Welcome and Keynote: Nancy Mahon, SVP, Global Corporate
Citizenship & Sustainability, The Estée Lauder Companies
Interesting talk; I learned that UK consumers respond well
to claims that a product decreases the company’s carbon footprint, but US
consumers aren’t interested in that and want to know about the effect on their
own carbon footprint.
Sustainability in the Eye of the Beholder
Rochelle Dreyfuss, Engelberg Center on Innovation Law &
Policy, NYU School of Law (moderator)
Anna Tischner, Jagiellonian University in Krakow: European
TM law can override sustainability despite EU’s attempted commitment to carbon
neutrality. Hermes won a case against an atelier that incorporated scarves into
new clothes. But her research shows consumers understand that refurbished etc.
goods have qualities not reflecting on the TM owner. Need more space for this. British
case didn’t allow refurbishment to convert devices to electric, but only b/c
the advertising was confusing—which is correctable, and thus perhaps a positive
sign.
Maggie Chon, Seattle University School of Law: Discussed
certification marks as ways to build consumer trust/purchase interest. Issues:
standards represented by certification mark can be opaque; hard to figure out
what they really require. Also, certifications can compete and have different
standards—consumers aren’t equipped to figure out which “fair trade” marks are
more stringent or less stringent.
Jessica Silbey, Boston University School of Law: Project
w/Mark McKenna on interviews with designers: insist on design as a process, not
an outcome; they want to unify form and function; and they consider themselves
human-focused, oriented to solving problems. In the sustainability context,
they want to act as moral entrepreneurs. Coherence, minimalism, sustainability,
accessibility, and inclusivity are goals—coherence and minimalism seem
aesthetic but they’re also about avoiding material waste. The last three are
considerations they think necessary for good designs/progress: the ability for
everyone to use the design. E.g., designing for an insulin pen that will
actually be used (many people don’t take their meds). OXO dustpan designed to
be used by all kinds of hands.
Aaron Perzanowski, University of Michigan Law School: Right
to repair and sustainability—appliances, electronics, vehicles need fixing; can
that be done outside authorized channels? Firms have strong incentives to
assert control over repair process, which can be incredibly lucrative. Fixing
cracked phone screens is $3 billion/year in US alone. Expensive repairs also
drive new device purchases. 150 million mobile phones are discarded per year;
60 million metric tons of e-waste a year. About 70% of toxic waste in US
landfills is e-waste. DMCA as a big problem; 1201 exemptions allow repair of,
e.g., tractors, but no one is allowed to distribute a tool to others to do
this, so farmers better be good programmers.
Patent law can also be an issue, as can individual component
parts covered by utility or design patents, giving power over price and
availability. Especially problematic given incredibly low standards for design
patent—big uptick in auto parts as well as home appliances. Fed Cir did away
with longstanding test for obviousness of design patents in GM v. LKQ; what
that means in long term is not yet clear but could mean fewer low value design
patents. Trade secrets are also an issue, but claimants can’t usually defend
them—the info is generally ascertainable through simple reverse engineering. We
don’t need to respect your wishes not to disclose info just b/c you’d make more
money if you kept it to yourself.
TM too (already covered by other speakers). Biggest problem
here is importation—exhaustion. But TM law prevents “material differences” and
courts are much too eager to find such differences—a difference in warranty;
existence of phone support (even for ball bearings). Nominative fair use does a
good job in its lane, though.
So far we’ve passed right to repair laws covering 100
million people in US, including in California. Also worked on National Defense
Authorization Act to get right to repair requirements in any purchase DoD
makes.
Tischner: EU design law has a repair clause for spare parts.
This allows independent manufacturers to make & sell parts that reproduce a
protected design as long as it’s genuinely for repair. The real tension comes
from TM law, not design law—the design law exception doesn’t apply horizontally
across IP, so companies use TM to block repair and control markets. Surveyed
professionals: saw logo on repair part as description of part, not indication
of origin. TM law is also normative, but results of our and similar empirical
studies should inform TM policy.
Q: do designers think about repair?
Silbey: They think about durability.
Perzanowski: there’s a tradeoff b/t durability and
repairability, which we need to recognize and educate about. Sometimes the
market recognizes this, as for cars. Not so much whether it’s designed for
repair but who gets to do the repair there. Consider relatively direct
regulatory intervention in design: mandating user-replaceable batteries on
consumer electronics, for example. If Apple was required by law to make a
swappable battery, it would probably do a really good job, but it won’t if it’s
not forced to; we’ve already seen this work with USB-C.
The Consumer Scientist
Chris Morten, Engelberg Center on Innovation Law &
Policy, NYU School of Law (moderator)
Fran Visco, National Breast Cancer Coalition: created a
science education program for patient advocates: how to analyze clinical
trials, interpret statistical information, understand the cell cycle—important
for determining endpoints.
Hilary Koch, Advocate for people living with diabetes:
continuous glucose monitors existed, but couldn’t be monitored
remotely—advocates like Koch created an open source solution for this. Likewise,
devices didn’t talk to each other; created open solution for that. Able to
sleep through the night for the first time in 10 years! Huge improvement in
diabetes management. Non-FDA approved device was better than anything on the
market b/c patients came together to make it themselves. Everyone had to make
it themselves (adding software to FDA-approved devices) to avoid FDA [and
1201?]. But someone was available to provide advice 24/7. Now there’s an FDA
approved device to talk to other devices, and one reason is b/c of the earlier
patient-based devices. Non-approved devices are also still out there and ahead
of the FDA-approved devices thanks to patient scientists.
She also had a really interesting discussion of how each
patient’s experience is different and they’re experts on their own experiences
and need more control: women want information on how their menstrual cycles
affect them and want to be able to press a button on their device to flag this;
many hospitals don’t allow insulin pumps, but today’s insulin pumps take care
of everything and this rule makes diabetics terrified to go into hospitals for
other issues.
Steve Woloshin, Dartmouth Geisel School of Medicine: patients
are often underrepresented in product design, testing, and regulatory approval.
Communication with patients to understand what the products (tests, devices,
drugs) do and how to use them is vital but it’s often an afterthought. DTC ads:
oversight is spotty and they aren’t required to tell you how effective they
are. Covid home test kits example: Although they did test the instructions,
which was good, they didn’t test whether people understood what results they
were getting—have to use Bayes’ law to understand the chance that you’re
infected, given a positive or negative test result. It’s easy to get wrong and
the instructions didn’t explain it at all. Empirical tests showed that 33% of
people in a high risk group (symptoms, exposed to someone with determined
covid) would not understand the risks of a negative result. Were able to reduce
that to 14% with revised instructions, and to decrease unnecessary quarantine
decisions. An untested communication can be as dangerous as an untested drug.
DTC ads: Billions of dollars spent on them; people see 9
drug ads/day. But they overstate benefits/downplay harms/overstate certainties.
There’s a lot of opportunity to make ads better but the system is
reactive/slow. FDA announced that it will revisit DTC ads. Dozens of warning
letters about ads, largely b/c visual messages were allegedly misleading (take
this drug and you’ll be able to climb mountains). Good start, but tip of
iceberg. Basic problem: ads fail to tell consumers how well the drug works. Often
unclear what outcomes the drug treats, or even conditions. Quantify the
outcome! Same for common serious harms.
Current regs say you have to discuss benefit, but benefit
just means indication under current rules—so if you say “decreases cholesterol”
you’re done. But does that affect your chance of having a heart attack? Does it
cut it in half from 2% to 1%? Something else? Nothing in current regs about
quantifying benefits or harms; nothing about pretesting ads for accurate
communication. Should have a drug facts box like a nutrition facts box.
Charles Duan, American University Washington College of Law:
standard IP incentive theories don’t explain open source innovations here,
which involve huge amounts of effort donated to the community. People who
change their diets to improve their health are also experimenting on
themselves—self-motivation is very important. Need to think about how to
regulate open source devices, where there isn’t a wealthy drug company behind
them.
IP Rights as a Signal to Consumers
Jeanne Fromer, Engelberg Center on Innovation Law &
Policy, NYU School of Law (moderator)
Chris Cotropia, University of Richmond School of Law: Do
patent claims matter to consumers? No, not really. There’s a false marking
provision in patent law that seems to think that they might. Patent is more
about communication between competitors/producers, less about consumers.
Patent’s justification: Incentive for invention, and for commercialization. Get
the new, useful, nonobvious thing created and produced. But can communicating
to consumer create a direct feedback effect?
Notice statute: can’t get patent damages unless infringer
has notice. Can be actual, or constructive by marking the patented product. The
audience is not the consumer, but competitors. False marking statute, though,
has consumers in mind—can’t mark product as patented or patent pending if
that’s not true; initially empowered qui tam actions. Theory was a consumer
oriented theory—that there was potential harm to the consumer. Lots of people
engaged in false marking b/c they had, e.g., plastic molds; the patent would
expire and they’d keep using the molds. Entrepreneurial lawyers started suing;
then AIA changed the law to require competitive harm from the false marking. So,
what information are consumers getting from the patent marking?
Study
by Alexander Billy & Neel Sukhatme: convinced drugstores to let them
enhance marking on actually patented products in some drugstores and not
others; they found essentially a perfect null effect. Tried again on Mechanical
Turk with vignettes and found the same null effect. Do find that “patented”
label leads survey respondents to think that the product was more innovative;
didn’t translate into willingness to buy. Another study, Gavin Milczarek-Desai
& Derek E. Bambauer: showed ads, some said patented, patented pending,
Consumer Reports supports, or nothing, and found no variation, but “patent
pending” may have a slight effect on reported willingness to buy. His own
study: crowdfunding campaigns. Found same (lack of) effect. Patent label didn’t
change success right, but “patent pending” had higher success rate. In lab,
people are 2x as likely to invest in a project that says “patent pending” as
opposed to “patented” or nothing. Consumers are just looking at the products and
deciding if they want to buy. Why might “patent pending” be different? Might
seem even more innovative—haven’t even had time to get a patent yet! But we
don’t know.
Jacob Noti-Victor, Cardozo Law: Copyright side—copyrights
are also not strong signals to consumers. There may be a theory that the © next
to a work confers legitimacy, but hasn’t seen empirical studies. Maybe video
game industry achieved some legitimacy by using ©? But we do know that
consumers don’t know what © means when they see it.
©’s human authorship requirement and effects of AI: enabled
or even manufactured consumer-facing signals of things consumers do care about,
such as authenticity. There’s no authorship for computer generated works as
such—long tradition of not recognizing nonhuman authorship. Trickier when
there’s a human and an AI system. Human prompting isn’t sufficient for human
authorship, CO says, even with detailed prompt engineering/iterative prompting.
Office based this on a reading of the law and the mechanics of the
technology—there’s too attenuated a connection b/t the prompt and the final
output; the prompter can’t predict or conceptualize the expressive
output—there’s no requisite causation/connection b/t idea and expression. Like
Chapman Kelly garden case where 7th Circuit says a garden is too
unpredictable to be ©able. But there can be protection for human selection,
coordination, and arrangement of AI products—curatorial decisions around AI
content, not AI content itself; will be thin copyright.
Office’s choices here are coextensive with consumer
preferences for process: preferences tied to the means of production and not
solely to the output. Fair trade coffee. Consumers are more likely to want to
buy non-AI work; this isn’t just squeamishness but ethical priorities and
desire for authenticity that affects consumer decisionmaking especially in
aesthetic contexts. Authenticity can have dark sides, but it’s also a way to
acknowledge the social role of art and its role in moral identity/self-identification.
Office requires disclaimers of AI generated material.
Registration potentially provides info to consumers. Could be a good record,
assuming copyright claimants are telling the truth. But more can be done.
Mark McKenna, UCLA School of Law: Most obvious way IP rights
might signal to consumers is by being a marketing tool: claimant advertises it
has an IP right to show the product is meritorious or unique compared to other
products, and that might work even w/o a clear idea of the content of the
right. The patent evidence is interesting; maybe there’s an analogy here to how
some colleges publicize percentage of faculty w/terminal degrees and others
don’t feel the need to do so; maybe at the top end, producers assume you know
they’re innovative (Apple) and don’t prioritize patents.
GIs: could also publicize the characteristic of a good as
being (supposedly) geographically
unique.
What about feedback loops where existence of rights feeds
back into scope of rights? TM: b/c those rights depend on consumer
understanding, but consumer understanding can be shaped by their beliefs about
what law allows/requires. The existence of rights depends on consumer
understanding, b/c it determines whether there’s been trademark use, or
secondary meaning to make it a TM; the scope of rights depends on consumers’
beliefs about what others are allowed to do. The rules on secondary meaning
give a lot of weight by actions taken by putative owner to claim the existence
of rights: creates incentives to publicize claims—the nature of putative mark’s
presence in ads matters a lot. Matters even more when the claimed matter is
complex; courts will often condition protection on “look for” advertising—to
call it out from the background noise.
Claims of rights in relation to certain kinds of uses of TM
can also shape consumer understandings in ways that turn out to affect legal
scope. This is true at the retail level—particular uses of a particular mark,
like NFL’s assertion of extremely broad rights in “Super Bowl” TM. Threatens
bars, churches, community organizations that advertise they’ll (legally) show
the Super Bowl. Even if there’s no suggestion of sponsorship other than the use
of “Super Bowl.” These are paradigmatic nominative fair uses and shouldn’t be
w/in the scope of the NFL’s rights, but the NFL has been unbelievably
successful with these threats, so most references are to “the Big Game,” which
itself is both cause and effect of consumer beliefs. But by the same logic, NFL
can claim rights in “the Big Game.”
This effect can also work at the wholesale level—entire
categories of uses like merchandising—50 years ago no one thought universities
had the sole right to use university marks on T-shirts. Madison, like every
other college town, was full of T-shirts featuring UW marks, some of which
predated UW’s own use on t-shirts. But a major campaign branded these as
counterfeits; leveraged relationship with university bookstores to control
major apparel companies. Strategy seems to have worked; many people now believe
the law requires university permission even though no one thinks the university
is responsible for the quality of the t-shirts. PTO even made up the “secondary
source” rule: use on the front of a T-shirt functions as a mark if the mark is
known in some other setting. Created ©-like rights in anything related to them,
justified by reference to the consumer understanding they’ve created. Can also
be used for, e.g., mid-century modern design—association of design w/designer
can be leveraged into “source” claims for the actual furniture.
Consumer understanding can be shaped, and some claimants are
well situated to do so and have strong incentives to do it; but we shouldn’t
hand over the game to claimants.
Rebecca Tushnet, Harvard Law School
I decided to frame my part of this panel as “can claims of
IP rights mislead consumers in a way that triggers general advertising
law?” I’m going to start with two requirements of false advertising law that
don’t generally apply to IP rights. First, federal false advertising law
targets only false or misleading statements in “commercial advertising or
promotion.” This is probably not a big barrier for the kinds of claims at issue
here, but it’s worth keeping in mind: use instructions, as discussed in the previous
panel, might not be advertising (though it likely depends on the product). Second,
materiality: to be actionable, a false or misleading statement has to be the
kind of statement that is likely to affect consumers’ decisions, as opposed to
TM law, which doesn’t require materiality for infringement.
As we already heard, materiality is often a problem in
litigating alleged IP-related falsehoods, including false patent marking – most
of the time, consumers don’t really care about patent rights. In addition, a
Supreme Court case, Dastar v. Twentieth Century Fox, limited the scope of the
federal Lanham Act in a way that turns out to be relevant to IP-related
signals. That case interpreted the language barring any "false designation
of origin, false or misleading description of fact, or false or misleading representation
of fact, which ... is likely to cause confusion ... as to the origin ...
of goods" to mean only references
to physical origin, rather than the source of ideas or expressions
embodied in a product.
Lower courts have subsequently held that Dastar limits the
scope of federal false advertising law b/c representations about IP rights
aren’t representations about physical origin; thus, falsely stating or implying
that your music is properly licensed does not constitute a false representation
covered by the act. Courts also interpret many state consumer protection laws
to be coextensive w/the Lanham Act, though it’s possible to argue that some are
broader. There is also a limiting case where the representations are not just
about IP rights but also state or imply facts about the physical product:
Crocs, Inc. v. Effervescent, Inc., No. 2022-2160 (Fed. Cir. Oct. 3, 2024).
Crocs sued competitors for patent infringement; defendant
Dawgs counterclaimed for false advertising about the characteristics of the
primary material Crocs uses to make its footwear products, a material it
promoted as the “patented,” “proprietary,” and “exclusive” “Croslite.” But
“authorship, like licensing status, is not a nature, characteristic, or
quality, as those terms are used in Section 43(a)(1)(B) of the Lanham Act.” By
contrast, “here, the false claim that a product is patented does not stand alone.
Dawgs presents allegations and evidence that the falsity of Crocs’ promotional
statements is rooted in the nature, characteristics, or qualities of Crocs’
products.” So the question will generally be whether the statement about IP
rights conveys a factual claim about the more tangible characteristics of the
good (or service) at issue.
Finally, I want to introduce as an additional framing point
that law, including product liability law, often doesn’t require TM licensors
to take responsibility for their products even when consumers might expect that
and even when the TM probably drove the sales—arguably false advertising should
not accept this result. Example: Troncoso v. TGI Friday’s Inc., 2020 WL 3051020
(S.D.N.Y. Jun. 8, 2020)
Troncoso purchased a bag of snack chips labeled “TGI Fridays
Potato Skins Snacks,” mistakenly believing the chips to contain real potato
skins given that the restaurant chain TGI Fridays sells a Potato Skins
appetizer that includes the flesh and peel of the potato. But, even though the
TGIF branding is probably what led consumers to have a lot of their
expectations about the product, and even though the court found that the
product was plausibly deceptive, the trademark owner was off the hook. The
court said: “TGIF may be liable for that misleading labeling under GBL §§ 349
and 350 and principles of common-law fraud only if it engaged in making the
misleading labeling.” The allegation of licensing “does not suggest that TGIF
was involved in any aspects of the labeling beyond its own trademark, which
Plaintiff does not allege is misleading”
It’s an example of IP rights—the right to license the mark
to others—as false signals. I’ll end with a potentially contrasting case:
Puma v. Wal-Mart Stores East, LP, No. A-1-CA-38023, 2022 WL 3221810, -- P.3d –
(N.M. Ct. App. Aug. 9, 2022) The Pumas alleged that defendants violated the New
Mexico Unfair Practices Act based on their purchase of a Black &
Decker-branded coffeemaker.
Based on Black & Decker’s reputation, the Pumas thought
the coffeemaker would be better than the lower-priced store brand and paid more
for it as a result. However, Black & Decker did not in fact design,
manufacture, distribute, or warrant the coffeemaker. The district court, after
a bench trial, found that defendants’ conduct constituted an “unfair or
deceptive trade practice.”
Thus, the presence of the trademark plus the absence of any
disclosure on the product or the advertising could deceive reasonable consumers
about either (1) the relationship between Black & Decker and Applica; or
(2) that the product was in fact a product of Applica, rather than of Black
& Decker. The court pointed out that the name, “Black & Decker 12 Cup
Programmable Coffeemaker” “emphasized that the ‘Black & Decker’ name was an
important characteristic of the Coffeemaker; these statements tended to deceive
a reasonable consumer, and Defendants knew or should have known that potential
purchasers of the Coffeemaker would likely regard information about the
Coffeemaker being a Black & Decker product as material.”
The court emphasized that it was not holding “that the use
of a trademark by a licensee pursuant to a trademark licensing agreement by
itself constitutes an unfair or deceptive trade practice,” or that individual
or widespread licensing was “per se irrelevant” to the inquiry. Nor was
evidence of the quality of the licensed product “per se irrelevant.” Rather,
the court of appeals was simply holding that the Lanham Act did not govern the
UPA claim, “and that, under the circumstances of this case, Defendants’ knowing
and willful use of ambiguity as to material fact, which tended to deceive a
reasonable consumer, constituted an unfair or deceptive trade practice.” I tend
to believe we’d be better off if we held TM owners more clearly to their
bargain—when they license in order to make a product more attractive, we should
recognize that the TM is helping to sell the licensed product and thus hold
them jointly liable for quality.
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