Eyes on the fair use prize: TV news clip service is fair

Fox News Network, LLC v. TVEyes, Inc, No. 13 Civ. 5315 (S.D.N.Y. Sept. 9, 2014)

See if you can tell how this case will come out from reading a chunk of the first sentence: TVEyes “monitors and records all content broadcast by more than 1,400 television and radio stations twenty-four hours per day, seven days per week, and transforms the content into a searchable database for its subscribers.”  Subscribers use search terms to find out “when, where, and how those search terms have been used, and obtain transcripts and video clips of the portions of the television show that used the search term.  TVEyes serves a world that is as much interested in what the television commentators say, as in the news they report.”  Fox sued.

The court found that, with the exception of certain features, TVEyes was entitled to summary judgment on its fair use defense.  The court also declined to keep any material on which it relied confidential.  “The interest of the public in the full basis of the fair use defense outweighs any interest in confidentiality.”

TVEyes’ subscribers use the service to track news coverage of particular events.  TVEyes is available only to businesses (or similar entities), not to the public. Subscribers include the United States Army and Marines, the White House, “numerous members” of the United States Congress, the Department of Defense, the United States House Committee on the Budget, the Associated Press, MSNBC, Reuters, the American Red Cross, AARP, Bloomberg, Cantor Fitzgerald, Goldman Sachs, ABC Television Group, CBS Television Network, the Association of Trial Lawyers, the judge’s former law firm Stroock & Stroock & Lavan, and local and state police departments. 

What do they do with this service?  “[P]olice departments use TVEyes to track television coverage of public safety messages across different stations and locations, and to adjust outreach efforts accordingly.”  Without TVEyes, the only way the police departments could do that would be to have individuals watching every news program 24/7, taking notes.  “An Internet search of a recent amber alert for a missing child, for example, would not yield the same results as would a TVEyes search result, because using the internet search results would provide only the segments of content that the television networks made available to the Internet.”  TVEyes, by contrast, is reliable and authoritative.

Subscribers have Watch List Pages, which monitor the subscriber’s chosen keywords and terms and organize search results by day (for 32 days).  A user can also run a Google News search on the Watch List Page for comparison.  Subscribers can tabulate a term’s use in a customized time period and compare its relative frequency to other terms.  They can set up email alerts and be notified 1-5 minutes after the keyword or term is mentioned on any of the 1,400 television and radio stations TVEyes monitors.  Subscribers get “a thumbnail image of the show, a snippet of transcript, and a short video clip beginning 14 seconds before the word was used.” 

Subscribers who click on a link showing how many times a term was mentioned on a particular day get a Results List Page, which displays each mention of the keyword or term in reverse chronological order, with a portion of transcript highlighting the keyword and a thumbnail image of the particular show that used the term. Clicking the thumbnail makes the short video clip play alongside the transcript on the Transcript Page, beginning 14 seconds before the keyword is mentioned.  The Transcript page provides program title, day/time of the clip, a transcript, the name and location of the channel, Nielsen Ratings data for the clip, the publicity value of the clip according to data from a television research company, and an address for the website of the channel that features the program or for the program itself if it exists.

TVEyes also creates pages that present the data in different ways: The Media Stats page provides a graphic showing the number of times a term has been mentioned over a given time period.

The Marketshare page displays a “heatmap” graphic that shows the geographic locations where the term is most used, and the frequency of the mentions. The Broadcast Network page generates a pie chart depicting the breakdown of broadcast stations on which the watch term was used. TVEyes also features a Power Search tool that allows users to run ad-hoc keyword search queries; clicking the thumbnail image will bring the user to the clip’s corresponding transcript page. Subscribers also can organize searches according to dates and times, by broadcast. The “Date and Time Search” feature enables subscribers to play a video clip starting at a specific time and date on a specific television station, rather than entering a search term.

As for subscribers, they can save and download an unlimited number of clips.  But the clips can only be ten minutes, and most are under two minutes.  A subscriber can email a link to the clip from the TVEyes website to anyone, whether or not they’re a subscriber.  Of course, once the user has downloaded a clip, she can share it with anyone (a result the court rather puzzlingly describes as the ability to share the clip or a link to it “on any and all social media platforms and by email”); links also go to TVEyes’ website and allow recipients to watch the video in HD.  After 32 days, the clip disappears from TVEyes unless saved or downloaded by a user.

All subscribers must sign a contract limiting use of clips to internal purposes, and a notice reminding users of the limits appears with every download.  When people ask how to get rights to post clips publicly, TVEyes refers them to the broadcaster.  It recently added a feature to block users from trying to play more than 25 minutes of sequential content from a single station.

Subscribers pay $500/month, more than the cost of cable service, earning TVEyes more than $8 million in revenue in 2013.  Its marketing touts users’ ability to “watch live TV, 24/7;” “monitor Breaking News;” “download unlimited clips” of television programming in HD; play unlimited clips from television broadcasts, “email unlimited clips to unlimited recipients”; “post an unlimited number of clips” to social media; and enjoy “unlimited storage [of clips] on TVEyes servers,” which gives it advantages over “the traditional clipping services.”  TVEyes also advertises that subscribers can edit unlimited radio and television clips and download edited clips. It states that Media Snapshot feature “allows you to watch live-streams of everything we are recording. This is great for Crisis Communications, monitoring Breaking News, as well as for Press Conferences.”

Fox spends a lot on producing news.  It makes about 16% of its television broadcast content available online, “and is concerned that a broader dissemination beyond that will result in a weakening of its viewer-base or create a substitute for viewing Fox News on television cable and satellite.” Its online clips show up within an hour of airing, but they don’t show exactly what aired—the news ticker is absent, and sometimes the clips are “corrected” versions of stories rather than the aired version. 

Monetization: Fox shows pre-reel ads before clips on its sites to make money, and also lets visitors search its video clips by keywod and share links to video (by copying and pasting) on social media. Visitors can’t download clips.  Fox further licenses third party websites, including Yahoo!, Hulu, and YouTube, to host video clips, for about $1 million in the past three years. “Fox News licensees must covenant that they will not show the clips in a way that is derogatory or critical of Fox News.”  (Insert your own joke about that.)  In addition, Fox distributes clips through its clip licensing agent, ITN Source, which allows companies and governmental organizations to use over 80,000 Fox clips in many ways, including posting them on a website “or social media platform” or to create digital archives.  This has made Fox about $2 million in licensing fees.  ITN’s partner Executive Interviews markets copies of video clips to Fox guests. However, the vast majority of Fox News revenues comes from cable fees. 

Here, Fox didn’t dispute TVEyes’ use of its broadcasts to create an analytical database. Instead, it sued over TVEyes’ provision of subscribers with video clips.

The use was transformative.  “Transformation almost always occurs when the new work

does something more than repackage or republish the original copyrighted work.’”  Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014).  And transformation can occur without physical alterations to the original. Swatch Group Mgmt. Servs. v. Bloomberg LP, 2014 WL 2219162 (2d Cir. May 30, 2014). 

Against HathiTrust and Authors Guild v. Google, Fox pointed to Nihon Keizai Shimbun, inc. v. Comline Business Data, Inc., 166 F.3d 65 (2d Cir. 1999) (ruling that abstracts and rough translations of Japanese copyrighted content were not transformative), Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104 (2d Cir. 1998) (allowing dial-in subscribers to listen to live radio over the phone wasn’t fair use), and Associated Press v. Meltwater US Holdings, Inc., 931 F. Supp. 2d 537 (S.D.N.Y. 2013) (news monitoring service that downloaded articles from the internet and allowed keyword searching was not transformative because it “uses its computer programs to automatically capture and republish designated segments of text from news articles, without adding any commentary or insight in its New Reports.”). 

Meltwater was the only case in which the defendants weren’t just “copying the plaintiff s work and then selling it for the very same purpose as plaintiff,” a quintessential infringement situation that shed little light on the present dispute.  Meltwater acknowledged that allowing users “to sift through the deluge of data available through the Internet and to direct them to the original source … would appear to be a transformative purpose.” But Meltwater didn’t offer “evidence that Meltwater News customers actually use[d] its service to improve their access to the underlying news stories that are excerpted in its news feed,” and thus failed to show that its service was actually used by subscribers for research or to transform the original news story into a datapoint that told a broader story about the overall news reporting industry.  

TVEyes was different, because video was different:  Print is “fixed in form” and readily available from publishing sources and archives.  A clipping service thus “provides essentially the same service as could be provided by the content provider itself.” But TVEyes’ search results provide a combination of visuals and text in a way that makes the commentary in the clips news itself.  “The focus of certain programs and talk shows on President Obama’s recent golf vacation, for example, was as much the news as the beheading of an American reporter.” In addition, the actual images and sounds “are as important as the news information itself –the tone of voice, arch of an eyebrow, or upturn of a lip can color the entire story, powerfully modifying the content.”  TVEyes’ indexing and collection of video allows subscribers to do more than categorize content—it allows them access to “information [that] may be just as valuable to [subscribers] as the [content], since a speaker’s demeanor, tone, and cadence can often elucidate his or her true beliefs far beyond what a stale transcript or summary can show” (Swatch).  So, “[u]nlike the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative.”

And none of that was really necessary to the next step, since it’s also true of text: “By indexing and excerpting all content appearing in television, every hour of the day and every day of the week, month, and year, TVEyes provides a service that no content provider provides.” By its nature, TVEyes doesn’t report on the news. It gives subscribers access to how the news is reported.  Meltwater, by contrast, “aggregated content already available to the individual user who was willing to perform enough searches and cull enough results on the Internet.”  (So would the individual user infringe?  Unless the individual user’s purpose there is the same as the content provider’s, which seems implausible, the individual user also has a different purpose than the source, and that wouldn’t change when a third party helped.)  TVEyes was the only source for a database of everything that TV channels broadcast 24/7.  It wasn’t all on the internet.  TVEyes brought it together made it searchable.  “That, in and of itself, makes TVEyes’ purpose transformative  and different in kind from Meltwater’s, which simply amalgamated extant content that a dedicated researcher could piece together with enough time, effort, and Internet searches.”  (These attempts to distinguish Meltwater are strained, but then Meltwater didn’t have the benefit of HathiTrust.)

Plus, the clips were important to provide “the full spectrum of information identified by an index, for the excerpt discloses, not only what was said, but also how it was said, with subtext body language, tone of voice, and facial expression –all crucial aspects of the presentation of, and commentary on, the news.”  Fox contended that a TVEyes subscriber could watch sequential 10-minute clips end to end, seeing all of Fox’s programs 2-5 minutes after airing.  This was unrealistic, given the cost and trouble. 

Ultimately, TVEyes’ search engine and display of result clips was transformative, serving a new and different function from the original. TVEyes’ message, “‘this is what they said’ -is a very different message from [Fox News’] –‘this is what you should [know or] believe’” (Swatch).  TVEyes’ evidence that its subscribers used the service for “research, criticism, and comment,” was undisputed, and these purposes are favored explicitly in §107’s preamble, making them weigh in favor of fair use.

I’m going to rush past what you all know about the effect of TVEyes’ commerciality, the nature of the work (greater scope for fair use because the news is factual), and the amount taken (no more than necessary for the purpose, since its value and reliability depends on being all-inclusive), given the transformativeness finding.  The court still said the third factor didn’t weigh for either side, though it seems that means “helps TVEyes,” “since ‘the extent of permissible copying varies with the purpose and character of the use,’ and TVEyes’ service requires complete copying twenty-four hours a day, seven days a week.”

Market harm must come from substitution, not from transformative markets.  Fox argued that TVEyes’ service decreased the per-subscriber fees advertisers, cable providers, and satellite providers were willing to pay by allowing people to watch copies on TVEyes.  But that assumed substitution, and the facts contradicted this speculation.

While the 19 programs in suit were available, only 560 clips were played, with an average length of play of 53.4 seconds and a maximum of 362 seconds or just over 6 minutes. “85.5% of the clips that were played were played for less than one minute; 76% were played for less than 30 seconds; and 51% were played for less than 10 seconds.” One program wasn’t excerpted at all.  TVEyes’ general statistics were consistent with these specifics:

From 2003 to 2014, only 5.6% of all TVEyes users have ever seen any Fox News content on TVEyes. Between March 31, 2003 and December 31, 2013, in only three instances did a TVEyes subscriber access 30 minutes or more of any sequential content on FNC, and no TVEyes subscriber ever accessed any sequential content on FBN. Not one of the works in suit was ever accessed to watch clips sequentially.

Thus Fox failed to show that TVEyes caused, or was likely to cause, any adverse effect to Fox News’ revenues or income from advertisers or cable or satellite providers.  More generally, in a typical month, “fewer than 1% of TVEyes’ users play a video clip that resulted from a keyword search of its watch terms.”  They play clips on average for 41 seconds, with a median duration of 12 seconds.  “95% of all video clips played on TVEyes are three minutes or shorter; 91% are two minutes or shorter; and 82% are a minute or shorter. Fewer than .08% of clips are ever played for the maximum clip time of ten minutes.”  Moreover, most clips come from keyword search; “fewer than 5.5% of all plays originate from a Date and Time Search.”   “No reasonable juror could find that people are using TVEyes as a substitute for watching Fox News broadcasts on television. There is no history of any such use, and there is no realistic danger of any potential harm to the overall market of television watching from an ‘unrestricted and widespread conduct of the sort engaged in by defendant.’”

What about the derivative market for video clips with YouTube, ITN Source, etc.?  Fox couldn’t show any lost customers from Executive Interviews (the closest match).  And its entire revenue over one year was $212,145 from syndication partners and $246,875 from clip licensing, “a very small fraction of its overall revenue.”  Given this small possible impact, any cognizable harm was outweighed by the public benefit of TVEyes’ service.

Turning to that public benefit: “Without TVEyes, there is no other way to sift through more than 27,000 hours of programming broadcast on television daily, most of which is not available online or anywhere else, to track and discover information.”  Subscribers use the service to “comment on and criticize broadcast news channels”:

Government bodies use it to monitor the accuracy of facts reported by the media so they can make timely corrections when necessary. Political campaigns use it to monitor political advertising and appearances of candidates in election years.  Financial firms use it to track and archive public statements made by their employees for regulatory compliance.  The White House uses TVEyes to evaluate news stories and give feedback to the press corps.  The United States Army uses TVEyes to track media coverage of military operations in remote locations, to ensure national security and the safety of American troops.  Journalists use TVEyes to research, report on, compare, and criticize broadcast news coverage.  Elected officials use TVEyes to confirm the accuracy of information reported on the news and seek timely corrections of misinformation.

This provided substantial benefit to the public.  Subject to possible exceptions discussed below, “this factor does not weigh against a finding of fair use, especially when the de minimis nature of any possible competition is considered in comparison to the substantial public service TVEyes provides.”  

Weighing the factors, TVEyes’ service had an entirely different purpose and function than the original broadcasts. “TVEyes captures and indexes broadcasts that otherwise would be largely unavailable once they aired.”  (Preservation as transformative purpose!)  Users’ purposes were also different: “monitoring television is simply not the same as watching it.” 

However, TVEyes didn’t receive summary judgment on all parts of its service.  For the portion of the service that allowed subscribers to save, archive, download, email, and share clips of television programs, the parties didn’t provide sufficient evidence showing these features’ relationship to the transformative purpose of indexing and providing clips and snippets, or instead “threatening to Fox News’ derivative businesses.”  Nor were the parties entitled to summary judgment on “whether the date and time search function was integral to the transformative purpose of TVEyes.  “While the evidence shows that this feature does not pose any threat of market harm to Fox News, the record fails to show that it is crucial or integral to TVEyes’ transformative purpose.”  (Feature by feature fair use litigation has the potential to get pretty ugly.)

The court then dismissed Fox’s hot news misappropriation claim.  Is there any extra element here that would allow it to survive §301 preemption?  Fox argued that the extra element was the free riding, as in INS v. AP. But for these purposes, the term “free-riding” means “taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and ... appropriating it and selling it as the [defendant’s] own ...” (Barclays Capital, Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876 (2d Cir. 2011)).

Barclays found a similar claim preempted.  There, the aggregator defendants weren’t free riding, but collating and disseminating information: plaintiff and others’ financial recommendations, which were news, and attributing the recommendations to their sources. “Similarly, TVEyes is not a valuable service because its subscribers credit it as a reliable news outlet, it is valuable because it reports what the news outlets and commentators are saying and therefore does not ‘scoop’ or free-ride on the news services.”  (Still have no idea what the extra element could be for hot news, but ok.)

A generalized state law misappropriation claim also failed. Such a claim must be “grounded in either deception or appropriation of the exclusive property of the plaintiff.” Thus, it was preempted by §301.  Fox argued that bad faith was an extra element, but it’s not, since bad faith alters the action’s scope but not its nature.

press release announcing patent/misappropriation lawsuit might violate Lanham Act

United Services Auto. Ass’n v. Mitek Systems, Inc., 2013 WL 652420 (W.D. Tex.) (magistrate judge)

USAA moved to dismiss Mitek’s false advertising counterclaim and strike its claims of bad faith; the magistrate judge recommended denying these motions.  USAA provides various financial services, and alleged that in 2005 it invented a method for consumers to remotely deposit financial documents. It filed patent applications for this invention, and chose Mitek as the software vendor for software to read the numbers on checks.  USAA allegedly disclosed the invention to Mitek subject to a confidentiality agreement.  In 2008, allegedly unbeknownst to USAA, Mitek filed a provisional patent application, reciting a claim to a similar invention.  In 2012, Mitek began telling USAA that it was infringing on Mitek’s patents.  USAA sued for a declaratory judgment of nonfringement/invalidity/etc. 

Mitek alleged that USAA violated the Lanham Act by accusing Mitek of conducting its commercial activities in an unethical manner.  USAA’s press release, “USAA files Suit Against Mitek Systems, Inc.,” states:

USAA has filed suit against Mitek Systems, Inc. for misappropriation of USAA's proprietary information, breach of contract, and fraud, among other claims.

USAA spokesman Paul Berry says, "USAA invented remote deposit capture technology to meet the needs of our highly mobile military membership, enabling them to deposit checks with a scanner or smartphone wherever they may be stationed. USAA has invested substantial time and money in the development and implementation of an invention which has revolutionized the banking industry."

"Mitek misappropriated USAA's proprietary and confidential information while working under contract for USAA, and then took numerous steps to claim it as its own,” says Berry. “USAA filed this lawsuit to protect USAA members and our Association."

The magistrate judge concluded that this was commercial advertising or promotion.  It was widely disseminated and promoted USAA by claiming that USAA developed an invention that has “revolutionized the banking industry,” and that USAA is looking out for its members and filed the suit to “protect” them.  Such statements “go well beyond describing the allegations in a lawsuit and arguably involve an attempt to influence customers to buy USAA's goods and services.”  USAA argued that it was simply identifying its allegations, but the press release didn’t specify its allegations or say that USAA was giving its “beliefs, opinions or views." Instead, the press release presented its contents as factual statements "and, by suggesting that it was protecting its customers in filing suit, USAA intimates that Mitek's products and/or services are somehow unsafe or untrustworthy.”  (At a minimum, this conclusion seems in tension with the law surrounding Lanham Act claims based on statements made about pending patent lawsuits, though that’s not a “commercial advertising or promotion” problem.)

USAA then argued that it wasn’t in competition with Mitek.  The magistrate judge found sufficient competition: “both companies have apparently sought to develop and implement a product to designed to enable mobile banking.”  USAA targets individual customers while Mitek targets banks as potential users/licensees, but that “hardly [made] a difference; the parties clearly are both vying for use of the same technology with the intent of selling this product and/or service to its customers” (emphasis added).

USAA also argued that it wasn’t trying to influence customers with the press release.  (Whose customers?  This might bear on the “competition” question, though I also think that the fact that one company has integrated production and one supplies just one component of the overall experience is relevant and might be enough to justify a finding of competition under some circumstances.)  Mitek, though, argued that USAA’s claims jeopardized its well-earned reputation (with whom? Mitek’s customers or USAA’s customers?).  The magistrate judge concluded that the press release could be understood “to influence customers to continue or commence business with USAA.”

The magistrate judge also concluded that the statements alleging misappropriation of confidential information concerned the nature/characteristics/qualities of Mitek’s services or commercial activities.

USAA then argued that it accurately described its allegations.  But the press release suggested that Mitek’s actions were unethical and that customers needed “protection.”  “These statements go well beyond merely describing the allegations in the complaint and arguably convey a false impression of Mitek's goods and/or services, providing USAA with an unfair advantage in the marketplace.”  (The marketplace for what?)

Online publication protected by first sale? or just fair use?

Stevo Design, Inc., v  SBR Marketing Ltd., 11-CV-00304 (D. Nev. Jan. 25, 2013)

Stevo sued SBR, mostly for copyright and trademark infringement. The court initially dismissed the complaint for lack of extraterritorial jurisdiction, but reversed itself on a Rule 59(e) motion and dismissed the complaint on other grounds.  Stevo sells pay per view and subscriptions to access “electronically-distributed sports betting reports, including compiled sports handicapping information.”  SBR, a foreign corporation with its principal place of business in Costa Rica, operates sbrforum.com, which publishes sports betting and handicapping information. Its message board allows users to post messages related to sports betting and handicapping.  Defendant Daniele, a Virginia resident, uses SBR.  SBR encourages visits through “loyalty points,” which are awarded for logging on and for contributing content to the message board.  Extra points are available for well-thought-out “original” content.  Users can also give each other loyalty points.  Loyalty points may be redeemed for credits at offshore gambling websites, and they’re even redeemable for cash as long as they’re gambled with first.

Stevo’s complaint alleged 65 causes of action, including trademark infringement, copyright infringement, and Florida and Nevada state law claims based on the unlicensed publication of Stevo’s works.  For example, Daniele allegedly purchased sports analysis from Stevo and then posted it on the message board.

The court initally dismissed the complaint for want of subject matter jurisdiction because the copyright and trademark laws lack extraterritorial force.  It revised its opinion because Stevo identified a US user who uploaded reports.  On reconsideration, the court determined that it had the power to hear the case, but that the claims weren’t properly pleaded.

On copyright, plaintiffs’ inconsistent copyright ownership allegations failed to state a claim: it alternately alleged that it owned the copyrights and that its websites did, and a parent may not assert the intellectual property rights of its subsidiary in a copyright infringement action. Had ownership been properly pleaded, the court observed, the claims would likely be within the reach of the Copyright Act, as the Lanham Act claims were.

Turning to the Lanham Act claims, the court found that it had subject matter jurisdiction because Stevo successfully pleaded that the actual or intended recipients of the alleged infringing acts were in the US.  “SBR’s U.S.-centric  content--English-language analysis of American professional and collegiate sports--supports the  notion that the SBR website’s ‘intended audience’ was United States consumers.”  Plus, the complaint alleged that at least one member of the actual audience came from Virginia.

However, the court found that the first sale doctrine protected the uses here.  (Oh, dear.  While this is Stevo’s fault for trying to turn its copyright claim into a trademark claim, the first sale doctrine doesn’t actually protect against copying.  Fortunately, the court gets it right immediately thereafter.)  Under first sale, a reseller who doesn’t materially change goods isn’t an infringer.  The court found that the same went for service marks, “at least where the service can be sold and resold without change to its ‘nature, quality, and genuineness,’” citing Tumblebus Inc. v. Cranmer,  399 F.3d 754 (6th Cir. 2005).  (This case doesn’t seem to stand for that proposition as I read it, though a ticket reseller should succeed under first sale, and we should also perhaps conceive of the information here as a “good” rather than a service given how it’s being used—the court is certainly correct that the thing of value, the information, isn’t being changed; indeed, that is the gravamen of Stevo’s complaint, and the court identifies the doctrine as applying to the “handicapping reports,” not the service of providing reports.  While first sale isn’t right here, this does raise the point that one should not be able to evade the first sale doctrine by claiming infringement of a service mark for the service of selling the branded goods.)

Anyway, Stevo’s alleged marks were the proper names of its sports analysts.  SBR users allegedly bought “trademarked” sports analysis from Stevo and then resold it or gave it away on SBR’s message board, usually repeating the analysis verbatim.  These acts weren’t infringements. 

Stevo argued that SBR’s publication created initial interest confusion as to the legitimate source of the handicapping reports; they argued that an exception to first sale applied to use of a trademark that causes the public to believe that the reseller is an authorized seller or franchisee. This was based on Stevo’s loss in the organic Googlefight: “a search for Stevo’s marks plus the word ‘picks’ (i.e., ‘Steve  Budin picks’) returns results in which SBR’s website is ranked higher than any of Stevo’s.”  That wasn’t enough to trigger an exception to first sale.  Among other things, the complaint identified comments critical of Stevo’s analysts on the SBR message board, making confusion as to authorization or sponsorship “incredible.”  Nor could the complaint be read to allege that SBR used Stevo’s marks in its ads or that it held itself out has having special access to Stevo. 

Stevo did allege that SBR advertised that visitors could obtain PPV sports analysis for free, but it didn’t offer any factual support, and also that wouldn’t create the type of confusion required to defeat first sale.  “Consumers would need to believe that a Stevo-authorized retailer provided for free what Stevo itself charged for. In context, therefore, it is implausible that such advertisements create the impression that SBR is an authorized retailer of Stevo’s services.”  Also, there was no allegation of search engine manipulation by keyword buys or metadata, “conduct at the heart of initial interest confusion on the internet.”  (Paging Eric Goldman!)

Okay, take all this discussion about first sale and apply it to nominative fair use.  In the 9^th Circuit, nominative fair use isn’t an affirmative defense but rather identifies uses that aren’t likely to confuse.  If a complaint fails to allege anything but nominative fair use, it fails to state a claim.  So here.  Users needed to use the marks to identify Stevo’s services and they used the marks only to do so. In addition, the message board criticism of Stevo’s analysists greatly reduced the likelihood of sponsorship/endorsement confusion.  Plus, the usernames under which the reports were posted (“Pin Fish,” “PepperMillRick,” “goldengreek,” etc.) didn’t suggest to visitors that either the posting user or SBR itself was the ultimate source of the report.  Initial interest confusion won’t defeat nominative fair use without “more indicia of endorsement” than alleged here, as in Abdul-Jabar v. General Motors Corp., where “the ‘commercial custom’ of celebrity endorsements in television commercials created an issue of fact as to whether the defendant’s commercial implied the celebrity plaintiff’s endorsement of its product,” or Downing v. Abercrombie & Fitch, where there was “an issue of fact with respect to endorsement when the mark was used to describe the defendant’s product rather than the plaintiff’s.”  Here there was neither a similar custom of sports analysts endorsing message boards nor use of Stevo’s marks to describe SBR’s own products or services.

Dilution and contributory infringement were therefore also out of the picture: nominative fair use does not dilute.  (Seriously?  Over 1000 paragraphs in the complaint and Stevo pled federal dilution, the kind that requires fame among the general consuming public of the US?  *cough*Rule 11*cough*.)  And without predicate acts of trademark infringement by SBR users, no contributory infringement either.

The court then turned to state-law claims against SBR and found them CDA § 230-barred. Under Roommates, SBR’s message board didn’t make SBR a developer of the content.  Indeed, §230 was specifically designed to overrule a court case holding a website responsible for a message posted on one of its message boards.  “‘[P]assive’ message boards with only occasional curation by message  board moderators warrant immunity under section 230.”  SBR’s practice of awarding loyalty points for posts didn’t make it a developer under the CDA.  Its encouragement wasn’t specifically directed at eliciting illegality.  Plus, SBR users could give loyalty points to each other; without reviewing every award, SBR couldn’t distinguish unlawful encouragement from perfectly legitimate encouragement, but § 230 was intended to relieve websites of that burden.  SBR’s policy of favoring original content also distinguished it from a developer.  Its allegedly “sporadic” attempts to eliminate infringing content “are precisely the type of thing that the CDA promotes,” by precluding liability based on imperfect monitoring.

The court then asked whether Stevo’s claims attempted to impose liability based on SBR’s status as a “publisher or speaker,” mindful of attempts to plead around that element.  The name of the cause of action isn’t important, but rather whether it inherently requires the court to treat the defendant as the “publisher or speaker” of  content provided by another.  Misappropriation of trade secrets did so: disclosure of trade secrets was publishing or speaking.  Unlawful acquisition of trade secrets would be a closer question in other circumstances, but the complaint didn’t allege any facts allowing the court to infer that the trade secrets were acquired in any other way than through users’ message board posts, making publication again critical.

Assuming, without deciding, that “misappropriation of licensable commercial property” was a cause of action in Florida, it was also CDA-barred.  Florida has a commercial misappropriation statute preventing the unauthorized use of “the name, portrait, photography, or other likeness of any natural person without consent,” but that would require Stevo to allege that it was authorized in writing to use those names, which it hadn’t done.  (And if it did, that would still be CDA-barred in the 9^th Circuit, since it’s a state IP law.)  General INS v. AP misappropriation, assuming Florida recognizes the tort, was CDA-barred because the alleged competitive injury—that SBR gave away for free what Stevo sold—was impossible without characterizing SBR as a speaker or publisher.

Stevo then tried “contributory misappropriation of licensable commercial property.”  Arguably, this doesn’t require that SBR speak or publish, only that it induce others to do so.  But that theory would swallow CDA immunity.  SBR generally encouraged users to post, but it didn’t tell them what information they should or must include and didn’t encourage or enhance any infringing content.  That wasn’t enough. Stevo’s Florida civil theft claim also failed, since the only plausible mechanism by which SBR obtained or used Stevo’s property was through publication.

Tortious interference claims failed too: Stevo didn’t allege that SBR knew about specific contracts its users had with Stevo in a manner that was more than speculative. Plus, the only interference came again from publication.

Finally, the court found that it lacked personal jurisdiction over Daniele.  Stevo alleged that SBR paid Daniele to publish infringing material on SBR’s  message board, that Daniele’s publications relate to the “sports wagering” industry in Nevada, and that Daniele’s online statements were accessible in Nevada.  These were insufficient contacts to give rise to personal jurisdiction.  Even if Daniele was SBR’s paid agent, a principal’s contacts may not be imputed to the agent for purposes of personal jurisdiction.  Moreover, merely discussing sports betting on an online message board doesn’t provide the people talking with a reasonable anticipation of being haled into Nevada courts, even if such bets are only legal in Nevada.  Advertising alone is insufficient to support jurisdiction in these circumstances; simple publication couldn’t be either.  Of course, internet availability doesn’t establish purposeful direction either, especially where the alleged victims of the postings weren’t forum residents.  (I am curious why they filed in Nevada, especially given the governing 9^th Circuit law.)

Do you know where your towel is, and what claims it gives rise to?

Hall v. Bed Bath & Beyond, Inc., --- F.3d ----, 2013 WL 276080 (Fed. Cir.)

Hall obtained a design patent on a “Tote Towel,” a large towel with binding around all the edges, zippered pockets at both ends, and an angled cloth loop in the middle.  He began producing the towel soon after filing his patent application.  He had a meeting with Bed Bath & Beyond and left samples of the packaged towel with BBB; both the package and the towel were marked “patent pending.”  BBB then had copies of the towel made, and Hall sued for patent infringement, unfair competition under the Lanham Act, and misappropriation under New York law.  The district court dismissed the complaint on the pleadings, and the Federal Circuit reversed except for the claims against individual executives sued in their personal capacity.

Design patent: The district court ruled that the complaint didn’t allege which aspects of the towel merited design patent protection, or how the defendants infringed the claim.  All that was required was to allege ownership of a cited patent, state the means by which each named defendant allegedly infringed, and point to the sections of patent law invoked.  BBB even admitted in its motion to dismiss on other grounds that patent infringement was pled properly.  Claim construction isn’t an essential element of a patent infringement claim.

The district court wanted the complaint to allege, among other things, what about the towel was  “‘new, original and ornamental,’ meriting the protection of a design patent,” but that’s not required by Iqbal/Twombly to give fair notice of the claim.  In any event, infringement is based on the design as a whole, not any points of novelty; the design patent is infringed if the ordinary observer would find them substantially the same/deceptively similar. 

Hall’s complaint identified the patent, included a picture, and described the accused towel as “virtually identical,” with the same shape and almost the same dimensions, including the “unique zippered compartments and hanging loop.” Hall alleged that the resemblance would deceive an ordinary observer, following the infringement standard.  The record also included pictures including the two towels.  The district court’s sua sponte dismissal should have been reserved for a complaint that was “so confused, ambiguous, vague, or otherwise unintelligible that its true substance, if any, is well disguised.”  The pleadings allowed the court to draw the reasonable inference that BBB was liable; no more was required.

Lanham Act: the district court found that the complaint merely alleged unfair competition “without elaboration.”  The court of appeals disagreed, based on the following allegations:

¶ 62. Defendants' use of [phrases including “Workout Towel,” “drapes around your neck,” and “convenient zipper pockets”] are likely to cause confusion, mistake, or to deceive as to the affiliation, connection, or association between the Tote Towel and the Counterfeit Towel.

¶ 63. The packaging of the Counterfeit Towel also states “performance that lasts the useful lifetime of the towel.”...Defendants' use of these terms and words on its label and in commercial advertising and promotion misrepresents the nature, characteristics, and qualities of the Counterfeit Towel which is of extremely poor quality and falls apart only after several washes.

¶ 64. Defendants' attempts to claim Hall's innovations and sell inferior, cheaper products, promising lifetime use, amount to unfair competition and misappropriation under The Lanham Act, 15 U.S .C. § 1125(a), which has caused and continues to cause serious injury to Plaintiff.

The district court held that the “likely to cause confusion” allegation didn’t state a claim because the complaint didn’t allege the existence of a trademark, either in the packaging or the design.  On appeal, Hall argued that his complaint wasn’t limited to trademark/trade dress, but rather that BBB advertised an identical and similarly packaged towel that would be confused with Hall’s towel.  (Um, that is a trade dress claim.  That’s like saying that two light bulbs are indistinguishable and therefore confusing. See below for more.) A false advertising claim can be brought against a defendant who misrepresents the quality of its own goods.

Hall alleged that BBB engaged in false or misleading advertising by claiming that its towel has “performance that lasts the useful lifetime of the towel.” He claimed that he washed one of BBB’s towels and it was damaged after a single washing, and the district court observed that “the difference between the [once] washed product and new is noticeable.”  However, the court then held that the advertising was puffery, not falsifiable, and that BBB “makes no guarantees about how long the towel itself will last.” Further, the district court found that Hall didn’t plausibly allege injury, to which Hall argued that the similar appearance would confuse consumers, who’d expect Hall's towel to be of similar poor quality.  (Again, a trademark rationale, not a general false advertising rationale.)

The court of appeals concluded that Hall plausibly pleaded falsity, whether literal or by necessary implication.  Although “lasts the useful lifetime of the towel” literally just says that the towel lasts as long as it lasts, even if it lasts for only one washing, that could still be false. The claim “implies that the towel will not fall apart after a single wash or a few washes.…A reasonable consumer would expect the ‘useful lifetime’ of a towel to be more than one or a few washes.”  The court analogized to the “Night Time Strength” case, Novartis Consumer Health, Inc. v. Johnson & Johnson–Merck Consumer Pharmaceuticals Co., 290 F.3d 578 (3d Cir. 2002). While in theory “Night Time Strength” could mean “whatever strength the product happened to have at night,” the court there found falsity by necessary implication because the phrase conveyed that the product was specially made to work at night.

Nor did Hall need to plead actual harm, only likely harm.  The parties’ products compete, and Hall alleged that one of his resale customers mistakenly believed that BBB was selling Hall's towel “for nearly half his price.” When the parties compete and the advertising is misleading, dismissal on the pleadings was inappropriate, given the Lanham Act’s “flexible approach” to injury and causation.

The district court thought that the performance claim was nonactionable puffery. The test was whether a reasonable buyer would take the representation at face value; if no one would take it seriously, there’d be no danger of consumer deception.  BBB’s claim of “lasting” performance was “stated as a fact; it is not ‘blustering’ or ‘boasting,’ and does not sound like ‘puffery.’” Dismissal reversed.

Note: it seems to me that only one of plaintiff’s §43(a) theories survives—the theory that BBB falsely advertised quality, not that its sale of a copycat product constituted false designation of origin, as alleged in ¶ 62 and repeated as “attempts to claim Hall’s innovations” in ¶ 64.  The opinion doesn’t say so outright, but its discussion is all about quality, and it couldn’t be clearer that Dastar bars the false designation of origin claim, which is, per the complaint, that by copying the design BBB created confusion about source.  If there’s no valid trade dress, that’s Dastar-barred.  Indeed, the Federal Circuit was pretty clear about this when discussing 9^th Circuit law a few years back.

The court of appeals also reversed the dismissal of the NY GBL § 349 and common-law misappropriation claims, for similar reasons.  Hall alleged that BBB willfully misappropriated his product, ideas, and design, and that the deceptive act under § 349 was the quality/performance claim.  The district court held that Hall didn’t allege injury, even if customers were misled, but Hall pled that “the extent of the imitation of the Tote Towel by Defendants” confuses consumers into associating the Tote Towel with “the inferior Counterfeit Towels,” and that this confusing similarity harms Hall's reputation.  Again, this is a Dastar-barred theory of injury (or really a Sears/Compco barred theory, though see below), but the court found that Hall sufficiently pleaded possible injury to his business.

NY common law bars unjust enrichment.  Hall’s claim was based on BBB’s acts “in accepting Hall's sample towel, ostensibly for consideration of a commercial relationship, and acting in bad faith by having Hall's towels copied for commercial benefit.” The complaint alleged misappropriation by “stealing” Hall’s patented designs. The district court held that Hall failed to plead any kind of contractual or quasi-contractual relationship, as required.  But Hall argued that that line of precedent applied only to misappropriation of ideas, not misappropriation of labor: he alleged that “he spent time and money designing the towel, surveying and buying materials, assessing consumer interest, manufacturing the Tote Towel, and further efforts, including applying for the '439 Patent.”  Thus it was his labor that was misappropriated, not his idea. 

Comment: Hunh?  Not only is this a workaround that can be used to turn any “idea” claim into a “labor” claim, thus eviscerating the limits on idea misappropriation that have been carefully developed in order to prevent the cause of action from interfering with the general freedom to copy, it doesn’t make sense on its own terms: Hall labored for himself.  BBB didn’t somehow end up with his towels or owning his patent, although it copied his towels.  It’s the results, not the labor, that BBB allegedly misappropriated; it’s not like Hall painted a BBB store and didn’t get paid.

The court of appeals still reversed.  “New York law does not condone inappropriate actions, and provides that equitable doctrines may support a misappropriation claim.”  It can impose equitable obligations to prevent injustice even without an actual agreement between the parties.  Unfair competition can be “any form of commercial immorality, or simply as endeavoring to reap where one has not sown.”  Thus, the district court erred in holding a contractual relationship required for misappropriation, whether the misappropriation is of an idea or of “labor and skill.”  Hall provided his sample towel in good faith and BBB then acted to his detriment, so the claim shouldn’t have been dismissed on the pleadings.

BBB argued that preemption still barred any NY claim. But some state regulation of potentially patentable but unpatented subject matter survives preemption, “in the complex balance between the policy of unencumbered movement of unpatented ideas, and principles of morality and fairness that are within state authority.”  Hall argued that BBB didn’t copy a publicly available product, but rather copied a towel he showed to BBB in the course of discussing a business relationship.  Without further elaboration, and with no explanation of the limits of its ruling, the court held that

principles of patent law preemption do not override potential causes of action based on unfair commercial practices. New York misappropriation law extends to “commercial immorality, or simply as endeavoring to reap where one has not sown.” We conclude that federal preemption does not apply to the circumstances set forth in the pleadings.

If there was no contractual relationship, or implicit confidentiality agreement (which is how I'd spin this holding), I have no idea why this would be true.  NY misappropriation law may try to extend to reaping where one hasn’t sown, but that’s why it’s quite often preempted.

The court upheld the dismissal of BBB’s false advertising counterclaim, which was brought on the ground that Hall falsely claimed that his towel was protected by his patent when the patent was really just pending. The district court found it plain from the pleadings that Hall’s representations weren’t made with the intent to deceive, and one defendant appealed on the ground that §43(a) doesn’t require deceptive intent.  The court of appeals upheld the dismissal because no plausible false advertising issue arose under the circumstances of the case. Likewise, the false marking counterclaim based on Hall’s retention of the label “patent pending” for a few months after the patent had issued failed because under the AIA, which applied retrospectively, defendants couldn’t allege competitive injury.

Judge Lourie dissented from the majority on the design patent and Lanham Act claims (why not the NY claims?).  The district court found the complaint to be a conflation of facts and theories, making no distinctions (something that seems to me correct about the quoted §43(a) allegations).  The district court asked about the elements of the towel that merited design patent protection as well as an explanation of how the BBB towel infringed and how each defendant acted in violation of the patent laws.  True, much of the district court’s concern related to validity rather than infringement, but “the overall design of a design patent consists of the particular aspects of the design, and noting those aspects is not claim construction. How else does one describe a design except to note the characteristic aspects of the design?” Thus the dissent found the district court’s actions insufficiently faulty, especially since the district court invited Hall to replead, and Hall didn’t, which he should have done. “The judicial system encourages correction of errors when made, and plaintiff should have paid the penalty for declining that opportunity.”

As for the Lanham Act, the dissent would have found “performance that lasts the useful lifetime of the towel” to be “mere puffery, a subjective claim that cannot be proven true or false and is thus not actionable under the Lanham Act.” It was an untestable tautology: “the towel lasts as long as it lasts.” (But could consumers come to a consensus about what it implies?  I agree with the majority that it implies more than one washing—the question is if what it implies is sufficiently measurable to be falsified.  I'd be inclined to think that a very, very flimsy towel could be falsely advertised this way, even though "performance" isn't very specific.)

Drake part 6

Panel 6: Trademarks and Unfair Competition

Prof. Sean A. Pager, Michigan State University College of Law

Unpacking Traditional Knowledge Rights and Wrongs

WIPO is busy drafting TK treaties and there’s a burgeoning literature. Often begins with a misappropriation anecdote, then laying out proposed rights and remedies. How you characterize the injury in the anecdote matters a lot for the rights and remedies one might design to follow.  Outsider comes into community, takes part of cultural heritage without consent, strip it of time-honored meaning, and commoditize it into an external market in an inauthentic, possibly offensive way.  Ending: community devastated by loss, tradition despoiled; indignity compounded by the knowledge that someone else is making money and they aren’t benefiting.

In this archetype there are two distinct injuries: harm to authenticities, a cultural injury; then economic injury/unjust enrichment.  For the latter, cutting a check/rough justice is probably ok; level of governance will be thinner than the necessarily thick regulation of cultural injuries.  What about geography, local v. globalism?  Cultural injuries are more likely to be local, local decisionmaker is more likely to govern more effectively for the interest; you might not need to worry about global harms because the harm from local violations will be felt disproportionately.  Whereas an economic rule, especially if it’s merely calculating a price, can be more easily expanded in geographic scope, and there’s no reason to think that someone making $ locally is any worse than someone making $ across the world.

Biological development: countries have access, but don’t have development resources to commercialize/synthesize—there is a holdup problem and an economic solution; need a global mechanism to solve it. Cultural resources are different: shaman’s melody; still recognizably derived from the shaman’s melody, thus capable of inflicting cultural harm. And yet primarily these harms are going to be local.  Sustained, serious uses will be by communities that are proximate to the affected community, because that’s how culture flows.  NCAA mascots as a US TK issue: why is it that all these American sports teams have Native American instead of Australian Aborigine mascots?  In Australia, the iconography is aboriginal rather than Native American, and the harms of inauthentic use are local.

Prof. Jake Linford, Florida State University College of Law

Trademark Owner as Adverse Possessor

TM owner resembles an adverse possessor through the process of acquiring TM protection. Requirements: actual possession, open and notorious, exclusive, continuous for statutory period, hostile/without permission/under claim of right. There are fights over whether good faith/knowing is the right standard, and other details of color of title.  Property rights in TM are not property rights in words, but property rights in words used to signify particular meanings for goods and services; this can be expansive for dilution but still isn’t ownership of the words themselves.  You secure rights by showing courts you’re serious/responsible about it. 

Courts think commercial strength trumps inherent strength. It’s acquisition of secondary meaning that matters, but we have no real solid rules about how that’s acquired. We presume in 2(f) that substantially exclusive continuous use for 5 years creates secondary meaning, but PTO has told examiners to ask for more in the case of trade dress, muddying the rules and creating uncertainty.  Rely more on what mark owners are doing in commerce than cleverness of the initial mark.  What if we turned 2(f) into a floor on the amount of time to acquire distinctiveness?  That could provide more certainty for competitors and consumers.

Not every crystalline rule necessarily benefits consumers.  If you had an inherently distinctive mark, failure to establish commercial strength might not hurt your chances of winning, at least for the first 5 years.  We may actually be doing this in practice, as he looks at likely confusion cases.

Posner: a TM owner has to be serious about protecting it; at the same time, not allow from the public domain a name the public is using to denote someone else’s good or service.  This approach was disregarded in Golan; we have a more active public domain in TM than in copyright.

(My comment: presumptions about strength are not really about confusion, and we should consider stopping pretending that they are.  EU approach: rights over the use regardless of likely confusion.)

Prof. Joseph A. Tomain, Florida Coastal School of Law

First Amendment, Fourth Estate and Hot News: Misappropriation Is Not a Solution to the Journalism Crisis

The NYT invents the news.  We need an institutional press with resources to cover what citizen journalists can’t.  Reap what you sow = occasionally a threat: you will get what’s coming to you.  Also, sometimes you’re forbidden from reaping what you sow.

The utilitarian claim is the key one: public will lose info necessary for self-governing society without a misappropriation right. 

Recall the history of INS v. AP: Hearst couldn’t send reporters of its own because it was excluded by the Allies.  This should make us wary about First Amendment implications of misappropriation.  In addition, who gets to decide what the value of the news is, or whether it’s degraded?  Vagueness is a worry. Prior restraint on information from a permanent injunction.  Does not appear to him to raise problems of content-based regulation, but assessing it by content-neutral standards still creates problems for things like injunctive relief; perhaps only monetary damages should be allowed.

Daily Mail principle: publication of lawfully obtained information is protected absent a state interest of the highest order.  Can hot news really pass this standard?  Name of a rape victim, contents of illegally recorded conversation, juvenile defendant’s identity: is economic incentive really more important than these interests?  Only at the most generalized level.

Golan: the public domain isn’t inviolate, so the SCt might let this pass.  But is there a difference between taking a work out of the public domain and taking facts out?

Utilitarian analysis: if constitutionally permissible, still a good idea?  Very hard to prove harm to newsgathering incentive.  Should courts be allowed to presume that harm naturally follows free riding? No, evidence ought to be required.

The real trouble: lost ad revenue.  Concentrated ownership of media outlets.  Taxation of online ads with revenue going back to the institutional press might be a way of supporting that press.

Dr. Katja Lindroos (Weckström), Lecturer in Intellectual Property Law, Faculty of Law, University of Turku (Finland)

Injunctions Against Intermediaries

TRIPS: effective measures against infringement; requires injunctions against certain types of infringement.  Doesn’t say injunctions have to be available against all types of TM infringers—minimum standards. Criminal sanctions against willful TM counterfeiting on a commercial scale.  EU: enforcement directive, 2004, covering all IP as TRIPS implementation—a long list of sanctions member states must afford; member states resisted and thought it was overbroad.  But still required!  Rightholder has a right to injunctions against noninfringing third parties.  2000 E-commerce directive; covers all IP too; narrow safe harbors for mere conduits, caching, hosting; (discussion on that centered around copyright despite scope of directive); no duty to monitor.  ACTA covers TM, copyright, and related rights. 

What is TM counterfeiting?  She showed “abibas” shoes, with a logo very similar to that of adidas.  But when it’s a fake iPod, are we really talking more about copyright or TM infringement, or even product liability?  Under current law, TM is the rubric.  Who goes to jail for TM counterfeiting?  French want to throw shoppers in jail.

Spotting the fake may be easier in physical space than online: if offered a Louis Vuitton on eBay, it may look just like the real one.  With copyright, we know that the rightholder can authorize digital sales; if the copyright owner says no, we know it’s an unauthorized copy. But with TM, it’s not that easy to distinguish between legal/illegal items on an auction site because of first sale.  We can’t assume the same type of absolute control as in copyright.

L’Oreal v. eBay: ECJ said eBay isn’t directly or contributorily liable under TM directive; nonetheless, injunctions must be available to rightholders under enforcement directive regardless of fault.

Helsinki District Court: Elisa must prevent subscribers from accessing Pirate Bay domains, big fine pending resolution of the case.

O’Melinn for Tomain: Is hot news content-based?  Say more about reasoning and about Golan.

Tomain: Given Golan, wouldn’t be surprised if Court could take facts out of the public domain, though that’s wrong.  Not content based because could have any content: sports, politics, etc.

For Pager: what would the baseline be for remedying cultural harm?

Pager: culturally defined—what is a harm, who is entitled to do this?  Devolve to local decisionmakers; a WIPO treaty could create the baseline principles.

Yu: indigenous communities often don’t want to separate TK and traditional cultural expression, economics/culture.

Pager: true, but we split IP all the time: copyright and TM.  Separating them doesn’t mean there’s an ontological distinction.  This has been overly politicized.

Corbett for Weckström: what standard must eBay follow?

A: notice and takedown for copyright, but not clear what TM requires.  L’Oreal has stopped sending notices, because they feel it’s not a good enough remedy.  Issue for court: possible injunction to get closer to active monitoring even though the court says monitoring shouldn’t be required; up to national courts to strike a reasonable and fair balance.  Discussion is somewhere between notice and takedown and an active duty to monitor.  German court—remove listings that say “replica” or “copy.” But then we have to discuss whether these tools are reliable or overinclusive.  German court on remand said that removing copy/replica listings was sufficient.  Once you have evidence from the TM owner that there’s routine infringement, might have to monitor IP address to prevent creation of new accounts.

Corbett: offline shop also has duties.

A: but eBay is not selling just one item; also eBay doesn’t have custody of a physical item, only a product description.  Not like a flea market where the seller can inspect the product and figure out if it’s fake.  Even with a picture, authentication is almost impossible.  Can use indicia—where sold, price, how many on offer—but that’s not as predictive as we might want.  Overinclusiveness isn’t as big a problem in copyright (well, it isn’t w/r/t digital downloads, as opposed to sale of copies, at least where there’s been a first sale; but I suppose if there’s no exhaustion of the distribution right, at least across national boundaries, then physical copies are also at issue).