Wednesday, August 28, 2019

district court ignores Empire, decides that Rogers doesn't cover nonfiction

IOW, LLC v. Breus, No. CV18-1649-PHX-DGC, 2019 WL 4010737 (D. Ariz. Aug. 26, 2019)

Every time I think I’ve seen it all .... Here, the court decides that Rogers doesn’t apply if the challenged book title isn’t itself “expressive,” which means something other than “conveys meaning.”  I feel like Old Luke.

Breus “is a clinical psychologist … who studies how his patients’ chronobiologies [natural circadian rhythms] effect their treatment.” He’s written three books and more than eighty blog posts discussing chronobiology and circadian rhythms.  Breus met Randy Miller, the sole member of plaintiff IOW and the majority shareholder of plaintiff WEC. Miller told Breus about his business, WHEN, and shared his ideas for an online counseling platform named “If or When” or “If not Now When,” “where coaches would help customers achieve their goals based on the concept of: ‘If I don’t do it now, when will I do it?’” They entered into a Confidentiality Agreement regarding their discussions, but Breus provided no services to plaintiffs and was never identified as an associate by their promotional materials.

This dispute is about Breus’s third book, The Power of When (initially titled The Overnight Solution), which “posits that an individual can be healthier and more productive by adjusting when she accomplishes certain tasks.” In 2015, Breus acquired to promote the book; it went live in August 2016. Id. at 5. He also registered to publish his Bio-Time Quiz, which went live in July 2016. Plaintiffs claimed that Breus, in developing the concept for his third book, used and incorporated information that he discussed with Miller and that was subject to the Confidentiality Agreement and trade secret protections.

Breach of contract:  WEC argued that Breus “utilize[d] the confidential materials received from [WEC], which included the confidential proposed trademarks and branding of WHEN selected by Mr. Miller.” Miller requested his attorney perform a trademark search on Power of When, and stated that he and his attorney “considered that phrase to be highly confidential” until it was publicly disclosed in an August 2016 trademark application. But this didn’t show that Breus violated the agreement, nor did the evidence show that The Power of When or its marketing materials mimicked the WHEN programs, ideas, and brand models.

As for the origin of the book title, defendants cited evidence that Breus’s publisher, LB, “conceived the title in a meeting where Dr. Breus was not present and later suggested the title to him via email.” The emails in the record didn’t controvert LB’s employee’s sworn testimony that she and LB conceived the title without input from Breus; indeed, the emails stated specifically that Breus had different title suggestions. The employee testified that she disliked the book’s working title; another person came up with The Science of When, but the publisher found the word “science” too technical-sounding so she suggested “power.” There was no contrary evidence; credibility issues couldn’t preclude summary judgment without evidence undercutting the truthfulness of the email exchange or the participants’ testimony about it.

WEC argued that even if Breus did not suggest The Power of When as a book title, he had a duty under the Agreement not to use it, but didn’t establish the existence of such a duty. Nor was there a breach of the implied covenant of good faith and fair dealing on this record; plaintiffs weren’t claiming misuse of confidential information, but “misappropriation of use of ‘WHEN,’ ‘Power of WHEN,’ and other uses of ‘WHEN’ throughout the book.” [Ugh.]

Trade secrets: a similar fate. Plaintiff’s principal Miller testified that the trade secret disclosed in Dr. Breus’s book is “WHEN” and “Power of WHEN”; that he did not own the trademark Power of WHEN until August 2016 when he filed a public trademark application [pro tip: the application isn’t “ownership”]; that the information disclosed in Dr. Breus’s book was “not confidential information”; and that it was no secret that he used “when” in connection with his business. Nor did anything identified as confidential by the plaintiffs show up in the book.

And yet the trademark claims survive, the court becoming entangled in various doctrinal thickets.

Claims based on WEC’s Power of When trademark: Defendants pointed out that Breus told Miller the title of his book in December 2015, and the title was conceived, domain names acquired, websites published, promotions began, and more than 15,000 copies of the book were shipped to retailers, all before WEC filed its ITU application on August 28, 2016. 

Plaintiffs’ argument was to cite cases that “the title of a single book cannot serve as a source identifier” and that “the publication of a single book cannot create, as a matter of law, an association between the book’s title (the alleged mark) and the source of the book.” The court thought the Ninth Circuit might be more flexible, and that the presence of “several promotional activities and the shipping of 15,000 books to retailers” might also matter.  However, the court thought that plaintiffs might be able to establish priority.  But priority isn’t the best way to describe the issue: even after the registration issued (2017), plaintiff shouldn’t be able to prevent uses that began before the filing date of the ITU. Prior users shouldn’t need to have “trademark rights” that would enable them to suppress others’ uses in order to have rights to continue use. 

The court reasoned that the trademark application constitutes “prima facie evidence of the validity of the registered mark” [also not true as stated; only as of 2017, when the registration issued, did the claims of the registration—not the application—constitute prima facie evidence of validity] and so a fact-specific inquiry was required.  “[A]n issue of fact exists regarding whether Defendants’ pre-August 2016 activities rebut Plaintiffs’ presumption of ownership… “A reasonable jury could weigh the factors and determine that Defendants’ pre-registration activities – most of which appear to have occurred out of the public eye – were not sufficiently public to identify the mark in an appropriate segment of the public mind as Defendants’ mark.”  [This is also an instance of Bill McGeveran’s observation that multiple overlapping doctrines allowing defenses can actually impair defendants’ chances—a §33(b) prior user defense might have worked here, subject to the court deciding that defendants would need to have had a valid mark as opposed to a use; descriptive fair use might also have worked. But the real problem is that defendants, in apparent good faith, began using the phrase before plaintiffs filed their ITU. But don't worry; it gets worse.]

Now, on to Rogers.  The court characterized the test as follows: “Under Rogers, a defendant must first ‘make a threshold legal showing that its allegedly infringing use is part of an expressive work protected by the First Amendment.’ Gordon v. Drape Creative, Inc., 909 F.3d 257, 264 (9th Cir. 2018).”

Defendants, completely correctly, argued that using a phrase as the title of a book satisfies that threshold showing because it’s the title of a book, which is an expressive work. Appallingly, the court disagreed because the book is a nonfiction book. Although the word “artistic” appears many times in Rogers cases, the First Amendment concerns about using trademark to suppress speech are no different for nonfiction. In addition, and in contradiction to Empire, the governing law of the circuit (cited several times in this opinion and yet somehow completely ignored on this point), the court required that defendants show that the phrase had “cultural significance or meaning beyond its source-identifying function” in order to invoke Rogers. [And by the way, even if you did require that, the descriptive meaning of the phrase is clearly meaning “beyond its source-identifying function”—when the title was chosen, there was no source-identifying function because even the ITU was not yet filed.]

Thus: “The Court must determine therefore whether Plaintiffs’ mark, Power of When, has assumed cultural significance such that Defendants’ use of the mark in Dr. Breus’s book title is expressive, rather than simply commercial use or advertising for his non-fiction work.”  Defendants, again completely correctly, pointed out that the book was a creative work with a lot of expression.  “But this evidence addresses the book’s contents, not whether the book’s title is expressive or artistic.” But of course that’s not even close to the test: the test is whether the putative infringer is using the claimed mark as part of a work; a title is part of a book just as it is part of a movie for First Amendment purposes.  The court cites Rogers’ statement that purchasers have the right not to be misled about the source of books without noting, as Rogers does, that titles [like other components of expressive works that aren’t the publisher’s imprint] don’t usually indicate source, which is why we have a special test.

And defendants didn’t show that the Power of When mark has “transcend[ed] [its] identifying purpose,” “enter[ed] public discourse and become an integral part of our vocabulary,” “assume[d] [ ] cultural significance,” been imbued “with a meaning beyond its source-identifying function,” or “evinces an intent to convey a particularized message” that “would [likely] be understood by those who viewed it.” [Cue endless screaming.]  Thus, “no evidence shows that Dr. Breus’s allegedly infringing use of The Power of When as a title is an expressive, creative, or artistic choice, rather than ordinary commercial speech that describes the content of his non-fiction self-help book.”  [Endless screaming continues; the court said it right there: the phrase describes the content of his book!  That is a particularized message!]

Thus, the use of The Power of When implicated ordinary trademark concerns, not the First Amendment.  Rogers didn’t apply.

Defendants sought to cancel WEC’s fourteen registered marks covering “personal growth and motivation consulting services,” all filed as ITUs with subsequent statements of use. However, the claimed use dates seemed creaky (most were in 2016; a few in early 2017), while “members of a beta test that presumably used services related to the marks did not complete surveys until 2017 and 2018. WEC produced a WHEN member status page showing no activity earlier than June 30, 2017, and produced communications with members of the beta test group in 2017.”  The court noted the authority holdign that uses that are sufficient to establish priority are not necessarily good enough to merit registration, which requires actual use and not analogous use. However, the Ninth Circuit still applies a totality of circumstances test to determine “whether a service has actually been ‘rendered in commerce.’”

WEC argued that it had “genuine, commercial, pre-sales activities before it launched its business, including presenting its service offerings to 10-15 prospective customers in Powerpoint presentations and in online and in-person meetings; creating branded apparel and websites; creating and distributing sales materials; creating and using training manuals and customer tools, including health journals; creating and marketing various service levels; raising investor capital; getting evaluations of trainings, performing beta tests and compiling surveys; and issuing press releases.” Query whether any of that would have had any chance of satisfying the PTO had it known that was what WEC called “use.”  The PTO requires the services to be actually rendered in commerce, and none of that sounds like rendering services.  Also query whether it makes any sense to think that this company was using fourteen marks—is it really plausible that there were fourteen symbols serving to designate the source of these services?

But anyway, there was evidence that on December 14, 2016, WEC conducted an online interactive team meeting with a prospective client using a document that bore the Power of When mark; that WHEN Advisors were trained in Fall 2016; and that WEC used the marks in actual sales after its launch. “WEC’s training schedule from September 2016 repeatedly includes the WHEN mark, and the 2016 Training Manual includes Find Your When. WEC’s other cited evidence, which appears to include internal documents and promotional materials, contains references to the other registered marks, including WHENness, WHEN Advisor, WHEN Way of Life, WHEN is Now, MyWHEN, and FYW.”

Because the Ninth Circuit test “specifically instructs the Court to consider pre-sales activities in determining whether a trademark owner uses its marks in connection with services rendered in commerce,” there were issues of fact about whether WEC’s activities “distinguished the marked services and were a commercially reasonable attempt to market their services.”

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