Thursday, January 17, 2019

reality series "Love at First Flight" doesn't infringe previous web series of same name

Reflex Media, Inc. v. Pilgrim Studios, Inc., No. CV 18-2260-GW(FFMx), 2018 WL 6566561 (C.D. Cal. Aug. 27, 2018)

The court here dismisses trademark/unfair competition and copyright claims against a reality TV show with the same name as Reflex’s earlier YouTube series on the same general idea, “Love at First Flight.”  The copyright claims were dismissed with prejudice, the TM/unfair competition claims without, and Reflex dismissed the entire case thereafter.

In early 2015, Reflex began to develop a reality entertainment series, Love at First Flight. Its coplaintiff Clover8 applied for a federal trademark registration.  “In advertising for the Original Series, it was described as a new web series by travel dating site, MissTravel.com, following two ‘singles’ as they go on a ‘destination first date.’” The advertising asked: “Will these singles miss their connection, or will they find Love at First Flight? Watch to find out!”  Reflex cast “individuals with substantial social media audiences.” The first four episodes appeared in August 2015 and are still featured on a YouTube channel and the MissTravel website. Each episode notes in the description that it is part of the Love at First Flight series (using standard font) and features a logo, “LOVE AT FIRST Flight by Miss TRAVEL,” in mixed cursive/block lettering and mixed black/aqua colors.



In late 2015, one of the defendants approached Reflex about adapting the original series for TV. They had various connections to the other defendants, some of whom began to develop the allegedly infringing series.  In late 2016/early 2017, they began to cast people; the casting call was titled “Take A Trip and Meet the Love Of Your Life On FYI Network’s TV Show Love at First Flight.”  Reflex first wanted a piece of the pie and then asked them to use a different name for trademark reasons, but received no response.

Six days after Reflex told the relevant defendants it owned a common law trademark, defendants applied for “LOVE AT FIRST FLIGHT” as an ITU for “[e]ntertainment services in the nature of a television and multimedia program series featuring subjects of general human interest distributed via various platforms across multiple forms of transmission media; providing entertainment information to others via a global computer network.” The filing declarations included a statement of belief that it was entitled to use the mark in commerce and that no one else had that right.

Despite further protests, defendants showed the first episode of their show on March 20, 2018 on Lifetime, owned by A&E, and aired eight total episodes. After the debut of the allegedly Infringing Series and five more times, AfterBuzz TV published a 52 minute video titled, “Love at First Flight Season 1 Episode 1 Review & Reaction,” discussing the allegedly infringing series. To promote the series/the aftershow, defendants (at least AfterBuzz) allegedly used Reflex Media’s logo as its thumbnail image link to the After Show’s live stream and video.

As for the alleged copyright infringement, Reflex alleged that its series

consists of individuals meeting for the first time in-person on multiple-day dates in exotic locations such as Hawaii; Cabo San Lucas, Mexico; Vancouver, Canada; and Costa Rica, and other planned locations to include landlocked cities like Las Vegas. The participants featured in the show are young attractive singles who participate in bonding activities such as: attending a live performance featuring shirtless male dancers, zip lining amongst trees, dinner dates, waterfall activities, boating, paddle water activities, and ocean snorkeling.

It alleged that defendants’ series

similarly consists of multiple-day dates in exotic locations such as Hawaii, Las Vegas, Seattle, and New York City. The participants featured in the Allegedly Infringing Series also are young attractive singles who participate in bonding activities such as: attending a live performance featuring shirtless male dancers, tree climbing using climbing lines, waterfall activities, boating, paddle water activities, and ocean snorkeling.

The complaint also alleged that both sets of series convey a “theme and mood of fun, adventure, and anticipation for the prospect of burgeoning romantic feelings between the participants on the show”  and that defendants “copied the core plot, theme, mood, settings, and characters of the Original Series, including an attempt to use one of Reflex Media’s previously used cast members.” The “theme and mood” of each show allegedly “conveys fun, adventure, and anticipation for the prospect of burgeoning ‘romantic feelings’ between participants.”

Trademark claims: Rogers applies, and Empire tells us there’s no exception for title-on-title claims in the 9th Circuit. (1) Artistic relevance is obviously above zero based on the pleadings, but (2) after the Honey Badger case, the second prong requires more factual analysis and might not be appropriately resolved on a motion to dismiss, even though it requires explicit misleadingness and the relevant question is “whether there was an ‘explicit indication,’ ‘overt claim,’ or ‘explicit misstatement’ that caused ... consumer confusion.” As past precedent establishes, survey evidence demonstrating confusion over endorsement isn’t relevant: “evidence must relate to the nature of the behavior of the identifying material’s user, not the impact of the use.”

Reflex identified three facts that it thought showed explicit misleadingness: (1) both series bear the same name, (2) YouTube shows commingled search results for both series, and (3) AfterBuzz promoted the allegedly infringing series using the Reflex logo. However, the complaint did not allege explicit misleadingness about the content or source of the work. “Plaintiffs’ reference to what essentially amounts to mere use is not enough to satisfy this prong.”  [The relationship between AfterBuzz and the other defendants was not entirely clear. According to the complaint, they "partnered" with AfterBuzz to promote the show. AfterBuzz describes itself as "the digital broadcast network dedicated to producing live and on-demand after-shows, news and coverage for nearly every TV show." Make of that what you will; it sounds like a careless person involved in producing/uploading the video grabbed the wrong image, which I agree is a mistake--among other things, it promoted a website that hadn't paid for the privilege--but probably shouldn't contaminate the rest of the activities at issue.] Dismissed without prejudice.

The copyright claims fared even worse; based both on the allegations and the judicially noticed/intrinsic to the complaint content of the two shows, the court dismissed them with prejudice for failure to satisfy the extrinsic test for substantial similarity.

Plaintiffs argued Ninth Circuit precedent doesn’t allow for dismissal of a copyright claim once the allegations are properly in place, but that’s not true where it’s extrinsic similarity that’s the problem.  
In applying the extrinsic test, courts compare “not the basic plot ideas for stories, but the actual concrete elements that make up the total sequence of events and the relationships between the major characters.”
Courts filter out “(1) scenes a faire that necessarily result from the choice of a setting or situation; (2) purely utilitarian elements; and (3) elements of expression merged with the underlying idea.” In this analysis, elements that are “similar at the abstract level” but are “markedly different” in their particulars are not substantially similar.

The plots here were very simple (and the allegedly infringing series followed the structure of many other dating reality shows, the existence of which the court took judicial notice).  Defendants’ hour-long series had participants paired off with another person with whom they embark on a 30-day trip across the United States. All eight episodes tracked the same handful of pairs, “with the looming and ultimate question being whether they will ultimately marry the other person.” At each location, they engage in bonding activities and win or lose various challenges, rewarding with either a motel or a luxurious hotel, depending on the outcome. At the finale, the pairs physically go to the wedding altar and decide whether they will marry each other or not.

Reflex’s series had key differences: each 13-minute long episode followed one pair of participants that meet for the first time in mostly foreign destinations. “Among each pair, one person is a social media ‘influencer’ or ‘personality’ with the other participant being a ‘Miss Travel [dating application] user.’” The show mentions Miss Travel throughout and the pair generally stays at high-end vacation rentals. The parties generally go their separate ways at the end of the episode. “In the four episodes presented to the Court, the couples get along with little to no friction,” in contrast to some of the events on the reality show.

The generic elements were similar, but there were no substantial similarities in the plot’s objective details. The court filtered out: (1) casting young attractive singles, (2) filming multiple-day dates in exotic locations, (3) contestants participating in bonding activities, and (4) a theme and mood of fun, adventure, and anticipation for the prospect of burgeoning romantic feelings between the participants on the show. That last generic stock theme/mood  “necessarily flows from the basic generic premise of the shows about participants dating through bonding activities while traveling.” There was no alleged similarity in dialogue, and the settings varied (Reflex generally used large US cities, while the allegedly infringing series was predominantly set outside the US mainland), and even if the settings had been the same/similar, that would still have flowed from the basic premise and constituted non-protectable scenes-a-faire. As for characters, “the participants play themselves. … Though there might be similarities between some of the characters, such as their pursuit of romance or love, those are merely stock character traits and they flow from the basic premise of the series.”  The paces of the series were markedly different—pairs interacted for a short period in the original series, and for 30 days in the allegedly infringing series. The pace of each series flowed naturally from their implementation of the basic plot premise.

Identical titles: here the law wobbles. Titles aren’t protected by copyright, but can “have copyright significance as one factor in establishing whether the substance of plaintiff’s work (not the title) has been copied.” [As circumstantial evidence of copying in fact … okay, I guess, but how it relates to substantial similarity is completely unclear, but it’s the Ninth Circuit.] Despite the title, there’s no substantial similarity between any protectable elements here, so the court dismissed the copyright claim with prejudice.

Tuesday, January 15, 2019

What's UpCounsel? LegalForce thinks it's false advertising


LegalForce RAPC Worldwide P.C. v. UpCounsel, Inc., 2019 WL 160335, No. 18-cv-02573-YGR (N.D. Cal. Jan. 10, 2019)

LegalForce’s litigation against various competitors in the trademark registration world continues.  UpCounsel “is an online marketplace for legal services that enables users (primarily entrepreneurs and businesses) to find and hire attorneys via its website.” LegalForce sued UpCounsel for false advertising and unfair competition, including acting as an unregistered lawyer referral service.

Here, some of the false advertising claims were dismissed as puffery, while others survived.

Law firm/virtual law firm: Exemplary statements included: “We are the world’s largest virtual law firm for businesses of any size. We allow businesses to get high-quality, cost-effective legal services. While our lawyers serve as outside general counsel to many companies, we also assist with specialized legal work like IP, immigration, commercial contracts, litigation, and much more.” The “world’s largest” part was nonactionable puffery.  The “virtual law firm” part was not actionable because of the context, which also introduced UpCounsel as a “startup” that enabled others to “find” attorneys and thus indicated that UpCounsel was a platform rather than a true firm.  I understand the court to be reasoning that there are “tech platforms that enable individual lawyers to communicate with clients” (Uber, but for lawyers) and there are “law firms,” and because most of the challenged statements gestured at identifying UpCounsel as a “platform,” all the rest of that understanding—including that the lawyers would be individuals operating separately—would naturally follow.  On the one hand, seeking legal counsel does require some care and attention from a reasonable consumer; on the other, (1) the whole point of the service is to target people starting businesses fresh, who may not know the ins and outs of the legal services market; (2) even experienced nonlawyers may reasonably not know very much about the important differences between a “law firm” and other means of getting legal services. Anyway, similar statements were analyzed similarly, where there was mention both of a “virtual law firm” and of independent contractors or a claim of “as good as using a law firm.”

However, claims of the form “Top 5% of { Practice Area}  Lawyers in { City}” were not puffery.  LegalForce alleged that “[b]y indicating ‘5%’, UpCounsel implies that there exists an independent and publicly trusted ranking system in each and every city and the attorneys that UpCounsel lists on its city pages are chosen from the top 5% of such a list. In reality, no such list exists.” It quoted a review by a customer of UpCounsel who said the reason he selected UpCounsel was because he believed it was “a network for only the most top notch legal reps in the area” and “[t]he attorneys offered with them are at the top of their game and you will get what you pay for.” Another customer wrote that he was deceived when he saw an advertisement on a search engine “[o]ffering ‘Business Legal Services On-Demand by Top Attorneys’” and thought that a disruptive startup would be a good, cheaper choice for a disruptive startup to use. He concluded: “I wish I had never used UpCounsel and I’m warning all startups, business and companies out there to never make the same mistake!” [Which goes to show that you maybe shouldn’t hire a lawyer the way you’d summon a Lyft.]

Lanham Act claims based on the claim of “Top 5% of Trademark Attorneys” already survived a motion to dismiss on the basis of puffery. Challenging similar statements pertaining to other types of attorneys, namely patent, intellectual property, copyright, and startup attorneys, didn’t change the analysis. UpCounsel cited Hackett v. Feeney, No. 2:09-cv-02075-RLH-LRL, 2011 WL 4007531 (D. Nev. Sept. 8, 2011) to argue that, in order to be actionable, the statement must answer the “critical question ‘[Top 5%] as determined by whom[?]’ ” But that case involved a “voted #1 best show in Vegas!”; not only is #1  particularly puffy, but voting on a best show is also puffier than specifying a specific category of attorneys. Specifying a specific practice area meant that “[i]t cannot be said that no reasonable consumer would rely on such an assertion.”

UpCounsel argued that Google made the challenged statements, not UpCounsel, but this didn’t work at the motion to dismiss stage.  “Plaintiffs allege that the search results ‘republish’ statements originally made by UpCounsel. The issue of who actually made the statements (i.e., the search results) is a factual issue to be resolved at summary judgment.”

The same result happened with “The 10 Best { Practice Area}  Lawyers in { State}  NEAR ME,” which was allegedly false because “individuals listed in each resulting page are not usually near the customer who did the search, and often not even in the same state.”  “A reasonable consumer reading these statements could conclude that UpCounsel attorneys are objectively and measurably superior to other ‘{ practice area}  lawyers in { state}’ near the consumer.” [And even if not, they could reasonably conclude that those were lawyers “near” them.]


So too with “{ City}  { Practice Area}  Lawyers 5.0 ***** Based on { X number of}  reviews,” e.g., “Cotati Intellectual Property Lawyers 5.0 ***** Based on 5450 reviews.” That was allegedly false because “It is impossible for Cotati Intellectual Property Lawyers to have 5,450 reviews on UpCounsel. Cotati is a small town in Northern California with a population of 7,455. There are only 21 attorneys in the city of Cotati licensed to practice law in California, and none of these 21 attorneys are listed on UpCounsel.” (Among other things, one guy who allegedly never even used the UpCounsel platform appeared as a “Top 5%” franchise lawyer in Santa Rosa, California, “Top 5%” copyright lawyer in Coeur d’Alene, Idaho, and a “Top 5%” intellectual property lawyer in Montgomery, Alabama, among other practice areas and cities.)  Invariably, LegalForce alleged, UpCounsel would display a five-star rating, resulting from deceptively aggregating reviews to make it seem as if the reviews came from actual customers in those cities and states.” UpCounsel allegedly used code to “refresh” its reviews to make them more attractive to Google.

UpCounsel argued that use of SEO techniques “as a means to its advertising ends” didn’t state a claim under the Lanham Act because UpCounsel’s “software code” wasn’t a statement that was seen or relied on by customers, and that statements regarding five-star reviews were non-actionable puffery. The first issue, whether the code is (or made) a statement that consumers saw and relied on was a factual issue for summary judgment. The statements were not puffery. [Among other things, that there were X number of relevant reviews is a verifiable statement, even if the individual statements in the review might be non-factual.]

Similarly, LegalForce alleged that UpCounsel “intentionally and purposefully, and in bad faith, attempts to deceive Google search crawlers and the public that uses Google to search for legal services.” For example, “UpCounsel’s tag for its 5450 fabricated reviews for attorneys in Cotati is based on a fraudulent data field called ‘reviewCount’ which is printed on each page,” and “UpCounsel’s page source for each of its tens of thousands of reviews” includes code whose the sole purpose was to “trick search engines into recognizing UpCounsel’s aggregate ratings as trustworthy.” Using this code allegedly intentionally violated Google’s technical and content guidelines.

UpCounsel argued that its “software code” and HTML “page source” weren’t statements that were seen and relied on by customers. Further, a false advertising claim requires a false statement made by the defendant, so UpCounsel argued that a claim couldn’t be based on search results that LegalForce elicited from a search engine using words that LegalForce chose. The court agreed that, standing on their own, the software code and HMTL page source weren’t actionable statements. But LegalForce’s pleading “tied the software code and HTML page source to specific actionable statements,” such that UpCounsel’s actions caused search results to include false and misleading statements.  The software code and HTML page source were thus allegedly evidence of intent to mislead consumers.

Next, LegalForce alleged that “UpCounsel deceives customers by steering them to attorneys and non-attorneys who are not located anywhere close to their city, or authorized to practice in their respective state” or in any state. Among other things, UpCounsel listed patent agents as lawyers; UpCounsel conceded that three examples cited in the complaint were in fact patent prosecutors (among other things, a patent agent appeared as a “Top 5%” immigration lawyer in Blackfoot Idaho and as an “Oregon Attorney[ ] & Lawyer[ ] for Hire On-Demand” through UpCounsel). But UpCounsel argued that it didn’t steer anyone to unlicensed attorneys and that nothing on its UpCounsel’s website represents that these individuals are attorneys.

Comment: Google search results are answers to questions, which thus could be false as answers—and potentially false advertising under the right circumstances—even if they lack a true/false value standing alone. If UpCounsel programs its site to respond to a search for lawyers with unlabelled nonlawyers or lawyers outside the jurisdiction and use the headline “Top 5% of Patent Lawyers in Oakland, California,” then the response can be as false as if I asked for Diet Coke at a restaurant and was given undisclosed Diet Pepsi in return (and though I am loath to admit it, the results for consumers could be far worse).  There’s nothing inherently false about Diet Pepsi; the falsity is in the use in response to a request for something else. 

However, this formulation seems to foreground a §230 issue that is not discussed in the opinion: does UpCounsel rely on what its (putative) lawyer-contractors tell it?  Or does the problem come from non-§230 protected decisions made by UpCounsel on how to structure or label the website?  This formulation also highlights that labelling may be the key here: there’s nothing wrong with advertising an alternative to what the consumer is searching for, but even in the comparatively more liability-happy area of trademark the courts have understood that labeling is the key.  One question is whether ultimately it should matter that, in the individual description of the lawyer/patent agent on the page of “patent lawyers,” (1) that description is provided by the user, or (2) the description is clear, which in the case of the specific patent agent identified by the complaint it was not—he offered “legal services” and “patent prosecution services” but didn’t disclose that he was a nonlawyer, something another nonlawyer might not notice especially among a page of lawyers offering similar services.  When I search Amazon I often get a set of results that don’t make any sense (something to do with algorithmic manipulation or something even weirder?); is Amazon falsely advertising to me because of those bad results, which come from seller-provided information?  My sense is that the answer is no, but then again the fact that some of the results are bad is much easier to determine when I’m looking for girls’ pants size 10; I also think that it is different for a platform to claim to provide access to legal services in particular, which structures consumer expectations when looking at specific entries.

One problem seems to be that UpCounsel structured its own page/headline creation algorithm to be so overenthusiastic that it recommended lawyers far outside their practice areas or states of licensure.  Unless that came from data entered by individual participants checking boxes for those practice areas/states, I think that §230 would not pose a barrier to liability for such structuring.

Anyway, the court concluded: “Accepting as true plaintiffs’ allegation that the search results ‘republish’ statements originally made by UpCounsel, as the Court must in analyzing UpCounsel’s motion to dismiss, UpCounsel cannot reasonably argue at this stage that it has not made false statements by way of the search results.”

UCL claims:  Allegations of lost business and decrease in business value, and allegations of wrongfully denied business opportunities, sufficed to plead standing under the UCL’s expansive standing doctrine.  But could LegalForce bring claims based on violations of other laws that didn’t themselves provide a private cause of action? Usually, yes; the limit is that plaintiffs may not “plead around an absolute bar to relief” by recasting the cause of action as a claim under the UCL: “[t]o forestall an action under the unfair competition law, another provision must actually ‘bar’ the action....” by explicitly precluding private enforcement or expressly providing immunity for the conduct alleged.

Some of the other rules that LegalForce alleged UpCounsel violated thus allowed a bootstrapping UCL claim, such as the provision of the California Business and Professions Code section that bars unregistered attorney referral services. This was not enforceable by private parties, but its violation could be borrowed to create a remedy under the UCL. However, the California ules of Professional Conduct expressly provide: “These rules are not intended to create new civil causes of action.”  Their violation couldn’t be borrowed for a UCL claim. As for federal USPTO rules of professional conduct, the court found no binding or citable authority that the claims were impliedly preempted.

The UCL unfairness claim also survived. As a competitor, LegalForce had to use the more limited definition of “unfair”: they had to plead “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” UpCounsel argued that this couldn’t be done without pleading “a reduction of competition in the market in general and not mere injury to their own positions as competitors.” The court didn’t agree that LegalForce had to state an antitrust claim to proceed.  They sufficiently pled that UpCounsel’s actions “otherwise significantly threaten[ ] or harm[ ] competition,” given allegations that UpCounsel gave itself an unfair advantage over legitimate, rule-following competitors.

Friday, January 11, 2019

FDCA preempts arguments that structure/function claims in fact mislead about disease prevention


Dachauer v. NBTY, Inc., --- F.3d ----, 2019 WL 150016, No. 17-16242 (9th Cir. Jan. 10, 2019)

Defendants make vitamin E supplements that claim, on their labels, to “support cardiovascular health” and to “promote[ ] immune function,” “immune health,” “heart health,” and “circulatory health.” Dachauer alleged false advertising, because the supplements do not prevent cardiovascular disease and might increase the risk of all-cause mortality. The district court granted summary judgment, and the court of appeals affirmed, mostly on the alternate ground of preemption.



The FDCA distinguishes between “disease claims” and “structure/function claims” for dietary supplements. A structure/function claim “describes the role of a nutrient or dietary ingredient intended to affect the structure or function in humans” or “characterizes the documented mechanism by which a nutrient or dietary ingredient acts to maintain such structure or function,” but “may not claim to diagnose, mitigate, treat, cure, or prevent a specific disease or class of diseases.” A disease claim, conversely, “claims to diagnose, mitigate, treat, cure, or prevent disease,” either explicitly or implicitly. To make a structure/function claim, the manufacturer must have substantiation that the statement is truthful and not misleading; the statement must contain a prominent disclaimer that the FDA hasn’t evaluated the statement and that the product “is not intended to diagnose, treat, cure, or prevent any disease”; and the statement must not itself “claim to diagnose, mitigate, treat, cure, or prevent” disease.

The FDA’s guidance states that structure/function claims may use general terms such as “strengthen,” “improve,” and “protect,” as long as the claims “do not suggest disease prevention or treatment.” It holds that, for example, “supports the immune system” doesn’t imply disease prevention, even though by any ordinary rules of communication it does.  The FDA further allows substantiation of structure/function claims with evidence of an effect on a small aspect of the relevant structure/function, rather than with evidence of an effect on the main disease that consumers associate with that structure or function.  [A concise explanation of the extremely underregulated features of supplement law, as compared to other fields.]

California law doesn’t allow private plaintiffs to demand substantiation for advertising claims. The private plaintiff bears the burden of producing evidence to prove that the challenged statement is false or misleading.  [Though of course it could be false or misleading by explicitly or implicitly claiming to have substantiation that doesn’t exist.]

The FDCA expressly preempts any state law that establishes “any requirement respecting any claim of the type described in section 343(r)(1) of this title made in the label or labeling of food that is not identical” to FDCA requirements such as those for structure/function claims. The argument that defendants’ structure/function claims were false because the supplements don’t prevent cardiovascular disease were thus preempted.

There was “ample” evidence that vitamin E supplements, taken in the doses that defendants sell, fail to prevent cardiovascular disease. Plaintiff’s expert argued that “no metric except the absence or presence of cardiovascular disease can measure heart health,” but this was a rejection of the two separate FDCA categories and thus not an acceptable conclusion because it would impose a non-identical requirement on supplements that claim to promote heart health.  [I think this is the right result under the law, which highlights that the current law has nothing to do with truth or truthful communication.  One could have a regime that allowed more specific claims—taking supplements with this ingredient is associated with improved indicator X, which itself may be associated with a lower risk of heart disease—but that’s not the system we have, which allows the manufacturer to skip all the qualifications and inherently imply broad-based efficacy by using the approved structure/function formulation.] The same was true for defendants’ claim that their supplements promote immune health, even if the supplements fail to reduce all-cause mortality.

However, the misleadingness claim based on the argument that the supplements increase the risk of all-cause mortality was not preempted. FDCA regulations say that a label “shall be deemed to be misleading if it fails to reveal facts” that are “[m]aterial with respect to consequences which may result from use of the article” under normal conditions of use or the conditions of use that the label prescribes. “In other words, if a supplement’s label recommends taking one capsule per day, and that dose actually causes an increased risk of death—a material fact ‘with respect to consequences which may result from use of the article’—the FDCA would deem it misleading not to reveal that fact on the label.”  That would also violate California law. However, the record lacked evidence that vitamin E supplements were actually harmful, as opposed to simply useless at reducing all-cause mortality (which they do not claim to reduce). At best, the record showed a “small” correlation between high-dose vitamin E supplements and an increased risk of all-cause mortality. The meta-analyses showing this correlation didn’t conclude that vitamin E supplements caused an increased risk of all-cause mortality. That wasn’ enough to create a genuine issue of material fact.

Claims in contracts aren't "advertising or promotion"


Segerdahl Corp. v. American Litho, Inc., No. 17-cv-3015, 2019 WL 157924 (N.D. Ill. Jan. 10, 2019)

This opinion deals with Lanham Act/coordinate state law counterclaims by American Litho against Segerdahl. The parties compete within the direct mail service market, a subset of the printing and marketing industry. American Litho challenged statements on Segerdahl’s website:

Our ability to handle your sampling program from start to finish under one roof means greater security, better quality and shorter turn-time.
We specialize in digital, web and sheetfed offset printing-all housed within our single campus network to provide a level of flexibility not found anywhere else.
Our integrated campus and end-to-end capabilities allow us to easily maintain control of your most intricate projects.
We are the only facility that can execute your entire sampling program on one campus-providing greater security, faster time to market, tighter quality and inventory control.

American Litho also challenged Segerdahl’s statements in its contracts with three of its customers, agreeing to perform all printing services in-house despite subcontracting portions of the work without their customers’ knowledge.  The statements in those contracts weren’t “commercial advertising or promotion.”  Statements to current customers aren’t “communicated for promotional purposes.”

Website statements: These were puffery. American Litho argued that Segerdahl’s website misled potential customers to believe that all printing jobs are handled on-site, but the statements were either exaggerated or so vague that they couldn’t be proven or disproven. American Litho focused on the phrase “from start to finish under one roof,” but the entire statement merely “brags on Segerdahl’s ‘ability’ to handle printing jobs that results in ‘greater security, better quality and shorter-turn time.’” Other similar statements were tied to claims about Segardahl’s generalized awesomeness. “Does American Litho suppose that customers are comparing with all industry rivals to verify whether Segerdahl truly offers ‘a level of flexibility not found anywhere else?’ The Court is doubtful…. One would expect these types of subjective nonquantifiable statements to be posted on a company’s website. That is the very purpose of advertisement.” [Ugh. I liked it when the purpose of ads was to convey actual information.]  Ultimately, these were “nonactionable highly subjective claims.”

Tuesday, January 08, 2019

false advertising claim needs to talk about asterisks to plead with particularity


Anthony v. Pharmavite, 2019 WL 109446, No. 18-cv-02636-EMC (N.D. Cal. Jan. 4, 2019)

Despite generally favorable substantive rulings for plaintiffs, the court dismisses the complaint for false advertising of a nutrition supplement for failure to plead with particularity under Rule 9(b), specifically for failing to discuss the asterisks on the claims at issue.

Pharmavite represents that its biotin supplements “may help support healthy hair, skin and nails.” Each health benefit representation on a label includes either an asterisk and obelisk (*†) or two obelisks (†‡), which I will shorthand as asterisks. The relevant references are to a disclaimer on the back of a label that says: “Biotin may help support healthy hair, skin, and nails in those that are biotin deficient”  or “May help support healthy hair, skin and nails in those deficient in biotin.”  This is allegedly misleading because “most people obtain more than enough biotin from their daily diets, so biotin supplements are unneeded, superfluous, and will provide no health benefits. Only a minuscule percentage of individuals with biotin deficiencies could potentially benefit from biotin supplements.” Allegedly, “[o]nce there is sufficient biotin in the body, any additional supplements are superfluous and the body ultimately excretes them.” The only benefits would come to people with  “exceedingly rare conditions that cause ... biotin deficiencies—less than [0.00138] percent of the population.”

Whether a reasonable consumer would be misled by the labeling could not be resolved as a matter of law, given the prominence of the claim to “help support healthy hair, skin and nails.” “A reasonable consumer, representing a significant portion of the population, could understand this representation to mean that there is a possibility that he/she will experience benefits to his/her hair, skin, and nails from using the Biotin Products.”  [It is extremely unlikely that “may” moderates this much if at all.]  As alleged, the vast majority of the population can’t benefit, so “for virtually all consumers, the term ‘may’ overstates the chances of obtaining any benefit.” Qualifying words like “may” may be relevant to the reasonable consumer’s understanding [cases cited, but not consumer research—plaintiffs might be well advised to plead that “may” doesn’t matter!] but that could still be misleading. “A reasonable consumer could understand ‘may’ to mean a reasonable possibility or a reasonable probability, rather than merely a vanishingly small possibility on the order of 0.00138 percent.” 

As for the deficiency disclaimers, there was a question of fact about whether a reasonable consumer would notice it and continue on to the disclaimer. The Ninth Circuit has rejected the premise that “reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ... small print on the side of the box.”  There was a separate question about whether the substance of the disclaimer was any use. “For instance, the disclaimer does not state that the Biotin Products would not benefit those who are not biotin deficient. Nor does it explain that exceedingly few people are in fact biotin deficient. A reasonable consumer, experiencing hair, skin or nail problems, might plausibly believe he or she has a biotin deficiency or would otherwise benefit from the product.” [Cf. the old Geritol case, where Geritol advertised that it could alleviate fatigue caused by iron deficiency—much more clearly making the relevant disclosure than here.  This was nonetheless misleading because most fatigue wasn’t caused by iron deficiency, so many consumers were buying a product that wouldn’t help them with the problem for which they sought relief, given that Geritol’s ads targeted the general, fatigued population.] Thus, the disclaimer was not so unambiguous and express that a reasonable consumer couldn’t be deceived as a matter of law.

However, the complaint still flunked 9(b) because it didn’t discuss whether plaintiffs saw the asterisk; whether they read the corresponding disclaimer; and if they did read it, how the disclaimer affected their purchasing decision. It didn’t mention the asterisk or disclaimer at all. Dismissed without prejudice.

The injunctive relief claim was dismissed with prejudice because plaintiffs didn’t allege an imminent or actual threat of future harm absent an injunction. The claim was “predicated on the premise that, as a matter of scientific fact, biotin supplements ‘are unneeded, superfluous, and will not provide any benefits’ to anyone without a biotin deficiency.” Thus, plaintiffs wouldn’t desire to purchase such supplements in the future if truthfully advertised.


False claims of "original" status don't support public interest in disseminating art for anti-SLAPP purposes


Coker v. Sassone, --- P.3d ----, 2019 WL 117467, 135 Nev. Adv. Op. 2, No. 73863 (Jan. 3, 2019)

In the course of interpreting the Nevada anti-SLAPP law, the Nevada Supreme Court says some things about the relationship between counterfeits that might easily be taken out of context and applied to any copies; I hope future applications heed its careful language.

Sassone is an artist and painter who has created numerous works of art, but never made original, signed lithographs. When he saw such advertised, he sued Coker, alleging that the copies being sold were counterfeit and that his signature was forged. Coker filed a special motion to dismiss under NRS 41.660, the state anti-SLAPP law, arguing that dissemination of artwork to the public is expressive conduct and is in the public interest. The district court denied Coker’s motion, finding that Coker failed to demonstrate that his conduct was “a good faith communication that was either truthful or made without knowledge of its falsehood,” one of the statutory requirements for anti-SLAPP protection. The Supreme Court affirmed, conducting a de novo review.

Under Nevada law, district court considering a special motion to dismiss must undertake a two-prong analysis. First, it must “[d]etermine whether the moving party has established, by a preponderance of the evidence, that the claim is based upon a good faith communication in furtherance of ... the right to free speech in direct connection with an issue of public concern.” At that point, “the burden shifts to the plaintiff to show ‘with prima facie evidence a probability of prevailing on the claim.’ ”

Only the first part was at issue here.  An anti-SLAPP movant  “need only demonstrate that his or her conduct falls within one of four statutorily defined categories of speech, rather than address difficult questions of First Amendment law.”  One such category is: “[c]ommunication made in direct connection with an issue of public interest in a place open to the public or in a public forum ... which is truthful or is made without knowledge of its falsehood.”  The truthful/good faith part was the problem here. Coker relied on his declaration that he bought the lithographs from a bulk art supplier and never personally created any copies of the artwork.  However, Sassone clarified that his complaint was based on Coker’s representation of the lithographs as originals. To take advantage of this category, “Coker would need to provide evidence persuading this court that at the time he advertised and sold the lithographs online, he believed that they were originals and, thus, advertised them as such. Tellingly, Coker has made no such statement. Nor has he provided this court with any evidence suggesting that he believed that the lithographs were, in fact, originals.” Thus, Coker failed to make the requisite showing.

In addition, Coker argued that his conduct was in direct connection with an issue of public interest, “widespread access to creative works.” However, Sassone wasn’t challenging “the mere dissemination of his artwork, but Coker’s description of the counterfeit works as originals. In this respect, Sassone acknowledges that had Coker copied Sassone’s works and sold the copies while disclosing them as such, Sassone would have no basis for his suit. We find this distinction imperative in concluding that Coker’s conduct was not made in direct connection with an issue of public interest” (emphasis added).

Under the governing law, which is statutory and not constitutional, and which is guided by similar California law, (1) “public interest” isn’t the same as mere curiosity; (2) a matter of public interest should be “of concern to a substantial number of people”; (3) there should be “some degree of closeness between the challenged statements and the asserted public interest—the assertion of a broad and amorphous public interest is not sufficient”; (4) the focus should be the public interest “rather than a mere effort to gather ammunition for another round of private controversy”; and (5) communicating something to a large number of people doesn’t alchemize it into a matter of public interest.

Here, (3) was lacking, as Coker failed to demonstrate how false advertising and the sale of counterfeit artwork was “sufficiently related to the dissemination of creative works.”  Stretching (4) out of its origin (to address the libel law scenario in which people are saying nasty things back & forth), the court also found that Coker failed to show that the focus of his conduct “was to increase access to creative works or advance the free flow of information. Without evidence suggesting otherwise, we conclude that his focus was to profit from the sale of artwork, and that increased access to creative work was merely incidental.”  [This is very troubling standing alone: a lot expressive activity, including online, is done for profit, and its content could easily be called “incidental”—at the very least, this idea should be rejected where a profit-seeking movant says that the content was deliberately chosen as content that deserved dissemination, though Coker apparently didn’t do that here.]  The conclusion was still limited: “we cannot conclude that selling counterfeit artwork online, while advertising it as original, is related to the asserted public interest of dissemination of creative works.”

Maloney v. T3Media, Inc., 853 F.3d 1004 (9th Cir. 2017), was not to the contrary. Maloney upheld the grant of a media company’s anti-SLAPP motion after the company was sued for distributing unlicensed photographs of NCAA student-athletes. The Ninth Circuit held that the activity was in the public interest “because the photographs memorialize cherished moments in NCAA sports history, and California defines ‘an issue of public interest’ broadly.” But Coker didn’t explain how sports memorabilia related to art. And Maloney didn’t justify extending the definition of “an issue of public interest” to include “the advertisement and sale of counterfeit artwork as original.” Whether this was expressive activity under the First Amendment was not relevant to the interpretation of the anti-SLAPP act.

Monday, January 07, 2019

Announcing the Fourth Edition of Advertising & Marketing Law: Cases & Materials by Tushnet & Goldman

Eric Goldman has all the details here.  Preview:
 It is available for purchase in the following formats:
* A DRM-free PDF file. Price: $12
* A DRM-free ePub file for mobile devices. Price: $12
* In Kindle. Price: $9.99
* A print-on-demand book from Amazon. Because of the book’s length, we publish the hard copy in two volumes: Volume 1(covering chapters 1-8) and Volume 2 (covering chapters 9-17). Price is $20 for each volume ($40 for the set) plus shipping and tax. The hard copy 4th edition is cheaper than the 3rd edition by 10%, plus the book should now qualify for free Amazon shipping, Also, we offer a free PDF or ePub file to buyers of the hard copy version; all they have to do is email me a copy of their receipt showing which edition they bought, and I’ll promptly email the electronic file.
As usual, if you are a professor, or are hoping to teach the course, and would like a free evaluation copy, please email me (egoldman@gmail.com).
A sample chapter, Chapter 13 (on publicity rights and endorsements), is available as a free download.
We’ve discussed the book’s background and our goals as authors in this essay.

Friday, January 04, 2019

Y/S/H Junior Faculty Forum, June 5-6 2019 Request for Submissions (including IP)


Yale/Stanford/Harvard Junior Faculty Forum
June 5-6, 2019, Yale Law School

Yale, Stanford, and Harvard Law Schools announce the 20th session of the Junior Faculty Forum to be held at Yale Law School on June 5-6, 2019.

The Forum’s objective is to encourage the work of scholars recently appointed to a tenure-track position by providing experience in the pursuit of scholarship and the nature of the scholarly exchange. Meetings are held each year, rotating among Yale, Stanford, and Harvard. Twelve to twenty scholars (with one to seven years in teaching) will be chosen on a blind basis to present their work at the Forum. One or more senior scholars will comment on each paper. The audience will include the participating junior faculty, faculty from the host institutions, and invited guests. The goal is discourse both on the merits of particular papers and on appropriate methodologies for doing work in that genre. We hope that comment and discussion will communicate what counts as good work among successful senior scholars and will also challenge and improve the standards that now obtain. The Forum also hopes to increase the sense of community among American legal scholars generally, particularly by strengthening ties between new and veteran professors.

TOPICS: Each year the Forum invites submissions on selected legal topics. For the upcoming 2019 meeting, the topics will cover the following areas of the law:
- Antitrust
- Bankruptcy
- Civil Litigation and Dispute Resolution
- Contracts and Commercial Law
- Corporate and Securities Law
- Intellectual Property
- International Business Law
- Private Law Theory and Comparative Private Law
- Property, Estates, and Unjust Enrichment
- Taxation
- Torts

A jury of accomplished scholars, with expertise in the particular subject area, will choose the papers to be presented. There is no publication commitment. Yale, Stanford, or Harvard will pay presenters’ and commentators’ travel expenses, though international flights may be only partially reimbursed.

QUALIFICATIONS: Authors who teach law in the U.S. in a tenured or tenure-track position and have not been teaching at either of those ranks for a total of more than seven years are eligible to submit their work. American citizens or permanent residents teaching abroad are also eligible provided that they have held a faculty position or the equivalent, including positions comparable to junior faculty positions in research institutions, for less than seven years and that they earned their last degree after 2009. We accept jointly authored submissions, but each of the coauthors must be individually eligible to participate in the Forum. Papers that will be published prior to Forum are not eligible. There is no limit on the number of submissions by any individual author. Faculty from Yale, Stanford, and Harvard Law Schools are not eligible.

PAPER SUBMISSION PROCEDURE: Electronic submissions should be sent to Katherine Pothin (katherine.pothin@yale.edu) with the subject line “Junior Faculty Forum.” The deadline for submissions is February 1, 2019. Please remove all references to the author(s) in the paper. Please include in the text of the email a cover note listing your name, the title of your paper, any coauthors, and under which topic your paper falls. Each paper may only be considered under one topic. Any questions about the submission procedure should be directed both to Christine Jolls (christine.jolls@yale.edu) and her assistant, Katherine Pothin (katherine.pothin@yale.edu).

FURTHER INFORMATION: Inquiries concerning the Forum should be sent to Christine Jolls (christine.jolls@yale.edu) or Yair Listokin (yair.listokin@yale.edu) at Yale Law School, Norman Spaulding (nspaulding@law.stanford.edu) at Stanford Law School, or Matthew Stephenson (mstephen@law.harvard.edu) or Rebecca Tushnet (rtushnet@law.harvard.edu) at Harvard Law School.

Tuesday, January 01, 2019

Parody as evidence of fame?

I was skeptical about the idea that the National Geographic golden frame was recognizable as a mark on its own, but parodic use (in conjunction with "society," so not entirely on its own) seems to me to be evidence to the contrary: