Recent press

Ludz claims Apple didn't 'think different' (MacNewsWorld)

Artist, 'Bama Collide over Trademark Issues (NPR)

Then again, California law is still pretty expansive

Aral v. Earthlink, Inc., --- Cal.Rptr.3d ----, 2005 WL 3164258 (Cal.App. 2 Dist.), affirmed an order denying Earthlink’s petition to compel arbitration of a putative statewide class action claim for violation of state ufair competition law. The UCL claim was based on Earthlink’s practice of charging for DSL service from the time service was ordered, even though the necessary equipment to start service didn’t arrive for some time (in the named plaintiff’s case, five weeks). The court held that, based on general principles of California law, provisions in adhesion contacts that preclude class actions are unconscionable where the case involves allegations that a large number of consumers have been cheated out of a small sum of money. Moreover, EarthLink sought an order specifying that arbitration of a minor monetary claim by a California resident take place in Georgia, and the court separately held that the forum selection clause discouraged legitimate claims by imposing unreasonable geographical barriers and was unenforceable.

Read about a just-argued Supreme Court case relevant to California courts' interpretation of the FAA here.

California unfair competition law: not quite as expansive as all that

Bivens v. Gallery Corp., 2005 WL 3114167 (Cal.App. 4 Dist.), shows that there are limits even of a very expansive state UCL. According to the complaint, the defendant published an ad in the L.A. Times advertising mattresses with “'PRICING STARTING AS LOW AS ... $48' in large type. In smaller print it states 'TWIN EA. PC.' In substantially smaller type, in parenthesis, it states 'SOLD IN SETS ONLY.'” The plaintiff allged that failure to give the total price for a set was likely to mislead consumers, especially because the ad didn’t define “set.”

In addition to determining that the plaintiff’s claims were barred by the newly added standing requirement of actual injury (substantially limiting plaintiffs’ ability to allege claims acting as private attorneys general, as in Nike v. Kasky), the court found that plaintiff’s claims were unsustainable because the defendant’s actions didn’t violate California law. Plaintiff’s first claim was that the ad violated a specific provision of California law stating that, if an ad lists a price for items only sold in multiple units, it has to also clearly state the minimum price – that is, if oranges are twenty cents each but only if you buy at least five, the ad has to say something like “minimum purchase $1.00” or “5 for $1.00.” The court determined that mattress sets aren’t identical goods sold in multiple units, so that provision didn’t apply. As for the more general false advertising claim (that innumerate consumers, of whom there are apparently many in California, would be fooled by the failure to display the price of the set), the court determined as a matter of law that no reasonable consumer would be deceived, since mattresses are generally sold in sets and the set requirement was clearly disclosed.

Of potential interest: the case illustrates the limited application of carefully delineated bans on particular acts, as often found in state unfair competition law. But more suggestively, if no reasonable consumer would be fooled by a price for a component when the component is only sold in a set, why would a reasonable consumer be fooled by a price for an item when the item is only sold in multiples? To reverse the question, doesn’t the specific provision, even if inapplicable by its terms, demonstrate that the legislature intended to protect consumers from this type of manipulation of numbers?

Massive Digitization Projects

Earlier this week I went to a talk sponsored by George Mason University's Center for History and New Media on massive digitization projects and their long-term implications. The speakers, Clifford Lynch (Executive Director, Coalition for Networked Information) and attorney Jonathan Band, were engaging and informative; the audience seemed to be library-oriented rather than lawyer-packed. My notes here do not necessarily reflect what was said, only what the speakers made me think about.

Lynch pointed out that different classes of works (books, photographs, etc.) have very different histories and patterns of use, but all are now grist for large-scale digitization projects. This clearly has some relationship to the change in humanities scholarship, which is increasingly looking for non-text sources of evidence such as images and music. The harder sciences also can stand to gain a lot from digitization of things like hand-written/typed temperature logs; once the information is scanned and manipulable in large-scale data analysis, previously unaskable questions can be answered.

Highly concentrated copyright ownership made digitization easier for journals (e.g., JSTOR) than for books, where rights tend to revert to the author after some time. This connects with Jonathan Band's later argument, which I think deserves close attention, that the very fact that both publishers and authors are suing Google for its library project supports Google's fair use case. That is, like the perfomers and record companies in Napster, the plaintiffs can't agree on who owns the rights to authorize digitization, and to the extent that individual authors do (or even may) own the rights, the claim that asking permission would be easy and thus a market could be formed is less persuasive, supporting Google's argument on the fourth fair use factor. Compare this to the Tasini litigation and other Authors' Guild suits against content delivery companies whose contracts with publishers turned out not to protect them from copyright claims.

Lynch emphasized that there are a lot of things we don't know about Google's plans, except its contract with the University of Michigan (apparently Stanford also plans to let Google go comprehensively through the monograph collection, including in-copyright works, but I haven't found anything from Stanford that definitively says so). Harvard, Oxford and the NYPL have agreed to experimental digitization of public domain materials, extensible by mutual agreement. (Lynch noted the irony that the protesting publishers' groups include as members the respective university presses, and suggested that greater press-university coordination might have been in order.) Google has been coy about what it will allow people to do with the public domain works; there is a difference between letting you read a book online, letting you download a book, and letting you download the corpus of scanned books. Of course, non-copyright controls on public domain works are nothing new, as museums have been using physical control to manage copies for decades.

Lynch closed by offering what he considered a bizarre prospect: that students and other searchers would have easy access to a lavishly documented world before 1923, which would then just sort of stop (at least with respect to high-investment content), with later material behind digital locks. Researchers might justly consider this an arbitrary division between the commercialized and the shared world. Will the 20th century be 80% missing from digital life? My comment: this of course assumes that pay-for-access digitization will be prohibitively priced; for many university students, at least, the commercialized digital world will be available, if their libraries can afford it.

Jonathan Band then spoke about the legal issues in the Google controversy, expanding on his previously published analysis to argue that Google is engaging in fair use. According to him, Google has recognized that, for certain reference works such as dictionaries, even a snippet might substitute for access to the work, so Google Book Search might give you a result listing for a term found in a dictionary but no text at all. As noted above, he emphasized the difficulty of finding the proper rights owners of all the relevant books; many are essentially orphan works, and an opt-in rather than opt-out arrangement would gut the project even if rights owners were generally willing to opt in once contacted.

As he pointed out, Google's web search business depends on opt-out, and if Google Book Search isn't fair use, then its web search seems vulnerable as well (a fact that may help Google more than hurt it, since web search is so important to the internet as it has developed). Of course a properly configured robot exclusion header doesn't require the author to keep up with who's doing search these days the way Google's opt-out for books does. On the other hand, as a practical matter only Google (and maybe Microsoft and Yahoo!) is likely to engage in large-scale digitization. I think this cuts both ways: maybe Google uniquely has the resources to seek permission or maybe this means that letting Google do this does not threaten any other likely market and it will be easy to opt out from digitization by telling Google. Band also emphasized the economic benefit to Google from Book Search: if it makes Google's search engine more attractive, suddenly there's a billion-dollar barrier to entry that can't be overcome just by writing a better search spider.

Ultimately, I don't think Google's size or uniqueness should be central to the fair use inquiry. Either an intermediary should be able to make a digital copy for the purpose of returning small segments to searchers, analogous to the software reverse engineering cases, or it shouldn't. This is especially important given that Google plans to give a complete digital copy to the library whose book was digitized; the library will then be in a similar position to Google. If it also restricts uses the way Google does (or some other way, for example by locking up the physical copy for preservation purposes and then allowing one electronic check-out at a time, the way some ebook lending works now), then the fair use analysis should be similar, with the exception of the commercial/noncommercial factor. The conceptual difficulty here is that there are a number of interrelated, arguably fair uses: Google gets to make a digital copy for itself in consideration for digitizing the book for the library; the library gets a digital copy back in consideration for lending the book to Google; these copies may never be accessible in full to any end-user.

I, for one, am very interested to see what's going to happen next.

Copyright and the FDA: Unconstitutional takings?

I recently read Lawrence Cunningham’s Michigan Law Review article, Private Standards in Public Law: Copyright, Lawmaking and the Case of Accounting, 104 Mich. L. Rev. 291 (2005), which uses Veeck v. Southern Building Code Congress Int’l, Inc., 293 F.3d 791 (5th Cir. 2002) (en banc), to explore when privately created codes and standards adopted into law should be held to lose copyright protection, at least as against copiers who copy in order to comply with the law. It’s an interesting question; what I didn’t realize until I was preparing for my advertising law class was that a similar issue has come up with respect to the FDA, which doesn’t adopt drug labels as law but does sometimes require them to be copied.

In SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharmaceuticals, Inc.,
211 F.3d 21 (2d Cir. 2000), the defendants obtained approval from the FDA to sell a generic nicotine gum product that compteted with plaintiff’s Nicorette and were directed by the FDA to use labeling almost identical to the plaintiff's copyrighted guide and audio tape. SmithKline filed a copyright action, and the court found that its labeling was creative and that copying by a direct competitor would ordinarily support an injunction. In this case, however, the FDA reported to the court that its requirement of nearly identical labelling was consistent with the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act, see Drug Price Competition and Patent Term Restoration Act of 1984 § 101, 21 U.S.C. § 355(j). The court accepted the FDA’s position and held that therefore the Copyright Act conflicted with Hatch-Waxman, and Hatch-Waxman controlled. Complying with both laws would have been possible, but only by entirely foregoing the production of generic drugs under Hatch-Waxman’s expedited approval process for generics, which Congress could not have intended. Also, though the court explicitly declined to rely on this, it’s plain that copyright is not needed as an incentive to produce drug labels (and that SmithKline’s concern was not to protect the commercial value of its copyright but the commercial value of its exclusive marketing rights for Nicorette).

Like Veeck, the case has not generated a substantial body of case law. It was later distinguished by FMC Corp. v. Control Solutions, Inc., 369 F. Supp. 2d 539 (E.D. Pa. 2005), on the ground that EPA regulations, unlike FDA regulations, do not require identical (or substantially similar) labels for me-too pesticides. Schwarz Pharma, Inc. v. Breckenridge Pharmaceutical, Inc., 388 F. Supp. 2d 967 (E.D. Wis. 2005), also distinguished SmithKline, on the grounds that the defendant’s copying of a prescription drug label was not undertaken pursuant to Hatch-Waxman; the court denied the defendant’s motion for summary judgment on the copyright claims absent further information about what, if anything, the FDA required for me-too labeling of generics more generally.

Only one law review article discusses SmithKline extensively (and unfavorably), John C. O'Quinn, Protecting Private Intellectual Property from Government Intrusion: Revisiting SmithKline and the Case for Just Compensation, 29 Pepp. L. Rev. 435 (2002). Given the case’s relevance to the question of when expressive works should be treated as unprotected facts, I think copyright minimalists like me should mention SmithKline more often. Alicia Ryan’s Contract, Copyright, and the Future of Digital Preservation, 10 B.U. J. Sci. & Tech. L. 152, 176 (2004), does mention SmithKline as support for other limited revocations of copyright rights – using the case to refute takings-type arguments, whereas O’Quinn thinks the case is a blatant instance of an uncompensated taking.

Kinetic Concepts, Inc. v. Bluesky Medical Group Inc., 2005 WL 3068223 (W.D. Tex.), involves a variety of claims by one maker of wound treatment products against another. In a series of decisions, the court refused to grant summary judgment to the defendant on these claims; this opinion discusses trademark infringement and dilution as well as false advertising. (Notably, the court is careful to make clear that a dilution by tarnishment claim can only be based on consumers' imputation of the shoddy quality of defendant's product to plaintiff; it is not enough that the defendant's advertising says mean things about plaintiff's product.)

Plaintiff claims that defendant’s advertising campaign falsely compares the parties’ products, plaintiff’s V.A.C. wound drainage system and defendant’s V1. In particular, the ads claim that the V1 performs the same function as the V.A.C., but at lower cost, even though defendant has not conducted any clinical comparison studies. Defendant also stated that the V.A.C. is approved specifically for wound drainage, whereas the V1 performs a variety of functions, implying that the V.A.C. is unidimensional. (Is this material? Is it another variant of a cost-effectiveness claim?)

Notable features of the case: Defendant’s ads state that a hospital can save between $100,000 and $500,000 using the V1, based on product and supply costs. But $500,000 apparently exceeds the maximum savings in defendant’s actual calculations, which claim $342,000 in savings. Is this enough to make the range “$100,000 to $500,000” not false or misleading? The court does not offer an answer.

Plaintiff also offers a survey to show that cost effectiveness, as understood by healthcare professionals, includes the effectiveness of the total treatment regime, including the costs of poor wound healing, and adds anecdotal evidence that defendant’s product sometimes hasn’t healed wounds as well (or as cost-effectively) as the V.A.C. For purposes of denying summary judgment, the court accepts this anecdotal evidence, despite defendant’s evidence that many factors influence wound healing and thus plaintiff’s evidence couldn’t show that the V1 was the cause of poor wound healing. Even if plaintiff's evidence is correct, I'd want to know a lot more about that survey: while doctors and nurses in general may define cost effectiveness broadly -- indeed, it seems natural for them to do so -- I'm not sure that they'd interpret a claim of cost-effectiveness in an ad for a particular product that way; I would think that consumers can be expected to understand that an ad is claiming direct cost benefits and not necessarily assessing total direct and indirect costs, especially if the ad specifically states that its claims are based on "product and supply costs." The plaintiff also has a survey that purports to show that the ads are generally deceptive, but it's not described in the opinion.

Another part of the case raises issues of using the Lanham Act to enforce other federal statutes: the V1 doesn’t qualify for the designation “Negative Pressure Wound Therapy” under Medicare’s definition, but plaintiff uses the term in advertising to describe the V1 anyway. Likewise, though defendant has FDA clearance to market the V1 as “may promote wound healing,” one of its promotions allegedly implies that the V1 affirmatively promotes healing, a claim the FDA hasn’t cleared. (My assessment of the case law is that the FDA claim is shaky – while a straight-up false claim of FDA approval is actionable under the Lanham Act, a statement that merely implies something within the FDA’s jurisdiction and that would require the court to interpret FDA rules is probably not suitable for private enforcement under the Lanham Act.)

Defendant’s ads use the slogan “Consider a better alternative,” and under the Fifth Circuit’s jurisprudence, this could be misleading in combination with specific claims, but the court notes that there’s no evidence that consumers associate the slogan with the ad’s cost-benefit analysis. Nonetheless, the court did not specifically rule out plaintiff’s ability to show that the slogan was misleading.

In a related opinion denying summary judgment against business disparagement claims, the court focused on an ad asking, “Is tearing out healthy tissue part of your negative pressure protocol?” Plaintiff offered evidence that tissue removal was actually a positive sign of healing; thus, the implication that such removal was undesirable could constitute disparagement. The facts may be true, but the "gist" is false, which is actionable under Texas law. Compare this result to claims of "aluminum-free" for deodorant or "rBGH-free" for dairy products, both of which have triggered litigation, with aluminum- and rBGH-using plaintiffs claiming that the defendants falsely implied that plaintiffs' products were dangerous.

The court also found an issue of fact on malice, another necessary element of a common-law business disparagement claim. Likewise, plaintiff’s claim of libel survived, since the defendant’s ad’s rhetorical question “Are you getting VACuumed by your wound drainage company?” could be defamatory. Because plaintiff isn’t a public figure, only negligent falsehood is required to succeed on a libel claim. (One might wonder why plaintiff is bothering with the business disparagement claims, which seem to duplicate the false advertising claims; the libel claim is useful because damages are generally presumed in libel cases, whereas they'd need to be proved for false advertising and business disparagement.)

Google Book Search: still some issues

First Google wouldn't show full pages from a congressional hearing because it thought the hearing was under copyright. Then I discovered this beauty, Larry Lessig's Free Culture, which is available under a CC license -- but not from Google!

Yes, it's certainly simple to check the status of a work and ask permission from the copyright owner every time you want to use one, isn't it?

Photoshop contests

The site Worth1000.com has a number of graphics contests, including some that are worth money; it also hosts ads. When it runs a contest for images of superheroes Photoshopped into well-known artworks, is it engaging in copyright or trademark infringement? Contributory copyright or trademark infringement? Does the answer differ if the underlying artwork is still in copyright? In other words, even if the resulting work is transformative and critical with respect to the superhero, is it necessarily transformative and critical with respect to the original painting? My favorites include Spiderman in Norman Rockwell (note that the site hosts an image of the original Rockwell for comparison purposes: what result there?) and American Goblin, both of which would allow two sets of rights claimants to object. Also good, but potentially riling only one copyright owner at a time, are the Annunciation with Dalek, Henry Incredible, Jack Jack Madonna, and Wonder Woman.

Likewise, there are potential right of publicity issues with the Celebrity Cyborgs and Celebrity Time Travel contests (not to mention copyright issues with the specific photos used as the bases for these entries), and I'm not even sure what to say about the Racial Profiling series, which is pictures of celebrities manipulated to give them different racial markers, variously interpreted by the entrants to include skin tone, other facial/hair features, and cultural markers (bindi, dreadlocks, etc.). It's a popular topic, with many more entries than most of the other topics I browsed.

Finally, there is a rather charming gallery, Factory Fresh Plants, which would be useful for anyone interested in biological patents, showing images of machines melded into plants. Plug&Grow, Think Pink, and Circuitry Evolved are my favorites.

It is perhaps ironic, given the likely sources of most of the original images, that there are prominent warnings at the top of gallery pages indicating that Worth1000 claims copyright in the galleries and stating, "You may NOT repost any of the entries inside this gallery on external sites (including messageboards and non-profit sites) without Worth1000's express permission."

Julie Cohen on The Place of the User in Copyright Law

I participated in Randy Picker's MobBlog on Julie Cohen's recent paper advocating looking at copyright law from the perspective of a situated user rather than an economic or romantic user. (Want to know what she means? Read the paper, it's fun.) My posts are here and here.

The best rhetorical move by anti-DRM folks to date

... was to call Sony's DRM-protected CDs "infected." Denotationally, the use seems wrong, but the connotation is rhetorically perfect and memetically powerful (48,200 results for "sony 'infected cds'").

False statements in business-to-business contexts

Allsup, Inc. v. Advantage 2000 Consultants, Inc., -- F.3d --, 2005 WL 3054130 (8th Cir. 2005), was a slightly unusual Lanham Act case. The defendant A2K had been formed by former employees of the plaintiff. Basically, plaintiff offers services to insurance carriers, helping them reclaim benefits overpaid to insureds. In 2001/2002, three insurance carriers asked A2K to bid on their overpayment recovery business; A2K did so, representing that it would be capable of providing overpayment recovery services in time to fulfill any contracts that it won. Allsup claimed that it was in the process of patenting its automated overpayment recovery system and threatened to sue; A2K withdrew its bids.

Not satisfied, Allsup sued for reverse passing off, false advertising, and state common-law claims. The district court dismissed all claims and Allsup appealed on the false advertising count. (I didn't go back and check, but I'm guessing Dastar had something to do with the failure of the reverse passing off claim.) The allegedly false claims dealt with A2K's claims that it would, in the future, enter the overpayment recovery market and be able to serve insurers.

Though there are many possible issues -- whether statements to only three companies can constitute "advertising or promotion" within the meaning of the Lanham Act; whether the statements of future intent constituted representations of fact or opinion; whether the highly sophisticated targets of A2K's claims should understand the difference between an operational business and a planned business; and so on -- the court of appeals found it sufficient to address simple falsity. Though A2K ultimately didn't enter the overpayment recovery market, Allsup put forth no evidence that A2K lacked either capacity or intent to do so at the time it made the representations. (Here is an unusual instance where intent is directly relevant to a Lanham Act claim, much as it is relevant in a bait-and-switch claim.)

The court did bobble a bit on implied falsity, simply reiterating that A2K's statements about intent and capacity were true, as if that were the end of the matter. Some true claims can, of course, be misleading; the court may have meant that Allsup identified no potentially misleading implications of these particular true statements, and in any event offered no evidence that a reasonable insurance company might have been misled. Interestingly, the court contrasted "literally false" statements with statements that are "false in context," which is not quite the same thing as implicitly false statements, though there is doubtless some overlap. I'm reminded of the Avis/Hertz case, which held that claims about how many cars a rental company "has" were not literally false when they were true of the available rental fleet though not true of the total cars owned by the companies; the context of an ad for rental cars made the claim literally true.

Cultural environmentalism conference

From the organizers:

Cultural Environmentalism at 10
A Center for Internet and Society Symposium
Stanford Law School
March 11-12, 2006
http://cyberlaw.stanford.edu/conferences/cultural/

Ten years ago, Duke Law Professor Jamie Boyle suggested that the history of the environmental movement offered powerful theoretical and practical lessons to those who sought to recognize the importance of the public domain, and to expose the harms caused by a relentlessly maximalist program of intellectual property expansion.

On March 11-12, 2006, Stanford Law School's Center for Internet and Society will host a symposium to explore the development and expansion of the metaphor of "cultural environmentalism" over the course of ten busy years for intellectual property law. We've invited four scholars to present original papers on the topic, and a dozen intellectual property experts to comment and expand on their works.

Molly Van Houweling explores voluntary manipulation of intellectual property rights as a tool for cultural environmentalism. Susan Crawford extends Boyle's analysis to the age of networks. Rebecca Tushnet looks at the ways in which the law's impulse to generalize complicates the project of cultural environmentalism, and Madhavi Sunder looks at how the metaphor affects traditional knowledge. Professor Boyle will also offer some remarks, as will Stanford Law School's Professor Lawrence Lessig.

Comments on the papers by: Terry Fisher, Harvard Law School, Jack Balkin, Yale Law School, Arti Rai, Duke Law School, Pam Samuelson, UC Berkeley School of Law: Boalt Hall, Neil Netanel, UCLA Law School, Julie Cohen, Georgetown University Law Center, Jesica Litman, Wayne University, Mark Lemley, Stanford Law School, Peggy Radin, Stanford Law School, Yochai Benkler, Yale Law School, Siva Vaidhyanathan, NYU School of Law

The event is free, but registration is required. We look forward to seeing you.

Mickey Mouse and the Boy Thursday

My mother-in-law brought over some old books for Leonard, and included, for our mocking pleasure, Walt Disney's Mickey Mouse and the Boy Thursday, published in 1948, a book so offensive that, as she says, it makes Little Sambo look like an anti-racist training manual. You can find the complete scanned text & pictures a few places around the web, including a self-proclaimed "sick" site and a white supremacist site. Google them if you must. I checked Gutenberg's renewal list and found that the book had indeed been properly renewed. How do we copyright minimalists feel about the possibility of Disney using its copyright to suppress these reproductions?

Rulings Kevin Trudeau Doesn't Want You To Know About

Kevin Trudeau, infomercial king, convicted credit-card fraudster, and repeated head-butter with the FTC, lost a battle in the Court of Claims recently in Trudeau v. United States, 68 Fed.Cl. 121 (2005). Trudeau's move from infomercials making false and unsubstantiated claims about potential health benefits to a best-selling book making similar claims, the latter of which gets substantially more First Amendment protection, is detailed in a good Salon article. After settling the latest FTC action against him, Trudeau filed suit against the FTC for breaching an implied covenant of good faith and fair dealing by announcing in the press release that he had admitted wrongdoing, while the settlement agreement recites that Trudeau denies any wrongdoing. Because the government was acting in its sovereign capacity, protecting the public interest, the Court of Claims found that it lacked subject matter jurisdiction under the Tucker Act.

Of course, Mr. Trudeau is still laughing all the way to the bank, since his book (I have rarely been more tempted to use scare quotes) continues to sell, despite the fact that it apparently offers little but assertions, phrases in all caps, and exhortations to sign up for a $499 service that will give you real health tips.

Shark cartilage

United States v. Lane Labs-USA, Inc., 427 F.3d 219 (3d Cir. 2005), deepened a fifty-year-old circuit split. The district court found that a seller of the supposed cancer treatments BeneFin (shark cartilage) and SkinAnswer (glycoalkaloid) had committed misbranding and false advertising in violation of the Food, Drug and Cosmetic Act (FDCA). The court of appeals upheld the district court's equitable power to order restitution to consumers, despite the absence of explicit authorization for restitution in the text of the FDCA.