martin—is associated with the footbag. Martin’s name on the instruction card simply identifies him as the holder of a record, not the endorser of any product.

Nor was labeling the toys “record-breaking” false advertising.  It was puffery. “[N]o reasonable consumer would believe that free toys accompanying kids’ meals to encourage intra-family play were the same types of items used to set world records.”

The llinois Right of Publicity Act excludes the “use of an individual’s name in truthfully identifying the person as the author of a particular work or program or the performer in a particular performance.” Martin argued that this exception didn’t apply because he didn’t perform in the defendants’ promotion. “But Martin’s qualification is not in the statute. [The statute] allows anyone to identify truthfully the performer of a particular performance. And that is what the defendants did.”

Sock puppet reviews aren't literally false absent additional non-identity literal falsity, court rules

Nunes v. Rushton, No. 2:14-cv-00627, --- F.Supp.3d ----, 2018 WL 1271446 (D. Utah Mar. 9. 2018)

Every time I think I’ve seen it all, I’m reminded that humans are not only stranger than we imagine, they are stranger than we can imagine. Plaintiff sued defendant for copyright infringement, defamation, etc., mostly unsuccessfully except for the copyright claims, leaving for trial only the amount of the statutory damages award for copyright infringement.

Plaintiff published her novel A Bid for Love in 1998 and registered the copyright the same year. Defendant published a novel, The Auction Deal, between May and July 2014 by distributing between 80 and 90 free copies to reviewers and bloggers for promotional purposes. “With the exception of the addition of sex scenes, The Auction Deal is substantially similar to A Bid for Love and shares the same dialog, scenes, characters, themes, settings, and plot.”

In May 2014, defendant also created about fifteen “sock puppet” accounts on Google, Yahoo, Goodreads, and Facebook to post positive reviews of her previous two novels and negative reviews of plaintiff's book. She also posted two negative Amazon reviews of A Bid for Love under her own name and two under sock puppet names. 

After plaintiff learned of The Auction Deal, she attempted to obtain a copy by requesting it from one of defendant's sock puppet accounts. In response, defendant sent plaintiff a series of disparaging comments, then pulled The Auction Deal from sale on Amazon after plaintiff contacted her. Other than copies she bought for herself, no other copies of the novel were ever sold.  Then defendant posted another negative review of A Bid for Love under her own name and nine more negative reviews of plaintiff's books from sock puppet accounts. She also used sock puppets to give multiple one-star ratings of plaintiff's books on Goodreads. On Facebook, her public comments about plaintiff accused her of “harassment.”

After plaintiff discovered defendant's identity, she decided to sue and started a GoFundMe fundraiser to finance her lawsuit. Defendant posted several comments on the GoFundMe page using sock puppets, calling the solicitation a “fraud,” “hoax,” and/or “scam,” e.g., “This ‘fund me’ has got to be a hoax or scam. A publisher would be backing this if it were a real claim.”

In deposition, defendant conceded that her novel was substantially similar to plaintiff's novel.  There was no factual dispute on her liability for copyright infringement, though there was enough to go to a jury on whether the infringement was willful, given that there was only circumstantial evidence of her state of mind when she infringed the copyright.  In an email, the defendant stated that, in her mind, she never published the book by selling copies to the public.  [Well, ok.  Seems kind of Trumpian to me, if she sent out review copies, but apparently she may argue that she was in a manic phase due to her bipolar disorder, so she lacked willfulness.] 

The claim for actual damages failed. Plaintiff didn’t argue that the infringement caused the sales of her existing novels to suffer, and instead alleged that the copyright infringement caused her mental anguish and prevented her from writing two novels that she would have otherwise written during this timeframe. The court determined that “actual damages” as used in the statute didn’t include damages caused by the copyright owner’s emotional response to the infringement of a published work. “[T]he explicit provision for the recovery of the infringer’s economic profits in the Act strongly suggests that the copyright owner’s ‘actual damages’ must similarly be economic in nature,” and the case law agrees. Thus, only statutory damages remained for trial.

 The defamation/defamation per se claims failed because the online comments and emails were opinion about plaintiff's books and personality traits, hyperbolic claims of “harassment,” “scam” or “fraud,” or unpublished communications sent only to plaintiff.  For example, in context, “readers would understand the use of the terms ‘fraud’ and ‘scam’ as exaggerated language expressing strong disapproval of Nunes’s efforts to raise money online, not as a charge of criminally fraudulent activity.”  As for “Ask your attorneys if in your quest to investigate and have people rally around you if you are guilty of harassment. I think the answer is yes,” that could be read to express a legal opinion, but even questionable opinions about the legal significance of plaintiff's actions aren’t actionable as defamation.

 Some of defendant's statements did contain false statements of fact, such as messages to book reviewers and bloggers claiming that plaintiff had given her permission to use elements of A Bid for Love or that plaintiff had co-written The Auction Deal with her. She also posted: “[Plaintiff] feels threatened because I told her I would be contacting my aunt, [apparently the CEO of plaintiff's publisher], and letting her know how she is handling the situation—through reviewers and not through the author. [The publisher/a bookstore] are appalled at the way she is handling the situation.”  But the asserted facts weren’t defamatory: false claims about permission or collaboration don’t have a “tendency to injure a reputation in the eyes of its audience.” False claims about her aunt and of the bookstores’ alleged disapproval weren’t defamatory, even though they were likely intended to intimidate plaintiff; the statements weren’t about her, and “a falsehood concerning an opinion held by a third party is not sufficient to expose an individual to public hatred or ridicule.”

 False light claims failed for the same reasons as the defamation claims.

 Business disparagement/injurious falsehood: A business disparagement claim “concerns statements regarding the quality of the plaintiff’s product or the character of the plaintiff’s business,” and not “statements about an individual’s reputation.” Defendant disparaged the quality of plaintiff's novels, giving them numerous one-star reviews and criticizing them for being “out of date” and “ridiculous.” These were constitutionally protected opinions, and defendant's other online comments couldn’t be used to support her claim for the same reason the defamation claims failed.

 Tortious interference: Defendant allegedly interfered with plaintiff's economic relations with the readers who purchase her books by way of two improper means: (1) posting defamatory comments on the internet and (2) infringing the copyright to A Bid for Love.  But the first wasn’t an improper means, given the result on the defamation claims, and the second was preempted by the Copyright Act.

 Plaintiff also alleged a violation of Utah’s electronic communication harassment statute. But the statute didn’t expressly create a civil cause of action, and the court wouldn’t imply one.

 Lanham Act false advertising: Plaintiff alleged that the use of multiple sock puppet accounts to post positive reviews of defendant's books and negative reviews of her books constituted false advertising. First, defendant pretended to be an independent reader, not the author herself/the author’s competitor. Second, by using multiple sock puppet accounts, defendant allegedly created the false impression that multiple individuals liked her books and disliked plaintiff's books.  Plaintiff didn’t submit evidence of actual deception, so she needed to show literal falsity. 

The court relied on Romeo & Juliette Laser Hair Removal, Inc. v. Assara I LLC, 2016 WL 815205 (S.D.N.Y. Feb. 29, 2016), another case involving fake reviews.  There, the court found that fake bad experiences of non-existent customers were literally false because they described events that never occurred and fictitious customers that did not exist. But reviews posted under three separate pseudonyms by an owner of a competing business who was an actual customer of the plaintiff, claiming that the services was slow and that the plaintiff’s employees were rude, weren’t literally false because they were “largely matters of opinion and the plaintiff [had] not shown that they are actionable as false statements of fact.” But that’s not really the literal falsity part: the literal falsity is the misrepresentation about being someone else (and about having three separate experiences instead of one).  Whether that literal falsity is material is a separate matter, but it might well be so, and the FTC’s Endorsement Guidelines follow the principle that falsity/failure to disclose in these matters violates the FTCA even without other specific factual claims, because of the materiality of endorsers’ connections to the endorsee.  I certainly would find it highly material that the author of a review was a direct competitor, or was also the provider of the reviewed good/service.

 However, the court here found that the sock puppet reviews were just opinions: Defendant “did not misrepresent the essential characteristics of the books she reviewed. Instead, she claimed that her books were good while Nunes’s books were boring and outdated. Such statements are a matter of opinion and cannot be proven true or false.”

 Also, the Lanham Act claim failed separately because plaintiff didn’t show any damages or injury. Plaintiff offered the testimony of her expert that negative online reviews generally negatively affect book sales, and the lay opinion of a representative of Amazon, as evidence that she had been harmed. But the expert didn’t analyze her book sales and didn’t know whether her sales went up or down after defendant posted her reviews, nor could the expert assign a monetary value to the effect online reviews may have; her opinion was based on common sense. The Amazon rep also provided his lay testimony that bad reviews generally discourage sales.  [My understanding is that there is some research out there trying to quantify this, for those of you thinking about the future of these claims.]  Without evidence as to the specific effect that defendant's online reviews had on plaintiff's books, or about sales during the relevant period of time, or customer surveys or customer testimony, there was no proof to support the damages claim for lost sales. Damages caused by mental anguish also weren’t covered by the Lanham Act. 

 Utah Truth in Advertising Act claims also failed; the law provides that a defendant who’s violated the law “shall” be enjoined, but also requires prior notice and an opportunity to correct the allegedly unlawful ad by the same media before injunctive relief is allowed.  Plaintiff's prelitigation emails and a blog post complained about plagiarism and copyright infringement, not about the alleged violation of the Utah Truth in Advertising Act, and it didn’t provide defendant an opportunity to correct the record in order to avoid an injunctive relief action.  Damages failed for the same reason as they did for the Lanham Act claims.

Tuesday, March 13, 2018

Pop goes the kitty? registration and infringement are separate inquiries, court points out

SportPet Designs Inc. v. Cat1st Corp., No. 17-CV-0554 (E.D. Wis. Mar. 2, 2018)

SportPet sued Cat1st for patent, trademark, and copyright infringement and violations of Wisconsin's Deceptive Trade Practices Act based on its sale of pet products such as play structures for cats. SportPet alleged infringement of two registered trademarks: POP OPEN for collapsible containers for household use [containers that … pop open?] and SPORT PET DESIGNS for pet kennels, beds, and bedding and pet toys.

SportPet wasn’t assigned the POP OPEN mark until after it brought this action, so it lacked standing to assert a claim for infringement. Even if it could establish standing, the complaint didn’t plausibly suggest infringement.  Not strengthening the claim for the distinctiveness of the mark, the complaint alleged that “Cat1st is violating SportPet's . . . Pop Open trademark[]” by “using and advertising the pop open design,” which “is a protectable mark.” But the word mark (if mark it be) does not protect “the pop open design” (which presumably would have its own functionality issues if claimed as a mark).

The complaint also alleged that “Cat1st's packaging and advertising copies” language from SportPet, e.g., “pop open, sturdy and lightweight, for travel, and convenient for carrying”—“almost word for word.”  That wasn’t enough here. Examples in the complaint showed Cat1st’s use of similar terms to those used by SportPet—e.g., “sturdy,” “lightweight,” “for travel,” and “for your carrying convenience”—none used the specific phrase “pop open” (or a colorable imitation of it) in any way, much less as a distinguishing and source-identifying mark.

SportPet’s second trademark claim did a lot better.  Here are the parties’ logos and packaging:
Plaintiff and defendant logos

Plaintiff and defendant packaging

Cat1st argued that the issue was whether its logo infringed SportPet’s standard text mark.  But that’s not so: trademark cases evaluate the marks “in light of what happens in the marketplace.”  [citing me!]  The court also rejected as outside the pleadings Cat1st’s argument that its uses were all “from packaging for products sold in Japan under an exclusive license agreement” between the parties, “where Cat1st lawfully owns the trademark registration for ‘Sport Pet Japan.’” Likely confusion was sufficiently pled.

SportPet’s copyright infringement claim failed because it had’t sought or received registration.  [And might have a Kirtsaeng issue, if Cat1st’s claims about Japan are true.]

The court also dismissed a claim under Wisconsin's Deceptive Trade Practices Act alleging that Cat1st misrepresented “to the public . . . that [it is] selling SportPet’s products” and “misrepresent[ing] to [SportPet] that [it] only sold the infringing products in Japan.” Cat1st’s misrepresentations to the public allegedly caused SportPet to lose sales due to customer confusion and Cat1st’s misrepresentations about where it was selling its goods allegedly allowed it avoid legal action as it snuck into the U.S. market. The court found that SportPet didn’t plausibly allege that the misrepresentations caused SportPet any pecuniary losses recoverable under the DTPA, because misrepresentations to consumers didn’t materially induce SportPet itself to act, as required.  And Cat1st’s alleged misrepresentations to Sport Pet didn’t contribute to SportPet’s decision to buy anything or otherwise enter into any commercial transactions as a consumer of goods or services, also required by the DTPA.

Use of photo beyond license window doesn't create false endorsement claim

Bovinett v. HomeAdvisor, Inc., No. 17 C 6229, 2018 WL 1234963 (N.D. Ill. Mar. 9, 2018)

Bovinett, a model and actor, participated in a photoshoot for HomeAdvisor. Bovinett’s agent was allegedly assured that the photos would be used in static form only (i.e., either in print media or as a static image posted on a website), and would not be incorporated into any video. Two weeks later, Bovinett’s agent signed a consent and release form stating that Bovinett agreed to convey his rights in the photos to HomeAdvisor for use “in advertising, promotions, and any other use, and in any media, desired by HomeAdvisor in its sole discretion, including but not limited to display on the HomeAdvisor website, in television commercials, and on the Internet.” HomeAdvisor’s personnel allegedly assured Bovinett’s agent that notwithstanding the consent and release language, HomeAdvisor would not put the photos to use in any video format.  Then it did.

Fraudulent inducement: Claims involving a false statement of intent regarding future conduct are generally not actionable under Illinois law, unless they are “particularly egregious” or are part of a larger scheme. These alleged misrepresentations weren’t particularly egregious, nor did Bovinett allege a pattern; two different statements about non-video use could in theory be a pattern, but Bovinett didn’t sufficiently allege the first statement with specificity.  Nor was fraudulent concealment properly alleged; this requires that the defendant concealed a material fact when under a duty to disclose that fact, but some sort of fiduciary or confidential or other special relationship is required and none was alleged.

Lanham Act/Illinois Consumer Fraud and Deceptive Business Practices Act/Illinois Uniform Deceptive Trade Practices Act:  Bovinett failed to allege any false statement.  And the likely confusion claims failed because there could be no confusion about Bovinett’s affiliation, sponsorship, or approval of defendants and/or their activities and services. “Bovinett admits he agreed to pose as a model for HomeAdvisor’s photoshoot with the knowledge that HomeAdvisor intended to use those photos in advertising. … [T]he allegedly tortious commercials might well leave viewers with the impression that Bovinett endorses HomeAdvisor. But that impression is accurate, at least as of the time Bovinett sold his rights in these photos, so the impression cannot confuse anyone.”  The court doesn’t discuss the rump confusion theory that viewers would be confused about whether he authorized video use—which could hardly be material to anyone, even if for some extremely unlikely reason the matter occurred to them.

Redbox's claims miss release window for injunctive relief

Redbox Automated Retail, LLC v. Xpress Retail LLC, 2018 WL 1240345, No.17 C 5596 (N.D. Ill. Mar. 9, 2018)

The parties compete in the market for DVD rental services through automated vending machines called kiosks. “In early 2016, Redbox learned that DVDXpress was using kiosks that were, like Redbox’s, entirely red in color. Around the same time, Redbox also learned that DVDXpress was advertising—on its kiosks, its website, and elsewhere—that customers could rent movies through DVDXpress twenty-eight days before the same DVDs became available through Redbox.”

Nearly a year later, one Redbox official wrote in an email, “I think that’s false advertising[.] We are day and date for most,” then asked the CEO whether DVDXpress’s red kiosks infringed Redbox’s “trademarks or other IP.” The CEO replied: “No it does not. We have looked at [sic] many times. Nothing we can do except get these locations.” Four months later (15 months after learning of the comparative advertising) Redbox sent a C&D.  More than three months after that, Redbox sued. 

Given this recitation of the facts, you won’t be surprised to learn that a preliminary injunction was denied due to Redbox’s delay.  The court didn’t even consider whether eBay changed the Lanham Act presumption of irreparable injury (it does) because the delay would rebut any presumption.

Redbox argued that, at first, only lower-level employees knew of DVDXpress’s alleged infringement. “But that assertion is not backed by evidence in the record, and in any event Redbox does not explain why it would be relevant to determining when it, as a company, learned of the infringement.”  The email from the CEO stating that the company had already looked “many times” into the matter of DVDXpress’s red kiosks and concluded that there was no infringement was only icing; it showed that Redbox was “well aware of [its] rights and had concluded that they were not violated.”

Redbox argued that it didn’t delay in bringing the false advertising claim because it sought relief based only on DVDXpress’s advertising regarding DVDs released between December 2016 and July 2017. But the content of DVDXpress’s advertising—“Rent it here first 28 days before … Redbox”—hadn’t changed since early 2016.  Redbox argued that DVDXpress’s comparative advertising was only “partially false” in early 2016, and that Redbox brought suit when the advertising became false as to more DVDs through new agreements with Warner Bros., Fox, and Universal Pictures decreasing the delay between a DVD’s release and its availability at Redbox kiosks.  If there had been a 28-delay for all such films in early 2016, then waiting to sue would have been a good idea.  But of the 24 recent movies Redbox claimed to have available within 28 days, only 8 were distributed by these studios.  There was no evidence that DVDXpress’s advertising as to those studios’ DVDs was any less false in early 2016. And even as to those studios, Redbox was releasing some DVDs from them earlier—five out of the 8 it named were distributed before the new agreement. Thus, the comparative advertising couldn’t have converted to “substantially false” as a result of those agreements.  Indeed, the emails showed that people at Redbox believed the advertising was false in early 2017.

Nor would the court stop the clock when Redbox sent its C&D. “If the letter had led to negotiations with DVDXpress, then Redbox perhaps could not be faulted for waiting to see if the dispute could be resolved out of court. But DVDXpress never answered the letter, and Redbox proceeded to wait a further three months before filing suit.” That delay “severely undermines any sense of urgency that might otherwise have attached to Redbox’s request for preliminary injunctive relief.”

Friday, March 09, 2018

Pod save the claim: "sportspods" competition leads to false advertising, TM claims

Anthem Sports, LLC v. Under the Weather, LLC, 2018 WL 1175406, No. 17cv596 (D. Conn. Mar. 6, 2018)

Anthem and UTW compete in the market for “sportspods,” small tents for viewing outdoor sporting events during inclement weather. I won’t discuss the claims for declaratory relief against potential violations of UTW patents.

Anthem initially distributed UTW products online under an exclusive distribution agreement, until the relationship collapsed and UTW turned to Dick’s Sporting Goods for distribution. “Anthem subsequently located a different manufacturer and “began offering all weather personal enclosure products under the trade names UnderCover™ and SportPod™, including SoloPod™, Action Pod™, TeamPod™, and BugPod™.” UTW then allegedly began using “the mark ‘Sportspod’ to refer to multiple goods” that it offered for sale.  UTW also allegedly threatened Anthem, its supplier, and customers with patent infringement claims.

On Facebook, when customers leave comments indicating a desire to purchase Anthem Pods on Anthem’s Facebook page, UTW’s representatives allegedly respond (i) that the “only place to get [Anthem Pods] is,”; (ii) that the Anthem Pods “are illegal knockoffs and very poor quality,” and that the “legal ones are only available at”; and (iii) that the Anthem Pods were “[Pescovitz’s] idea and patent”; (iv) and that the Anthem Pods are “complete knock offs.” (Couldn’t UTW's reps just be blocked?)

Based on this conduct, Anthem brought a false designation of origin claim, a false advertising claim, and a trademark infringement claim. Guess which survived!

For false designation of origin, the court found that Anthem hadn’t properly alleged a reverse passing off claim.  Misrepresentations of inventorship aren’t actionable under Dastar.  The alleged claims that Anthem pods could only be bought from UTW were really statements that the Anthem pods were are “knockoffs” or of “inferior quality,” and that the only place to get legal “pods” was from UTW’s website. These comments couldn’t plausibly be interpreted to suggest that UTW sold Anthem Pods but rather presents UTW as an alternative.

False advertising: The “knockoff” and “poor quality” statements were mere statements of opinion, not fact.  The “illegal” and “patent infringing” statements were also nonactionable layperson statements of legal opinion.  “Complete knockoffs” was both opinion and puffery via subjective hyperbole.

Trademark: claims based on UTW’s use of SportsPod and Anthem’s claimed SportPod mark survived.  [Since the judge in this case identified the products at issue as “sportpods,” I foresee a problem with this term as a mark for the products.]

Anthem also sufficiently alleged tortious interference (and common law unfair competition) from UTW’s allegedly disparaging statements on FB, including an allegation that UTW made these comments with full knowledge of the lack of “any legitimate basis” for them and in “bad faith to unlawfully stifle competition.”  Instead of identifying specific lost customers, what was required was facts demonstrating “that, except for the tortious interference of the defendant, there was a reasonable probability that the plaintiff would have entered into a contract or made a profit.” The complaint alleged that various potential customers have expressed interest in purchasing Anthem Pods on Anthem’s Facebook page, and the majority of the disparaging comments were aimed at customers who had expressed enthusiasm for Anthem’s products.  Targeting “enthusiastic potential customers” made it plausible that some of them didn’t buy Anthem pods due to UTW’s statements.

Connecticut’s unfair trade practices law, CUTPA, also allowed a state coordinate trademark infringement claim, but not a false advertising claim for the reason discussed above.  Anthem also alleged that UTW violated CUTPA by “inducing Anthem to invest significant resources and efforts in marketing and selling the UTW Personal Enclosures by promising Anthem that it would be the exclusive distributor for such products other than UTW and then selling the UTW Personal Enclosures to Dick’s Sporting Goods for resale.”  UTW argued that, even if accepted as fact, these allegations established little more than breach of contract.  However, “although “a simple breach of contract would not be within the criteria for a CUTPA claim, substantial aggravating circumstances attending the breach would sustain such a claim,” and Anthem alleged sufficient aggravating circumstances by adding to the alleged breach trademark infringement and baseless infringement threats against Anthem when the company attempted to sell its own products in lieu of those from UTW.

unauthorized sale of model's photos leads to internally inconsistent TM/ROP ruling

Passelaigue v. Getty Images (US), Inc., 2018 WL 1156011, No. 16-CV-1362 (S.D.N.Y. Mar. 1, 2018)

Elodie Passelaigue is a professional fashion model who sued under the Lanham Act, Washington state law, and New York law against Getty, Bill Diodato Photography, and Bill Diodato (no stranger to IP litigation) for unlawfully licensing and selling images of her that were eventually used to advertise synthetic beauty products. The court dismissed some claims but allowed others to continue.

As part of one advertising campaign in early 2004, Clinique arranged for a test photo shoot in New York, and hired Diodato to take the photos. After the test shoot, Diodato allegedly “asked Ms. Passelaigue if he could use photos from the test shoot for his portfolio and professional website simply as an example of his work.” He allegedly “showed her a form document titled ‘Model Release,’ representing to Ms. Passelaigue that if she was willing to allow him to use the photos only for his portfolio and website, she just needed to sign the Model Release form.” Passelaigue allegedly agreed to allow him to use the photos for his website “[a]s a professional courtesy.” The Release she signed allegedly didn’t have some important information, including photographer or witness signatures, a “Description of Shoot,” or an attached copy of a photo ID or “Visual Reference.”

In 2009, Passelaigue was hired to model for a photo shoot in New York for Spiegel, and Diodato photographed that shoot. Diodato allegedly took about a dozen headshots of Passelaigue without Spiegel’s consent, and told Passelaigue the headshots were “precautionary, in case Spiegel later decided it wanted to use the images for the cover of a catalog.” Passelaigue didn’t sign anything at the 2009 Spiegel photo shoot.

In 2014, Passelaigue learned for the first time that her headshots were being used for an advertising campaign for Botox and on an Allergan website,  The webpages allegedly falsely suggest that Passelaigue was at least in her 40s.  Allergan allegedly continued to use Passelaigue’s images in its advertising campaigns until 2016.  Passelaigue’s agent investigated, and eventually Getty provided a copy of the Release containing a handwritten date of “6-11-09” under her name, and the phrase “Clinique Underwater Shot [sic] & Spiegel Beauty” on the line designated for “Description of Shoot,” both written by someone else. This Release also included two sample headshots, one from each shoot.  Getty eventually identified the photographer as “Adrianna Williams,” who was selling other models’ photographs through Getty, but other models hadn’t heard of her either, and Passelaigue determined that the photographer was in fact Diodato.

The court found the release binding as to the 2004 Clinique shoot only, since Passelaigue conceded that she signed it; the plausible allegations of “doctoring” the release sufficed to continue the case for the 2009 photos.  Passelaigue argued that she was fraudulently induced to sign the original Release because
Diodato orally promised her that he would only use her photographs in his portfolio and on his website.  However, the release language was two paragraphs of super-broad language allowing the photographer to distribute the images “for editorial, trade, advertising, packaging or other purposes in any manner or medium … throughout the world, in perpetuity.”  It further said, “I understand Photographer may contract with a stock agency and that the images may be included in stock files. I further understand and agree that the images may be modified, altered, cropped and combined with other content such as images, video, audio, text and graphics.”  Because the alleged misrepresentations conflicted with the terms of the Release, “there can be no reasonable reliance as a matter of law.”

Nor was the Release voidable because, “for a high-end fashion model, the limitation of $500 in damages, as well as the prohibition on any objection to unflattering, embarrassing, or otherwise objectionable uses, are unconscionable terms.” Although the allegations in the complaint suggested “some deceptive tactics,” they didn’t rise to the level of depriving Passelaigue of “meaningful choice,” as required for unconscionability.  “The Release is short—one page—and afforded Plaintiff with the opportunity to easily disprove Diodato’s alleged oral promises that he would only use the photographs for his portfolio.” Passelaigue didn’t allege that her bargaining power, experience, and/or education were limited, or that she was under any sort of duress or pressure to sign the release without reading it, and she admitted that she signed it as a “professional courtesy.” Thus, there were no allegations that Diodato did anything so as to effectively deprive Passelaigue of a meaningful choice.

The same arguments disposed of her fraud claim.

Continuing on with the 2009 photos, the court turned to her NY right of publicity claim.  Defendants argued that the photographs weren’t used “for purposes of advertising or trade” under Section 51 because they were merely making the images themselves available for license.  But an image for sale by an online image distributor is exempt from Section 51 liability only so long as it was “for use in a manner lawful under this article.” Because Passelaigue plausibly alleged that the sale of images was not in fact “for use in a manner lawful under” Section 51 by virtue of the fact she did not knowingly authorize their use, and she also adequately alleged that sale of the images themselves was “for purposes of advertising or trade.” 

The court also disposed of defendants’ First Amendment defense.  “The photographs here are entirely commercial in nature. They were commissioned by companies seeking to use them in advertising campaigns, and any artistic expression added by Diodato as the photographer was incidental.” Nor was Section 51 preempted by §301 of the Copyright Act, because of the additional element of use of the image for advertising or trade purposes without written consent.

Passelaigue’s Lanham Act claims mostly failed.  Her allegations were that defendants violated the Lanham Act by (1) misrepresenting that Getty had the right to license or sell photographs of her; (2) using the fictitious name of Adrianna Williams as the name of the photographer, which was likely to cause confusion as to the origin of the images; and (3) contributing to Allergan’s use of her image in a way that falsely associates her with synthetic cosmetic products.

However, Passelaigue had no rights to the photos themselves.  “[H]er only plausible claim can be based on harm to her image, and its false association with another product.” Thus, alleged misrepresentations (1) and (2), as well as allegations that Diodato contributed to Getty’s acts, failed to state a claim; even if she did have rights to the photos, Dastar would bar those claims.

Turning to claims based on false affiliation with Allergan and with the pseudonym Adrianna Williams, the court noted that “the misappropriation of a completely anonymous face could not form the basis for a false endorsement claim, because consumers would not infer that an unknown model was ‘endorsing’ a product, as opposed to lending her image to a company for a fee.” However, Passelaigue’s allegations she is an “internationally-renowned fashion model” might establish that her mark is strong enough to cause a likelihood of consumer confusion.  In addition, the sale of images of Passelaigue on Getty’s stock photo website and its listing under the work of photographer “Adrianna Williams” were affiliations that are covered by the text of the Lanham Act. [How could this possibly be material to anyone?  Also, if Diodato really did take the pictures, why can’t he use a pseudonym without violating the Lanham Act? Are other pseudonyms also violations of the Lanham Act?  Also also, why isn’t this conduct, which is to say a false designation claim repled as "affiliation" with Getty or Williams, covered by Dastar too?]

As for contributory infringement, Passelaigue failed to sufficiently allege that defendants intentionally induced non-party Allergan to violate the Lanham Act, as required. She alleged that Diodato was aware that, by selling the images to Getty, that Getty would “use the images commercially, advertising them for sale or license to others, such as Allergan,” and that Getty “knew or should have known that professional models such as plaintiff ... would not have agreed to convey rights to their images to Diodato, Getty, or ultimately one of Getty’s clients.” She further alleged that Getty should have known how Allergan would use the image because it licensed that image. None of this was sufficient to allege intentional inducement. (Citing Tiffany v. eBay.)

Anyway, the NY unfair competition claims were analyzed just as the Lanham Act claims, except that NY also requires bad faith.  But Passelaigue’s allegations of defendants’ responsibility for the unauthorized use by Allergan would show bad faith.  [Wait one second: weren’t those the allegations just found insufficient to allege contributory infringement?  If NY law is the same as federal law, how can this be the case?]

As for NY consumer protection law under Section 349, allegations that Getty misrepresented its right to license were too conclusory to state a claim, or explain how the alleged misrepresentation actually targeted or harmed consumers.

The court refused to dismiss class allegations at this stage of the case.