Tuesday, August 07, 2018

ad for a "true story" states an opinion, not a fact, when applied to an expressive work

Incarcerated Entertainment, LLC v. CNBC LLC, No. 18-480, 2018 WL 3677918 (D. Del. Aug., 2, 2018)

Ads for TV shows aren’t immune from false advertising law.  However, “[s]ummarizing an argument or opinion offered within the show is different than a statement made about a show as a product such as its length, characters or producers.” An ad representing a show as the “true story” of disputed historical events was commercial speech subject to the Lanham Act, but as long as the ad summarizes a theory actually expressed in the show, there’s no Lanham Act violation.

As alleged: 18-year-old Efraim Diveroli owned a defense contracting business, AEY, and in 2007 beat out more established contractors like Northrop Grumman and Lockheed Martin to fulfill a $298M weapons and munitions contract to arm the Afghan army/police.  Later, Diveroli pled guilty to conspiracy after a federal fraud indictment; he served a 48-month sentence. While incarcerated, Diveroli wrote a memoir entitled “Once a Gun Runner ...” and assigned the copyright to Incarcerated Entertainment, which also owned rights to photographs of Diveroli, dating back to his early childhood, and to Diveroli’s life story.

In 2016, Warner Bros. released War Dogs, which was promoted as being based on Diveroli’s life story. In 2017, CNBC broadcasted an episode of American Greed entitled “The Real ‘War Dogs’ ” [contrasting with the film] which similarly focused on Diveroli’s experience as a government contractor. CNBC promoted American Greed as a “shocking true crime series [that] examines the dark side of the American dream” and “tak[ing] you deep inside shocking true stories of brazen con artists who thrive on stealing fortunes, ruining and even taking lives.” An ad for the episode contained a video clip from an interview included in the episode with a comment that Diveroli got rich selling “bad ammunition while people the same age as him are taking the sacrifices. Despicable.”

The court here resolved false advertising claims.  CNBC argued that the ad accurately represented the American Greed episode and therefore didn’t include an actionable false statement. Diveroli argued that he didn’t sell “bad ammunition” to the US, and that people seeking his true story were likely to watch American Greed instead of buying his memoir.  Incarcerated conceded that “based on a true story” would be non-actionable, but argued that the affirmative representation of presenting the true story fell within the Lanham Act’s prohibition.

CNBC first argued that the “true stories” statement wasn’t commercial speech, and that the ads should get the same constitutional protection as the underlying work. The court disagreed. The promo was an ad, as defendants called it in their briefing; it referred to a specific product for economic purposes. “Capturing the potential viewers’ attention and capitalizing on the popularity of the film War Dogs, the advertisement attempted to attract viewers to CNBC for economic gain” by telling them they’d get the true story. 

Incarcerated’s claim failed at the next step: it failed to plead a false or misleading statement of fact.  Advertising statements made to summarize an argument or opinion within an expressive work are opinion, while statements about the work as a product (e.g., who’s performing in it) are statements of fact.  Incarcerated’s claim related to the former: a summary of the episode’s argumentative content. The court declined to let Incarcerated relitigate the fraud and conspiracy allegations of more than a decade ago in a Lanham Act trial.

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