I Always Feel Like Somebody's Watching Me

Maxwell's Demon: Interesting story on Facebook's sudden change of the default for visibility of actions -- with a new person-based newsfeed, each member's comments on others' pages and pictures, ending or beginning relationships, and other acts are now highly visible. People can now track their acquaintances' activities across many pages they wouldn't otherwise have seen.

Even in a world with Google, people expect that many traces they leave in cyberspace are not particularly visible, since they'll rarely be noticed by people other than the intended audience -- precisely because Google offers up so many things to the rest of us. A unilateral change in visibility leaves us feeling overexposed, violated and even betrayed.

Of course, as Facebook's director of marketing says, "the new features don’t reveal anything new. Rather, they just make the information easier to find." But that's exactly the objection: that this change contributes to the disappearance of the semi-private, the between spaces where people can share things with a limited group of selected others.

Also: now that I'm using Blogger Beta, I have switched to labels instead of the clever but ugly Greasemonkey/Del.icio.us hack I was using to tag posts. I hope to go back and switch over old posts over the course of the next week or so. I only have about 200 posts left! Such is the price of early adoption.

Typosquatting isn't false advertising

Lands' End, Inc. v. Remy, --- F.Supp.2d ----, 2006 WL 2521321 (W.D. Wis.)

Plaintiff sued for violations of the Lanham Act, ACPA, and state law based on its payment of commissions to defendants, as part of plaintiff's affiliate agreement, that allegedly turned out to be generated by typosquatting, in violation of that agreement.

Defendants operate websites such as www.savingsfinder.com, www.poshshops.com, and www.shopperseguide.com. They were Lands' End affiliates. When an internet user clicks on a link on an affiliate's website, connects to www.landsend.com and makes a purchase from plaintiff, the affiliate earns a 5% commission on the purchase. Along with agreeing not to use "infringing" content, affiliates agreed to use links provided by Lands' End network servers or other Lands' End-approved means; if they wanted to use other methods of generating traffic to Lands' End, including third-party serving mechanisms, they needed Lands' End's approval. They were also requried to disclose information about the websites they proposed to link to the Lands' End site, but here defendants didn't disclose their interests in www.lnadsend.com, www.klandsend.com, www.landsende.com, et cetera. (Defendants no longer own or operate these sites, but they did during the relevant periods.)

When a user mistyped the landsend.com URL and went instead to one of defendants' sites, s/he would be redirected to a URL associated with the affiliated website, thus ensuring that defendants got credit for any subsequent purchases. In other words, as far as Lands' End was concerned, those shoppers came from referrals from savingsfinder.com etc. and defendants got a commission for helping shoppers pick Lands' End.

Perhaps to avoid detection, this process occurred only when a user mistyped the www.landsend.com address for the first time. If the user mistyped the Lands' End domain name at any later time, a phony error message would be displayed on the browser, stating that the Lands' End site was "unavailable and may be experiencing technical difficulties." It was difficult for unsophisticated users to realize that they were being rerouted to the Lands' End website through the affiliate URLs.

Eventually, Lands' End "detected unusual referral patterns and payments" made to defendants. It discovered that many of defendants' referrals had originated from typosquatting domain names. By that time, it had made $190,000 in sales to customers directed to www.landsend.com through defendants' websites.

Unsurprisingly, the court denied defendants' summary judgment motion on the ACPA claims. Defendants claimed they lacked bad faith intent to profit because they didn't divert consumers away from Lands' End, but pointed them in the right direction. Still, the court pointed out, they profited from owning a domain name based on plaintiff's famous mark, took active steps to hide what they were doing, and failed to disclose their domain names when applying to become affiliates.

Defendants fared better on the state and federal false advertising claims. (Why false advertising and not trademark? Perhaps because consumers were not in any relevant sense confused by the relationship between plaintiff and defendants. They were looking for Land’s End and they found it; defendants collected a toll from plaintiff on the way, but consumers never knew about that. The second-time-unavailable trick might have prevented plaintiff from making some sales if any consumer mistyped the URL twice, but that would be hard to prove and still doesn’t resemble infringement.)

Anyway, the court found that the Lanham Act claims failed because defendants made no statements to consumers and sold no goods to plaintiff. This is bizarre reasoning towards the right outcome, since (1) omissions can be false advertising and (2) the issue isn’t whether defendants sell things to Land’s End but whether they’re competitors, which they don’t seem to be. The court also held that typosquatting of this sort isn’t “advertising.” Defendants profited, but they did so by not publicizing their activities.

The Wisconsin state law claim also foundered because defendants didn’t make any affirmative representations to the public about merchandise. Land’s End argued that defendants misled it about the source of their referrals, thus positioning itself as a member of the public. The court found an essential distinction between defendants’ behavior towards Land’s End and their behavior towards the public; it is the latter that the state law tries to govern, and defendants didn’t do anything bad to the public. Any misrepresentations directed at Land’s End weren’t statements to the public relating to merchandise.

The breach of contract and fraud claims, also unsurprisingly, survived defendants’ motion for summary judgment.

Defendants had the chutzpah to argue that plaintiff suffered no damages because, absent their activities, customers would have just given up when their mistyped URLs failed to produce a Land’s End website. The court commented that this reasoning was “specious, at best.” Consumers aren’t idiots; an error message would have led most, if not all, of them to recognize their typos and retype the correct address. Land’s End thus lost 5% of the sales made by consumers who initially made typos when it paid an unnecessary commission to defendants.

Under the pink (again)

Farm Raised Salmon Cases, 2006 WL 2510152 (Cal. App. 2 Dist.)

Various plaintiffs sued grocery stores alleging that the defendants sold artificially colored farmed salmon without disclosing to consumers the artificial coloring. This allegedly misled consumers about origin, quality, freshness, flavor and other characteristics, and potentially posed health risks, since wild salmon have natural pinkish coloring and farmed salmon is gray unless it's fed special chemicals. The cases were consolidated. The superior court found that the FDCA preempted the unfair competition, CLRA, false advertising, and negligent misrepresentation claims and that the matter should be referred to the FDA or the California Department of Health Services under the primary jurisdiction doctrine, and dismissed the complaint.

The court of appeals affirmed on the grounds that Congress intended to preclude private enforcement of the FDCA, which requires food labels to state that farmed salmon is artificially colored. Thus, a state law private right of action based on an FDCA violation would frustrate the purposes of exclusive jurisdiction for the FDA, and the state law claims were impliedly preempted. This is a substantial turnaround from other California cases, which have held that state law creating a consumer remedy for illegal conduct can allow a consumer to sue even when the law the defendant violated has no independent private right of action. It will be interesting to see what happens if the case goes further.

Also of note: The court pointed out that California law adopts FDA standards and that the state department of health has regulatory authority over misbranding of the sort alleged in the complaint. But if the principle that only the FDA can enforce FDA standards is so robust that it preempts state law as to private plaintiffs, enforcement by state officials seems problematic as well. In fact, the statutory language cited by the court allows the health department "or any other person" to seek an injunction against a violation of state law; either way, non-FDA enforcement creates the risk of multiple standards. Although the FDCA provides that in some circumstances, after giving notice to the FDA, states can sue under the federal law, California law authorizing the health department to act based on state law doesn't require the department to give notice to the FDA – and why would it, since the department is enforcing state law? I can't wait to see some aggressive defendant cite this case against a state enforcement action. It's not too surprising, then, that the AG argued in favor of the plaintiffs.

The court's conclusion was cast in sweeping terms: if the facts plaintiffs would have to prove to win their case would "demonstrate" a violation of the FDCA, state law is preempted. This fact-based analysis will create problems in sorting out summary judgment. It will also cover an awful lot of claims, maybe more than the court of appeals recognized, since the FDCA requires truthful labeling of pretty much everything under its jurisdiction, which is a significant percentage of the American economy. The courts in Lanham Act cases have been moving towards the theory that if a plaintiff can prove that a claim is misleading without relying on violation of FDA standards, it can prevail. This preemption theory would preclude that strategy, even though the plaintiffs in this case alleged that colored, unlabeled salmon misled consumers into thinking that the salmon was wild regardless of FDA regulation.

Related Wisconsin case with different outcome discussed here. Alternate preemption reasoning discussed here.

Tags:

• fda
• preemption
• falseadvertising

Update on FDA and preemption

Pharma Marketing Blog and Eye on FDA discuss the proposal to have FDA pre-review all direct-to-consumer ads. While the former notes that AstraZeneca's proposed tradeoff is that reviewed ads cannot then be found misleading or inaccurate (because problems never develop in practice, especially when you're guessing about how audiences will receive a message!), it's worth noting that the other obvious benefit to pharma from pre-review is that then it will be easier to argue that deceptive advertising claims are preempted. Judge Breyer recently partially rejected a preemption claim because FDA doesn't review DTC in advance, which can only have increased the industry's enthusiasm for pre-review.

Tags:

• fda
• preemption
• falseadvertising

Recent reading

Fan Fiction and Fan Communities in the Age of the Internet, eds. Karen Hellekson & Kristina Busse: You’ve got to read Textual Poachers to do fandom studies. This collection is an instant essential on that level, for anyone interested in what it means to base a creation on a specific preexisting work, which is to say anyone interested in transformative use. Every essay taught me something. The main focus is on fandom as a community, which means that all its works are in some sense communally authored even though individual attribution also remains important. The other strand running through the pieces is the idea of using literary theory (or performance theory, see below) instead of the usual sociological approaches to studying fans -- treating fan creations as texts that can usefully be analyzed not just as expressions of resistance or cooptation, but as works of authorship and art.

Francesca Coppa’s history of fandom and later essay about the relevance of performance studies are alone worth the price of admission. Fan fiction as theatrical performance, explaining the genre’s focus on bodies and on repetition with a difference – this is an idea so brilliant that it seems obvious once she lays it out. As a bonus, she can really write. As copyright law has expanded to regulate more and more things that can be done with texts other than make identical copies of them, turning a "work" into an abstract thing that is never fully realized in any specific physical instance (see Julie Cohen's forthcoming Creativity and Culture in Copyright Theory on this), copyright looks more and more like a theory of performance, in the sense that each replication of a "work" is a link in a chain, each of which reflects on the others. Copyright scholarship could thus benefit from Coppa's approach. I've drawn on Coppa's work, and Sonia Katyal has a relevant piece that applies Austinian theories of performative language to copyright and slash fan fiction, but there's more to be done.

Aside from Coppa’s contribution, there are several other suggestions for a general term for forms of writing, like fan fiction, that claim interpretive power without authority and without closing off the possibilities for other contributions to the same set of texts. This includes Abigail Derecho’s fascinating “archontic,” which she offers in an essay that traces the history of rewriting as a women’s history of writing, sometimes literally in the margins. Many essays focus on fans’ use of Livejournal to post fiction and the interactions between readers and writers, texts and revisions, public and private, fact and fiction, and other traditionally opposed binary relations that Livejournal in particular and fan culture in general tend to undermine. The diversity of fandom will continue to increase, and maybe historical and critical perspectives can give some guidance on how fans can deal with the ever-increasing circles of fannish influence. One big binary that was largely unaddressed in the volume, and definitely deserves copyright scholars' attention, is the commercial/noncommercial divide, which has long been part of the fannish narrative of why it's okay to write fan fiction. Today, third parties like Livejournal, and occasional fans, are monetizing and commercializing "user-generated content" that consists of unauthorized derivative works. How should we deal with that? If the other binaries aren't sacred, why should this one be?

Skydiving without standing

Skydive Arizona, Inc. v. Quattrochi, 2006 WL 2460595 (D. Ariz.)

Plaintiff’s trademark and false advertising claims are based on defendants’ websites, which allegedly misrepresent defendants as “Arizona Skydiving,” “Skydiving Arizona,” “Skydiving Arizona Center,” “Tuscon Skydiving Center,” and “Skydive Flagstaff,” when in fact defendants operate no such facilities. In addition, defendants allegedly falsely claim that the “Skydiving Arizona” facility is “the busiest skydive center serving Arizona” and runs “multiple turbine aircraft.” Defendants allegedly have similar websites for Phoenix, Tempe, Scottsdale, Mesa, Gilbert, Yuma and Flagstaff. Plaintiff claims that Defendants have sold “certificates” to Arizona residents with false claims that the certificates are redeemable at Plaintiff’s facility, and that defendants have made false and misleading statements concerning their relationship with Plaintiff.

After dismissing individual defendants for lack of personal jurisdiction, the court addressed certain allegations against the corporate defendants in the complaint.

Part of the complaint alleges that the defendants copied copyrighted photographs from the website of a well-known Arizona skydiving videographer and used those photos to misrepresent their services. The photos include a picture of a group of skydivers at plaintiff’s facility, but defendants used the picture on several of their websites, labeling it as a photo of defendants’ experienced staff. Plaintiff alleges that this occurred on websites for several states, and also alleges that defendants similarly copied photos, text, graphics, layout, and design from another, Canadian website, using the copied materials to advertise fictitious sites in 17 states. Moreover, defendants allegedly posted false testimonials from supposed customers on multiple sites. In addition, plaintiff alleges that, when a Tennessee skydiving facility owner died, defendants called the phone company and had the 1-800 number changed so that it would be forwarded to their telemarking center.

The court ruled that these allegations don’t cover conduct with direct bearing on the plaintiff. Plaintiff doesn’t operate outside Arizona, so the non-Arizona sites can’t harm it. (Unless the various sites combine to create the impression of a respectable nationwide business that’s a better bet than a local operator, though that might be hard to prove.) Because plaintiff couldn’t show that these false statements diverted business from it, it had no standing to challenge them under the Lanham Act. Plaintiff has no brief to defend the reputation of the skydiving industry generally, even if defendants’ practices make the whole industry seem shady. As a result, the court struck these specific allegations from the complaint.

A couple of comments: Dastar is one reason not to treat wholesale copying as false advertising, though of course if the defendant copies statements that aren’t true when applied to itself, it’s engaging in false advertising. It seems to me that these allegations may still bear on defendants’ intent to confuse (in the case of the 1-800 number) or to misrepresent. Intent can weigh against a defendant as part of the multifactor confusion test, and courts occasionally take it into account in false advertising cases. For similar reasons, if liability is established, the scope of defendants’ acts may bear on damages, though the Lanham Act doesn’t provide for punitive damages. Would state-law claims help here?

The Dork Tower on Copyright in Characters

GMs beware: check your EULAs, or you could end up like this!

What we as a country really value

Working on a book chapter on trademark and free speech, I came across an argument for the dilution cause of action that I really don’t buy: “Rare characters like James Bond are national treasures; as such they should not be free for all to use.”

Um, as opposed to Abraham Lincoln or the American flag? Also, isn’t James Bond a foreigner of some sort, and thus not our national treasure? Talk about cultural imperialism …

Cite: Kristen Knudsen, Tomorrow Never Dies: The Protection of James Bond and Other Fictional Characters Under the Federal Trademark Dilution Act, 2 Vand. J. Ent. L. & Prac. 13 (2000).

Your Second Life ... as a celebrity impersonator

This Washington Post story on artists performing concerts in the game Second Life is intriguing because it doesn't distinguish authorized performances (Suzanne Vega, Regina Spektor) from unauthorized (a group of fans dresses as U2 and plays their music). The DMCA should protect the game company from copyright liability for the tribute band, but does the CDA cover right of publicity claims? Smart money says yes, but courts could still find no violation by the Second Life tribute band by finding that, even if the right of publicity is an intellectual property right and thus not subject to the CDA's protections for ISPs, fan-generated celebrities aren't being used for commercial advantage and thus don't fall within the scope of the law. I haven't seen any discussion of this so far, though I'm not completely up to date in the literature on virtual worlds.

New FDA preemption decision in Celebrex litigation

In re Bextra and Celebrex Marketing Sales Practices and Product Liability Litigation, 2006 WL 2374742 (N.D.Cal.)

Judge Breyer is handling this multidistrict litigation, consisting of putative class actions arising from the marketing and sale of Celebrex. Non-steroidal anti-inflammatory drugs ("NSAIDs") have been widely used for pain relief for several years. NSAIDs, however, pose a risk of gastrointestinal toxicity, which results in thousands of deaths every year. Pfizer developed Celebrex, a NSAID known as a COX-2 inhibitor, with the hope that it would have fewer gastrointestinal side effects than traditional NSAIDs. Pfizer marketed Celebrex both to consumers and to medical professionals as a solution to chronic pain.

Plaintiffs allege that Celebrex’s marketing was deceptive because Pfizer (1) suppressed data showing the cardiovascular risks associated with the use of Celebrex; (2) falsely claimed that the use of Celebrex had fewer gastrointestinal side effects than traditional NSAIDs; and (3) falsely claimed that Celebrex provided superior pain relief and safety over traditional NSAIDs. Celebrex was a very successful drug, accounting for billions in sales, at a price premium that was an order of magnitude greater than the price of traditional NSAIDs. Plaintiffs allege that, had Pfizer not falsely advertised Celebrex, they would have purchased equally effective and less expensive drugs. The putative class seeks to represent all U.S. end-payors, including consumers and third-party payors who bought or paid for Celebrex not for resale, from December 1, 1998 until now.

Plaintiffs have four claims: (1) RICO; (2) state consumer protection laws; (3) unjust enrichment; and (4) breach of warranty. Pfizer argued that all these claims were preempted by the FDCA and the FDA’s regulatory authority, and made other arguments as well. This opinion addresses only preemption.

The FDA required Celebrex to be marketed in accordance with its approved label, which included a warning for aggravated hypertension but did not otherwise warn of cardiovascular risks. The FDA had access to study results that might have raised a red flag, but the agency didn’t act. Plaintiffs allege, however, that Pfizer also had results that would have reinforced the concerns raised by that study, and that the FDA would have taken the problem more seriously had Pfizer not concealed this until 2001.

In 2001, an FDA Advisory Panel reviewed the cardiovascular risks of Vioxx and Celebrex. The result was a requirement of a new warning on the Vioxx label, but the FDA specifically determined that the overall rate of serious adverse cardiovascular events for patients taking Celebrex was no higher than in patients taking other NSAIDs, and the FDA-approved revised label reflected this. In 2005, the FDA concluded that the benefits of Celebrex outweigh the risks in appropriate patients and therefore Celebrex should remain on the market as a prescription drug, but ordered Pfizer to include a black boxed warning on the Celebrex label that highlights the potential increased risk of serious adverse cardiovascular events.

Back when the FDA first approved Celebrex, it warned Pfizer that "any promotional activities 'that make or imply comparative claims about the frequency of clinically serious GI events compared to NSAIDs or specific NSAIDs will be considered false and/or misleading....' " In 2005, the FDA required an upgrade in the GI toxicity warning on the label to a black box warning that NSAIDs, including Celebrex, “cause an increased risk of serious gastrointestinal adverse events including bleeding, ulceration, and perforation of the stomach or intestines, which can be fatal.”

How to apply preemption principles to the complaint? The complaint alleges that Celebrex’s marketing was unlawful because it didn’t disclose increased cardiovascular risk. Essentially, plaintiffs argue that Pfizer should have included an additional warning not rquired by the FDA on the Celebrex label and advertising.

Many courts have held that “failure to warn” claims don’t conflict with FDA regulations and are therefore not preempted, as FDA requirements impose only minimum standards. Other courts, however, have found preemption, at least where the FDA actually considered and rejected a similar warning.

The FDA recently issued a preamble to a Final Rule on labeling that reversed its longstanding position on preemption. The FDA now "believes that State laws conflict with … Federal law when they purport to compel a firm to include in labeling or advertising a statement that FDA has considered and found scientifically unsubstantiated." The FDA expressly disagrees with those cases that have held that state-law failure to warn claims are not preempted. The FDA has ultimate authority over a label, so the manufacturer can’t change it without permission. Moreover, the FDA’s label is both a floor and a ceiling. Additional disclosures of risk information can make a manufacturer liable under the FDCA if the additional statement is unsubstantiated or otherwise false or misleading. (Has anyone ever heard of the FDA telling a manufacturer that it’s disclosing too many risks?)

The FDA was concerned that additional disclosures could, instead of protecting patients, confuse the benefit/risk profile necessary to make informed judgments about drug use. And such disclosure requirements would be imposed by nonexpert judges and juries, often on behalf of a single individual or group without consideration of others’ interests. The result would be defensive labeling, which could result in underuse of good drugs. (Ah, the old Type I/Type II error problem. If the FDA is certain it doesn’t make many mistakes approving beneficial drugs, then it’s wise to worry about underuse.)

The court determined that the preamble was entitled to deference. Following the Supreme Court in Geier, the court found that Congress delegated implementing authority to the FDA; the subject matter is technical; and the relevant history and background are complex and extensive. The agency is uniquely qualified to understand the likely impact of state requirements. Plaintiffs argued that a preample isn’t a regulation or even an interpretive rule, but the court held that it was enough of an expression of agency opinion to justify deference. True, the consistency of the FDA’s position matters, and FDA used to hold that its standards were minimum ones rather than both minimum and maximum. In fact, in 2000, when the FDA published the proposed drug rule (the rule to which the preemption preable is attached), it took a no-preemption position. The change came in 2001, after a change in administration, when the FDA began to submit pro-preemption amicus briefs. But changing position after executive branch change is not inherently illegitimate, and the FDA’s position has been consistent since then.

The FDA's view is that a claim is preempted if the FDA determined that the warning the plaintiff seeks to impose is not supported by the evidence before the FDA. The FDA does not have to expressly determine that the warning would be false and misleading, although the FDA has suggested that an unsubstantiated statement is indeed false and misleading. (Of course, the DC Circuit’s First Amendment jurisprudence has been very hostile to this position when it’s actually used to regulate claims, for example on supplements, as opposed to being used defensively by drug companies. But, presumably, the logic behind the DC Circuit’s rule means there are also First Amendment problems with imposing liability for failure to warn. But Pfizer doesn’t want to make that argument if it can rely on less sweeping preemption claims.)

The allegation that Pfizer withheld material cardiovascular risk data from the FDA does not change the preemption analysis. The court pointed out that “[t]he law is well established that a claim premised on a drug manufacturer's failure to provide data to the FDA is preempted.” Thus, the cardiovascular risk claims were all preempted.

Pfizer also argued for preemption of the other theory of liability, that Pfizer falsely claimed that Celebrex had fewer GI complications than other NSAIDs and was more effective. Pfizer noted that the FDA requires drug companies to submit all advertising to the FDA's Division of Drug Marketing, Advertising, and Communications ("DDMAC"). DDMAC reviews the advertisements for compliance with the FDCA and FDA regulations on advertising, and has the authority to require a company to stop running a particular advertisement or to run a corrective promotion.

And how well does that work out? Money quote from DDMAC's director:

"We get complaints from consumers and physicians who call us up and say, 'Tom, how can you allow that TV ad to be on?'" Abrams says. "They're flabbergasted when we say, 'We didn't approve it before it went on TV.' Often, we're seeing it at the same time as the American public. DDMAC has limited resources and we use our limited resources as effectively as we can to do our job."

DDMAC usually takes long enough to act that many campaigns are over before DDMAC objects. DDMAC has been notably quiescent for the same period of time that the FDA has argued in favor of preempting state-law failure to warn claims. And the Washington Legal Foundation has a policy of responding to every DDMAC letter that issues on First Amendment grounds, just to show the antiregulatory flag.

Still, Pfizer submitted its challenged Celebrex advertisements to DDMAC and, with a few exceptions, the DDMAC did not object. According to Pfizer, this is necessarily equivalent to a FDA determination that the ads are accurate and strike a fair balance between the benefits and risks of Celebrex. Therefore, any claim that such ads were deceptive conflicts with the FDA's determination and are impliedly preempted.

The court was correctly unwilling to take preemption that far. There was no record evidence that the FDA actually reviewed all the submitted ads, let alone that FDA review means a determination that the ad isn’t misleading. The FDA’s silence on whether false advertising claims should be preempted was also significant in comparison to its position on failure to warn claims.

Pfizer also argued that particular ads identified in the complaint are consistent with the FDA-required label and therefore any claims based on those advertisements are preempted. Plaintiffs' claims, however, are that the ads implied that Celebrex is superior to other NSAIDs because it causes fewer gastrointestinal symptoms, a claim which the FDA expressly determined would be false and misleading. Given that Pfizer was arguing that its ads did not imply GI superiority or greater efficacy and were thus not misleading as a matter of law, the court was unwilling to make a determination at this stage of the case.

Last, Pfizer argued that the FDA, not a court or a jury, should initially decide whether Pfizer's ads are misleading because plaintiffs' claims fall within the "primary jurisdiction" of the FDA. The primary jurisdiction doctrine applies to issues within the special competence of an administrative agency, and allows courts to route threshold decisions to that agency. The court easily rejected this argument. The issue isn’t whether Celebrex has fewer GI complications than other NSAIDs. The FDA already determined it doesn’t. The issue is whether Pfizer falsely claimed that Celebrex was superior, and courts and juries routinely decide false advertising cases.

With failure to warn off the table, false advertising may be increasingly important in pharmaceutical cases, even as issues of reliance and causation make consumer protection class actions difficult to maintain. (Third-party payors may have an easier time aggregating claims, as long as they have standing.) In another judicial system, one might expect a probabilistic or “fraud on the market” theory to emerge, but I hardly expect it will in these times.

Music for Cyberprofs

The Pet Shop Boys have a solid new album, including the song Integral, which is about the proposed British national ID cards. It doesn't hurt my enjoyment that this is good old-fashioned PSB. The album is available through iTunes.

Riffing on the post title, here's a not-very-good fan video on YouTube that uses Integral as music for Cybermen. (And another, slightly better, but still under-edited.)

The long tail

Chris Anderson, The Long Tail: Why the Future of Business Is Selling Less of More: Full disclosure – I got a copy of the book free by promising to review it.

Anderson is responsible for a meme that's gone way too far, the long tail of niche markets. If you read the original Wired article, you probably know most of what this book covers about using cheap storage and transmission to deliver specialized content to audiences who share some blockbuster tastes but also want their own idiosyncratically customized music, etc. collections. Note the subtitle, which is important to the focus of the book’s argument: There's gold in that thar Long Tail, Anderson argues, a vast untapped potential for making money, the way Netflix and iTunes are doing.

My natural inclination is to think of media fandom as a long tail, providing exactly the customized versions of Superman and Lex Luthor that I want to see. Anderson only mentions in passing the problems of intellectual property that arise when lots of new people start making stuff, often out of bits and pieces of preexisting stuff. He sees copyright as a licensing barrier that will be overcome by smart businesses in order to provide us all with the contents of the celestial jukebox, but that’s probably not true for things like fan fiction and fan videos. Copyright owners are more likely to license pure reproduction cheaply than to license the right to create new works. Fan fiction, art and videos can be perceived as threatening to the brand even if the copyright remains strong. Moreover, although Anderson is aware that lots of the new content is noncommercial, he assumes that his audience wants to monetize that, either by serving as an intermediary to link producers with consumers or by licensing their own content. Thus, he doesn’t necessarily have much reassuring to say to those out on the long unauthorized, noncommercial tail.

Anderson can be sloppy in matching cause and effect in his enthusiasm for finding long tails everywhere and simultaneously insisting that they’re tailiest on the internet. He discusses a well-known study about the effect of variety on consumers’ choices and satisfaction with their ultimate selection, a study that’s considered in more detail in The Paradox of Choice (excerpt; is it tragic irony or poetic justice that the 8th Google result for “paradox of choice” was a video lecture by the author on Google Video?). Basically, researchers offered jam samples and coupons at a specialty food store, either with six unusual flavors or twenty-four unusual flavors. Sixty percent of shoppers stopped to taste at the larger display, and only forty percent at the smaller. But wait! Thirty percent of shoppers who sampled one of six bought a jar, while only three percent bought from the one of twenty-four array. On the internet, this paradox of choice turns into the “tower of Babel” objection that choice overwhelms and confuses us.

Anderson points out that sorting and filtering mechanisms are a good fix, but he often speaks as if their use has to be online, where you can get recommendations and reviews. To him, the “problem on the supermarket shelf” is that jam just sits there, categorized by the retailer and mute about its characteristics other than those the producer puts on the label. But a page before knocking the supermarket shelf, he noted that his own supermarket carries more than 300 varieties of jam. Something other than user reviews and filtering is producing that, probably including most shoppers’ ability to ignore exotic jams unless they have a specific desire to try one. Maybe retailers are irrational, but maybe they benefit from 300 jam varieties even if jam producers don’t, as long as the variety drives consumers to the store (see the 60% versus 40% result above) where they can be convinced to buy other things, as Eric Goldman is investigating. Anderson doesn’t try to explain how his supermarket grew a long tail.

Still, the meme is incredibly productive: There’s a long tail even in media fandom. The Yuletide Rare Fandoms challenge is an instance of the long tail, where decreased costs of communicating and coordinating mean that fandom now tries to provide a story that only one person might want to read for each person who participates. And the thing about the Long Tail is you get moved down it by also having (relatively) popular tastes – if you weren't in media fandom in some way already, you likely wouldn't know about Yuletide. The new information economy is one in which people’s top choices are shared but our overall preferences are unique. We help each other find customized mixes by recommending and rating items we have in common.

An important implication is that if you’re trawling through a general category of content, whether it’s movies or even action movies, more of what you see may be not your thing, because there is so much variety. The promise of the long tail is that, when you do find your thing, it will be much closer to your heart than the best you could have done in a world with less variety. But people are complex and consumption is always relative, so the path to realizing that promise may be a difficult one.

Anderson doesn’t engage with issues of positional consumption or the sense of loss that this fragmentation really does engender (even though I agree it’s a good thing overall). He’s a bright but not a deep thinker, as indicated by this entry on his blog, where he misunderstands what Andrew Keen says about how Anderson's predestination theory of technological development is like Marxism as an accusation that Anderson is a "commie or a hippie." Though Keen is a conservative for whom an analogy to Marxism is equivalent to a knockout blow, he's not redbaiting. He's arguing that Anderson's faith in a market shaped by lots of individual, unguided, unedited choices shares the same excessive faith in human nature that was supposed to produce communist utopia. Anderson does cite Marx for the idea that everyone should be able to produce what they want without being locked into an identity – I can herd sheep in the morning and paint pictures at night without being a “shepherd” or a “painter.” Anderson, like Marx, has faith that people with the resources and leisure to create will do so even without monetary rewards.

NB: I'm a lot closer to Anderson than Keen in most of my biases. I also have faith in the creative impulse independent of market incentives. Keen is prone to anti-intellectualism, as when he complains that Henry Jenkins and Yochai Benkler write incomprehensible prose because he – who isn't in either of their fields – doesn't understand it. I found the quoted paragraph of Jenkins perfectly comprehensible. And while I won't claim that Benkler is easy to read, The Wealth of Networks is a major synthesis of thought on law and the information society. It is particularly silly for Keen, who attacks the fragmentation of knowledge and touts the value of sustained in-depth thinking found in books, to criticize a book because he can't understand the title of the next-to-last chapter. He didn't make it 50 pages into the near-500-page work of social theory. That's like saying a college-level anatomy text is bad because, hey, I have a body so I ought to understand the next-to-last chapter as soon as I crack it open. Anyway, given that intellectuals like Benkler are prime examples of people who create for nonmarket reasons, it’s probably not surprising that Keen doesn’t like them much.

Keen is right that Anderson is a booster rather than a theorist. The Long Tail is a book of examples and not a theoretically sophisticated argument about technological determinism. If you want an assessment of the likelihood of transformation of the market given technical possibilities versus legal constraints, read Benkler's book, particularly Chapters 11 & 12. (Benkler also does a careful job on the “paradox of choice” objection discussed above.)

The long tail idea does not claim that everyone has something interesting to say, for blockbuster values of "interesting." Everyone has something interesting to say to her friends and family – I'd happily listen to my dad's thoughts on Veronica Mars even though they're not unique and I wouldn't be interested in the same thoughts from a stranger. Long tail technologies like Livejournal and Blogger allow everyone to be famous to 15 people. Peer production doesn't mean that professionally produced content will disappear or even lose its grip on top-ten lists. It means that lots of people will share some favorites but their fifth, sixth, etc. choices will differ wildly. Individual amateurs are not generally that important; amateurs together are significant.

Latest round of the heartburn wars: not about Nora Ephron

AstraZeneca LP v. TAP Pharmaceutical Products, Inc., 2006 WL 2338144 (D. Del.)

AstraZeneca sought a declaratory judgment that its “Better is Better” campaign for Nexium, which has now been discontinued (see remnant here), was not false or misleading under the Lanham Act. TAP, producer of Prevacid, counterclaimed and demanded a jury trial. (The court found that TAP wasn’t entitled to a jury trial because its damages evidence had been excluded and its only remaining available relief was an injunction.)

Nexium and Prevacid treat acid reflux with a similar method of action. The “Better is Better” campaign ran for half a year, late 2004 to early 2005, and included two TV commercials, print ads, website materials, and a pamphlet. The basic claim: “recent medical studies ... prove Nexium heals moderate to severe acid related damage in the esophagus better than the other leading prescription medicine.”

TAP didn’t contest the reliability of the two studies on which AZ relied, which showed a difference of 12.7% and 4.9% in healing damage at eight weeks compared to Prevacid (86.6% versus 73.9% and 82.4% versus 77.5%), with greater improvements the more severe the damage was. Rather, TAP argued that the ads conveyed several false and misleading messages: (1) Nexium is better for symptom relief, (2) Nexium is clinically better, when it’s only marginally better at healing, and the statistically significant difference is clinically meaningless, and (3) Nexium is better for everyone, when only a small minority of patients have “moderate to severe” damage.

The court rejected most of the parties’ challenges to each other’s experts, holding that they went to the weight of the evidence rather than its admissibility, for example TAP’s testimony about the difference between statistical and clinical significance. TAP offered survey evidence, which AZ sought to discredit. Dr. Thomas Dupont did two surveys, one based on a TV commercial and the other on internet advertising.

Claims (1) and (3) (better for symptoms/better for everyone): Based on combined responses to general (paraphrase: What did the ad say?) and specific (Did the ad say Nexium is better? What is it better at doing?) questions, Dupont concluded that 71.1% of respondents took away a message that Nexium provides superior symptom relief, while 32.1% understood that Nexium was better at healing damage. A final closed-ended question allowed respondents to choose whether the ad said Nexium was better than other medications for symptom relief, healing damage, both, or neither (and a don’t know option). In response to that question, 20.8% of respondents said Nexium was only better at healing damage to the esophagus, 15.8% said it was better only at treating symptoms of acid reflux disease, and 62.5% said it was better for both. Dupont, however, stated in his report that this last question was only included as a precaution, in case the answers to the open-ended questions were ambiguous. He felt that question six may have been either suggestive, overly complex, or both, and that the question was unnecessary because the answers to the open-ended questions were clear.

The internet survey included a question assessing materiality and its closed-ended question dealt with whether Nexium was better just for people with moderate to severe damage or for some other group. Before the close-ended question was asked, 11.2% of respondents who viewed the test ad said something about moderate to severe damage, while no respondents who viewed the control ad made such a statement. Dupont stated that these results "don't help us a lot in understanding whether or not consumers understood the limitation on the claim being made in the ad." In other words, it’s possible that more people understood the limitation on the claim than just 11%. In response to the closed-ended question, 38.5% of test cell respondents said that only people with moderate to severe damage to the esophagus were healed better by Nexium. However, 38.3% of control cell respondents, which did not contain the words moderate to severe, gave the same response. TAP’s rebuttal expert therefore opined that these questions should be excluded from the analysis. She believed that many respondents were merely guessing.

Perhaps unsurprisingly, similar percentages of test and control subjects indicated that the ad they saw would influence their purchase decision; very few gave the specific reason that Nexium heals damage better. But, of course, the real action is in the difference between the open- and closed-ended questions. The court agreed that the closed-ended questions prompted meaningless responses, and without the closed-ended questions it was impossible to interpret the answers to the open-ended ones. At most, all you can say is that at least 11% understood the limitation to moderate/severe damage, and somewhere between 0% and 89% were misled. Thus, the internet survey was excluded because it lacked probative value.

Independent of all this, AZ argued that a consumer could properly conclude that Nexium is superior overall because it’s superior in healing moderate to severe esophagal damage. TAP responded that there’s an established rule that a claim that’s only true with respect to a subset of patients is false when presented as an unqualified claim. But the court found that no such rule exists. My reaction: there are cases going both ways. The most logical way to divide them is to say that, if the subset is a small fraction of the total consumer population (people whose fatigue comes from iron deficiency rather than other factors, to take an example of a false claim once made for Geritol) or if the consumer can readily whether she’s a member of the subset (people who have migraines rather than normal headaches), unqualified claims that relate only to the subset are false. If the consumer could easily be a member of the subset and isn’t likely to find out, it can be worth trying the product and thus the unqualified claim isn’t explicitly false. If most people with heartburn don’t know the extent of their esophagal damage, then the court’s conclusion fits with prior cases. Given that Nexium is still useful for people outside the subset – unlike Geritol for people whose fatigue is from thyroid deficiency, say – it’s reasonable for consumers to conclude that, all other things being equal, Nexium is better because it’s better for moderate to severe damage.

Claim (2) (statistically significant versus clinically significant): TAP argued that Nexium’s statistical advantage over Prevacid was not clinically or therapeutically significant, and thus claiming an advantage was literally false. The court rejected this argument. The cases on which TAP relied involved situations where there was affirmative evidence that the difference touted by the defendant had no clinical significance. In Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharma Co., 129 F.Supp.2d 351 (D.N.J.2000), the defendant’s product was stronger in vitro than other products on the market, but in vivo results consistently indicated that greater strength didn’t improve efficacy in the body. Likewise, in Castrol, Inc. v. Quaker State Corp., No. 91 Civ. 8517(CSH), 1992 WL 47981 (S.D.N.Y. Mar.2, 1992), the defendant proved its product was faster flowing than other products, but tests of engine wear (which was the claim at issue) showed that faster flow, if anything, made things worse. Here, the studies on damage healing were relevant to consumer use.

One can imagine a case in which a statistically significant result was clinically irrelevant, though it might be hard to fit into current Lanham Act jurisprudence. For example, a rigorous enough study could decisively prove that Medication A is effective in 1% more patients than Medication B, or works on average one hour faster. Especially if Medication A is more expensive or has greater side effects, I find it hard to imagine doctors thinking that Medication A is clinically better. Now, expense and side effects are technically unrelated to efficacy and so ordinary Lanham Act law wouldn’t consider them in evaluating the truth of efficacy claims, but if the issue is what doctors would actually recommend, then perhaps we should take them into account.

Anyway, the court found that the clinical significance issue was really better addressed in evaluating implicit falsity. I’m not sure I buy that, because I find it hard to imagine why advertisers would ever make claims about statistical significance except to lead consumers to conclusions about clinical significance, which meets the standard for “necessary implication.”

TAP tried to bolster its argument with FDA regulations that state that an ad may be false if it uses the concept of statistical significance to support a claim that hasn’t been demonstrated to have clinical significance. The court rejected this, because the FDCA isn’t privately enforceable. (Again, while plaintiffs do have to show violations of the Lanham Act, not just the FDCA, the FDA’s regulations reflect the idea above – that there’s a necessary implication when an advertiser makes claims of statistical significance, especially to a lay audience – and probably should be usable as evidence in support of this conclusion.)

Because AZ was entitled to summary judgment on the literal falsity claim and the internet implicit falsity claim, all that was left was the TV implicit falsity claim, and of that, only the theory tested in the TV survey, that the ads falsely conveyed the idea that Nexium was better at treating all the symptoms of acid reflux, not just better at healing damage. The court stated in a footnote that TAP couldn’t rely on results from one medium to show falsity in another medium. Without further explanation, this is unconvincing – if the claim is the same, why should it make a difference whether the delivery mechanism was TV, radio, internet, or Pony Express? Perhaps, however, the TV ad copy was sufficiently different to justify this conclusion; otherwise it’s a needless restriction on the ability of plaintiffs to challenge a modern multichannel advertising campaign.

Given that the court already excluded TAP’s damages expert, the only issue remaining is the falsity of a discontinued ad campaign, so the court ordered the parties to conference, presumably with an eye towards dismissal.

Playboy, call your lawyers

This NYT story by Kurt Eichenwald is as disturbing as his first piece on child exploitation online. What struck the IP lawyer in me was the name and logo for one site he discussed, Playtoy Entertainment. With a one-letter difference in name and a disgusting business model, Playtoy has got to be a good candidate for at least a tarnishment claim. Perhaps the appalling nature of the services -- sexualized photos of very young, clothed children -- makes confusion unlikely, but I imagine there are a lot of judges out there who'd happily buy tarnishment. (I did not visit the Playtoy website because, frankly, I'm a little worried about the legal consequences of doing so. I don't know if there are disclaimers of affiliation with Playboy, or if the site's existed openly long enough to provide an equitable defense.)

As for the main topic of the article, Amy Adler has done very interesting work on the problem of child pornography law and the evasions it invites.

Heightened pleading and "advertising or promotion"

MPC Containment Systems, Ltd. v. Moreland, 2006 WL 2331148 (N.D. Ill.)

Plaintiff alleged a potpourri of state and federal claims against defendants, but this opinion addressed only defendants’ motion to dismiss plaintiff’s Lanham Act unfair competition claim.

Plaintiff designs, manufactures and installs containment systems, including storage tanks for water and fuel. Defendant John Moreland and his son, defendant Lawrence Moreland, were plaintiff’s employees/independent contractors for about twenty years, until October 2005. John was an executive VP whose duties included design of tanks as well as sales and bid preparation, including those for tanks made specifically for the U.S. Air Force, plaintiff’s largest customer for the last five years. Lawrence also worked on the manufacture of the Air Force tanks.

Given that this is a lawsuit, you can guess what comes next: working in secret, John and Lawrence established a competing business. Among other things, plaintiff alleges that, while they were still employed by plaintiff, they made false representations while promoting their product, disparaged plaintiff’s tanks, and caused a likelihood of confusion over plaintiff’s sourcing or sponsorship of the Moreland tanks. As a result, plaintiff lost a $7 million contract.

Defendants argued that the complaint alleges misrepresentations to a single customer, which can’t be “commercial advertising or promotion,” to which my reaction is: When the “single customer” is the U.S. Air Force, your claims to it constitute commercial promotion.

But that didn’t matter, because the court sua sponte decided that the complaint fails to meet the heightened pleading requirements of Rule 9(b). The court raised the issue because heightened pleading for fraud is required not only to provide adequate notice, but also to address “the sufficiency of the claims that fall within the context of misrepresentations made ‘in commercial advertising or promotion.’”

I’m highly dubious, since the court doesn’t explain what it needs to know other than that the parties compete and defendants were talking about their products to a big customer. But, according to the court, though plaintiff adequately alleged who, what, and where, it failed to provide the when and the how. It alleged that misrepresentations occurred before John & Lawrence stopped working for it, but since that period was over two decades long, that doesn’t provide adequate notice. (One would hope this can be fixed with an amended complaint; also, it hardly seems to intersect with the concern for whether defendants were engaged in commercial promotion.) Plaintiff also failed to specify the method used to communicate the misrepresentations, which is necessary to figure out whether they’re within the scope of the Lanham Act using the Gordon & Breach multifactor test for “advertising and promotion.”

Again, I’m not clear why this is so. Gordon & Breach determined that even fully First Amendment-protected journal articles could be used as advertising, and thus advertisers using them subjected to the Lanham Act if the articles were presented to potential customers to sway purchasing decisions, so I cannot figure out what the problem could be. Both oral and written materials (not to mention images!) can be false advertising under the Lanham Act; plaintiff is clear that only one customer was targeted; what could come out differently in the test depending on the method used to communicate? There could be potential differences in how one treats oral statements – some courts give oral statements more leeway in a puffery analysis, though I think that’s a mistake when the speaker has sufficient organizational status that s/he can be expected to know the truth – but that doesn’t seem like the appropriate focus of a motion to dismiss.