Monday, February 03, 2025

materiality surveys may not need controls

In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., No. 14-MD-2542 (VSB), 2025 WL 354671 (S.D.N.Y. Jan. 30, 2025)

This is a ruling on 19 motions to exclude expert testimony in this case, which is mostly an antitrust case; I will focus only on some false advertising-relevant rulings.

Keurig sought to exclude Hal Poret’s testimony, offered primarily for the purpose of showing that Keurig statements misled consumers into believing that its 2.0 Brewer worked only with Keurig’s K-Cups, and to provide an additional basis for one plaintiff’s false advertising damages expert, to rely on when estimating Lanham Act damages resulting from Keurig’s incompatibility statements.

The court started with a presumption favoring the admissibility of surveys. Poret didn’t test the exact language Keurig used, but that wasn’t fatal.  Although surveys “must ‘be designed to examine the impression presented to the consumer,’ ” “there is no obligation that the survey use the exact language challenged, or mirror the advertising conditions exactly.” Instead, Poret interviewed consumers about “what they did and why,” addressing the broader question of why consumers had not purchased competitor’s single-serve cups. His choice not to show the allegedly misleading ad campaign didn’t render the entire survey unreliable, since his methodology was well accepted in the survey field.

It was also not fatal that the survey lacked a control group. “Control groups are not the universal and inflexible requirement of survey research as Keurig seeks to portray them.” They’re useful when the survey is trying to determine the source of attitudes or beliefs or behaviors, or to “test directly the influence of [a] stimulus” such as a commercial. But “a control group may not be necessary if the risk of simply recording pre-existing values is not as great. For example, “a control group is not required for a survey that purports only to understand what developers perceive as relatively more or less important factors in their decision-making process.” That was the case here.

Likewise, Keurig’s arguments that the questions were biased and leading were insufficient to affect admissibility. The questions were closed-ended, but that can be legitimate. Certain respondents were asked to choose from a list of reasons that they did not purchase unlicensed pods. Some of these choices favored plaintiff’s position (e.g., “I heard or read that the Keurig 2.0 brewer works only with Keurig brand or licensed pods”) but some did not (e.g., “I prefer the taste of Keurig or Keurig-licensed brands.”). “Determining consumers’ preferences on these kinds of clearly defined alternatives is the kind of task for which close-ended questions are frequently more appropriate.”

The court also rejected the criticism that the universe was unrepresentative because Poret “imposed near-equal age distribution within his sample survey,” creating an underinclusive universe of respondents whose ages matched neither the population of Keurig users nor the population of the United States. The survey population of interest was Keurig 2.0 Brewer owners, which was appropriate.

Another plaintiff expert was Sarah Butler, who was offered to testify both on Keurig’s testing of competitor cups and her own surveys. Keurig objected to the first, because it argued that her “training is in consumer surveys, not laboratory testing of physical products.” But she was qualified to opine on whether Keurig’s comparisons between K-Cups and competitive cups adhered to “specific research standards and methodology.” Butler was an expert on survey research, market research, sampling, and statistical analysis. Her evaluation related to research standards and methodology generally, and not merely to “product testing,” and thus she was qualified to opine on whether the methodology of a research study allows for statistically valid conclusions to be drawn. Her non-survey testimony concerned whether the cup testing conducted by Keurig followed “generally accepted research standards for comparative product tests—such as objectivity, sufficient sample size, use of control groups where appropriate, and testing protocols—necessary for reliable statistical analyses,” and therefore aligned with her experience, training, and expertise.

As for her surveys—one of home users and one of out-of-home users like office users—the court also allowed them. For the home users, Butler made adjustments to the control group to ensure that “respondents who had previously been exposed to Keurig’s false advertising campaign were controlled for.” In devising her survey, Butler noted her concern that “the rates in the Control group may be driven by past exposures to statements made by Keurig about the unreliability of Competitive Cups.” “Mitigating the impact of preexisting beliefs on survey feedback is a sound objective in survey research. Indeed, failure to control for the impact of preexisting beliefs can render a survey unreliable.” Where a control group without preexisting beliefs is unavailable, “social scientists sometimes employ statistical weights or adjustments to the control groups. … Given the threat that preexisting views pose to survey validity and the broad use of far more intensive methods of control group weighing in modern econometric methods, I do not agree with Keurig that there is no scientific justification for Ms. Butler’s modification of the control group.”

For the out-of-home group, Keurig argued that there was no control group at all, but that survey targeted “individuals responsible for beverage supplies or contracts with beverage suppliers for their office or business location to evaluate the impact of Keurig’s relationships with Distributors[ ] on purchasing behaviors in the Away-From-Home Market.” Thus, it didn’t seek to test the impact of a particular stimulus or statement on these individuals, and a control group wasn’t as necessary.

Keurig also objected to questions in the first survey that it argued created a false dichotomy between “licensed” and “unlicensed” pods as well as the use of words like “unapproved” that it deemed biased, along with stronger warranty language than Keurig itself used. Keurig’s rebuttal expert conducted a survey along its proposed lines which yielded substantially different results.

The court disagreed. Keurig’s own materials used “unapproved,” so it was fair to ask consumers about that, and the other questions didn’t suggest answers in an impermissibly leading way. Although there were differences between “affecting” a warranty and “voiding” a warranty, “none are so strong that exclusion of the survey is warranted or that it becomes more likely than not that Ms. Butler’s opinion is unreliable. Although Keurig’s survey produced different results, this is to be expected—surveys conducted in different ways produce different results.” Cross-examination was the remedy.

The court also rejected sample-based criticisms of the second survey, noting that samples don’t have to be perfect.

Keurig also criticized the use of “recall-based measures” (i.e., questions about past purchasing decisions) in the first survey, on the grounds that “[i]t is widely recognized that recall-based measures do not yield reliable responses.”  “[R]ecall bias, which recognizes the potential for inaccurate responses due to fading memories over time,” is a known issue with survey reliability. But that went to weight rather than admissibility. And asking about aggregate decisions over a long term is less problematic than asking about very specific things. Likewise, adding an “I don’t know” option can mitigate the problem, which was done.

Saturday, February 01, 2025

WIPIP: Copyright: Incentives and the Digital Age

Tang, Creative Labor in the Age of Platform Capitalism

Theories of expressive work and creativity: lead to idea that AI training itself is not a © problem b/c it doesn’t use work expressively. Past idea: digital creativity enhances autonomy by giving individuals greater roles in authoring their own lives. When people are creative, making new things out of old things, become producers, they exercise and perform freedom and become the sort of people who are free. Semiotic democracy.

This model is challenged by paradigm shift in digital creation. From early days of YouTube—hotbed of amateur creativity—to current situation of rightsholder synergy. “Collaborative model” in which “rights holders” and “online creators” are partners in sharing viral profits. YouTube’s ContentID, along with Meta and TikTok, allows users to take bits and pieces without themselves needing to pay. This changes how we think about digital creativity on the internet. Those autonomy arguments are actually no different than autonomy arguments made by Uber, Postmates, and other gig economy companies—greater flexibility for a bohemian lifestyle. But we know that’s not true. Creators relied on TikTok for their livelihoods—Uber drivers are subject to algorithmic black box whims; YouTube doesn’t make its monetization/demonetization policies public. At best, platforms are oligopolistic for creators.

Platforms have always gathered that meaning-making expression into data; made it clear when they changed TOS to make it explicit that they were using data to train generative AI. The analysis of the datafication of creative works can learn from privacy scholarship, which has asked: how does privacy law evolve from dignitarian individualistic notions focusing on noneconomic invasions for the era of mass privacy invasions through gathering data en masse?

Q: historically, the vast majority of artists have failed. Maybe the platforms make things better [or don’t make things worse] by allowing artists to find their audiences.

A: consider TV writers negotiating for uses of AI.

Rosenblatt: This is part of a story of precarity; sounds like freedom but isn’t—gig economy analogy is convincing. What does this do for ©? TV writers—that’s WFH. The one thing these creators have is ©, and what good does it do them? Very little. YouTubers have © but it doesn’t seem to be relevant. Is there something else we should be doing?

A: all these arguments—the payments would be minimal, it would be too hard to track all the uses—have been made in privacy, so we could look there. WFH: challenge to the idea of the inextricable link b/t work and the author.

Lunney, Incentives and Music Composition

Fundamental premise of ©: more rights means more $ for righsholders means more creative output. This paper is looking at music composition: does revenue increase output? Does revenue increase number of composers? RIAA shipment data in constant dollars—going back to 1962. Steady climb; 80s recession and recovery; Napster/filesharing decrease until 2015, back to the early 60s level, and then starts to rise again. ASCAP etc. payouts also have to be considered for composers, and there we see a steady increase rather than sharp drops, with a few blips. With both taken into account, you still see a filesharing effect, but not quite as drastic as for recording revenues (and not much recession effect).

What happened to composers? Hot 100: a relative measure of quality rather than absolute, since it’s competing with the current alternatives. More money means fewer top hits rather than more contenders. For absolute measures of quality, looked at decay over time. The 90s (high revenue period) songs did worse than expected. The low-revenue 2006-2015 period is where people are still listening to the songs today. Can control for various variables including teenage population and revenue is still uncorrelated or negatively correlated with revenue.

Superstar composers: only 2 from the 1990s, many more from other lower-revenue decades. So more money is associated with fewer and lower quality hit songs, fewer first appearance songwriters, and fewer superstar songwriters. Next steps: more data, looking for varied output based on quality of hit, and revisiting assumption of equal shares of songwriting credits.

Rosenblatt: what the trends are in publishing deals—are the deals better/worse/different/360? Industry practice has changed considerably over that period.

A: good question, but his core question is does more © yield more music? Why it does or doesn’t is an interesting Q but not his main one.

Fromer: Movies: Blockbusters are often perceived as less creative; gatekeeping around who is allowed to produce them—is there anything like that dynamic here?

A: certainly gatekeeping on the artist side. Harder to tell on the publishing/composing side. We hear about artists being taken advantage of. [We definitely hear about composers forced to share credit with performers in order to get the song recorded by them.]

Fromer: Artists wanting to work with a particular hitmaker may matter.

A: we’re increasing the number of composers on average in a hit song, for sure.

Q: some songs are on the Billboard 100 forever.

A: sure, it’s not a perfect measure of quality, but that’s why I also look at whether it’s still being streamed years later.

Q: another possibility: look at # of DMCA takedowns to measure popularity/quality.

Cathy Gellis: did the Copyright Act of 1976 coming into effect have any relation to what happened to spike revenue in 1978? But also note that the “filesharing collapse” was also correlated with the collapse of record stores, which wasn’t just about filesharing but was also about the prices record companies were charging to record stores that made them unsustainable.

A: hard to explain 1978. But you’re right, there’s a lot going on. And only looking at Hot 100, so there may be other things going on, although the music industry is highly skewed to the top.

Q: Number of composers being added: people are preemptively adding composers w/similar style b/c of fear of Blurred Lines type lawsuits.

Pager, Copyright's Extended Duration as Feature not Bug

Most valuable works may struggle before they are recognized as valuable—Van Gogh died penniless. Moby Dick, Citizen Kane were commercial failures. Art from marginalized communities may take time to be recognized.

Publishers will only invest in works that they think will pay off fast if © term is short. Does that mean © needs to last 100 years? Not arguing for any particular term. But could play with a variable term. Return to a renewal term—option. That would allow mainstream iconic works to renew, which would be bad; could couple it with some sort of revenue cutoff, so the works that have had returns on their investment can’t renew.

RT: Renewal restrictions: as far as I know most blockbuster movies have technically lost money; so how would that work?

A: could go by box office/gross.

RT: What about the naïve economic model here? The midlist is already gone from publishing with life + 70—publishers are already not investing in works that will pay off over 20 years, even with that very long term.

A: you might take more risks on an unknown if you think there’s more money around.

RT: what does that have to do with the term? Your time horizon is still going to be 1 year. [See also “I’ll be gone, you’ll be gone.”]

Jake Linford: you’re really telling a desert story not an incentive story: this person deserves a reward and we need to create some sort of system to give them a reward.

Tang: there’s tons of data that the industry is becoming more risk-averse and more winner-take all, not willing to tolerate failure, despite its concentration (because of its concentration?). [Cory Doctorow and Rebecca Giblin say that the way to deal with the bully taking your kid’s lunch money is not to give your kid more lunch money; this is a statement about © rights.]

WIPIP: Innovation policy

Michael Burstein, The Law of the Direction of Innovation

Foundational texts: NBER Rate and Direction of Inventive Activity, and revisited. But we need to ask: what innovation should we prioritize? What innovation, by whom, and for whom? These are contestable subjects of political choice. Health law scholars have started to ask why so many me too drugs instead of novel therapeutics; trying to generalize from these questions.

Positing two axioms representing conventional wisdom in law & business: (1) entrepreneurial activity, mediated by price signals and supplemented by exclusive rights, is the best way to establish the direction of innovation. (2) private ordering of innovation policy takes place largely in the absence of legal structure; law’s role is only to ensure that IP facilitates adequate price signaling.

This is wrong in a few ways. Startups direct innovative efforts towards funders’ interests—structured by VC incentives. Incumbent firms are influenced by corporate rules. Covenants not to compete matters. That’s all not just price. Even if was just price, IP doesn’t mediate price in a vacuum; IP makes choices. Market demand also doesn’t equal social demand/value of innovation. Gov’t funding remains an important tool of innovation policy.

How do we get an innovation ecosystem w/striking disparities in investment/development of tech that we see today? VC investment is mostly in IT and consumer-oriented stuff. Silicon Valley has become optimized to produce those kinds of innovations. Crypto, but not encryption from same underlying tech base. Crypto has low capital requirements, low barriers to entry. Encryption is deep tech, w/long and uncertain regulatory cycle/demand, but potentially much greater social value.

We’ve had different innovation systems over time—Bell Labs, corporate R&D.

One goal: challenge notion that innovation is part of market alone and not part of legal choice.

Gaps in literature to fill: economic literature has some useful modeling, but doesn’t explain mechanisms by which economic incentives actually arise. Innovation ecosystems may be described, but each part of ecosystem is molded by various laws, private law and public law. In law, we tend not to see the ecosystem as deserving of integrated study—we tend to atomize each piece.

Law influences direction by structuring relationships among firms, individuals, and markets (VC contracts are an example: generally applicable law rather than innovation specific); by delineating entitlements (creation/enforcement of legal rights or creating space for nonmarket innovation); creating or limiting markets—shaping demand (export controls that limit the addressable market for certain tech); subsidizing investments, generally through gov’t spending or the equivalent (gov’t grants).

Harder cases: corporate governance—that shapes both individual firms/people as well as markets as a whole. R&D tax credits; gov’t procurement—both a subsidy and market-making. Regulation—can prohibit and can structure what people can do, and direction of innovation responds in kind. IP may operate across modes. Delineating entitlements and subsidizing investments by overcoming public goods problems, but also shapes market, e.g. by identifying what’s protectable and unprotectable and by shaping licensing law.

Sapna Kumar: how does the model handle goods that more closely resemble public goods than private goods, like new antibiotics and vaccines for infectious diseases less common in the US now (but might be in the future). Infrastructural goods might be different.

A: the market paradigm tells us the underproduction problem is bigger with such goods, so it wouldn’t surprise him if things like regulation/gov’t procurement play a bigger role there.

Rosenblatt: people are uncomfortable with value judgments: which technologies are value-promoting and which aren’t.

Kumar, Scientific and Technical Expertise after Loper Bright

Her impression: majority fundamentally misunderstood intertwining of sci/tech expertise w/statutory interpretation. Lessons we can learn from patent litigation about how judges acquire needed knowledge about technical issues. Proposal: funding neutral experts for appellate courts for complex administrative law cases.

Loper Bright: Judges must independently interpret statutes. Judges must exercise independent judgment when they interpret ambiguous statutes; adopted very narrow version of Skidmore deference—can’t defer to agencies but can look for persuasiveness, doesn’t seem different from being persuaded by a party or amicus. Claimed holding based on APA, but framed decision w/in Art. III arguments—invoked Marbury twice.

Many prominent scholars claim lots of deference is left, but her own view is that lots has changed. Courts are forbidden from deferring. LB might exacerbate politicization for judges. Some judges may try to improperly defer. But what about judges who try to faithfully follow LB—what is a deference-free system of interpretation?

Patent has some lessons! District judges struggle to understand complex sci/tech, which contributes to patent cases being time-consuming. They cope by relying heavily on expert tech tutorials, technically trained clerks, tech-trained magistrate judges, and neutral experts for complex cases, sometimes special master or technical adviser. How does the CAFC cope? Expertise of the judges themselves, and technically trained law clerks.

We don’t have any of that for APA situations. No means for parties providing tech tutorials; appellate courts have few technically trained clerks; page limits on briefs and non-tech trained lawyers make it hard for judges to learn what they need; no means for hiring neutral experts at appellate level.

Neutral expert proposal has been floating around for a bit: Breyer & Leventhal, JJ, both proposed. Common in other countries, EU and England. Best of both worlds—independent judgment of judges & access to reputable info on sci/tech.

Implementation: Congress could fund it up front (unlikely); appellate courts could do this on their own and bill parties for cost (is this allowed?). Experts would explain background sci/tech, not opine in law. Give teachings in written form, subject to party response. Goal to prevent overreliance and opacity, while preserving adversarial system. Patent system suggests that this can work. This isn’t a substitute for Chevron, but it’s something.

RT: Could an appellate ct send to dct for this purpose?

A: would take amending the APA.

Burstein: can appellate courts appoint special masters?

A: seen conflicting things—need more research into their inherent authority.

Jacob Sherkow: there are original APA actions in the dct—those could have experts.

Q: generalist judges are always coming into situations they don’t know anything about—music, reinsurance markets, complex family situations, how do ski resorts work. That doesn’t mean anything you said is wrong. But why is science special?

A: dct often plays a filtering role.

Q: problem where you can’t find an expert who isn’t in one camp or another—an interest in advancing (or not) large hadron collider projects. Maybe you need to hire 2-3 with different ways of looking at the same thing.

A: that’s true.

Friday, January 31, 2025

WIPIP: Copyright: Infringement & Enforcement

McFarlin, Restoring Joint Authorship

We apply a separate accrual approach to © infringement: Petrella. But a one-time plain & express repudiation of joint authorship to a claim for accounting, Zuill, 9th Circuit. Should we continue to do so? Chuck Berry & Johnnie Johnson disputed authorship but Berry’s name was the only one on the record—counts as an express repudiation, so he loses his chance to claim authorship. But if Petrella could assert claims 40 years later, why not Johnson?

Zuill’s rationales: (1) inequitable to let claimant wait in the weeds and then pounce—seems inconsistent with Petrella. (2) adverse possession by ouster, since © is like real property in that it lasts for a really long time. Flawed analogy? Ouster generally means sole possession of a tangible thing in exclusion of co-owner. Requires actual dispossession, not just declaration or failure to share profits. Stability of title has economic importance, sure, but so did Scorcese’s title to Raging Bull. How can you become an author of another’s work by prescription?

Should new claimants be able to reopen this, like Johnnie Johnson’s estate?
Glynn Lunney: what counts as an accrual of a cause of action? W/infringement, a new infringement. How does a claim of authorship accrue multiple times?

A: the claim accrues as an acclaim for an accounting upon the failure to pay profits. A new revenue source comes in; the failure to pay creates the new claim.

Lemley: test case where there’s a repudiation but no profits for five years. What should happen then? (He thinks the inconsistency is that Petrella is wrong.)

A: standing for declaratory judgment, but no bar to future suit. That’s an inconsistency—using declaration standing for claim and then putting a bar on the accounting.

RT: Evidentiary difficulties (which aren’t as pressing for Petrella type cases)? What about applying this to WFH?

A: courts are already dealing with that, in e.g. the Jack Kirby case, and yes, to be consistent you’d probably have to extend that to WFH claims.

Q: how does this affect termination rights?

A: also a big problem. Also exists w/infringement and separate accrual. Courts may subconsciously be anti-joint authorship and pro-sole authorship, even if it’s not coherent.

Smith, Looser Forms of Parody

Campbell initially defined parody for © purposes as commenting on the original work; if it has no critical bearing on the substance or style of the original composition, its claim to fair use diminishes. Some decisions didn’t let you target the author or the subject: Salinger v. Colting; Dr. Seuss v. Penguin Books; Kienitz v. Sconnie Nation. Split though b/c cases like Burnett v. Twentieth Century Fox allowed targeting of author or someone associated with the work. Targeting the subject of the work—generally involving a photo. WWE v. Big Dogs—courts generally found that to be satire but not parody; some cases push the line.

Then, Goldsmith twice said that parody targets an “author or work.” So, the questions: parody of what: what can a secondary work target? And what are “looser forms of parody”? (In discussion she suggests “String of Puppies” as a possibility.) Is it on a scale or spectrum? Is there something between parody and satire? Is it something that’s more effective with the borrowing albeit not strictly necessary?

Linford: parody v. satire as proxies for necessary v. not necessary? But how do you figure that out?

Newman: Barbie fair use cases are not really commentary on the expression of Barbie but commentary on the social meaning of Barbie that she had accrued over time. [I think that’s revealing of the vapidity of the demand that a parodist comment on the “work”—not all parts of the work are protected by copyright law. Just like dissecting a joke kills it, the plaintiff in a fair use case tries to break the parody/commentary down and say it’s not required for whatever the defendant is trying to say.]

Lemley: Ralph Nader Mastercard ad: the judge was motivated not to rule for Mastercard & accepted that this was a parody of sanctimonious merchants of high interest consumer debt, but that was clearly not the primary message Nader was trying to send. One question is what the standard of proof is; another related one is who the audience is—“may reasonably be perceived” suggests the (reasonable) audience should be consulted.

Comments note that Europe (wisely) doesn’t distinguish parody from satire.

Lunney: courts like to look reasonable and split the baby, which may explain the language distinguishing satire in Campbell.

Rub, Circumventing SCOTUS

Copyright law needs updating, but Congress is not doing it. Examining 21st century opinions Eldred, Grokster, Golan, Kirtsaeng, Star Athletica, Aereo-- attracted many amicus filings, use in copyright casebooks, citations in law reviews, so we understand them as important. But lower courts don’t always do much with them.

Part I: Narrow interpretation cases: Aereo, Star Athletica. Aereo: volition doctrine could be on the chopping block, but the Court didn’t name it, and the Second, Fifth, and Ninth Circuits have subsequently ignored it while the dissent blessed volition (and worried about its future) and the SCT majority didn’t disagree—no impact on the volition doctrine’s development.

Star Athletica: can I draw it? Seems a very test to meet. Separability still has some teeth, in some courts, sometimes; some courts apply a low standard and some courts don’t. Courts use other filtering doctrines extensively to replace separability. This is the messiest.

Grokster: worried that SCT created an independent duty to filter. But the tech moved on and distribution models moved on. Turns out that Grokster didn’t do much. Inducement cases tend not to turn on failing to filter and looking for profit. Got filtering through business models [and suing Cox and other connection providers!]

Kirtsaeng: Court prioritized free movement of copies. But market segmentation is still here. Most © materials are distributed digitally. Second Circuit shut down secondary market in digital copies (ReDigi) and libraries too (Internet Archive). Price discrimination by right is still here nonetheless.

Eldred & Golan: No limit on Congressional power to expand copyright—but user groups got organized to press against expanding copyright in SOPA/PIPA. Legal power can exist without political power. Didn’t open floodgates to new legislation. [Though that’s perhaps b/c of point one: Congress can’t often get it together to act.]

Even most significant SCT decisions w/Ginsburg & Breyer exert only modest influence on broader trajectory of © law. Repeat players in ecosystem can bypass any disturbance to Force. © is incremental. 0.7 opinions/year can’t do much. Are we spending too much time focusing on SCT? Is this minimalism justified?

RT: Do you mean © law or © practice? You make claims about the broader trajectory of © law but a lot of your points are about © industrial relations. Likewise, effects of Star Athletica on registrations/C&Ds may be very different.

Lunney: If Grokster had come out the other way, would the market look the same today as it does or would it be radically different? I think it would be different. Eldred, likewise—if Lessig hadn’t brought the case, would there have been enough political focus to develop the political pressure against term extension?

A: sure. Maybe not overruling Sony was a message.

Lemley: maybe we’ve ignored cases we should have paid attention to—Petrella has completely reshaped copyright litigation by trolls, with big effects on substantial similarity doctrine in music cases as a consequence (as well as other things like the law developed around actors like Higbee). Fourth Estate, the registration case, has also had a big impact.

WIPIP: IP for the Larger World

Koo, De-Colonising Copyright Law

Is fair use even possible outside the US? If we want to export fair use, what is it we actually want to export? Many US academics many not think it’s the greatest idea—if we had a blank slate to redesign, what would we do?

Issues: © not fit for purpose in developing English-speaking Commonwealth countries—Caribbean, Southeast Asian. Issues with access—sometimes access is only possible through piracy. Single author doesn’t fit well with collaborative creative cultures—reggae music. Indian and African influences on Caribbean music; restricts innovation to current forms. What is considered original creation? Who is considered an author? Like US, law was traditionally imposed, but we continue to impose them on ourselves. Doesn’t reflect needs/lived realities. Cut and paste from UK or from international treaties. Lack of inclusion and lack of influence of these countries—may not even has existed as independent/as republics when these agreements were being negotiated.

TWIL (third world international law) or postcolonial approach? TWIL approach: attempt to destroy international law will seem impossible b/c of link to trade. But this framework is undemocratic and oppressive. How can the reformation take place?

Undemocratic: int’l treaties demonstrate a battle between have and have-not countries

Harms: ignores collective creative cultures, limits access to works, hamstrings innovation and cultural creative processes. Maybe not allowing students to photocopy at will, but maybe allowing museums and libraries to digitize.

Borrowing copyright concepts may simply amount to trading colonizers for imperialists.

Rosenblatt: mix of cultures in Trinidad & Tobago

A: Yes, so what does creation look like? Influence is everywhere; can be accused of infringement from other places?

RT: suggestion to leverage TRIPS?—ability to retaliate for non-IP related trade violations of the US, which are clearly going to feature strongly in the next 4 years—prior TRIPS rulings on online gambling/the US homestyle exception for small businesses allow other countries to retaliate including by suspending their IP laws w/r/t US IP. Why not allow students or libraries to photocopy US works at will?

Digital versus analog: access that is limited to countries that need it will either require strong digital walls or analog copies.

Do you think that designations of origin are better forms of IP? Madhavi Sunder/IP3

Is there a universalist end state? If so, then might want something that could be imperial/ you wouldn’t worry about being accused of infringement from outside.

A: wouldn’t necessarily be worried about a universal system if it worked well. Trinidad & Tobago is tourism-based; any system that allows more sources of investment/development would be good?

Designations of origin—not useful immediately, only if you’re known. Have a GI for a T&T steel band, but have to convince people outside that it’s worthwhile.

Irene Calboli: be provocative, go bold—don’t have to have all the details yet while you’re making the case for reform, rather than trying to mitigate.

Gebru, Cultural Appropriation as Passing Off

No authoritative definition, but common features: power imbalance, lack of understanding, harm of some sort, context matters. First mention of “cultural appropriation” in OMG Dolls case—though court didn’t like it.

Proposed taxonomy has two axes: is the symbol diffused or distinct; is the use noncommercial or commercial? Diffused: place-bound; legally recognized group; shared across different communities. Would only allow legal intervention with a commercial appropriation of a distinct symbol. Diffused and noncommercial: Justin Timberlake’s cornrows. Specific and noncommercial: Kente cloth used by congresspeople after George Floyd’s death. Diffused and commercial: Aunt Jemima. Specific and commercial: Navajo symbols used by Urban Outfitters, litigated by Navajo as TM case.

Passing off theory—extended to GI theories with “Greek Yogurt,” “Champagne,” etc.

Case studies: Jeep Cherokee. Is there collective goodwill? Yes, some signaling happening—trying to communicate meaning. Official name of the source group; distinct group w/place, centralized institutions, legal status. Easy case for framework.

Gucci’s use of turban: sacred product; market value?; other cultures have turbans, so is it unique—harder question.

Q: privileges centralized cultures—which bakes in a certain perspective. Why should we privilege that? The reason a culture is diffuse might be because of previous cultural violence, now immunized. Maybe that’s how it has to be. [The recent book by Carrie Lowry Schuettpelz, The Indian Card: Who Gets to Be Native in America is really good on this point.]

A: yes, it is a present day snapshot of what consumers think right now.

Q: then just be very transparent about that.

Buccafusco: Gucci seems like a pretty expressive company, so what’s the difference between Justin Timberlake’s dreadlocks and Gucci’s turbans? Is it just that Gucci is monetizing directly and Timberlake indirectly? Plus, there seems like there’d be a lot of food in your regulatable quadrant. Are you just reinventing GIs?

A: food might be too diffuse.

Rosenblatt: are you concerned at all with transformation? Also, what is a culture that can be appropriated? Subaltern subcultures like punks, some organized and some less so, can get appropriated.

Buccafusco, Masur, & Whalen, Measuring the Value of Distinctive Brands: Evidence from the Bordeaux Wine Market

Distinctive here means different from other marks, not well-known. Everyone agrees that branding is important. Chasse-Spleen: easier to find. Suggestive or arbitrary or fanciful but not in the “jumble of letters” sense. Question: to what extent do distinctive brand names help generate price premiums?

In many markets, we don’t see much congestion around the semantic core, and TM law keeps firms from clustering. But! The market for Bordeaux wines comes from the 18th century, when TM law wasn’t doing much work. More than 5000 unique wineries, 150 million gallons of wine, largely homogenous products: red blends of Cabernet and Merlot. Most branding choices more than a century ago. Median price is $15/bottle, but some bottles sell for $1000s/bottle. 28% of producers share a virtually identical name w/at least one other producer. 150 with LaCroix in their name, including 6 Chateau LaCroix alone.

H1: distinctively named wines will command higher prices. H2: even after controlling for wine quality. H3: price differential for distinctive names will be higher for high-quality wineries than for low-quality wineries. Scrubbed la, de, des, chateau and computed pairwise similarity scores b/t each wine name and every other wine name. Measured similarity by nearest ten neighbors.

H1 supported: highly similar wines: $13.44 expected price. Highly dissimilar: over $27.

H2: assume a rating of 90, a median good score. 21.68 versus 25.02, so the price premium persists, about 15%

H3: low rating wines, difference is $2.21; high rating, difference is $9.59 both about 200% price difference

We don’t detect meaningful distance costs, that is, being too unique—but there aren’t any Chateau XZMOXO or the like in our datasets, so we might not see that.

We detect no price benefit for low priced wines that might have gotten a boost from similarity to high-priced neighbors. “Chateau LaTour Margot” not so good.

Why don’t they switch? Tradition? A lot are owned by multinationals, so why not?

Congestion is a problem, and TM should continue to push brands away from linguistic core

We also don’t have enough variation in quality data to identify effects of investments in quality on differently named types.

Fromer: Is it possible that having a similar name decreases incentives?

A: Even among the high end there are lots of very similar names. Very hard to tell; not making causal claims.

Calboli: are there registrations?

A: probably not. Certainly not in 18th century.

Calboli: Would like to know whether logos help distinguish—crests of specific noblemen.

A: trying to pull, but there aren’t pictures in many circumstances.

Calboli: how often are there overlaps on a given menu? Distribution might differ.

A: Yes and no.

Q: does any law govern name changes? Champagne region has weird rules I know.

A: probably; also a ton of social pressure.

Calboli & Izyumenko, Role Models Matter: Surveying Gender Gap in Intellectual Property Teaching in Institutions of Higher Education

Inquiry will span US, Europe, Asia (where numbers of women are lower, especially in higher positions). Data collection and surveys.

Questions about data collection?

Mazzurco: extending the tenure clock as an issue: Women have to extend their tenure clock b/c if they take leave, they can’t write while they’re on parental leave b/c they’re taking care of a newborn; men often don’t take leave or if they do, they are able to write while they are on leave so it’s an extra benefit for them.

A: that may also affect pay.

Q: you should also ask the same questions of men to learn about whether there are differences in treatment/responses/perceptions.

WIPIP Panel 2B Copyright: Authorship, Ownership

Newman, Adoption as Authorship

Concept of being an author: personally generating all the sensory signals other humans will process as part of the work—comes into being because my mind decides to put it there and my body guides it. Certainly in authorship disputes between the person who generates the idea and the one who creates the detailed expression, the latter is favored. But then it gets more complicated. Setting up a shot versus clicking the button to take the shot: Sarony. What matters is whether you had a clear intellectual conception and you used tools to embody the expression. To be an author is to have a fully formed work in your head and transcribe it in some medium? But even that is a bad model of authorship usually. What happens is more: I generally know what I want to say, and engage in trial and error to see what I can get on paper that makes sense. It probably bears some relation to what I started with, but not identical. The fundamental act of authorship is getting to some point where you recognize some set of signals that you recognize should have communicative meaning that you adopt as a communicative act. Until adopted, it was just a set of signals; adoption makes it a communicative act. Alfred Bell’s famous dicta: defective musculature or clap of thunder can be adopted. Don’t want to limit it to only the final product you choose to publish—if you’re engaged in working, it’s inherently adoptive, whether or not that’s your final product. Jackson Pollock: if one of those, he didn’t like the result and chose to discard it, that canvas is not a work of authorship.

RT: Read Karen Gover, Art and Authority. You aren’t saying the core is adoption rather that it’s the union of conception and adoption – have to already be engaged in a process of creation, not just wandering down the beach looking for driftwood—Duchamp’s urinal, or adopting the Constitution or the Rifleman’s Creed as your own expression.

A: he does think picking up the driftwood is expressive but not eligible for copyright because it’s a preexisting fact, just like using AI and picking a result might produce expressive work that’s not created by you. [RT: then what makes your theory a theory of copyright and not a theory of art?]

Betsy Rosenblatt: introducing intent? What about private works?

A: publication isn’t important, but communicative intent is. You can adopt something as your unpublished work.

Buccafusco: you’re defining authorship, not originality. [I will note that Feist seems to conflate those two.] There are some cases of authorship that might not have originality.

Q: if you reject a bunch of photos as bad, are you an author of them?

A: you took the photos with the intent of making a work, so probably. There’s some sense in which the subsequent act of reviewing the works I’ve generated/caused to be generated and identifying which are satisfying should be regarded as important.

Q: fixation as a proxy for adoption, at least as of 1976? Compare to Hemingway common law copyright case.

Op den Kamp, First: Shifting Benchmarks in Film History, Copyright, and Archival Practices

Palmedo, Lutes, & Safner, The Demographics of Authorship in the United States

Video essay about Leland Stanford’s commissioning of Edward Muybridge to try to determine whether horses’ feet left the ground all at once during a gallop. Copyright claimed 1878 by Muybridge, but Stanford published The Horse in Motion in 1882 with Muybridge’s name left off title page, mentioned only as technical assistant. Royal Society in UK shut him out as a result. Stanford used photos as raw material, informational only.

Rosenblatt: Muybridge did achieve IP protection, just couldn’t capitalize on it as he wanted to b/c Stanford was so powerful. Is this a story about IP or about power? The power of narratives to swamp law?

Q: but was Muybridge really a lone author or was there real collaboration?

A: Stanford is able to produce witnesses who say he paid for everything even though there are no written documents—it’s about the greater tensions in his wealth (letting M live on his land for free, etc.). Though he knew for years that M was registering © and taking out patents on inventions.

Brent Lutes, Demographics of Copyright Registrations in the US

2011-2022 applications; 9 most registered types of works; registrations by individuals; using registrations per person per year by zip codes; geographic matching. When you control for education, effects of income on registration go away—so income was a proxy for education. Education also drives a lot of the racial/ethnic data. Urbanness is also important: population/housing density. 10% increase in urbanness increases copyright registrations 5.5%, not coming from numbers or income—probably an agglomeration effect. Age also matters too—older adults register more than younger adults, even controlling for education and income.

Raw correlations with racial/ethnic groups were significant; if there were educational and income equalities, the range would shift a lot, but Native Americans would still not be registering very much and multiracial groups would be registering a lot. More diverse areas are associated with more registrations, but we don’t know which way the causation flows. We also know that urbanness and diversity are correlated. Controlling for urbanness, still there’s a positive statistically significant relationship with diversity.

Karol, American Art's Little Copyright Secret: Why So Many 20th Century Artworks Are in the Public Domain and Why That Matters

Basic claim: most works were published and placed in public domain when first exhibited for sale in commercial art galleries with no notice and no restrictions on copying. We should presume, absent contrary evidence, that midcentury visual art shown in a gallery for sale is in the public domain unless the estate/foundation demonstrates otherwise. Limitations: American art before Jan. 1, 1978. So roughly 1930-1977. Example: image from an art show from a photographer who was in there—making copies—without restrictions.

Publication without notice terminated ©. Exceptions for limited publication. American Tobacco v Werckmeister 207 US 284 (1907), pre 1909: no general publication because bylaws of Academy, where work was exhibited, expressly prohibited copying.

Letter Edged in Black, ND Ill 1970: No restrictions on copying, thus work of sculpture is in public domain. Others, including state court cases, reason similarly.

But publication under the 1909 Act is notoriously outcome-driven—MLK “I Have a Dream” case example b/c courts often think that preserving © in canonical works is important.

Museums as interest groups in support which would help them digitized collections?

Courts should not worry about issues going forwards since this is only for pre-1978 works. But will publishers accept the truth?

Deborah Gerhardt: Why not go all the way to 1989, when notice was eliminated fully as a requirement? Also, it’s not just visual art! Film, other modalities.

WIPIP, UNLV: TM Protectability

Jeanne Fromer (with Beebe and Stein), An Empirical Picture of Trademark Law

We are running out of competitively effective word marks. What about images? Word marks dominate consistently over time, but numbers have increased in every category. Our definitions: images include image only, text+image, and stylized word marks. Live image marks over time keeps increasing, with a lot of text+image and a growing number of others.

Inadequacy of TM law: visual depletion and congestion; difficulty handling visual similarity in confusion analysis; difficulty handling visual distinctiveness in the sense of source identification.

Empirical questions: are we running out of visual marks? What are changes over time in classes? Applicant behavior?

2003-2023: image only, 200K office actions, image+text, 500K office actions. 79.1% of case files contain images.

Design search codes: 3 level taxonomy of 29 top level categories such as human beings, foodstuff, supernatural and other beings, and furniture; 157 second level categories, such as trees/bushes, cutlery, and bells; 1400 third-level categories, such as Dutch women. Shades of “those belonging to the Emperor.” All sorts of weird racial categories. (I wonder if this will be purged by the new administration.) Design search codes can be added by the PTO or suggested to be added/changed by applicants. Need to find more about the process, which seems quite informal.

In class 25, apparel, for all 2023 live marks, only 50 of the 1400 noncolor design search code categories are not claimed (e.g., Scotch women). Geometric figures & solids is pretty crowded, same with animals. 32 marks with images of a dove in class 25. When a word is taken, it’s taken; are these all different doves capable of coexistence? Also, image+text with image of dove is 74, and 16 word only marks.

Visual complexity: is number of design search codes per mark increasing over time? Is resort to geometric marks increasing or decreasing? Can we measure complexity with an AI model?

Likely confusion: McCarthy says there’s little in the way of guidelines to determine degree of visual similarity that causes LOC; no point in launching into long analysis, only thing to say is I know it when I see it; court case agrees.

Increasing 2(d) refusals over time—but that seems possibly to be based on text, not on the images, b/c examiners have difficulty finding similar images based on tools they have (her hypothesis)

Distinctiveness: Abercrombie for word marks, Seabrook for non-word marks. 2d Circuit continues to try to shove non-word marks into Abercrombie, but most other circuits use Seabrook. Abercrombie focuses on distinctiveness of source. Seabrook looks at distinctiveness from other marks or ornamentation—differential distinctiveness. Suggestion: we should look for both! Consider things that are generic/descriptive for the classes for which they have design codes (e.g., a carpet design code for carpets).

Jake Linford: Thinks of both Abercrombie and Seabrook as asking the same question of sending the consumer a signal of branding.

A: that may be a proxy, but they aren’t necessarily the same thing. Flowers have nothing semantically to do with apparel, but are used in fashion.

Deborah Gerhardt: it can do both, like red for strawberry flavor.

A: yes, absolutely. Just reads Seabrook differently.

Felix Wu: psychology literature on images and how much distance between images we should require—can that tell us anything?

RT: holistic v. sequential perception of images v. words.

Rachael Dixon: People do try to game the system all the time—claiming a cannabis leaf was a maple leaf, for example. There are no design codes for poop emojis.

Sari Mazzuco: There might be a lot of space for congestion if there’s a lot of thin protection, like a thinly protected stylized “O.”

A: yes, that might be a difference from words, like a bunch of text+image marks with a name + image of a rug for rugs. (I wonder if the rug image should then be disclaimed.)

Grynberg, The Paranoid Brand in American Politics

Misinformation and trust. Can marketing tell us anything useful? Not interested in specific sources like NYT, but in mindsets. Institutional trust v. cynicism. Faith in liberal institutional structures with self-correction mechanisms v. cynicism about information as power.

Marketing framework: How Brands Grow, influential book w/contested theses—brands grow by improving their mental and physical availability—does the brand come to mind when purchase is possible? Distinctivess in their model matters more than differentiation. True differentiation is hard absent IP which can create faux differentiation; consumers don’t care nearly as much about brands as marketers do. Thus distinctive brand assets, like brand names, logos, jingles etc. around which memory structures may form, are more important than actual product features. Important: category entry points—moment that product category is relevant, opportunity for brand to come to mind—marketer can target these entry points. E.g., people might eat candy when taking a break from work. Kit Kat marketing is built around “take a break.”

Any worthwhile application to information problems? Ideas as brands: “Government can’t do anything right.” What views are mentally available if there’s a line at the DMV?

Branding trust v. cynicism: “trust the science” v. “do your own research”

If differentiation isn’t so important: Both can fill the need of explaining the moment, framing read of a news source, providing a course of action, entertaining, etc. We “shop” from both mindsets. Institutions often act in a non-trustworthy way, meaning the paranoid view is sometimes correct.

Structural advantages for cynical brand: building reach is cheap: flooding the zone with shit; ease of tailoring to audience, emotion/outrage; ease of tailoring to whatever is happening; institutional supports. Decline of reported journalism and expense of real journalism. Suitability for short, high-volume consumption like social networks. Decline of gatekeepers.

What can the trust brand do? Targeting entertainment, education/civics, smoothing contacts with government like pre-filling tax forms as an anti-disinformation measure; understanding the need for volume/reach. Problem: Nuance complicates mental availability.

Does this perspective yield anything that is interesting or distinct from what’s in the ether?

Branding and the anti-democratic moment? Democratic systems are open to multiple sources of information and strong self-correction mechanisms. Populist view is that everything is about power. Closed systems are dictatorial. Populist branding activities are also organizing/control activities in an attention economy.

Q: maybe trust/cynicism isn’t the right dichotomy. Positive v. negative claims—reliability v. they’re bad is also in the marketing literature. Where is the position of rational ignorance for a consumer? Maybe now we start in a position of distrust and people look for reasons for trust, which is why Trump has fewer problems than Dukakis.

Dickson, X Doesn't Mark the Spot: When Name Changes Fail

89% of marketing emails in July 2024 still called it Twitter. Some of the most visited English language news sites in the world still use Twitter in their reporting. Other rejected name changes: The Willis Tower is still the Sears Tower; the Mario Cuomo Bridge is still the Tappan Zee; the Ronald Reagan National Airport is still National. Stadium name change rejections are also common. People are still mad about Macy’s buying Marshall Field’s and changing the name to Macy’s in 2006—protests continued to 2012 and beyond.

Why do companies change names? (1) bankruptcy/going out of business; (2) mark super racist; (3) merged/bought out; (4) poisoned/killed people; (5) terrorist group is using name of our company like mobile payment system ISIS.

Why resist? Neuroscience: stickiness, anchoring bias; nostalgia; local pride, fears of encroaching outside forces; sense of community; disapproval of person or entity related to name change.

Could companies actually retain rights to marks they haven’t been using in years based on consumers’ continuing use of these names? Public use doctrine for nicknames like Coke might help them, as in Coca-Cola v. Koke, even though Coca-Cola discouraged used of the name at the time due to cocaine connotations. Bud for Budweiser, VW Beetle got rights in Bug. Yankees got to stop “Baseball’s Evil Empire.” Even public use of VDS to refer to VCDS.

Can the public use doctrine overcome abandonment? Even when companies have actively discouraged use?

Many companies that have rebranded have managed to keep their registrations alive for years after abandonment with really sketchy/bad specimens: Twitter’s renewed in 2024; Washington football team renewed its old name with a specimen article about its past use. Marshall Field’s renewed with a picture of a sign on a building that didn’t even match the claimed mark; so too with National Airport.

Q: another reason/explanation: resentment of participating in someone else’s marketing campaign—especially if the stadium name changes every 3 years. (Also defends renewal of Washington team mark to prevent other people selling merchandise.)

RT: This set of examples is a really good illustration of Jessica Litman’s insight that we participated in creating value of TMs too. Indianapolis Colts case would say that when there’s no continuity b/t old and new marks, there’s no interest for the new owner to assert—today, I think we would consider that also in the register of Article III standing.

Linford: thinks that courts would find standing based on the idea that consumers would punish the old owner b/c the connection remains.

Irene Calboli: it’s different with X because reporters say (formerly Twitter) and that’s different from having people still carrying around Chanel bags in Russia even though Chanel no longer sells in Russia—those are different kinds of contexts that have to be recognized.

Q: contrast: what are the characteristics of name changes that do stick? How long do the changes take to stick?

Thursday, January 23, 2025

NYC loses greenwashing case against Exxon and pals

City of New York v. Exxon Mobil Corp., --- N.Y.S.3d ----, 2025 WL 209843, No. 451071/2021 (N.Y.S. Ct. Jan. 14, 2025)

Probably not the last we’ll hear about this, but the court dismissed the City’s two consumer protection claims against defendants for: (1) misrepresenting the purported environmental benefit of their fossil fuel products, and failing to disclose the attendant climate change risks of these products, and (2) engaging in false and misleading greenwashing campaigns. Previously, the courts dismissed public nuisance, private nuisance, and trespass claims as preempted. See City of New York v. BP P.L.C. et al., 325 F. Supp. 3d 466 (S.D. NY 2018), aff’d City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021). The court summarized its key holdings:

First, the City’s allegations that NYC consumers are climate conscious, yet are being misled by Defendants’ failure to disclose that fossil fuels cause climate change is not sustainable because the City propounds that the connection between fossil fuels and climate change is publicly known information. Second, the City has not sufficiently pled that Defendants’ alleged greenwashing campaigns, involving statements about clean energy and alternative energy sources, are “made in connection with the sale” of a consumer good (i.e., fossil fuel products) in NYC, as required under the CPL. The Court further determines that claims for statements that predate April 22, 2018 are time-barred.

The greenwashing allegations related to: (1) “product greenwashing” statements intended to mislead consumers as to the climate benefits of specific gasoline products without disclosing the adverse impacts of those products on the climate, and (2) “corporate greenwashing” statements intended to present Defendants as climate-friendly thereby inducing consumers to purchase their fossil fuel products. As an example of product greenwashing, BP advertises Invigorate, “an additive that BP describes on its website as better than ‘ordinary fuels’ that have problems like ‘increased emissions’.” Shell advertises the Shell Nitrogen Enriched Cleaning System and a line for its premium grade of fuel called V-Power Nitro+ Premium as “produc[ing] fewer emissions.” Exxon advertises that Synergy Diesel Efficient fuel is the “latest breakthrough technology” that helps consumers “[r]educe emissions and burn cleaner,” and “was created to let you drive cleaner, smarter and longer.” And lots more. The City argued that these statements were misleading “by emphasizing the climate-friendly benefits of the product without disclosing the material fact that the product still causes climate change despite the claims of reduced emissions.”

“New York courts have determined that where the plaintiff does not plead facts that the defendant alone possessed the purported material information, a reasonable consumer cannot have been misled.” The fossil fuel/climate change link is public, so consumers can’t have been duped by defendants’ failure to disclose.

Also, some of the alleged product greenwashing statements (I didn’t list them all) were puffery or not misleading in context, referring to keeping an engine cleaner, not the environment.  

As for the corporate greenwashing statements, they weren’t sufficiently alleged to be “made in connection with the sale ... or ... offering for sale ... of consumer goods or services.” The court thought that accepting the City’s interpretation—where brand advertising that makes consumers feel good about a seller counts—would render the “made in connection” requirement meaningless. Thus, “statements as to investments in clean energy resources, such as wind and solar, and alternative energy sources, such as LNG, hydrogen fuel cells, and biofuels,” weren’t actionable.  

The court thus didn’t reach defendants’ arguments that their statements were protected by the First Amendment. It did hold that government enforcement actions weren’t covered by the anti-SLAPP law.

Wednesday, January 22, 2025

GIGO? literal falsity and a remedy mismatch

InSinkErator LLC v. Joneca Co., No. 8:24-cv-02600-JVS-ADS, 2025 WL 250032 (C.D. Cal. Jan. 10, 2025)

InSinkErator, allegedly the world’s largest manufacturer of garbage disposals for home and commercial use (and to its shame, an entity that sued a TV show for dilution for showing a garbage disposal being used unsafely), sued its competitor Joneca for falsely advertising the horsepower of its garbage disposals and secured a preliminary injunction.

Joneca prominently claims that its garbage disposals are rated at 1/2, 3/4, 1, and 1 1/4 horsepower on its product packaging, as well as its promotional materials online and in brick-and-mortar retail stores nationwide. These garbage disposals tend to match the same horsepower advertised by InSinkErator on its disposals, but at a cheaper price. InSinkErator’s testing revealed results approximately 39% below the claimed 1 1/4 horsepower disposal, and 24% below the claimed 1 horsepower disposal; none of Joneca’s products allegedly produced the claimed horsepower.

Joneca didn’t deny the test findings, but argued that the recognized standard for garbage disposals looks only at input horsepower and not the output horsepower measured by InSinkErator. Thus, it argued that there was no falsity, because all of the tested samples met or exceeded the input-based horsepower rating.

The key question, then, was whether “horsepower” was unambiguous. If the court construed the question to be “what do consumers think ‘horsepower’ means?” maybe it would have required a consumer survey. But the court didn’t; it accepted testimony about industry standards, and thus finds literal falsity. Joneca’s expert relied on the Underwriter Laboratories compliance standard UL 430 Waste Disposers, which establishes a method for rating horsepower of garbage disposals on an input basis. But that was a safety standard, not meant to be used to measure horsepower, as confirmed by engineers at UL. The court was more persuaded by InSinkErator’s expert and sources such as the National Electrical Manufacturers Association (and others), which requires claims of horsepower on motors to be derived from the torque output by the motor. Ultimately, a court may determine literal falsity “based on its own common sense and logic interpreting the message.” See Edminston v. Jordan, 98 Civ. 3298 (DLC), 1999 WL 1072492, at *9 (S.D.N.Y. Nov. 24, 1999). “The general consensus among engineers, even if not specific to the garbage disposal industry, appears to be that horsepower is determined by mechanical output.”

InSinkErator also provided market research to show that consumers ranked horsepower as one of the top purchasing considerations for garbage disposals, as well as “retailer perspective” indicating that horsepower was “a key differentiating factor”—Lowe’s and Home Depot organize and advertise them by horsepower. “This signals that horsepower is an important—if not primary—distinction used by retailers to market to consumers.” That bolstered “the common sense impression that more horsepower means more efficiency.” Home Depot characterized higher horsepower disposals as “Heavy Duty,” and lower as “Light Duty” and said that “[t]he higher the HP, the better the disposal will run. Food waste will be ground into finer particles and you’ll have fewer jams,” while Lowe’s said that “models with higher HP motors have better sound insulation and run more quietly than basic models.”

And then, in the remedy, the court imposes only a disclaimer remedy that seems quite unlikely to work, and won’t actually correct for the misimpressions given how—as it has already explained—garbage disposals are marketed.

In setting out the injunction, the court states that “Joneca would be free to explain during retailer bids and sales presentations that its products have a certain horsepower input, or alternatively, to explain that InSinkErator’s AC induction motor design requires more output horsepower to provide the same level of performance as Joneca’s PMDC motor. Such is not a hardship, but rather the truth, as Joneca has described it.” But will it need to do so given the actual injunction?

The injunction bars “false and deceptive horsepower claims,” then says that “Any horsepower-related communications to retailers, wholesalers, or other third parties for the purposes of obtaining contracts for the sale of Joneca-made garbage disposal products will include a clear and conspicuous disclaimer stating: ‘Horsepower claimed on package does not indicate motor output or motor power applied for processing.’” But they’ll still be shelved in stores as 1 HP motors next to InSinkErator’s 1 HP motors, if I understand this correctly. (The order says Joneca can’t assist, etc. the continued display of false and deceptive claims in stores—are the general statements about HP on Lowe’s and Home Depot’s sites, or the stocking of the parties’ products side by side, encompassed in that?)  Even if the sticker is conspicuous, it seems at best contradictory with the store placement; will consumers then think that’s also true of InSinkErators? Making matters worse, if the motors on the parties’ products work differently, then they aren’t actually fully comparable just on horsepower, are they? What exactly is a consumer supposed to make of all this?

I’m left wondering: why not at least explain why the court didn’t require Joneca to label its product with what the court had just held was the only truthful measure of HP with respect to motors in this context—output?


Monday, January 20, 2025

annoyingly redacted opinion finds Block falsely advertised versus TurboTax

Intuit Inc. v. HRB Tax Gp., Inc., 2024 WL 5320392, No. 5:24-cv-00253-BLF (N.D. Cal. Dec. 3, 2024)

Intuit, which makes TurboTax and has had some advertising troubles of its own (hey, check out the IRS Free File program, for taxpayers with AGI of $84,000 or less and with many fillable forms for those with more), sued HRB (Block) for its advertising of a competing tax product, and succeeded in part.

TurboTax has three tiers: TT Do-it-yourself (DIY), Live Assisted, and Live Full Service. Live Assisted, the focus of this case, allows customers to prepare their tax returns largely independently, but it also provides “unlimited access to tax experts to help them with any questions that they may have,” among other features. (Live Full Service, by contrast, involves actually turning over all the taxpayer’s documents to a tax professional to prepare the return.)

Within TT Live Assisted, there are multiple individual products that a customer may select based “upon the level of tax complexity” of their situation. TT Live Assisted Basic might apply to a consumer with just a W-2 and no additional schedules. TT Live Assisted Deluxe is for a “slightly more complex” tax situation, e.g. “additional deductions and credits” or “mortgage interest.” Live Assisted Premium, “essentially includes all tax forms [and] schedules.” But all have tax expert assistance including “expert final review,” following a prompt asking whether the consumer wants to connect with an expert about their tax return.

Block has two tiers: Do-It-Yourself (DIY) and “File with a Tax Pro.” Within DIY, there are a further four tiers, including Free Online, Deluxe, Premium, and Self-Employed. DIY Free Online is geared toward simple tax returns and is free. DIY Deluxe is for consumers with more complex tax situations, such as those seeking to “maximiz[e] deduction and credits,” so it includes more tax forms. DIY Premium allows reporting of investment or rental income. DIY Self-Employed is for self-employed taxpayers who need to file a Schedule C.

DIY Deluxe had live expert help, artificial intelligence assistance, an automated accuracy review or error check, year-round support, and various guarantees, among other features. Separately, Block offers “Tax Pro Review” as an add-on, which allows “a DIY consumer, after they have filled out their taxes, the ability to send their tax return to a tax expert” along with their source documents, so that the tax expert can review, sign, and file the return.

Intuit challenged five of Block’s ad claims: (1) claims that Block’s products with expert and AI assistance features start at a lower price than Intuit’s products with similar features; (2) claims that Block’s paid DIY products are comparable to TurboTax Live Assisted; (3) claims that Block’s products with AI and expert assistance cost “[a]t least $54 less than TurboTax Live”; (4) claims that Intuit’s Live Full Service product “starts at” $169; and (5) claims suggesting that “5 million ‘TurboTired’ TurboTax consumers ‘switched’ to Block in 2023.”

For example, Block advertised: “Fed up with hidden fees? Make the switch to H&R Block with upfront transparent pricing.” TT challenged the middle tile’s claim that Block offered “expert help” “[s]tarting at $35” when Intuit’s “starting at” price for the same “expert help” was $0.

comparative ad

Also, relevant to claim (2), the ad compared a TurboTax Live Assisted product—Live Assisted Deluxe—with Block’s paid DIY products that don’t include a final expert review, which Intuit alleged was a material difference. TT Live and Live Assisted included guarantees that Block didn’t for its paid DIY products. Finally, Intuit, argued that Block’s products used chatbots to make it “incredibly difficult, if not impossible, to actually engage with an expert,” whereas TT didn’t.

For claim (4), Intuit dropped the price of Live Full Service to many customers at a starting price of $89, although in prior years the starting price had been $169; until it was contacted by Intuit regarding the inaccuracy, Block ran ads stating that the starting price for Intuit’s Live Full Service product was $169.

For (5), Intuit pointed to an email: “It’s Better with Block” that also included “TurboTired? Switch and save with Block” and concluded: “Join the 5 million+ who switched to Block last year.”


TurboTired/join the 5+million who switched ad

Intuit offered Professor Joel Steckel of the New York University Stern School of Business as an expert who conducted several surveys. He testified that respondents looking at Block’s home page—which displayed an advertisement similar to the challenged ads—believed that “there were at least as many features in the Block website and that the Block product costs less.” Based on another study, in combination with a review of academic literature, Dr. Steckel concluded that “Block’s conduct, which resulted in the perception of an equal or superior product at a lower price, could cause negative feelings regarding the pricing of TurboTax products and harm the TurboTax brand.” And a third study looking at the TurboTired ad led him to conclude that claims that “5 million+” people switched to using Block products “likely did influence ... consumers to switch to Block” because those consumers “would have understood that ... the 5 million-plus who switched to Block had all switched there from TurboTax.”

Block’s own expert, Hal Poret, critiqued these surveys and the related testimony, including use of controls.

Claims about expert/AI help: Intuit argued that Block “falsely claim[s] that its paid DIY products offering ‘expert’ and ‘AI’ assistance ‘starting at’ $35 were cheaper than Intuit’s product with expert and AI help.” These challenged ads were “literally false,” according to Intuit, because TurboTax Live Assisted Basic—which is free for certain customers—includes expert and AI assistance. Block responded that the point of the ad was not to compare the starting price for expert/AI assistance in any circumstance, but rather to compare Block’s DIY Deluxe product with Intuit’s TurboTax Live Assisted Deluxe product, and that the prices listed were literally true insofar as those were the products being compared.

The court found that Intuit’s reading of the ad was correct and that the ad was literally false by necessary implication. Block’s own witness testified that the bullet points listed on the relevant advertising tile pertained to various Block products, not just Block’s DIY Deluxe product: the tile mentions “[o]ptions for deductions, investors, and self-employed,” a statement that alludes to Block’s DIY Premium and DIY Self-Employed products.

Thus, it wasn’t credible that the ad was supposed to compare TurboTax Live Assisted Deluxe with Block DIY Deluxe based on “the tax situations that th[ose] product[s] cover” and “the tax forms that are available” in those products. The advertising tile clearly emphasized the availability of expert assistance—other than the $35 price, the most prominent text on the tile states “File your taxes with expert help.” And it said nothing about the specific tax forms available through Block’s DIY Deluxe product; instead, it alluded to multiple different Block products. “Block could easily have emphasized certain specific tax forms if indeed that was the basis for the price comparison, but it did not do so. Instead, it told customers about the starting price for Block’s products that include expert help. A viewer of this ad would readily recognize the ‘necessary implication’ that the TurboTax product it listed as a comparison was the lowest-priced TurboTax product with expert assistance.” The court therefore presumed actual deception as well.

The court also found likely success on materiality. (Here’s where harm causation gets tricky—since Intuit doesn’t directly benefit from anyone who uses the free product with expert assistance, and people who pay for TT because they mistakenly thought they’d get to use the free product are more accurately characterized as victims of false advertising rather than as beneficiaries, the “value” that Intuit gets here is actually at most “brand value” rather than the value of a truthful claim. We’re in a world where that’s enough, I guess.)

Steckel’s study of the ad at issue concluded that “respondents thought that there were at least as many features in the Block website and that the Block product costs less.” He also found that “price [was] extremely important,” and he also found that approximately one-third of survey respondents identified availability of tax expert assistance as important. He also summarized academic literature showing that “price comparisons ... increase[ ] the purchase likelihood of the brand making the comparison and reduce[ ] consumers’ intent to search for more information.” “In combination, Dr. Steckel’s findings support his conclusion that claims that tax expert assistance is available starting at a lower price through Block’s products are likely to affect consumer purchasing decisions, since a significant number of consumers are interested in expert assistance and a significant number of consumers also care strongly about the price of the product they select.”

Block’s critiques were insufficient; Poret primarily challenged the lack of a proper control group, which went primarily went to misleadingness/deception. And even without a proper control, the court wasn’t “persuaded that it should ignore Dr. Steckel’s finding that 25 percent of respondents who viewed the original advertisement thought it showed that Block’s products included comparable or more features than the comparator product.”

The court also found likely injury to Intuit, applying a presumption of injury when there’s direct competition and a tendency to mislead, as well as testimony of Intuit’s Director of Marketing Strategy of her belief  that the ads “absolutely were harmful” to Intuit, in the form of both reputational harm and economic harm and Steckel’s testimony that “Block’s conduct, which resulted in the perception of an equal or superior product at a lower price, could cause negative feelings regarding the pricing of TurboTax products and harm the TurboTax brand” and conclusions from the academic literature that “price comparisons ... increase[ ] the purchase likelihood of the brand making the comparison and reduce[ ] consumers’ intent to search for more information.”

To the extent Block was enjoined from claiming that expert and AI assistance “starts at” a lower price with Block than with Intuit, Block would likewise be barred from claiming that expert and AI assistance costs at least $54 less with Block than with Intuit, given that Intuit provides expert and AI assistance for free through TurboTax Live Assisted Basic, so such assistance is actually available for less with Intuit than with Block.

What about the claims comparing Block’s paid DIY products with TT Live Assisted? Intuit identified several putative material differences: (1) although both companies’ products offer “as-you-go” expert assistance, only TurboTax Live Assisted has the additional “expert final review” feature without additional cost; (2) this also allows a free upgrade for an expert to prepare, sign, and file the review; (3) TurboTax Live Assisted includes a guarantee that consumers will be reimbursed for any penalties assessed due to errors made by the tax expert who assisted the Live Assisted consumer; (4) TT’s access to live experts is easier.

Block argued that comparing the two was not misleading and that these putative differences were marketing gimmicks that weren’t significantly different; the vast majority of TT Live Assisted consumers, it said, didn’t get an expert final review, since they must take proactive steps to prompt the review process.

Lanham Act case law accepts an apples-to-oranges theory of falsity for comparative advertising when an ad “omits differences which would have been material to recipients.” The court found that Intuit’s feature was genuinely different from Block’s on expert final review, citing some redacted evidence. Its tools “enable Intuit’s experts to proactively identify any overarching concerns about consumers’ prepared returns.” Although both companies’ products permit unlimited question-and-answer with live experts, at the end of the process, an Intuit customer can request a final review in which the expert conducting the review proactively looks for issues and uses unique tools to help target any such issues. Block doesn’t have that “proactive” feature for its paid DIY products.

In addition, TT Live Assisted permits a tax expert to “complete, sign, and file” a consumer’s return on their behalf, while a Block consumer looking for a similar sign-and-file service must “pay the add-on fee for Tax Pro Review.” Although this free upgrade occurs in only a “tiny fraction” of cases (again, redacted), the court found that this was also a genuine difference.  However, the argued ease of access to expert assistance was not shown to be a genuine difference. Both products included “as-you-go” assistance from experts that can be reached using a “help button” from virtually any page of the tax preparation software experience. Both had live help via web chat, phone call, or screen share. Although Block’s web chat uses an “AI Assistant” to ask an initial set of questions before connecting a consumer to a live expert, the court was persuaded Block’s evidence and arguments showing that the exchange with the AI assistant was quite brief. And although some Block experts are located in India, they receive the same training and interact with consumers the same way regardless of their location.

Finally, Intuit’s argument that the parties’ guarantees were meaningfully different was mistaken.  

So, were expert final review and/or free sign-and-file used in a “tiny fraction” of cases material? The court indicated that materiality could be assessed in two ways: whether the omitted information was “ ‘likely to influence the purchasing decision’ of consumers,” generally demonstrated through use of consumer surveys, or whether “the defendants misrepresented an inherent quality or characteristic of the product.” While the “inherent qualit[ies] or characteristic[s]” of a product may sometimes be self-explanatory, any doubts as to what counts as “the very nature” of the product “must be addressed by evidence of why a consumer sought out a given product—i.e., the primary purpose(s) that drove their consumption activity.”

Expert final review was neither an “inherent quality or characteristic” of Live Assisted nor a “key product feature” going to “the very nature” of an online tax preparation product, unlike the way that “the amount of beef in a burger is an inherent quality or characteristic of a burger.” Evidence that a redacted percentage of Live Assisted consumers take advantage of the expert final review feature didn’t help. [Hmph.] “The Court is skeptical that a feature that must be affirmatively invoked—and if not invoked, is not experienced by the consumer—counts as part of ‘the very nature’ of a product.” There was no other evidence that the prospect of such review drove consumption. Evidence that consumers who used expert final review really liked it did not mean it was material to a purchase decision. Nor did Steckel study expert final review specifically. “[I]t is possible that consumers do not see a difference in value between the type of expert final review offered by Intuit and the as-you-go expert assistance offered by a live expert through either party’s products.” For the extraordinary remedy of a preliminary injunction, this was insufficient.

Similar problems hampered Intuit’s showing on the materiality of the free sign and file service, especially since Intuit doesn’t widely advertise this service, which requires “dig[ging] deep enough” online to even know that such an upgrade is available and “the fraction of individuals who are upgraded in this way is vanishingly slim.”

Claims that over five million consumers switched to Block, when only redacted [ugh!] did: Intuit argued that 5 million was the total number of new Block customers. Block added a disclaimer to that effect on its website after Intuit filed suit, but Intuit argued that it was insufficient. Block also argued that it discontinued any combination of this claim with the “TurboTax switcher” message so the claim was moot. The court disagreed, because voluntary cessation doesn’t moot a claim unless there’s no reasonable expectation that the wrong will be repeated. Here, Block only added a disclosure after the TRO hearing and that was just an asterisk linked to small text at the bottom of the page, not directly below the claim.

The court found likely success on falsity. The ad at issue necessarily implied that over 5 million people switched from Intuit to Block. The phrases “TurboTired? Switch and save with Block,” “Switch from TurboTax® now,” and “Join the 5 million+ who switched to Block last year” all appeared in the same content box within the email. Plus, even if it weren’t false by necessary implication, Steckel’s survey showed likely deception in more than 50% of respondents; even with the disclaimer language in the body of the email, Steckel found that 47 percent of respondents still came to the same conclusion.

Poret critiqued the survey by arguing that TurboTax and H&R Block are the “dominant names” in the field of online tax preparation, so people would just guess they’d switched from TT. But “Block has offered no case law supporting Mr. Poret’s conclusion that a net deception measurement of ‘10 to 20 percent or higher’ is necessary to show ‘enough evidence that an ad is misleading.’” Then there are redactions that make the discussion hard to comprehend, but seem to have something to do with Block’s intent. “In other words, Block itself has created relevant ‘noise’ that may lead respondents to believe the ‘5 million+’ switched language refers to people switching from TurboTax specifically, regardless of whether the specific iteration of the advertisement the respondents review says anything about TurboTax.”

Anyway, the court found that the ad was false, without need of a “net deception baseline (or a specific quantitative value thereof),” as informed by the court’s own “experience and understanding of human nature.” While the materiality burden was high, for a preliminary injunction, “Intuit has a slightly more forgiving burden for proving actual or likely deception.” Steckel’s testimony met this burden. “That a large portion of respondents were also confused by Dr. Steckel’s control version of the email does not change the fact that many viewers of Block’s advertising claim came away from it with the wrong conclusion.” [It just means the control also was deceptive!]

Materiality/injury: Block’s own redacted internal materials supported materiality. [What were they????] “Block clearly believes that advertising about switching to Block has in past years successfully encouraged consumers to make such a switch.”

Claims that TT Live Full Service started at $169: Intuit argued that Full Service was available at $89 to a redacted [!!] percentage of customers as “test pricing.” Block argued that its pricing team checked TT’s website and saw the $169 price and had no reason to believe that Intuit would change its prices in January. Block contended that it couldn’t be held liable “if Intuit is posting two different prices online” without disclosing that prices may differ in certain test markets.

Although false advertising is nominally strict liability, and although the strength of this argument as a matter of consumer protection is very hard to evaluate given the redaction (if the test pricing was available to 2% I’d feel very differently than if it was available to 75% of customers), the court was attracted to the mootness argument here to avoid the issue. Block’s witness testified that a Block manager checked Intuit’s website every day to validate the $169 comparison price. When Block was contacted by Intuit’s team about the $89 price, Block “put a process in place to update that content and correct the mistake on [Block’s] site,” and Block represented that it does not plan to run ads using an inaccurate starting price for TurboTax Live Full Service in the future. There were no circumstances “raising the specter of gamesmanship” here; this was just a mistake that had been addressed, and the court denied the request for an injunction as moot.  

For the claims that survived the other factors, there was a presumption of irreparable harm, which Block didn’t rebut, and “[e]vidence of threatened loss of prospective customers or goodwill certainly supports a finding of the possibility of irreparable harm.” Plus there was Steckel’s testimony that “Block’s conduct, which resulted in the perception of an equal or superior product at a lower price, could cause negative feelings regarding the pricing of TurboTax products and harm the TurboTax brand” and could “influence ... consumers to switch to Block.” Thus, Intuit was entitled to an injunction against Block ads (1) suggesting that the “starting” price for expert and artificial intelligence assistance is lower with Block’s products than with Intuit’s products, and (2) placing language about “5 million+” people having switched to Block in proximity to language about switching from TurboTax or other language inviting the inference that all 5 million+ people switched to Block’s products from Intuit’s products.