Plaid must face jury on PNC's TM/advertising claims, but has good laches/acquiescence argument

PNC Financial Services Gp. v. Plaid Inc., 2024 WL 3687956, No. 2:20-cv-1977 (W.D. Pa. Aug. 7, 2024)

PNC is “a large, diversified financial institution offering retail and wholesale banking services,” while Plaid connects cash payment and investment account applications like Venmo, Robinhood, and Coinbase with a user’s banks. This allows a user to input the username and password affiliated with their bank account to create the connection between the user’s bank and the fintech app so money can be transferred between them.

PNC interface, L; Plaid connection interface with PNC logo, R

sample Plaid bank selection workflow

PNC alleged that Plaid infringed its trademarks by replicating the authentic PNC log-on screen to get them to provide private financial information, allowing Plaid to collect their data. Plaid responded that PNC knew about this as early as 2017 and worked with Plaid to make it easier for PNC customers to connect to fintech apps. The relationship became hostile in 2019, when a third party allegedy got PNC customer information that had been obtained by Plaid and leaked it on the “Dark Web.” At that point, PNC blocked Plaid from accessing/linking PNC account information using Plaid Link software in fintech apps.

Plaid allegedly then presented PNC consumers who were trying to connect to fintech apps via Plaid Link with messaging screens, using allegedly confusing branding, that said, “we’re currently experiencing connectivity issues with this bank” and “PNC has made a change that prevents you from being able to link your accounts.” One such screen also provided a link to the CFPB website and advised such users that they could file a complaint against PNC about their lack of fintech app access with that federal enforcement agency, “which PNC says led to users (who were presumably PNC retail customers) filing complaints against PNC with the CFPB. Plaid’s messaging also encouraged PNC customers to change banks.” In late 2020, a new Plaid user interface finally propitiated PNC.

PNC sued for counterfeiting, infringement, and false advertising/unfair competition under federal and Pennsylvania law. This opinion denies summary judgment to everybody on everything they sought, including claims and defenses.

Counterfeiting is probably the most eye-opening charge. A jury could find that the marks used by Plaid were spurious, that is, substantially indistinguishable from PNC’s actual marks and suggesting a false origin. There were “subtle color differences,” but indistinguishability was a “hallmark” question of fact.  And, interestingly, counterfeiting has to cover the “same” goods and services as the registrant’s, and the court considered it a jury question whether this was so. A jury could rationally conclude that Plaid and PNC do not offer the same financial services, given that “Plaid is not a bank.” Its customers are primarily fintech apps, not bank account holders. However, a reasonable jury could also find that Plaid offers the same “financial services” as PNC, or at least that both offer “financial services” covered by PNC’s registrations, especially given statements Plaid made to the PTO that it offered financial services. (The court did find that there was no judicial estoppel preventing Plaid from offering a defense that the services weren’t the “same,” given the gray areas involved.) A jury could also conclude that even if bank customers aren’t Plaid customers, they’re Plaid’s target audience—although how that matches up with the counterfeiting requirement I don’t know.

Trademark claims: The court declined to do a shortcut around the likely confusion factors despite the similarity of the uses and related services. (As is so common these days, the real issue is affiliation confusion, which also matters.)

The “consumer care” factor weighed against Plaid because of evidence that “Plaid Link’s entire system was designed to make consumers feel more comfortable in providing Plaid their banking information,” e.g. “[W]e use the bank logo and color scheme because it has a significant impact on conversion. It gives users more familiarity and trust in completing the linking flow.” Although banking may be “high engagement,” the evidence of confusion in the survey was “rather high (perhaps surprisingly high) in the control condition” at 38%; Plaid’s own statements indicated that using the logos made consumers more “comfortable” “and thereby perhaps less likely to be careful with their banking information”; and Plaid’s own experts “emphasize[d] that Plaid Link’s design structure promotes near-autonomous consumer decision making.”

But other consumer-based factors were up for grabs. A jury could readily conclude that “Plaid and PNC provide far different services and market to very different customers.” [Part of the issue here is: who’s confused about what? Plaid’s customers aren’t likely to be confused.]

Length of time/actual confusion: Record evidence “unconnected to Plaid’s messaging on the heels of the 2019 Cybersecurity Event” was “relatively sparse.” A consumer complaint cited by PNC might be relevant to false advertising, but didn’t obviously show trademark confusion:  

Venmo says they have lost connection with my bank – sounds like Venmo’s problem. I attempt to reconnect. Then the ‘Plaid’ screen appears. (As noted, I’m sure it’s safer to have this extra level of security – when it functions). Then the PNC (?) ‘Enter your credentials’ screen appears; when I enter my username and password the PNC screen says ‘the username you provided was incorrect.’ I have called PNC to confirm my username, and it’s the same one that works on the pnc.com site. So what next?

Maybe the complaining consumer believed that Plaid is a security feature of PNC, but “this consumer complaint could also be read as saying that Plaid is an independent software service that provides another level of security. More importantly, there is minimal other record evidence of actual confusion based exclusively off of Plaid’s use of PNC’s marks.” There was the survey, but a jury could find in Plaid’s favor.

Plaid’s purposes— “consumer ease of use and bank identification”—were not bad faith as a matter of law. However, bad faith isn’t required, only “intentional conduct” [what can this possibly mean? It seems to turn knowledge into bad intent]. And “statements from Plaid’s CEO regarding Plaid’s efforts to conceal its use of bank marks from the banks supports the conclusion that Plaid’s intent was willing and voluntary.” That is, the CEO told employees to make sure that they did not send an email announcing the addition of over 6,000 new bank logos to Plaid Link to the banks themselves. “A jury could readily conclude that Plaid wanted to guise itself in the marks of other banks, including PNC.”

PNC has a stake in another company, Akoya, designed to compete with Plaid. “[W]hile a jury could reasonably conclude that PNC is likely to indirectly compete with Plaid and that Plaid’s use of PNC’s marks harms PNC’s hypothetical future efforts in the account linking and data aggregation field, a jury could also conclude that PNC is prosecuting this case less to foster its own expansion plans and more to undermine Plaid before advancing its competing product.”

False advertising: This claim was based on Plaid’s messaging screens blaming PNC after PNC implemented changes that prevented users from using Plaid to link their PNC accounts with their chosen fintech apps. Plaid encouraged consumers to report PNC to the CFPB, and Plaid customer service representatives told those customers to switch banks.

Surprisingly, the court found that these statements could be “intentionally misleading,” because the statements “implicitly place the culpable fault on PNC for the measures it took to protect its customers’ data after the 2019 Cybersecurity Event. … [A] jury could conclude that Plaid did not tell PNC customers the full story, namely that there had been a security breach involving Plaid by which PNC customers’ private data was leaked on the ‘Dark Web.’” And the reference to the CFPB “could also be found to imply that PNC’s conduct was at least wrongful, if not illegal.” [But the precedents usually agree that statements by laypeople about violations of laws that are arguable/not yet decided are not factual and therefore can’t violate the Lanham Act. Unless Plaid was under a duty to disclose the security incident, it’s usually ok to give only information that favors yourself.] And PNC identified “multiple communications from consumers to the CFPB regarding their dissatisfaction with PNC after Plaid’s messaging screens went live,” such as “PNC has blocked access to Plaid, which allows me to transfer funds in and out of my account. It’s extremely inconvenient and I will have to switch banks because of it.” But that doesn’t demonstrate deception! That was true! Still, the court found this to be evidence of materiality.

Nor could Plaid win summary judgment on harm. A jury could find harm to goodwill.

PNC didn’t manage to kick out laches/acquiescence as a defense. PNC delayed four years before objecting, and another before suing, “despite evidence that shows that PNC worked with Plaid during much of that four-year period and had access to demos that showed PNC what the Plaid Link user interface looked like.” Prejudice was a closer question; it may have run up the potential damages, and Plaid could argue that to the jury. Acquiescence was similar: there was “plenty of record evidence that suggests that PNC made a thoughtful decision to continue working with Plaid despite having access to Plaid’s allegedly infringing user interface, at least in demo version, such that PNC conveyed implied consent to Plaid to use PNC marks as it did.” A jury could find this was more than mere inaction, especially given the participation of PNC senior executives.

Punchbowl, punchback: district court finds confusion unlikely between invitation and political news sites

Punchbowl, Inc. v. AJ Press LLC, 2:21-cv-03010-SVW-MAR (C.D. Cal. Aug. 22, 2024)

Punchbowl home page

Punchbowl News home page

On remand from the 9^th Circuit, the court conducts a multifactor likely confusion analysis and finds that Punchbowl’s digital invitation services are too distinct for likely confusion with Punchbowl News’s political reporting. Two points stand out: first, the court considers it significant that mostly women use Punchbowl and mostly men use Punchbowl News.

Second, there’s a useful discussion of misdirected communications in light of the unrelatedness of the services. There were about 100, which in the context of thousands of queries a year for each party was not significant. Moreover, misdirected communications may be probative of the fact that the names are similar, but not of likely confusion, because relevant confusion has to relate to some kind of purchase opportunity. Otherwise, trademark would turn into a right in gross:

Ultimately, the dissimilarity and lack of proximity between the services provided by Plaintiff and Defendant carry the day. This conclusion is the obvious one. At worst, some consumers might mistakenly contact one party when they mean to contact the other party. A misaddressed email, Facebook comment, or X post is a negligible friction that stems from the fact that both parties have named their services a common word. No reasonable consumer would purchase a subscription to a party planning software platform when they intended to subscribe to a news website (or vice versa) because they thought they came from the same source. No reasonable jury could find otherwise.

Trademark question of the day

 Spotted around town:

For reference, here's the Grand Theft Auto font:

State Little FTC Acts still have teeth, as Georgia's proves

Federal Trade Commission v. Peyroux, --- F.Supp.3d ----, 2024 WL 1283344, No. 1:21-cv-3329-AT (N.D. Ga. Mar. 11, 2024)

The FTC and the state of Georgia sued three corporate defendants and two individual defendants, Peyroux and Detelich. The underlying acts carried out by various defendants involved promoting stem cell therapy, which “involves the injection of shots with products containing cells or growth factors derived from birth tissue, including amniotic tissue or fluid, placenta, Wharton’s jelly, umbilical cord blood, adipose tissue, and bone marrow.” To get a sense of the costs at issue, over 2017-2019, at least 485 consumers purchased stem cell therapy injections from one defendant, Superior, at a total cost of $3,350,416. Many patients were seniors.

The other corporate defendants were consulting services that advised chiropractors and healthcare clinics on how to increase revenue by offering additional services to patients. They provided “resources — marketing manuals, flyers, lectures, sample emails ads, and PowerPoints — and a procedure to launch advertising campaigns.” They provided coaching on how to deliver PowerPoint presentations to potential patients, including on “handling objections” and arranging financing; offered medical training for clinics; ordered supplies for the stem cell injections, and provided other sales training, for example, on how to track patients and potential patient responses to marketing campaigns. Defendant Stem Cell Institute of America (SCIA) also “advertised stem cell therapy directly to consumers through lectures, postcards, emails, its website, YouTube, a documentary, and more.”

Peyroux was the 100% owner of all three corporate defendants; Detelich was, among other things, a co-founder, officer, and director of SCIA, and directly involved in developing, marketing, and delivering consulting services about stem cell therapy for the other two corporate defendants. Superior and SCIA filed for bankruptcy in 2019 (this proceeding continues as an exercise of the police power, despite the automatic bankruptcy stay).

The ads at issue misrepresented the efficacy of stem cell therapy, e.g., “stem cells can be used to treat nearly any type of condition caused by injury or degeneration” and specifically claimed the ability to treat, inter alia, COPD, Parkinson’s disease, multiple sclerosis, and congestive heart failure. The ads offered to “reduce and even eliminate your pain without surgery or additive medications.” Some of the ads claimed FDA approval. One of the training videos included a role-play about how to respond to customer resistance: “Over the past few years that we’ve done this, we have treated hundreds of patients with knee conditions with amazing results. So the level of degeneration you have in your knee makes you a really good candidate for this procedure. And I feel very confident in telling you that this is going to be a positive outcome for you as far as improving your range of motion, quality of life, and decreasing pain.”

The court granted summary judgment to the FTC and the State on many issues, including that the corporate defendants engaged in a common enterprise and that the individual defendants were liable for the corporate defendants’ acts. In addition, they made false or unsubstantiated efficacy claims; false claims of FDA and FTC approval; and supplied their client clinics with false/unsubstantiated ads and so provided clients with the means and instrumentalities to commit further deceptive acts and practices.

Both the false efficacy claims and the false FDA/FTC approval claims related to health and thus were presumptively material. And the defendants supplied the means and instrumentalities of deception to clinics through their extensive provision of ads and related services.

As to individual liability, this requires (1) control of the corporation’s relevant acts and (2) some level of knowledge. Where a defendant is a corporate officer of a small, closely-held corporation, “the individual’s status gives rise to a presumption of ability to control the corporation.” Knowledge means that the individual had “ ‘actual knowledge of the [unlawful] conduct, was recklessly indifferent to its [unlawfulness], or had an awareness of a high probability of [unlawfulness] and intentionally avoided learning of the truth.’ ” Furthermore, “[a]n individual’s degree of participation in the business is probative of knowledge.” Both of the individual defendants here directly participated in the unlawful acts and advertising—they even delivered seminars for the scheme—and also had authority to control the acts.

Georgia’s little FTC law, the GFBPA, outlaws “[u]nfair or deceptive acts or practices in the conduct of consumer transactions and consumer acts or practices in trade or commerce.” Examples of such unfair or deceptive acts and practices include “[r]epresenting that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have.” It also bars using “a computer or computer network” to “[e]ngage in any act, practice, or course or business that operates ... as a fraud or deceit upon a person.” “[T]he legislative intent and interpretation provision of the GFBPA makes clear that the Act should be interpreted broadly to end deceptive practices, and that the Act should be interpreted as coterminous with the FTC Act.” The court therefore rejected defendants’ arguments that joint GFBPA liability could only be imposed if the corporate veil could be pierced under Georgia law, noting that courts applying the laws of several other states have found similarly.

On remedies, Detelich argued that there should be no injunctive relief against him because there was no risk that he will engage in similar conduct again. In determining whether there is “some cognizable danger of a recurrent violation,” courts consider “the egregiousness of the defendant’s actions; the isolated or recurrent nature of the actions; the degree of scienter involved; the sincerity of the defendant’s assurances against future violations; the defendant’s recognition of the wrongful nature of his conduct; and the likelihood that the defendant’s occupation will present opportunities for future violations....”

Using this standard, injunctive relief was appropriate as to all existing defendants, who engaged in  “a comprehensive campaign to develop and disseminate misleading advertisements about the efficacy and approval of stem cell therapy on a massive scale.” The ads were the focus of their business, and they profited massively therefrom. The degree of scienter was high, and the individual defendants currently held interests in many other healthcare companies.

The State also sought monetary relief in the form of civil penalties and restitution under the GFBPA, which allows civil penalties up to $5000 per violation (without specifying a method for identifying how many violations occurred). There are additional penalties for targeting elderly and disabled people online, up to $10,000 per violation.

Georgia sought $5000/day for misrepresentations on Superior’s website ($6,650,000), $10,000/violation for 59 online advertising campaigns, 161 brochures downloaded online, 148 seminars delivered, and 335 elderly consumer purchases of stem cell shots ($7,030,000); $5000 for each individual consumer who purchased a stem cell shot who was not elderly ($750,000); and (4) restitution for the 485 customers who purchased stem cell injections from Superior ($3,350,416).

The court declined to decide on an amount at this time and noted the additional information it sought, but rejected some defense challenges to the availability of monetary relief. First, civil penalties under state law can be obtained in federal court, given an amendment specifying that “the Attorney General is authorized to initiate ... or otherwise appear in any federal court or administrative agency to implement the provisions of this article.”

Nor was the civil penalty provision unconstitutionally vague, even though defendants argued that it had no specific method for calculating the number of violations or setting an amount within the range. The per-violation language should be interpreted in concert with the rest of the statute, suggesting that “each unfair or deceptive act or practice, or consumer transaction, serves as a separate violation of the statute.” Courts interpreting similar statutes have assessed per violation penalties “based on the number of ads published, transactions completed, consumer purchases, or a mix of these measures.”

Grubhub's listing of unaffiliated restaurants on its platform could infringe TM

Lynn Scott, LLC v. Grubhub Inc., 2024 WL 3673718, No. 20 C 6334 (N.D. Ill. Aug. 6, 2024)

Restaurants brought a putative class action alleging that Grubhub used their names and logos confusingly, asserting claims under the Lanham Act.

“Grubhub acts as an intermediary between consumers looking to order food and restaurants looking for additional customers.” Restaurants who partner with Grubhub pay it a percentage for “an additional way of generating orders, internet advertising, and a delivery infrastructure.” Plaintiffs alleged that, since its founding (2004), Grubhub only included restaurants on its platform who agreed to appear. Thus, consumers allegedly expected that “restaurants listed on Grubhub’s platform were working cooperatively with Grubhub to provide takeout and food delivery services.” But in 2019, Grubhub changed to add more than 150,000 restaurants, including plaintiffs’, without permission.

Grubhub allegedly used different colors on its mobile app to help drivers distinguish restaurants who were partners versus unaffiliated restaurants and further disguised its actions by having drivers place orders under customer names and pick them up from the regular customer area without mentioning Grubhub. Customers allegedly erroneously blamed the restaurants for negative dining experiences.

False association: Some plaintiffs failed to allege protectable trademarks, but this would be curable in an amended complaint. The court rejected plaintiffs’ argument that they could bring false association claims without alleging a protectable trademark; “§ 43(a) does not have boundless application as a remedy for unfair trade practices.” Belmora was factually and legally distinguishable; there was at least a valid foreign mark there.

And likely confusion was generally a factual question. Enough was alleged here, including “exact replicas” of names and logos. For actual confusion, plaintiffs alleged “multiple accounts of customers who received poor service from Grubhub and, in turn, blamed Plaintiffs,” e.g., for an “outdated” menu on Grubhub that meant that orders couldn’t be fulfilled correctly. [I take it the court wouldn’t find confusion plausible if it was a newspaper review that became outdated. The usual multifactor test isn’t really suitable for that (or anyway, all the work in rejecting the plausibility of that theory comes from the unrelatedness of the goods and services).]

False advertising: Plaintiffs alleged that (1) use of Plaintiffs’ names and logos, (2) false representations that Plaintiffs’ restaurants are working alongside Grubhub, and (3) false and misleading statements made in connection with Grubhub’s use of the names and logos, such as statements that Plaintiffs’ restaurants were closed and the posting of incorrect pricing and menu items, constituted false advertising. Without discussing materiality, the court found this adequate.

IPSC Closing Plenary: Fair Use After Warhol

Christopher Buccafusco, Copyrighting Style

There are plenty of precedents that say style isn’t ©able. Appropriating the “core” of a work is not infringing in the absence of substantial similarity.there are also cases suggesting ©ability of style: Steinberg, saying style is part of expression. Blehm v. Jacobs, Bandana v. TJX, Reece v. Mark Ecko say that style is an ingredient of expression etc.

Unfortunately, this matters because of AI. Greg Rutkowski is a more popular prompt than Picasso and he doesn’t like this. Visual art for examples, but can be extended to music and text.

To some extent, style is ©able and to some extent not. Style sits between idea/content/subject and method/process, things that are excluded from ©ability. © attaches to the how, not the what: the means by which the ideas are given expression. The manner by which the author makes certain choices. These are forms—but that’s one way of defining style, the manner in which we clothe our forms of thought. Synonymy: the idea that you can say the same thing in many different ways. That’s a questionable commitment in aesthetic philosophy these days.

Same problems if we think of style v. method/process. Style feels a lot like method/process—ways in which you learn to engage in 2-point perspective drawing seems like a method for doing things. But not everything with a bunch of steps in it is uncopyrightable. Choreography can be ©able.

We can also make incentive claims about broader protection for style. But © doesn’t (shouldn’t) care about fame or distinctiveness. Copyright attaches to works, not ouvres. The scope of © shouldn’t grow b/c an author has made six works when the six works made by six different authors would have a smaller scope of ©. Style inevitably involves authorial choices about manner and form of expressing ideas; impossible to say with any coherence when these choices become sufficiently abstract to be ideas. Telling the jury “good luck” admits that we don’t know how to do this.

Path forward: copyright consists in the original properties by which a work expresses: by which it represents, denotes, and exemplifies. These include both formal features and the subject or content of the work. A work is an expressive unit of both the formal features and the underlying content; the relationship between those is what constitutes the work. Only when all the relevant features are substantially similar should we find infringement: combining formal features and underlying content should be required. Subject of work acts as a limitation on scope of ©. Monet gets a © in his depiction of waterlilies but not as against depiction of violets. 2 photos of Michael Jordan in grande jete pose but with different formal features.

This will get hard: Steinberg-style drawings of other cities are hard for him.

This is basically what Krofft said in the parts that are good and not terrible: you need substantial similarity in expression of ideas, not merely of ideas. Statue of a horse can’t embody the same idea as statue of a dancer even if formal features are the same, nor would a painting of a dancer.

Cubism makes it hard: could Braque have sued Picasso? Hard to figure out what the subjects are.

Is this relevant to fair use? Suggests that satire should have a greater claim to noninfringement than it historically has. Satire involves using the same style to clothe different ideas; therefore it shouldn’t infringe (lack of substantial similarity as in the Greatest American Hero case; German case law; perhaps the jury’s reasoning in the Kat von D case).

Courts should avoid analyzing “feel” and more focus on formal features. More about glint in eye than “uncomfortable” versus “larger than life” in Prince.

[seems like this is going to have trouble with derivative works]

Amanda Levendowski, Fairer Public Benefit

Bias and harms of works aren’t taken into account in fair use analysis: recruits a legal tool typically aimed at one set of problems for the purpose of cleverly addressing a different set of problems. Here the tool is the “public benefit” subfactor of fair use, aimed at balancing public benefits with market harms. Novel tech can promote sociotech harms like bias, mis/disinformation and social/environmental destruction. Particularly pronounced with algorithms and AI. Defining public benefit could mitigate some of those harms. [I am v skeptical of this given the inability of courts to do full cost benefit analysis; 1201 exemption analysis shows that putting downstream effects into the hopper is generally a way to suppress fair uses, and competition, in the service of fears of lack of control by big companies like John Deere.]

Cases that have discussed public benefit in fair use: 19 of 38 involve novel technologies—VCRs, digital libraries, early algorithms.

Defining public benefit is difficult. But deeply troubled by algorithmic fair use cases that allowed lots of exploitation—iParadigms (plagiarism detection) and Perfect 10 (exposing women to public view when they contracted for more restricted nudity). Amplified misinfo: these women didn’t consent to having their nudity exploited publicly. This is inconsistent w/the promotion of progress, and misinformation doesn’t do that. [How do you know that viewers received that message or perceived any difference between “posing for Perfect 10” and “having images online”?] Not saying Perfect 10 was wrongly decided, but not an uncritical public benefit. Could have named the costs, which influences how lawyers and courts think and behave.

Should consider public benefits of use discounted by public harms. Benefits and harms are both difficult to quantify.

Courts, as well lawyers counseling clients, can do this. Courts can elevate scholarship into doctrine. [Do we think that today’s courts will embrace the broader social benefits of a trans Joker, or instead consider the film to inflict broader social harm?] This wouldn’t be dispositive and anyway the harms will already have been caused in litigation.

What about Congress? Codifying this definition is risky.

Fairer public benefit can be operationalized by client-centered lawyers seeking to help clients develop better technologies—exploring possible consequences of their actions. Consequences are often sociotechnical, not legal. Lawyers should be counseling on them. Formalize the tech; assess public benefits; identify public harms; reconsider public benefits; report to the client.

[why do you need to bring © into this? If ethical lawyering assesses sociotech impacts, then © is just a distraction.]

Michael Mattioli, Facilitative Fair Use

Implications of Warhol on training AI: surprising ways that AI is actually facilitating some good things in © ecosystem. Little AI services may be much more beneficial than Big AI. Amanda Wood-Shapiro, writer with dyslexia, describing use of AI as game-changer for author. Ability/desire to tell stories; difficulty organizing thoughts. More than just spellcheck/grammar checker; AI was a mentor for her (Grammarly). Not the only neurodivergent person using LLMs to get ideas out as authors. Publishers drowning under slush piles may be able to use LLMs to identify the diamond in the rough. Sudowrite and other editors—help speed of production, looking at narrative consistency and pacing. Writing ad copy, which authors need to sell their works. Not just books; ScriptBook for scriptwriting can evaluate potential in script—character likeability, whether there’s a big enough audience, etc.

Word of pessimism: if it’s not run properly, especially if trained on limited/biased dataset, could narrow the range of voices. But these tools are already there. AI models for casting data to determine who to cast—but trained on existing ads and films. Generating storyboards: directors can experiment w/different camera angles and scene composition.

AI is used to produce/disseminate games—porting it from platform to platform.

W/o fair use, these tools are far more limited. Licensing=only really deep pockets can play, and even they will have access to a far more limited set of training data, steering © system towards more bias and fewer voices. [Although the companies didn’t love how much omegaverse showed up in their first few iterations.]

Pamela Samuelson, Justifications for Fair Uses

Warhol: main opinion uses “justified,” “unjustified,” and “justification” 28 times in discussing factor 1; identified “targeting” as a justification, with 10 references to “target” (5 in dissent). Warhol Foundation, majority found, didn’t offer a persuasive justification for offering a license to Conde Nast to use Orange Prince on a magazine cover. Need justification for each use, not just initial creation. Will courts interpret Warhol as limiting justifications to targeting?

Whyte Monkee v. Netflix: court did exactly that—using parts of a funeral video in documentary was not transformative b/c didn’t comment on the authorial choices and intended meaning of the video. Fortunately, 10^th Cir. reheard the case; waiting to see whether they don’t mess it up quite as badly.

Other questions: will/should justification become a new subfactor in factor 1? She hopes not.

What fair use justifications will/should courts find sufficient besides targeting the first work for criticism or comment? (lots of them hopefully)

Are justifications only relevant to factor 1? (no)

Are justifications only needed if the second work has the same purpose as the first work? (maybe)

What kind of evidence is relevant to proving justifications? (??)

Leval’s conception of justifications: also uses “justif” words 33 times, almost all in relation to factor 1. For him, justification turned on transformativeness, adding something new with a further purpose or different character, altering the first with new expression, meaning or message. Historians & journalists need to quote others’ works to support their arguments/theories—a key concern for Leval. Thus transformativeness enables © to fulfill its larger public purposes. A justification may exist under factor 1, and it must be weighed v. other factors, e.g., did D take too much. Transformativeness is for him the justification—you don’t need a justification on top of a justification.

Campbell took a holistic conception of fair use justifications and emphasized the importance of fair use to provide breathing space; courts must consider all factors together and weigh them in light of the ends of copyright law. Transformative purpose may have spillover effects in relation to the amount and market effects factors—the more transformative the second work, the more spillover effects are likely. Every case to be decided on its own facts.

Campbell did involve targeting for criticism, but this isn’t the only kind of targeting in case law. Targeting the author, not the work: New Era—what a cruel, bigoted person L Ron Hubbard was. Targeting the subject of the work: Kienitz, saying the mayor was a jerk. Targeting a third person: Hill v. Public Advocate—photo of gay couple kissing to target legislator who supported gay marriage. Targeting a theory—Time v. Bernard Geis Assoc.

Justifications beyond factor 1: GvO involves factor 2 justifications; programmer investments in learning Java declarations that were inextricably bound up with method calls & implementing code

Factor 3 justifications: Faulkner Literary Rights v. Sony: “miniscule qualitative” part was fair use.

Factor 4 justifications: harm speculative/work not competing—Sony v. Universal; AG v. HathiTrust.

Other types of justifications? Public interest in access to info: Warhol gives this as example, making information available, citing Authors Guild v. Google; search engine cases (Kelly, Perfect 10, Authors Guild v. Google); online posting of gov’t edicts (ASTM); print disabled access to books (HathiTrust). Private interest in access to info: reverse engineering cases (Sega v. Accolade).

Freedom of expression: protests (Kienitz); anti-censorship (SUntrust)

Evidentiary: documentary film clips used to prove filmmakers point; evidence in court (Bond v. Blum); court reproducing images in opinion (Warhol)

Economic justifications can also come in different flavors; her project is to evaluate different types of justifications.

Post-Warhol caselaw has gotten more boring; courts don’t seem to understand that works could have more than 1 purpose. A “further” purpose is what Campbell talked about. Depends on level of generality of “purpose”—watch out for manipulation. DC Circuit upheld ASTM’s posting as transformative, Warhol notwithstanding. Cramer v. Netflix—tattoos shown briefly in Tiger King show fair b/c of transformatively different purpose. Thomson Reuters v. Ross: jury to decide if training data transformative; Warhol didn’t require TR win. Sedlik v. Kat von D appeal pending—Sedlik argues that he has to win regardless of jury verdict b/c of Warhol. Still early to judge impact, but justification not yet playing major role; most cases involve more than targeting original for criticism. Bringing that to court’s attention is our job.

Chris Sprigman, Copyright, Meet Antitrust: The Warhol Court and the Rise of Competition Analysis in Fair Use

Warhol has two innovations. First, the analysis has to be use by use, not work by work. Imminent in prior jurisprudence, but comes out roaring here. The use in Warhol is the licensing to Conde Nast for use on an issue commemorating Prince’s life. Second, a change in the definition of what a different purpose or character is for transformativeness purposes. Many uses with new meaning/message will be transformative, but needs to be sufficient to make the use different in purpose or character from a use the P might want to make of their work. “[T]he first factor relates to the problem of substitution—©’s bete noire.” That is, the thing copyright hates most is not copying itself, but copying that substitutes. Using a work to achieve a purpose the same as or similar to the original is more likely to supplant the original.

That makes competition key to transformativeness. It was intuitive to the Court that the images looked alike and could be used on magazines, and therefore competed. This is wrong. Milk and Coca-Cola can both be drunk; someone dying of thirst would grab at both; but they are not competitors in any ordinary sense.

Antitrust has a thicker definition. Start with a candidate market (e.g. Goldsmith’s photos). If a single firm owned all products in candidate product market, would it be profit-maximizing to impose a small, significant nontransitory price increase of 5-10%? If not, add the next closest product and try again. Does Peets compete with Starbucks? If they both increased prices, would people defect to Dunkin and defeat the price increase? If they would, you haven’t defined your market.

This methodology is both empirical and normative. Empirical: uses data from historical price changes/econometric analysis; customer/user interviews; objective information re product characteristics. Normative: why 5-10%? This is the competitive margin on which antitrust should focus. This isn’t always the lower threshold; sometimes 1% is enormously consequential for an industry where the margins are very slim. The normativity of the test is connected to its empirics.

Methodology actually applied to fair use cases: a D who creates an artwork for exhibition or sale will almost never compete. When you narrow it to particular uses, as Warhol did, substitutability becomes more tractable. What about widely distributed works? Empirics of antitrust will work for you—there will be historical price data that help you assess cross-elasticity of demand b/t works.

What about Warhol itself, with episodically licensed works on both sides? Hardest case. Prince is one of most photographed men on planet. That means that the market for works to illustrate magazine articles is crowded. Many works available for licensing. Unilateral effects theory: competitive “nodes.” If you have a crowded market, there can still be a harm if there’s a competitive node—if competition b/t the Goldsmith photo and the other photos was much less close than competition b/t Goldsmith photo and Warhol image. That’s what the Court should have asked. Asking about licensing to magazines generally is like saying that milk and Coke compete. Photo is a classical portrait; the Warhol work licensed to Vanity Fair was about iconization—a visual representation of “Purple Fame.” If they had licensing people, people would have observed that the Warhol was compatible with the article and the photo was less so. After Prince’s death, Orange Prince was an icon painting.

Moderator: Pamela Samuelson, Berkeley Law

Lemley for Levendowski: Negative as well as positive public benefits for the market factor too—why not? Level of generality at which you assess benefits v. harms: Perfect 10 was not a tech for depicting naked people, but rather for depicting images. Assess only uses made in particular case, or all uses and future uses that come from having/not having image search?

A: agree, include market benefits as well. Level of generality is a tricky question: privacy law can be imported to provide some frameworks about ©. For Perfect 10, Nissenbaum’s theory of contextual integrity explains why it’s invasive to take images behind a paywall and reproduce them outside the paywall. That aligns with courts’ unwillingness to endorse disclosure of unpublished works.

McKenna for Buccafusco: Formal characteristics and subject of work—there are levels of abstraction problems in identifying subjects—why is Monet’s subject lilies and not “flowers”? Steinberg: you said the formal characteristics were the same but not the subject—do you mean “thing depicted” or “meaning”?

A: definitely creates another hierarchy problem, but may be able to get a better handle on it by separating them. Substance hurdle + formal features hurdle.

Saurabh Vishnubhakat for Sprigman: isn’t your distinction b/t Warhol and photo snobbish and aesthetic?

A: don’t overread snobbishness—my analysis fits any crowded market. It’s about consumer preferences, which we take as they are. If they’re coffee snobs, we let them be; if magazine people think that the Warhol picture fits a theme, we don’t judge that.

Felix Wu: if the lookalikes generated by AI are substitutionary relative to original artists, should we worry about that?

Buccafusco: If we think about competition, Moscow on the Hudson doesn’t compete plausibly with Steinberg; you could increase the price of the latter a lot and Robin Williams’ presence would still make the former nonsubstitutionary. This is also probably true of a lot of the derivative work stuff.

Sprigman: Be disciplined about what part of the FU analysis we’re doing. Factor 1 involves competition. Steinberg is definitely not competitive. But it might not add new meaning or message and therefore might not be transformative. [I thought he was going to pivot to Factor 4 being a distinct analysis.] The court announces a result in Warhol telling us that competition is central for transformativeness, but doesn’t explore the dark corners. Let’s just say we apply substitution analysis to that situation—we would probably find the same purpose. Is purpose defined by competition? Or is purpose guided by competition? He thinks the latter is more useful. If they compete b/c of similarities in nonprotectable expression, that shouldn’t count.

Katrina Geddes for Levendowski: worry about courts’ ability to handle more capacious understanding of public benefit. Would that devolve into a battle of experts where whoever hires the best expert wins? Wouldn’t that harm smaller communities?

A: good question, and part of why I think best way to implement this is pre-litigation stage. Client may just say “thanks, it’s profitable to spread disinformation.” That’s the dangerous part of client centered lawyering. But less a battle of experts and more a battle of amici. [This is also about resources—they need to know that they need amici, and they often don’t until it’s too late.] We saw this in the pending Internet Archive case; they made a robust public benefit argument that the court didn’t like but did grapple with.

Q: Look at CFR 21 in medical device world—you’re always talking about reasonable assurance of safety versus benefit/effectiveness. That’s a way to balance interests. For AI: controls for randomness/going off the rails need to be taken into account. For Sprigman: is this a noun, verb, or adjective?

Q: Antitrust: plaintiffs hate market definition; it’s really hard. Courts hated having patent case inside an antitrust case in pay for delay and might hate this too.

A: Doesn’t have to be fullscale analysis; Court should have gotten an explanation that not all magazine licensing is the same/competitive. Maybe 5-10% isn’t right margin: should look at incentives to create in the first place.

Stefan Bechtold: Price is probably not the only normative goal in ©, so SSNIP might not be the right tool.

A: if we’re honest about ©, it’s trying to remove discipline from prices, so is that right? But what is our specific goal in factor 1 analysis? Court just told us a mission for that, and we can use these tools, albeit not unthinkingly. Who are the buyers? They may be very different in © markets versus commodity market. © has problems; so does antitrust. Every regulatory system has problems. But we learn something from asking the Qs that antitrust wants us to ask.

RT: 1201 exemptions suggest to me it’s a bad idea to ask any authority to do global-cost benefit analysis as part of a fair use inquiry. The Copyright Office thinks that it should only find circumvention noninfringing if it won’t risk people crashing Teslas, and it’s not good at that assessment.

A: Clients come in the door thinking that © is the problem; you need to identify problems earlier, sooner, and louder. It would be better as a general part of good transactional lawyering, but no one is there yet. If clients have © Qs, that gives them an opportunity to engage with public law problems. [I don’t get why that means it’s copyright’s problem. Clients often confuse TM, ©, ROP, employment law, and lots of other stuff. The lawyer’s job is to identify their actual problems.]

Rothman: Prince was terrified of being photographed; even with lots of photos of him, there may be fewer carefully posed photos than you think. Thinks Warhol is more about misappropriation.

A: Prince contained multitudes; he was photographed a lot even if he hated it. The Court may be motivated by something other than substitution, but what it said was substitution.

IPSC Breakout 5 Comparative Approaches

Stefania Fusco (co-author Valerio Sterzi), Does the EU Need an EBay-Like Case? Evidence Against Granting Automatic Injunctions in Europe

Patent paper; issues involving NPEs similar to trolling issues in US. If most infringement cases are between noncompetitors, automatic injunction is inappropriate and an eBay-like rule is appropriate, and their research suggests that this is the case.

Justin Hughes, Comparative Online Bad Guys

After issues of application of © online were settled, key was determining liabilities of intermediaries. A problem of elephants and mice. Enforcing against mice is difficult, but elephants can’t hide and are subject to lawsuits. So enforcement for CSAM through © went to platforms. DSM Directive in EU and US developments were all about enforcement on the elephants. A big part has been site blocking: a court or admin body orders an ISP to block internet access to particular online locations. Roots as old as 2001 Directive ordering methods developed, as well as 512(j)(1) allowing site-blocking injunctions in the US which has never really been tested in court. Now picking up speed—over 30 jurisdictions, most democracies, have endorsed site-blocking, often by the highest court. [defined: no fault injunctions against ISPs, so I guess China’s Great Wall doesn’t count?]

Early days: there were questions of power to make orders against innocent third parties. EU: statute. Canada: determined as matter of common law. EU got proportionality analysis. Early cases, also questions of technical possibility and burden sharing for site blocking. Can be done with domain names, IP addresses, a combination, URL blocking. 2014: ECJ said that the court didn’t need to designate technical measures—could order an outcome prohibition; transmission entities have to effectively achieve site-blocking. EU study: most EU jurisdictions have included that intermediaries must pay, also true in Australia. 2018: UK House of Lords, TM site-blocking case disagreed.

How do you ID the bad guys? Pirates, rogue, flagrantly infringing online locations (Singapore), infringement-based business models. This wasn’t an issue in early cases because if you’re asking to block “the pirate bay” there’s not a big problem, and courts will gloss over the necessary evidence. But more important with dynamic injunctions, where jurisdictions adopt some shortcut mechanism whereby an initial injunction against ISPs can be used by Ps to add URLs/domain names/IP addresses to the injunction. Adopted in Argentina, Canada, India, Singapore, UK, Netherlands, Germany.

Comparatively, jurisdictions are starting to develop criteria: Singapore’s “flagrantly infringing online location,” codified 10 years ago. Primary purpose to infringe ©; directories, indexes, categories of means to commit or facilitate © infringement. Australia adopted a similar law (includes weighing of harm to others and whether other injunctions have been issued). Good to look at what people in other countries are doing. Delhi high court decision 2019 followed Singapore/Australian list. Canada has considered use of new domain names, IP addresses, etc. to evade site blocking; India and Singapore consider volume of traffic/frequency of access to the online location; etc.

Many of the things the courts say are separate factors are going to “is the primary purpose or effect to cause © infringement?” Directories/indexes for promoting infringement; flagrancy; silence or inaction on receipt of takedown notices; circumvention instructions. One interesting factor: looking to whether website has been disabled by orders from one or more courts in other jurisdictions on © grounds. Australia, Denmark, India, Singapore all consider this.

Would not be surprised to see legislation coming to US this year. Hope will consider these models before adopting rules.

Q: how related to SOPA/PIPA?

A: motivated grassroots action—truly believe that American court could already do this under 512(j). Why didn’t people test 512(j) in court first? The answer is: most people in DC think that the tech community is ready for this. We’re in a very different place: now Google can do no right on Capitol Hill. Balance of power has changed.

Marketa Trimble: Under Nevada law, have to comply with other countries’ laws to be licensed for online gambling in Nevada.

A: hard to imagine US court doing this on its own initiative.

Peter Yu: duration of blocking? UK careful about that.

A: interesting but not important b/c pirates move on so quickly that an 18 month period is 5 business models. Might matter to transmission ISP to clean up their blocklists though.

Cesar Ramirez-Montes, Digital User Rights in the Mexican Supreme Court

Potential for global South to think of exceptions/limitations as user rights, using Mexico as a point of reference. Not bashing the country and its © system as such, but presenting the academic argument for room in global South to develop this notion, and Mexico specifically. Implementation of safe harbor provisions under USMCA was challenged before Mexican SCt; two different rulings.

Descriptively: USMCA provides only for notice and takedown, lifted from DMCA. Prescriptive: Mexican legislators should rethink their adoption of DMCA Plus mechanisms such as notice and stay down which was adopted as part of transposing the USMCA into legislation. Also: Mexican SC should develop notion of exceptions and limitations as user’s rights as a new rule of interpretation that provides greater attention to user interests and thereby balance © scope with larger public interest.

Almost excessive attention paid to rightholders’ interests and little interest in users’, audience’s, and public’s interest. As if it was merely a system of protecting authors and nothing else.

The public bears a great cost from this, and © owners gave nothing in return. Model: Canadian SCt ruling and relevant scholarly explorations of exceptions and limitations as user rights.

Mexico adopted the safe harbor framework from USMCA, which was modeled on DMCA. But added staydown obligation: “reasonable measures” to prevent same content from being uploaded. Implementation also covers TPMs though overrides protections for out of copyright works. Also funneling WIPO internet treaties, Marrakesh Treaty, and TPPA implementation. Result: DMCA-Plus approach to safe harbors.

Challenges before SCt: (1) freedom of expression under Mexican constitution, contrary to due process and legal principle; (2) lack of definition of key terms did not provide legal certainty. Notification requirements didn’t require evidence of infringement; chilling effects and failed to provide adequate remedies for users entitled to circumvent b/c of tool prohibitions on DRMs: a disabled person could be entitled to an exception but unable to get a device that would do the circumvention.

Jan. 2024, Mex. SCt First Chamber dismissed the appeal re TPMs but found that staydown unduly restricted freedom of expression according to proportionality test. Previously, Mexican law already had remedies for © owners. Comparative analysis of US law; cited EFF on DMCA’s effects. Grand Chamber arrived at a different conclusion in May/June 2024, but have not published reasoning.

Marketa Trimble, Cross-Border Exceptions and Limitations to Copyright: “Powered by AI”

Not interested here in whether training infringes/using AI as an example of a process. Legislation of exceptions and limitations is often considered on a single-country basis. But in multi-country transactions, such as when a library in country A wants to provide an article to a researcher via a library in country B, we need to know if there are identical or similar exceptions in A and B that cover the acts in the same manner. Libraries need cross-border exceptions; the model of AI suggests that we could get them, but libraries lack the political clout of big companies. Potential solutions: internationally uniform exception; mutual recognition of national exceptions (exists in some countries—once it’s permitted in one country, the other country accepts it as legal); mutual recognition with national verification (we have the same kind of exception and we check for compliance with our exception). Localization (no matter what happens across the border, we apply that country’s exception). Private ordering. Delocalization by brute force: Seen online in other areas where companies don’t bother to localize TOS, just comply with US law which is home country law; that solves the problem for them and they wait for litigation if it materializes. Technological solutions?

International law and EU law are models. Mutual recognition in EU Orphan Works Directive; mutual recognition with verification in Marrakesh; localization approaches in EU SatCab directive, EU Portability regulation, and DSM Directive. But attempt to enlarge localization to other aspects of © ran into hard wall in EU. Unification of exceptions is unlikely to do the trick.

Take some lessons from preexisting examples and models, recognizing that libraries and archives can’t move international change forward on their own.

Peter Yu (co-author Matthew Sag), The Globalization of Fair Use Standards for AI

Copyright Office is interested in whether there will be globalization on training and copyrightability. Different reasons for divergence: author’s rights/©; civil/common law; developed/developing. We look at training AI regimes. Group one: fair use. US, Israel (ministry of justice opinion embracing training); Liberia, Malaysia, South Korea, Sri Lanka, Taiwan. Canada is somewhat similar to US. Group II: TDM exceptions: Japan, UK, EU, Singapore, possibly China. Japan was earliest, in 2009. Not using for personal enjoyment = exception the broadest we’ve seen. Singapore is newest: computational data analysis (with limits to prevent excess dissemination). Interestingly, Singapore also has fair use.

Group III: Others, like China’s 3d amendment to Chinese copyright law. “Other circumstances as provided by laws and administrative regulations”—allowed limitations and exceptions. Seems to move towards an open-ended system. We’re waiting for implementing regulations.

UAE: efforts with Falcon AI. Law is very far behind; closest we’ve found is educational use.

No consensus. Emerging equilibrium. The underlying grundnorm: idea/expression distinction.

Countries do want to move forward; incentives to allow creation of systems in US/China/EU race. Gowers Review of IP—not adopted! But they believe that fair use would be better for UK to advance tech development. US dominance in AI investment and development.

US developments on deepfakes also matter—new ROP protections could change the environment. AI Act/not clear whether opt out or remuneration will proceed in EU. Also EU is trying to reach out with its regulation by being indifferent to jurisdiction in which AI was trained.

TDM/fair use is the way to go. There won’t be major international disputes on input end, but different modalities for implementation. Non IP issues will affect © development. Changes are likely to be incremental.

Hughes: you assume it’s fair use in the US. But we don’t know. Isn’t the real lesson that law doesn’t matter in the face of all the venture capital investment? We may never get a fair use determination b/c OpenAI and Google are doing deals with Reddit, and maybe the cases will settle.

A: we do think there’s enough case law for fair use, but what’s unclear is the interface b/t input and output.

AI and Authorship

Margaritha Windisch, Unveiling the Bond Between Artists and Their Work: A Vignette Study

Personality rights theory of ©: bond between artist and work/work is part of the personal sphere of the creator and part of their personal identity. Authors’ rights are designed to protect that intellectual and emotional bond. Strong emphasis on moral rights in continental Europe.

Fascinating empirical study among European visual artists randomly assigned to use traditional materials, digital drawing, or AI prompts. Their connection to their work felt significantly lower with AI prompts (somewhat lower with digital drawing but not nearly as much).

Time spent on creating matters to bond, but even controlling for that there is an effect. Whether their personality is reflected in the work/whether they had freedom of choice in decisionmaking—factors relevant to EU law; significant decrease for AI condition—whether they perceive the work as their own intellectual creation is much lower v. physical or digital creation. Differences b/t German-speaking and French-speaking participants as well!

There’s no threshold for the bond b/t artist and work; what’s the right policy to protect authors when there is a low bond? UK provides for © protection for computer generated work for 50 years, but no moral rights. The author is defined only as “the person by whom the arrangements necessary for the creation of the work are undertaken.”

[I’m really interested in Kant’s disrespect for visual art in initial arguments about authors’ rights, which is right there in the name (it’s not artists’ rights). Somehow people just skip past the medium in modern moral rights argument—but how and why?]

Jessica Silbey: We have bonds to lots of things in our lives that we didn’t create or don’t own.

Josh Sarnoff: rewarding for the bond seems to be rewarding the wrong thing—acquisitiveness or ownership desires.

A: no, the bond develops through the process of creation—what makes it difficult to produce is what develops the attachment to the work.

Q: consider storyboarding for a movie—playing with AI might be different.

A: agreed. Visual art has a tradition and might well be different for works that have had tech in the creation process from the beginning.

IPSC Breakout 4 IP and Property/Contract Theory

Shyam Balganesh, The Eunomics of Intellectual Property

Lon Fuller’s institutional design theory: understand institutional design as a way of understanding institutions on the understanding that they’re not infinitely mutable. One shouldn’t begin with an unilateral approach on their ends. Ordinary assumption: institution is trying to maximize some goal, so tweak construction based on that goal. Fuller says this is problematic. We need to understand institutions as means-based. The means are not fully contingent, but themselves add important values and are not infinitely mutable. Eunomics is that project.

Don’t understand contracting, mediation, adjudication as ways to maximize other variables solely. They emerge from ways humans desire to interact with each other in society—conventional morality. That interjects not just path dependence but some kind of immutability b/c the normative goals of that kind of ordering interact are sticky. People desire that contract be in some part about human relations. Means/forms themselves contribute important normative goals.

Second: inner morality. Often described as having to do with morality & general jurisprudence, but Fuller had a simpler understanding: forms of ordering have their own internal integrity. There are elements in a form which remain immutable such that if you take it away, it ceases to be that form. Take away the impartial judge + adversarial system = not a judicial system. Take away reasoning = ceases to be adjudication. A commitment to integrity in form.

Third: The forms of ordering in society around resources and interactions are necessarily limited, not infinite. Limited set allows humans to channel and recognize how they want to order their lives. The mechanism of adding to the set is slow and evolutionary. There is a strong resonance to numerus clausus.

We can apply this to IP. There are three or four major common forms of ordering IP around which different regimes come to be structure. Newer kinds of resources may hybridize, but they’re defaults. Copyright, patent, trademark.

(1)   Appropriation form. Focuses on nature of wrong, interpersonal relationship of appropriation that doesn’t begin w/identification of resource but w/interaction deemed to be a wrong. That generates right/duty obligation. © is paradigmatic, but expanded to ROP where an intermediary doesn’t have to define a right in advance.

(2)   Grant-based: patents, property, prospects. The resource mediates the interpersonal relation. An impartial third party is supposed to delineate the resource.

(3)   Use perfection form: focus on behavior of entity that can develop over time a right that is perfected through registration or recordation—trademark.

The list is closed, but not closed at all times. It evolves and hybridization is possible. The forms themselves, the defaults, are conventionally determined b/c they come with their own underlying normativity. The means of institutional forms are not necessarily contingent and bring their own values.

Zachary L. Catanzaro, Algorithmic Deadhands: What is Dead May Never Die

Idea of AI trustees that enforce rules after individual’s death. These aren’t conscious systems. Try to get “bounded optimality,” not exactly replicate testator’s intent. Cognitive processes can be extended after death through technological artifacts. We could train a system to monitor for death records and make corresponding dispensations. We could try for active monitoring of beneficiary behavior: A to B so long as B never smokes. That requires more surveillance (Zuboff’s Surveillance Capitalism). What about “as long as B lives a healthy lifestyle”? We could train AI to predict probable intent by looking at data about O’s behaviors. We could exercise more control, in ways that are often bad—genetic or political profiling. Coercion of behavior.
In property law today we teach there’s a balance b/t free alienability of property and honoring testator’s last wishes; there’s conflict in the case law, but there’s a pendulum between formalism and not.

Allowing AI systems to predict and control the present creates new digital mortmains; emerging risk of reinforcing this type of property control. Convoluted way of circumventing abolition of fee tail/restraints on alienation/longstanding rules of property law that prohibit conditions on who a person can marry, what religion they can be, etc. Too much control. Risk of model collapse as systems self-iterate.

Possible solutions: reinforced privacy protection, anti data scraping laws, temporal limits on behavioral data use, etc. Further research: deeper into law of perpetuities/trust law. Philosophy of mind and causality for automated systems. Transhumanist applications. Any hard rule programmed in systems to limit them will necessarily be formalistic in nature.

James Grimmelmann: what would the legal system do in response to one of these dead hand systems? The traditional legal rule would be to void an unenforceable condition. Is that sufficient for a system like this?

A: We do need another form of intervention. The problem w/ relying solely on property law is that most states have weakened dead hand control to the point of meaninglessness—a Fla trust can last 1000 years.

Jennifer Rothman:

[Along with all these other problems, I just think about “my abortion is different”—O’s behaviors and O’s beliefs about what others should do may well differ.]

TJ Chiang, IP Ownership and Penalty Default Rules

Patent v. copyright ownership defaults: employer ownership of employee creations is WFH in © but patent, employee owns absent assignment. Every contributor to conception is automatically a joint inventor; © makes primary author sole author absent agreement. Patent = no duty to account, every coowner is an owner who can practice without accounting; © is different and every coowner must account to others (absent agreement).

Penalty default concept can explain the differences. Patent prosecution is expensive and legally complex, so patents tend to involve at least one legally sophisticated party and higher stakes, making it suitable for penalty default rules. © is automatic on fixation and easy, not suitable for penalty defaults. Criticism of “penalty default”: these aren’t penalties, just majoritarian defaults and conditions for contract formation. Rules that force parties to reveal info to courts are very different from rules that force one party to reveal information to the other; they function quite differently.

His theory: penalty defaults incentivize disclosure of info to courts. Info asymmetry between parties is not his focus. To be efficient, a penalty default requires: a party being penalized to be legally sophisticated enough to know about the rule. Benefit to courts in saved costs must outweigh transaction costs in contracting around the rule; social loss of bad outcome if/when parties fail, and cost to devise and apply the penalty default rule. There must be enough privately at stake to give sufficient incentive to contract around the penalty default. Should create a high private loss but low social loss if bad outcome eventuates.

Jeanne Fromer, First Ideas

First is polysemic. Interweaving of earliest in time and best. We mix these up; it’s important to understand the normativity of choosing “first,” and think through what we’re trying to accomplish with different forms of IP to allocate rights.

General rule in real property is first possession. Pierson v. Post as most famous American case (or McCulloch!). Pursuit isn’t enough; possession is the key. In patent that is reduction to practice, which can be actual or constructive. This creates pressure to file early, especially given statutory time bars after disclosure.

When we think about patent: you have to have actually created every embodiment you claim w/in the scope of invention—not necessarily physically but constructively. If you say “I invented all light bulbs with filament starting with letter T” you have to have constructively enabled tomatoes, thistles, etc. First is fictional in many ways, and this is a theme. You might have done some subset but not a full scope and we’ll deem you to have done that.

Things are also carved out of first—law of nature, abstract idea, natural phenomenon.

Some rules are about not claiming first too quickly: utility rules—there has to be a specific benefit for the invention. Novelty/nonobviousness; getting beyond prior art—if not, no one is first. Continuations and doctrine of equivalents also affect firstness. And people who are prior to first—prior use—are carved out as well.

Copyright is more generous in allocating firstness b/c standard is so low. In some ways © rejects firstness because it doesn’t matter if others are doing the same thing.

TM: use and registration differ in source of firstness; legal fictions like national use also extend firstness. Lack of rights in gross mean that firstness is cabined in other ways.

Real property critiques of firstness—appropriation/expropriation of prior peoples—can also influence IP. Expressive incentives matter as well: firstness as incentive? What about first losers? We don’t have violence in the same way as in real property but we do have power dynamics, like first to file being easier for big entities.

Grimmelmann: there are a lot of similar ambiguities in real property—disputes over the scope of what people have acquired title to. Biggest modern survival is adverse possession; always a question about whether you possessed the whole or only part of the parcel. More continuity than contrast. (I also think about the work of people like Claire Priest and Gregory Ablatsky’s The Rise of Federal Title, which emphasize that constructive possession/allocation from regional capitals was actually a huge driver of US ownership in contradiction both to native title and to small colonizers.)

Mark McKenna: key to emphasize that first is not found in nature. Many disputes: Not trying to decide who’s first; which of two people beat the other to it. Should that make a difference? (Relativity of title!) Also, consider reverse confusion, which isn’t really a confusion doctrine but a priority doctrine. Sometimes we have to pretend there’s confusion to honor the first use or it will be wiped out.

A: We’re often allocating rights and making claims w/o having to think about other parties in dispute. Maybe we shouldn’t as much—wait more until there’s an actual dispute. Reverse confusion was one of the things that got her into this project.

Matthew Murrell, Cyborgs and the Law of the Human Body

Dick Cheney had the wifi for his pacemaker disabled because of fear of cyberattacks; implants have been with us for a while, especially cochlear—eye implants are on the way. 3 million Americans have implants now; this will grow exponentially due to brain/computer interfaces.

Common law: wooden leg is property not person, and no compensation can be awarded for injury. Some states have updated worker’s comp but still treat the artificial body parts as property, not part of the body.

Neuroscience: artificial parts of body are unquestionably part of the body: our brains map our bodies and are constantly updating that map. Phantom limb syndrome: body schema includes lost arm. If a prosthetic is used, the brain adapts—tooth fillings, artificial hips, artificial limbs. Interesting things at edges—in virtual spaces, people can map onto 3 foot long arms, but not lobster claws—but the brain is adaptable. Our body is our body schema in the brain. It is wrong to treat them as personal property only.

One path forward: default rule is that cyborg bodies should be treated the same as corporeal bodies. Privileged lived experience of individuals with atypical bodies and individuals with modified bodies. Individuals with modified bodies are going to use cyborg bodies to express themselves—an important site of political expression. Cyborgness will be immaterial in the normal run of cases—worker’s comp, tort.

Exceptions: capability of a particular body part. Human ability=normal vision. Superhuman ability=hawk vision 20/2. This may be material for, e.g., intrusion on seclusion. Extra-human capability=ability to see infrared light; police officer with this would still have to follow Kelo.

Corporeality: the further a cyborg body drifts from the human form, the more it might warrant departure from the default rule—people may be able to operate spaceships.

Severability: wearables are getting more sophisticated; we may need to distinguish wearables from body parts.

Andrew Gilden: Haraway’s Cyborg Manifesto is the first thing he thinks of—we’re all sort of cyborgs. Worry a little bit about overly focusing on neuroscience and the nervous system as defining what’s a legitimate body. How does this apply in the context of gender-affirming surgery? Advanced wheelchairs?

A: The full paper addresses some of this—social theory and empirical work on virtual spaces—when white subjects are given Black avatars, their scores on implicit bias tests go down for a while. Struggled with how to constrain the definition of cyborg, but trying to clamp down on problems—more expansive you get with the word cyborg, the more it includes wearables. Optional additions will be a part of this explosion.

RT: Peggy Radin’s concept of property—why shouldn’t removable property be part of our personhood? Maybe different treatments in tort and accessibility law are appropriate? How much does it matter if our minds map onto the body part? High heels can be really important to a person, but not worn all the time.

A: countervailing: in tort, the idea of the body is hugely important and expensive—you may be committing battery if you strike a horse and its owner is riding it.

Q: also consider product liability regimes. Strict liability/design defect.

Jeremy Sheff, A Heap of IP: Vagueness in the Delineation of Intellectual Property Rights

Vagueness and notice: a pervasive concern in IP. Vaguely delineated IP rights are worrisome b/c public won’t know what it can do. Patent: specifics vital and a goal of the system is to provide specificity. Copyright=exemplar of work is the work makes the claim inherently vague; TM—vagueness attends both registered and unregistered marks, especially trade dress.

Can philosophical literature on vagueness help?

Sources of vagueness: at least two dimensions. First: qualitative. IP rights are not really in things, they more resemble rules. The property in IP is inevitably a category of possible things.

Second: composite nature of IP rights. IP rights/claims have elements: limitations of patent claim; features, particularly protectable features, of © work, and components of a trade dress. Although they might not be explicit in a claim, in an infringement case the first thing we do is ID the elements and look for them in the accused embodiment.

Qualitative vagueness turns on imprecision of natural language: “no vehicles in the park” doesn’t necessarily tell us what’s inside and outside the rule. More broadly, the idea going to philosophy of language that we have cause to be skeptical that any rule can define in advance its application to all situations. Even with nonlinguistic claims like © and TM, those types of claims often get translated into linguistic terms for purposes of analysis b/c that’s what legal systems do.

Composite nature: there’s another dimension of vagueness, the problem of the heap. The sorites paradox/the Ship of Theseus. How many elements can be removed/replaced before it is no longer the same thing? With patents, all elements are required—unless the doctrine of equivalents applies! Figuring out how many elements we can take away before we’re not dealing with the same thing is a central challenge. How many hairs can be taken away before a person is bald? People disagree, and the predicate operates on a continuum rather than hair/no hair.

Vagueness can be multidimensional—qualitative and quantitative vagueness can occur at the same time and any given element can also be vague, for infinite regress. Best Cellars TM case: what is the trade dress and how many things don’t have to be there before it’s not infringing? If the circles for the wine were hexagons instead, would it be infringing? What if the wood was dark instead of blonde?

Philosophical approaches may not be available to legal systems. One response: epistemicism: there is a sharp boundary, but it is unknowable. Or we could reject bivalence: there is a range of cases for which the predicate is neither true nor false—or both true and false. Legal systems can’t do that—we need an answer, infringement or not.

Responses to qualitative vagueness, one approach is precisification: change the natural language meaning of the term to a quantifiable technical meaning. But multiple precisifications of a vague predicate may be plausible; which should we choose? One approach is asocial: we categorize the range of precisifications and try to determine truth values in certain situations. Narrows the zone of borderline cases but does not eliminate them.

Social approaches: associated with crude Wittgensteinian reading: meaning of vague term is only determined by community’s use. That’s what IP does: allocates authority to community to figure out whether this embodiment does or does not infringe a right.

Interesting things about IP’s solution: (1) community differs across the range of IP. Patent: PHOSITA. Copyright: public. TM: ordinary consumer. (2) Even though the law creates privileged communities, decisionmakers who resolve vague rights claims often come from outside the privileged interpretive community (except in ©). Choices are not about eliminating vagueness but about defining who gets to do it. That tells us a lot about who the system is for.

McKenna: how does the overall scope question get allocated? When a court decides something is a valid trade dress, the court is deciding what the elements are, including thinking about functional elements, then throwing the rest of the decision to the jury. Even in ©, idea/expression or merger has also done definitional work.

IPSC Breakout 3: Trademark and Unfair Competition

Mary Catherine Amerine, Reasonably Careless Consumers in False Advertising and Trademark

Consumers can devote much more (or less) time to a decision than seems rational for the amount of risk/benefit in their lives. Court expects consumers to be reasonably prudent in both TM and false advertising. But courts apply this test very differently and in contradictory ways for inexpensive consumables. In TM, assumption is that consumers will be more careful with expensive goods and less careful, to downright careless, for cheap grocery items. This goes back to the 1930s. Consumers can’t be expected to examine labels carefully—they find confusion for marks that might not be very close, like BREW NUTS/BEER NUTS, POWERBAR/POWERSTICK energy bars, BULLS’ EYE/RAGINB BULL for BBQ sauce, HUGGIES/DOUGIES. Ann Bartow points out this also reflects assumptions about female shoppers, who do 80% of shopping. Class component as well. More importantly, the assumption may just be wrong. 2019 survey on “low involvement” and “high involvement” buyers; 53% of grocery shoppers were high involvement; under age 45 more likely to be high involvement; gender had weak association with high involvement, but yearly income = more likely high involvement. So courts might be wrong about half the time.

One question: how does this bear on store brands that mimic national brands.

Compare: false advertising in product packaging, where courts have very different expectations for the reasonable consumer, both Lanham Act and state law unfair competition cases, of which there are far more. Manuka honey case: court said that reasonable consumers would know rather a lot about Manuka honey. That’s a much higher standard than required in TM. Is this disparity justified? She doubts it, even based on history and tradition. Low cost should not equal low care across the board.

Mark McKenna: Is there any relationship between cost and care or differences in how that manifests in categories? That is, how should courts operationalize this? Deep tension b/t empiricism and normativity in both these areas. Is doctrine really trying to approximate empirical reality or making decisions about the kinds of consumers we’re willing to protect? [which would be an additional reason TM would be broader b/c we aren’t distinguishing among types of producers we’re willing to protect in the same way.]

A: sees false advertising cases as normative.

RT: Lowest common denominator reasoning: one response is that TM says that if consumers are heterogenous we protect the least sophisticated group regardless of whether there are costs to the nonconfused group. Consumer protection law doesn’t do that. If we said that out loud within our discussions of reasonability maybe there’d be less of a conflict.

Relatedly: probabilistic reasoning: a private plaintiff can win if a substantial number are likely to be deceived, which can be as low as 15%; in a class action, courts think it has to be presumed that 100% are deceived, and they don’t seem happy with numbers that low although they might be willing to go with 40% or 50%

Hughes: Surveys aren’t scrutinized for whether they selected reasonable consumers—which affects the “empirical” claim. [I love this point.]

TM law may also be contextless b/c they’re about registration. [That seems unlikely to me, given the number of TM infringement cases litigated about reasonable consumers.]

Courtney Cox, This is a Talk About Deception

Manipulation is a broader concept than deception. Existing laws and doctrines targeting fraud may also extend to manipulation that’s not deceptive. Courts might have more power than we think without additional laws. If we think of consumer protection law as being in part about manipulation, not deception—Joe Camel, where children are being manipulated—maybe those are not sui generis but part of a broader prohibition. There are other ways to muck with adults’ decisional processes. Methodological point: be careful about theoretical concepts because of anchoring bias (also a leading tool of fraudsters) which can lead us astray.

Evidence against this thesis: the name of the ancient tort, deceit. The name of the modern tort, fraudulent misrepresentation. Restatement Second of Torts also says misrepresentation. But we should get to ask whether deceit is about “misrepresentation” or about “deception” (the result).

Deception: A causes B to have a false belief (maybe intentionally). But a better definition includes A intending for B to conclude (or to communicate/imply) that P, acts so as to cause B to conclude that P, where P is false, and where A has the relevant beliefs. Mostly, at the very least, A can’t believe that P is true. If A doesn’t believe P is true, that may be misleading but it’s not deceptive.

Who cares? Start w/leading example of law of deception, the tort of deceit, the leading lies-based cause of action: fraudulently make misrepresentation for purpose of inducing another to act in reliance: subject to liability for pecuniary loss caused by justifiable reliance.

The centrality of reliance to this tort according to Goldberg & Zipursky matters: reliance is not about harmful lies; even if a misrepresentation harms a victim, there’s no deceit claim unless the victim relies on it. If a third party pays for a purchase by a second party that she’d already agreed to pay for (“whichever you pick”), and the misrepresentation affected what the second party chose and negotiated for, the third party can’t recover for deceit because she didn’t rely on the misrepresentation. The deception didn’t play into her decisionmaking process. Thus, it would seem that deceit is not about deception. But then what is it about? Her suggestion: manipulation. Covert or hidden influence—surreptitious mucking with the reasoning process. It’s common to confuse manipulation and deception—trick, dupe, cheat, cunning.

Once you see that deceit is about manipulation and not deception, you can choose two deceits: manipulating another to detriment or manipulating another to detriment by means of deception.

But, surprise! Restatement allows claims for deceit even if fraudster believes P is true.

RT: Perhaps if these distinctions are too difficult for philosophers they are definitely too difficult for courts and we should start looking for harm causation + falsity anywhere in the chain.

However: Joe Camel seems different from causing someone to have a false belief. “Neither true nor false”—bullshit/puffery. Saying that you “believe” Joe Camel doesn’t make much sense.

A: if we think about deceit as being about deception, you’d need a proposition, but if it’s about manipulation, there’s a potential for manipulation in ways other than a false proposition, including a surreptitious mucking with the decision process. Puffery can be false, but grownups are expected to know that “best” is not reliable.

McKenna: simple version of manipulation seems fundamentally incapable of being a rule that a court could apply; distinguishing between manipulation and persuasion is an impossible task (as is often whether they have been “harmed” by being persuaded). That suggests the narrow version—manipulating by deception—is the only way to make the legal standard manageable. [I will note that an interventionist state could decide to rely on what you were persuaded to do as a distinguishing fact, though that has a bad history.]

A: relevance to dark patterns/behavioral manipulation that we aren’t aware of and affect our decisions but don’t involve propositions. Philosophers might be able to learn from consumer protection law about how to break down the concept of manipulation [and distinguish it from persuasion?]

Barbara Lauriat, Two Nations Separated by a Common Trademark Law

In UK, goodwill is a different thing from TM protected by the tort of passing off. TM rights depend on registration, though not unaffected by use; registered TMs are property rights. UK is not “unfair competition” regime as such: protects the property right in goodwill through tort.

US: TM is use-based and protected through common law enhanced by statute; US courts identified goodwill as the property right protected by common law TM doctrines; blurred distinction between registered and unregistered marks—all protected by the same doctrine.

Christopher Wadlow identified three doctrinal strains by the 1870s: common law passing off, which required fraud and allowed only damages as a remedy. Passing off in equity, which could result in injunction without proving scienter. Statutory doctrine of property in TM, by which infringement was wrong whether there was knowledge or intent. TM law is messy and these blend; in the UK, those three strands resolved in early 20^th century into two strands: registered TM rights and tort of passing off which protects goodwill. In US they turned into one amorphous blob. 1903: Paul’s Law of TMs says in England “TM has become practically synonymous with registered TM.” 1878 treatise: recent authorities mean that TM is property insofar as an imitation will be infringement restrained by law even when there has been no fraud. What about things that couldn’t be registered? Was it supposed to take over from common law? Wasn’t clear. TMs became increasingly formalities-based: in 1905 Act, registration was source of title to exclusive right as opposed to evidence of common law right; use was not required for registration. But passing off required property to protect that wasn’t a TM. By 1915, they used “property in the business or goodwill likely to be injured by the misrepresentation.”

In the US, goodwill was the object of TM/unfair competition protection; goodwill is use-based.

Areas that highlight the challenges of combining formalities based statutory protection with use based common law protection in both jurisdictions: secondary meaning/acquired distinctiveness; incontestability; prior rights; assignment in gross; bad faith; dilution; relationship with privacy/personality.

McKenna: Periodization here is tricky b/c registration comes to UK earlier. Thinks by early 20^th century, distinction between technical TMs and unfair competition was pretty solid, though it then collapses. Trade names: now thought to be the category of things that need secondary meaning, but they used to be something different. Lanham Act drafters understood themselves as covering technical TMs and leaving unfair competition alone; courts just made up protection for unregistered marks, mostly because of Erie. There was a distinction in American law, but it got wiped out.

A: broadly agree to a great extent—not as linear as it was in the UK. US swerves at two and then gets one.

RT: [unjust enrichment: not required to show harm. Starting to create Article III problems in the US. What about the UK and lack of harm requirement?

A: there are some cases that definitely verge on harm-free. Depends on the judge. Unfair advantage—incorporated EU rules—is that unjust enrichment? Does unjust enrichment start to come naturally when you’re protecting goodwill? If there’s statutory provision, you just protect against what the statute says (though you may have to figure out what counts as “unfair advantage” from the statute).

Vidal v. Elster: Thomas claims that English law protected against use of name as fraud; no, that’s the opposite of the truth, 1848 Clark v. Freeman, where P was an eminent physician but not a competitor in the market for consumption pills; he lost because he had no claim (neither libel nor TM). English law protected against use of TMs/passing off by competitors, which could include names under appropriate circumstances.

Matthew Sipe, Trademasks

Ghost kitchens where you think you’re buying from a local but you’re getting Chili’s wings, which you might already know you hate. Rebranding after disasters, e.g. AirTran to Southwest. Makes it harder for consumers to exercise their preferences. New TMs hide from consumers. Companies also do the opposite: proliferate brands; buy small businesses and keep their names so the beer you think is local is made by ABInBev. Every beer band you’ve ever heard of is owned by two sellers. Conceals outsourcing; changes in labor practices; changes in product quality.

TM law tolerates this; it’s not misuse or abandonment. This is a problem for our ordinary conception of TM law as protecting consumers against deception, reducing consumer search costs; protecting producer investments, incentivizing producers to maintain their reputations. Masking creates deception and confusion, increases search costs, and reduces the incentive to maintain your reputation because you can bail at any moment. Even in the heartland—passing off—we are totally fine with deception and confusion aided and abetted by TMs.

Instead, the only justification for TM law is protecting producers; benefits to consumers are purely ancillary. TM owners allow producers to control search costs for consumers—raising and lowering are both permissible.

Makes TM law as competition story less plausible—not efficiency, not consumer welfare, so it’s competition law with a producer welfare standard.

Makes TM as property way more plausible: centered on preventing interference and free riding rather than public benefit; quasi-moralistic; right to destroy; lack of strong duties for owners; tolerant of inefficiencies.

Proposal: Supplementing trademarks with consumer protection—to make TMs more acceptable, control TM as vehicles of deception that are deceptive because of secondary meaning. Maybe InBev needs to put its logo on the beer brands it acquires, at least for a while. Maybe new formulas need to be clearly advertised.

Fromer: who would have standing? Competitors might be the appropriate targets in this story.

McKenna: this isn’t just about when there’s some change in the mark. Inherent in the fact that the modern source rule doesn’t mean anything like what “source” means—includes marks adopted in the first instance. The way they’re used obscures everything about the production process.

Theoretical claims about TM are grossly overbroad: TM has never been about search costs—only a very tiny range of search costs; there are millions of other sources of search costs about which TM has nothing to say. If you really cared about search costs writ large, you’d do cost benefit analysis. You’re talking about circumstances where the balance changes. But that just means the scope of TM’s concern for search costs is narrow; the assumption is that the market polices other aspects of search costs—if they change their product and it sucks, the best thing they can do is keep their TM because it allows us to punish them for that.

A: some are self-correcting and others aren’t.  A consumer might never discover that their favorite microbrewery was purchased by InBev.

Hughes: you’re against versioning? GM makes Cheerios and Trader Joe’s makes Honey O’s in the same facility. Is that also a problem because TJ’s sells what are in effect Cheerios? Thinks the deterioration problem is self-correcting. Ben & Jerry’s says Unilever on the back so it’s not deceptive.

Rosenblatt: We think of TM as being about deception, but maybe they should be about manipulation! Also, maybe this is not an acceptable regulation of interstate commerce any more!

RT: Take a look at treatment of omissions under consumer protection law/scienter requirements are relevant. Scienter and materiality are often partners: if it’s material and unexpected, we can often infer that you intended people to rely on the omission. When you have to read the back of a package as a reasonable consumer is a question presently setting district and circuit courts on fire!

A: expects that the lowest likelihood of reading the back of the box is when you’ve bought it before and already have defined expectations.