Mylan Pharmaceuticals, Inc. v. Procter & Gamble Co., 2006 WL 435471 (S.D.N.Y.)
Mylan sued P&G over ads for the over-the-counter version of Prilosec (omeprazole). Mylan makes an FDA-approved generic version of prescription omeprazole. P&G, under a license from Astra Zeneca, makers of prescription Prilosec, made and advertised FDA-approved Prilosec OTC.
Mylan alleged that P&G's ads falsely claimed that Prilosec OTC was the same drug as prescription omeprazole and that Prilosec OTC was approved for conditions as to which prescription omeprazole, but not Prilosec OTC, had been proven safe and effective. (Prilosec OTC is only approved for frequent heartburn; omeprazole is approved for Gastroesophageal reflux disease (GERD), erosive esophagitis, duodenal ulcers, gastric ulcers, and pathological hypersecretory conditions.) The court, ruling that some of P&G's statements could be read to expressly claim equivalance between OTC and prescription omeprazole, held that there were material disputes of fact about whether the two were equivalent, which was an objectively verifiable question. Thus, summary judgment was denied to both sides.
Mylan also argued that any claim that Prilosec OTC is the same as prescription omeprazole implies that the OTC version has been approved for the same conditions for which the prescription version has been approved. There is no private cause of action under the Food, Drug and Cosmetics Act for a claim that the product has been unlawfully promoted for a non-approved or off-label use. Furthermore, given that the FDA approved the labeling, there can be no claim that the name Prilosec OTC is inherently misleading because it's associated with the prescription version. In this case, however, Mylan presented a consumer survey showing that P&Gs statements of equivalence confuse consumers into thinking that the two products have been approved for the same condition. The court concluded that this theory was not barred by the Lanham Act, and disputed issues of material fact meant a denial of summary judgment.
This is an important result. There has always been a tension in FDA-related Lanham Act cases: one strand says that which the FDA has approved, let no court put asunder. Another says that consumer deception, if proved to be occurring, is actionable. Here, the idea that the challenged claim was implied through advertising provides a way to manage the tension: Victory for the plaintiff would not necessarily require P&G to change the labeling, which requires FDA approval. But what if a survey showed that the name Prilosec applied to an OTC product would always lead consumers to believe it was approved for all prescription indications? Then we'd be forced to pick which matters more, FDA approval or deception.
Background: because P&G and Astra Zeneca believed that the FDA would not approve Prilosec for OTC use for conditions requiring a doctor's diagnosis, they only sought approval for frequent heartburn. The parties dispute whether the OTC version can in fact safely and effectively treat the other gastrointestinal conditions for which prescription omeprazole is approved; the FDA said at one time that Prilosec OTC was "an appropriate treatment for erosive esophagitis and Barrett's esophagus," though it's not approved for those conditions.
The approved label says that Prilosec OTC may be used to treat "frequent heartburn," warning consumers that certain symptoms "may be signs of a serious condition." The label doesn't explicitly say that Prilosec OTC may not be used to treat conditions other than heartburn. In fact, whever the label, doctors may legally recommend Prilosec OTC for any use.
While approval was pending, generic manufacturers submitted citizen petitions to the FDA, arguing that extending the brand equity of Prilosec to an OTC version would inevitably confuse and mislead consumers about their ability to self-treat more serious diseases. While the Lanham Act suit was pending, the FDA denied these citizen petitions. The FDA's response observed that reports of the use of Prilosec OTC for prescription-labeled conditions represented a miniscule fraction of the amount of Prilosec and Prilosec OTC sold. A number of OTC products have the same active ingredient and product name as a prescription counterpart even though they have different indictations, including Motrin AB, Zantac 75, Pepcid AC, and Tagamet HB. Given that both products contain omeprazole, there's no risk of confusion as to the pharmacalogical effect.
The initial ads made a number of "heritage" claims referring to the prescription version of Prilosec, such as "One of the world's largest selling prescription medicines is now over the counter as Prilosec OTC."
P&G argued that the FDA's approval was a dispositive determination that its packaging and labeling, including the name, are neither false nor misleading. In prior cases, courts have distinguished between ads that merely repeat approved labeling information and those making claims not approved for labeling or packaging; only the former are protected against Lanham Act claims. Indeed, the FTC, not the FDA, directly regulates advertising for OTC drugs, indicating that the FDA is not necessarily the final authority.
The court accepted that three of P&G's ad statements might be literally false:
• "One of the world's largest selling prescription medicines is now over the counter as Prilosec OTC."
• "One of the world's top-selling prescription drugs in its class now over the counter."
• "This was the world's # 1 selling prescription medicine. And now, it's over the counter right in your store." (The court also allowed other, slightly different wordings to go to the jury.)
The basic problem is that Prilosec OTC is not identical to prescription omeprazole, which remains available only by prescription. A reasonable jury could conclude that, though the active ingredient is the same, they have different formulations (OTC has magnesium and is a tablet, whereas the prescription version is a capsule, and P&G concedes they aren't bioequivalent), making the claims literally false.
As for the implied falsity of being approved for the same conditions, Mylan submitted a consumer survey by frequent Lanham Act flyer Jacob Jacoby. Jacoby's survey concluded that two-thirds of respondents were misled by P&G's TV and print ads – they were iether led to believe that Prilosec OTC and prescription omeprazole were the same drug product, or that the two had been approved for the same indications. In addition, P&G's own records reveal "voluminous" complaints from consumers who believed that P&G's ads promised equivalence (and were presumably disappointed).
P&G argued that any gap between the ads and the truth was not material. Though the drugs are not bioequivalent, they are similarly bioavailable, which means that they achieve approximately the same concentrations in the bloodstream. The court found that a reasonable jury could conclude that the falsity (if any) would likely influence consumers' decisions. Given that Prilosec OTC is available as a tablet and the prescription version only as a capsule, and consumers prefer the tablet form, they might use the OTC version if they believed the two were the same. Moreover, it's undisputed that the FDA has approved them for different indications.
Though it's not quite clear, it seems that the court thinks a reasonable jury could conclude that the mere fact of FDA approval for an indication is material, which seems right to me. Even if the underlying evidence is the same, consumers might prefer an FDA-approved product on the theory that the FDA has more experience in evaluating that evidence, which consumers are largely unequipped to evalute on their own. With explicit claims, "our product works" or even "tests show our product works" would be less persuasive than "the FDA agrees our product works," and it should be no different for implicit claims.
Wednesday, March 08, 2006
Tuesday, March 07, 2006
Neiman Barkus
Apparently several people thought that Neiman Barkus was a good name for a pet store (see also the Neiman Barkus store at the Canine Hilton in Texas, which might have some extra trademark problems) and the Pampered Pooch store, whose slogan is "A Neiman Barkus for your pooch!"). Neiman Marcus is suing at least one of them. Neiman Marcus sells $750 Gucci pet carriers, so the goods and services may overlap a bit.
What about "Needless Markup" as a name for a store?
What about "Needless Markup" as a name for a store?
Orphan Works, Panel 2, part 2
Last panelists and audience questions:
Jay Rosenthal, Recording Artists Coalition: There are four different issues that need more study. The basic idea is good, but we need a bigger tent for creators.
(1) Conceptual problem: There's a lack of accountability for the initial search process. It's in the prospective user's best interest to fail. The Canadian system for unfound owners is no good, but in a commercial context at least, we should require people to use professional copyright search companies. Sample clearance has created a whole induistry that can do this for music. (Comment: sounds like bankruptcy reform, requiring you to pay a credit counseling service regardless of why you went bankrupt.)
(2) Particular problem with artists: They're the hardest to find and have the fewest resources to fight the designation. There needs to be an attorney's fees provision to get them the right to contest orphan works claims. Rosenthal likes the idea of a copyright small claims court.
(3) Work for hire/termination rights: This isn't outside the scope of the inquiry because it goes to who is the owner for whom you're required to search. You should have to search for the possible owner of a future interest, if the primary owner can't be found. A work might have two sets of parents, one off hiding and another that will return. (Comments: If the artists and industry directly involved can't figure out who owns the masters, I just don't think libraries are going to be able to cut the Gordian knot. Also, this whole parenthood metaphor is beginning to creep me out.)
(4) Moral rights: The vast majority of uses will be wonderful, but a work could be used in a way that damages an artist's integrity. Most artist fight for approval rights over the use of music in movies. If a label disappears, the artist loses that contractual protection. Imagine the use of music in a porn film – and worse, the proposal compels attribution, so the artist will be blamed. It might not happen often, but would be a staggering blow to a particular artist. Consider adding a small step toward moral rights in US law by allowing artists to stop disparaging uses, whether they're works for hire or not. (Comment: small step or giant leap?)
Eric Schwartz, Smith & Metalitz: Schwartz wanted to make some practical points. He's worked with orphan books and film clips – nothing happened to the users and nothing will, because those works were orphans. Section 412 is the starting point: you can usually determine the registration status of a work. When statutory damages and attorneys' fees are unavailable, ultimately you'll be okay. (Ah, Holmes's bad man! What with the libraries and their risk aversion, I'd almost forgotten about him!)
Still, there is an orphan works problem. Preservation is allowed under section 108, and there's fair use, but those aren't convenient – section 108, for example, doesn't cover online access. Everyone wants orphans to come work for them, but no one wants to praise orphanages – they exist because libraries etc. have spent millions on retention and preservation.
Overall, Schwartz likes what the Office did, focusing on (1) facilitating voluntary licensing and (2) ensuring safe steps if (1) fails. The burden of proof and search obligations are in the right place: on the user. Reasonable search has to be different for different classes of works because licensing is different in each. The Office could rejigger the proposal to make clearer that reasonable search varies. A higher threshold for photos and graphics might be appropriate because they lack collective societies and registries. (Comment: this has to be a higher standard for pursuing what information you have, right? Because you're a lot less likely to have that information in the first place, and that's very hard to change by setting a high standard for search.) Maybe born-digital works will make search easier, but that hasn't happened yet. These steps may be inconvenient, but you are using anotherr's work.
Unpublished works are a concern: the proposed rule is antithetical to the civil law system. The right of divulgation is a problem, which needs to be watched.
Congress should also spend the $35 million to put the Copyright Office database online, as a starting point.
As to the distinction between commercial and noncommercial uses, if an archive spends $20,000 on restoring a film, it will never recoup its costs even if it sells copies. We should give it the ability to count the production costs (I wasn't clear whether that meant treating its uses as noncommercial or simply saying that a reasonable license fee would only kick in after restoration costs were recouped). This is fair because, but for their efforts, the material wouldn't exist.
On derivative works, the proposal needs clarification. Incorporating photos into a movie set background isn't transformative, but no injunction should issue in such cases either.
Jennifer Urban, USC Law IP Clinic: The clinic represented independent and documentary filmmakers – follow-on creators -- in the comments. These filmmakers hope for commercial success but aren't assured of it; they depend on copyright themselves, but have limited resources and budgets.
Reasonable compensation is a worry. The Copyright Office has tried to define it, but it's still difficult for small users who lack resources and lack the ability to spred risk. They're putting their films on credit cards. An E&O insurer, despite the reality of the situatin with respect to unregistered works, will be a conservative gatekeeper, and it's dealing with lots of filmmakers who are competing for insurance. Thus, a damages cap is quite important. Attorneys' fees for bad faith make good sense; also a small claims court. She's also willing to consider some sort of affidavit or statement of good faith, as long as the standard is flexible.
Question: From a lawyer who works with jewelry and textile designers: copyright information is taken off of works and knockoffs are produced in Asia. How can we deal with that?
Answer from panelists: That's the same problem as with illustrations and photos – it's hard to identify the source. The pirates certainly aren't performing due diligence. (In other words, not really an orphan works problem.)
Question from me: The Report says that only a handful of comments addressed attribution, yet it's half the proposed solution. Why is that?
Answer from Copyright Office folks: It came up in the roundtables, and there seemed to be consensus that it was basically fair. Jonathan Band added that attribution makes it easier for orphans to find their guardians – the name of the photographer might enable heirs to appear. Of course, you might get a problem of 7 more minutes of movie credits (kind of like the fine print in ads, useful only to regulators and probably not to heirs). Rob Kasunic said that it's a matter of basic good faith, showing that the work wasn't the creation of the user (query: do people reading historians' works need to be told that?) and also allowing the user and creator to get together. I find the former explanation more persuasive than the latter, since everyone agrees that creators/heirs are extremely unlikely to reappear.
Question from me: Say more about derivative works.
Answer from Copyright Office folks: Does putting a photo in a book create a derivative work of that photo? Case law is unclear. If it doesn't, the proposed language may offer no protection against injunction even though that's what we want. Secondary users should be protected when someone needed to use the work and added new material, but not when they just put one photo with a bunch of others and don't really rely on that particular work. (E.g., Google Print, if Google tried first to find owners.) The Office is struggling with alternative language – suggestions welcome!
Question: What about the problems with visual artists generally?
Answer: One of the points of the Report is that we should try to eliminate the problem in the future. There is an orphan works problem – often you just can't find the owner – and we should incentivize finding aids. You can't herd cats, but you can move their food, and that's what the proposal tries to do.
Question: Mostly people would have to come to DC to search the Copyright Office records, or pay to have it done – how much diligence do you have to do to find a company that disappeared 25 years ago?
Answer: Peter Jaszi said that best practices, sectorally, were a big part of the answer. Jonathan Band: In publishing, thousands of houses were bought and sold over time. The AAP is in the best position to put together family trees; if they did that once, people could rely on it.
Question from Brad Holland: One group tried to create a registry of artists through the Copyright Clearance Center, which didn't cooperate. Illustrators have tried to get together with photographers for a visual artists' collecting society, but it hasn't happened. Why not have Congress allocate money to do it, or give artists ten years before this provision kicks in to let them get their act together? (Comment: see above re: cats. If I told my cat I was going to move her food in ten years, she'd … yawn. She's got more important things to do just this minute.)
Answer from Copyright Office folks: A registry is not just difficult and costly, but hard to adapt to technical change. The Copyright Office doesn't know illustrators' business and licensing models. You guys should design a registry for your own needs to create a functional marketplace. You need a system for credit and collective licensing whether or not we get orphan works legislation. If you're successful, you'll solve a lot of orphan works problems, but there are lots of true orphans now, which is why it's a bad idea to wait. The proposed sunset provision allows adjustments to be made.
Then we were out of time. Once again, Peter Jaszi and his crew created an excellent program.
Jay Rosenthal, Recording Artists Coalition: There are four different issues that need more study. The basic idea is good, but we need a bigger tent for creators.
(1) Conceptual problem: There's a lack of accountability for the initial search process. It's in the prospective user's best interest to fail. The Canadian system for unfound owners is no good, but in a commercial context at least, we should require people to use professional copyright search companies. Sample clearance has created a whole induistry that can do this for music. (Comment: sounds like bankruptcy reform, requiring you to pay a credit counseling service regardless of why you went bankrupt.)
(2) Particular problem with artists: They're the hardest to find and have the fewest resources to fight the designation. There needs to be an attorney's fees provision to get them the right to contest orphan works claims. Rosenthal likes the idea of a copyright small claims court.
(3) Work for hire/termination rights: This isn't outside the scope of the inquiry because it goes to who is the owner for whom you're required to search. You should have to search for the possible owner of a future interest, if the primary owner can't be found. A work might have two sets of parents, one off hiding and another that will return. (Comments: If the artists and industry directly involved can't figure out who owns the masters, I just don't think libraries are going to be able to cut the Gordian knot. Also, this whole parenthood metaphor is beginning to creep me out.)
(4) Moral rights: The vast majority of uses will be wonderful, but a work could be used in a way that damages an artist's integrity. Most artist fight for approval rights over the use of music in movies. If a label disappears, the artist loses that contractual protection. Imagine the use of music in a porn film – and worse, the proposal compels attribution, so the artist will be blamed. It might not happen often, but would be a staggering blow to a particular artist. Consider adding a small step toward moral rights in US law by allowing artists to stop disparaging uses, whether they're works for hire or not. (Comment: small step or giant leap?)
Eric Schwartz, Smith & Metalitz: Schwartz wanted to make some practical points. He's worked with orphan books and film clips – nothing happened to the users and nothing will, because those works were orphans. Section 412 is the starting point: you can usually determine the registration status of a work. When statutory damages and attorneys' fees are unavailable, ultimately you'll be okay. (Ah, Holmes's bad man! What with the libraries and their risk aversion, I'd almost forgotten about him!)
Still, there is an orphan works problem. Preservation is allowed under section 108, and there's fair use, but those aren't convenient – section 108, for example, doesn't cover online access. Everyone wants orphans to come work for them, but no one wants to praise orphanages – they exist because libraries etc. have spent millions on retention and preservation.
Overall, Schwartz likes what the Office did, focusing on (1) facilitating voluntary licensing and (2) ensuring safe steps if (1) fails. The burden of proof and search obligations are in the right place: on the user. Reasonable search has to be different for different classes of works because licensing is different in each. The Office could rejigger the proposal to make clearer that reasonable search varies. A higher threshold for photos and graphics might be appropriate because they lack collective societies and registries. (Comment: this has to be a higher standard for pursuing what information you have, right? Because you're a lot less likely to have that information in the first place, and that's very hard to change by setting a high standard for search.) Maybe born-digital works will make search easier, but that hasn't happened yet. These steps may be inconvenient, but you are using anotherr's work.
Unpublished works are a concern: the proposed rule is antithetical to the civil law system. The right of divulgation is a problem, which needs to be watched.
Congress should also spend the $35 million to put the Copyright Office database online, as a starting point.
As to the distinction between commercial and noncommercial uses, if an archive spends $20,000 on restoring a film, it will never recoup its costs even if it sells copies. We should give it the ability to count the production costs (I wasn't clear whether that meant treating its uses as noncommercial or simply saying that a reasonable license fee would only kick in after restoration costs were recouped). This is fair because, but for their efforts, the material wouldn't exist.
On derivative works, the proposal needs clarification. Incorporating photos into a movie set background isn't transformative, but no injunction should issue in such cases either.
Jennifer Urban, USC Law IP Clinic: The clinic represented independent and documentary filmmakers – follow-on creators -- in the comments. These filmmakers hope for commercial success but aren't assured of it; they depend on copyright themselves, but have limited resources and budgets.
Reasonable compensation is a worry. The Copyright Office has tried to define it, but it's still difficult for small users who lack resources and lack the ability to spred risk. They're putting their films on credit cards. An E&O insurer, despite the reality of the situatin with respect to unregistered works, will be a conservative gatekeeper, and it's dealing with lots of filmmakers who are competing for insurance. Thus, a damages cap is quite important. Attorneys' fees for bad faith make good sense; also a small claims court. She's also willing to consider some sort of affidavit or statement of good faith, as long as the standard is flexible.
Question: From a lawyer who works with jewelry and textile designers: copyright information is taken off of works and knockoffs are produced in Asia. How can we deal with that?
Answer from panelists: That's the same problem as with illustrations and photos – it's hard to identify the source. The pirates certainly aren't performing due diligence. (In other words, not really an orphan works problem.)
Question from me: The Report says that only a handful of comments addressed attribution, yet it's half the proposed solution. Why is that?
Answer from Copyright Office folks: It came up in the roundtables, and there seemed to be consensus that it was basically fair. Jonathan Band added that attribution makes it easier for orphans to find their guardians – the name of the photographer might enable heirs to appear. Of course, you might get a problem of 7 more minutes of movie credits (kind of like the fine print in ads, useful only to regulators and probably not to heirs). Rob Kasunic said that it's a matter of basic good faith, showing that the work wasn't the creation of the user (query: do people reading historians' works need to be told that?) and also allowing the user and creator to get together. I find the former explanation more persuasive than the latter, since everyone agrees that creators/heirs are extremely unlikely to reappear.
Question from me: Say more about derivative works.
Answer from Copyright Office folks: Does putting a photo in a book create a derivative work of that photo? Case law is unclear. If it doesn't, the proposed language may offer no protection against injunction even though that's what we want. Secondary users should be protected when someone needed to use the work and added new material, but not when they just put one photo with a bunch of others and don't really rely on that particular work. (E.g., Google Print, if Google tried first to find owners.) The Office is struggling with alternative language – suggestions welcome!
Question: What about the problems with visual artists generally?
Answer: One of the points of the Report is that we should try to eliminate the problem in the future. There is an orphan works problem – often you just can't find the owner – and we should incentivize finding aids. You can't herd cats, but you can move their food, and that's what the proposal tries to do.
Question: Mostly people would have to come to DC to search the Copyright Office records, or pay to have it done – how much diligence do you have to do to find a company that disappeared 25 years ago?
Answer: Peter Jaszi said that best practices, sectorally, were a big part of the answer. Jonathan Band: In publishing, thousands of houses were bought and sold over time. The AAP is in the best position to put together family trees; if they did that once, people could rely on it.
Question from Brad Holland: One group tried to create a registry of artists through the Copyright Clearance Center, which didn't cooperate. Illustrators have tried to get together with photographers for a visual artists' collecting society, but it hasn't happened. Why not have Congress allocate money to do it, or give artists ten years before this provision kicks in to let them get their act together? (Comment: see above re: cats. If I told my cat I was going to move her food in ten years, she'd … yawn. She's got more important things to do just this minute.)
Answer from Copyright Office folks: A registry is not just difficult and costly, but hard to adapt to technical change. The Copyright Office doesn't know illustrators' business and licensing models. You guys should design a registry for your own needs to create a functional marketplace. You need a system for credit and collective licensing whether or not we get orphan works legislation. If you're successful, you'll solve a lot of orphan works problems, but there are lots of true orphans now, which is why it's a bad idea to wait. The proposed sunset provision allows adjustments to be made.
Then we were out of time. Once again, Peter Jaszi and his crew created an excellent program.
Orphan Works, Panel 2, part 1
Panel 2, evaluating the Copyright Office proposal:
Matt Skelton & Rob Kasunic, Copyright Office: There was a huge response to the Notice of Inquiry, about 850 comments total. Roundtables and informal meetings were also important to the process. The Office made a real effort to deal with the situation holistically – it could have gone to complex sectoral limitations, but instead wanted an allover scheme.
The attribution requirement, in some situations, merely calls for an indication that the owner is unknown and that the material is not original to the author of the new work.
The Office was surprised that users didn't want specific regulatory guidance on what reasonable search was – they wanted to establish best practices through negotiation. Also surprised that people who are comfortable with "reasonable search" are uncomfortable with "reasonable compensation." (I can't see why: same adjective, very different potential consequences.)
Looking at the derivative works language in the proposal, they may not have fully captured the idea, which was not necessarily to distinguish between derivative works and nonderivative works, but to take into account the extent to which a user relied on a particular work in creating a new work. (As I understood it, the concern is that a book reprinting an orphan photo probably isn't a derivative work of the photo under existing caselaw, but the selection and printing of that particular photo still creates enough of a reliance interest that injunction should be unavailable to a newly appeared owner. It seems to me, however, that "the extent of reliance" is an equally awkward way to address the problem; most especially, it would be a bad idea to have a court deciding that, since another photo would adequately illustrate the same point, the user's reliance isn't sufficient to avoid injunctive relief.)
The Office is looking for other ways to express that concept. Where there's no reliance on the underlying work, its use could be enjoined, though the court should take into account whether there was some reliance. (Thus, the Office may not agree with my parenthetical concern – if the photo could be replaced in later editions of a book, for example, maybe that should be the result. It seems to me that this would have the greatest consequences for online exhibits and the like, since a resurfacing copyright owner could often argue that the changeability of the online form means that reliance interests are minimal.)
Jonathan Band, Library Copyright Alliance: The sunset provision is a horrible idea (he's the one who suggested trading for a Title I DMCA sunset). Given the hard work everyone's done defining the problem, a sunset makes no sense.
A damage cap as opposed to reasonable compensation would be better for certainty. However, the LCA understands political reality and is willing to consider reasonable compensation, as long as there's additional certainty about what reasonable means. The Report has pretty good definitions, which should be incorporated into statutory language, not legislative history.
Other, more technical issues are resolveable. What's a noncommercial use – a library gift shop? (Libraries have gift shops?) A university coursepack?
Attribution of photos is a very real problem. Maybe we need to lean on publishers to do that in the future. A statutory requirement of attribution for photographs is not a good idea because it gets into moral rights territory, but it would be good to mitigate the problem on a going forward basis.
Brad Holland, Illustrators' Partnership: Holland's organization was joined by architectural, medical, scientific and other illustrators, along with cartoonists and organizations that represent artists' estates in opposing orphan works protection. At least, illustrations and photographs should be treated specially because authors produce a limited number of books (tell that to Isaac Asimov!) and can keep track, whereas illustrators and photographers have thousands or tens of thousands of works to manage.
As an aesthetic matter, it hurts a photograph to have credit attached. Imagine the Sistine Chapel with Michelangelo's name and "all rights reserved" across the painting.
Nine times in the Report, it says that most works have no economic value soon after publication – this is a basic premise.
That's false: anecdotally, artists get more value after 20 years because of their reputations. (My comment: the plural of anecdote is not data.) Moreover, before 1976, an artist's drawing for the New Yorker was unlikely to be reused; that was perceived as unethical. Now secondary rights are contentious and valuable. Bill Gates is buying up photos and illustrations by the hundreds of millions – smart businessmen don't spend so much money on works with no commercial value. (My comment: we're back to Google again – aggregation's value is greater than the sum of the parts.)
Holland's group objects to two loopholes in particular. First, the Report says that information on the face of a work of art is highly relevant to whether a user's search is adequate. Holland told the story of an artist, Cutler, who always used © as the C in his name on his art. A stockhouse took the work, breaching his contract and infringing his copyright, but he was unable to go to court against a giant corporation. Holland saw his work reproduced in a Singapore newspaper which had cut the C off of his name. The information was false – the most diligent search in the world wouldn't have found Utler, and this isn't Cutler's fault. (As someone in the comments noted, none of this is an orphan works problem.)
Second, the proposed remedies are too limited. The Report acknowledges that illustrators can't go to court over infringements, but the requirement that reasonable search parameters be developed on a case-by-case basis will mean that no ground rules will ever develop, since no one will sue to develop them.
There are also problems of retroactivity: artists have done work in good faith with no information on the face of the work. (I began to get the sense that Holland was treating "face" somewhat more literally than I would have. Also, do artists expect that, because they can't be found, no reuse will be made of their works? By definition, they can't really expect economic benefit. So what orphan works protection denies them is some certainty that their work will not be disseminated – a type of moral right.)
Holland's group concedes that legitimate problems exist, such as family portraits taken by professional photographers. But in every small town, there's someone who doesn't know that copyright law exists or is willing to break the law – it's like jaywalking, a law to be winked at. (Wow. So much for moral rights.) The Netherlands allows reproduction of family photos by or on behalf of the person(s?) portrayed or the heirs. We should adopt the same rule instead of an omnibus bill.
In conclusion, the Report offers a blueprint for a license to infringe.
Next: more panelists, and questions.
Matt Skelton & Rob Kasunic, Copyright Office: There was a huge response to the Notice of Inquiry, about 850 comments total. Roundtables and informal meetings were also important to the process. The Office made a real effort to deal with the situation holistically – it could have gone to complex sectoral limitations, but instead wanted an allover scheme.
The attribution requirement, in some situations, merely calls for an indication that the owner is unknown and that the material is not original to the author of the new work.
The Office was surprised that users didn't want specific regulatory guidance on what reasonable search was – they wanted to establish best practices through negotiation. Also surprised that people who are comfortable with "reasonable search" are uncomfortable with "reasonable compensation." (I can't see why: same adjective, very different potential consequences.)
Looking at the derivative works language in the proposal, they may not have fully captured the idea, which was not necessarily to distinguish between derivative works and nonderivative works, but to take into account the extent to which a user relied on a particular work in creating a new work. (As I understood it, the concern is that a book reprinting an orphan photo probably isn't a derivative work of the photo under existing caselaw, but the selection and printing of that particular photo still creates enough of a reliance interest that injunction should be unavailable to a newly appeared owner. It seems to me, however, that "the extent of reliance" is an equally awkward way to address the problem; most especially, it would be a bad idea to have a court deciding that, since another photo would adequately illustrate the same point, the user's reliance isn't sufficient to avoid injunctive relief.)
The Office is looking for other ways to express that concept. Where there's no reliance on the underlying work, its use could be enjoined, though the court should take into account whether there was some reliance. (Thus, the Office may not agree with my parenthetical concern – if the photo could be replaced in later editions of a book, for example, maybe that should be the result. It seems to me that this would have the greatest consequences for online exhibits and the like, since a resurfacing copyright owner could often argue that the changeability of the online form means that reliance interests are minimal.)
Jonathan Band, Library Copyright Alliance: The sunset provision is a horrible idea (he's the one who suggested trading for a Title I DMCA sunset). Given the hard work everyone's done defining the problem, a sunset makes no sense.
A damage cap as opposed to reasonable compensation would be better for certainty. However, the LCA understands political reality and is willing to consider reasonable compensation, as long as there's additional certainty about what reasonable means. The Report has pretty good definitions, which should be incorporated into statutory language, not legislative history.
Other, more technical issues are resolveable. What's a noncommercial use – a library gift shop? (Libraries have gift shops?) A university coursepack?
Attribution of photos is a very real problem. Maybe we need to lean on publishers to do that in the future. A statutory requirement of attribution for photographs is not a good idea because it gets into moral rights territory, but it would be good to mitigate the problem on a going forward basis.
Brad Holland, Illustrators' Partnership: Holland's organization was joined by architectural, medical, scientific and other illustrators, along with cartoonists and organizations that represent artists' estates in opposing orphan works protection. At least, illustrations and photographs should be treated specially because authors produce a limited number of books (tell that to Isaac Asimov!) and can keep track, whereas illustrators and photographers have thousands or tens of thousands of works to manage.
As an aesthetic matter, it hurts a photograph to have credit attached. Imagine the Sistine Chapel with Michelangelo's name and "all rights reserved" across the painting.
Nine times in the Report, it says that most works have no economic value soon after publication – this is a basic premise.
That's false: anecdotally, artists get more value after 20 years because of their reputations. (My comment: the plural of anecdote is not data.) Moreover, before 1976, an artist's drawing for the New Yorker was unlikely to be reused; that was perceived as unethical. Now secondary rights are contentious and valuable. Bill Gates is buying up photos and illustrations by the hundreds of millions – smart businessmen don't spend so much money on works with no commercial value. (My comment: we're back to Google again – aggregation's value is greater than the sum of the parts.)
Holland's group objects to two loopholes in particular. First, the Report says that information on the face of a work of art is highly relevant to whether a user's search is adequate. Holland told the story of an artist, Cutler, who always used © as the C in his name on his art. A stockhouse took the work, breaching his contract and infringing his copyright, but he was unable to go to court against a giant corporation. Holland saw his work reproduced in a Singapore newspaper which had cut the C off of his name. The information was false – the most diligent search in the world wouldn't have found Utler, and this isn't Cutler's fault. (As someone in the comments noted, none of this is an orphan works problem.)
Second, the proposed remedies are too limited. The Report acknowledges that illustrators can't go to court over infringements, but the requirement that reasonable search parameters be developed on a case-by-case basis will mean that no ground rules will ever develop, since no one will sue to develop them.
There are also problems of retroactivity: artists have done work in good faith with no information on the face of the work. (I began to get the sense that Holland was treating "face" somewhat more literally than I would have. Also, do artists expect that, because they can't be found, no reuse will be made of their works? By definition, they can't really expect economic benefit. So what orphan works protection denies them is some certainty that their work will not be disseminated – a type of moral right.)
Holland's group concedes that legitimate problems exist, such as family portraits taken by professional photographers. But in every small town, there's someone who doesn't know that copyright law exists or is willing to break the law – it's like jaywalking, a law to be winked at. (Wow. So much for moral rights.) The Netherlands allows reproduction of family photos by or on behalf of the person(s?) portrayed or the heirs. We should adopt the same rule instead of an omnibus bill.
In conclusion, the Report offers a blueprint for a license to infringe.
Next: more panelists, and questions.
Orphan Works, continued
This post comes from notes I jotted down before I spoke, so it may not reflect actual content, whereas I think I basically captured what other people said. (It's come to my attention that some people consider my notes on other people's presentations freakishly complete. I blame eight years of policy debate.)
Most of my experience with orphan works comes from contacts with historians. Images are the biggest problem: you may know where you found them and sometimes who's in them, but rarely who created them. We have a family photo from early in the 20th century that shows members of my husband's family posing with their favorite socialist newspaper. Another historian wanted to use the photo in a book about Jewish politics in New York; we sent him a copy and gave permission. Did we have any right to give permission? Who knows? The use wasn't conventionally transformative but may have been a fair use – the historian was using it to illustrate his argument about the importance of small differences in politics by showing that the choice of newspaper was significant enough for a family to use it as a means of self-definition. Regardless, the publisher wanted the empty ritual of permission.
More generally, authors are hard to trace, and if anything the problem is worse when the copyright owner was an organization that's now defunct. The successors often don't know what they own or if they own it. They worry about giving permission, so refuse or don't respond to inquiries, or they blithely give permission without owning the rights.
A story from the heirs' side: My grandfather, Leonard Tushnet, wrote short stories and a few books. They were all published after 1963, so renewal was automatic; he passed away before the first terms ended, so the renewal terms went to his heirs (my father and aunts). To my surprise, I found one of his stories reprinted in a recent anthology. I'm sure the publisher sought permission from the original publisher – and got it – in good faith, but it was nonetheless mistaken, and strictly liable. The heirs have no plans to enforce the copyright, but I tell this story to point out how easy it is even for repeat players to screw up.
The basic question I'm interested in: How hard should we make new users work? Carnegie Mellon invested several million dollars in digitization, a substantial chunk for permissions. Very roughly – read more here or here -- they found 1/3 of the publishers fairly easily, 1/3 with difficulty, and 1/3 not at all. (And, as noted above, some of the ones they found didn't necessarily have the rights.) Is this game worth the candle?
Most of my experience with orphan works comes from contacts with historians. Images are the biggest problem: you may know where you found them and sometimes who's in them, but rarely who created them. We have a family photo from early in the 20th century that shows members of my husband's family posing with their favorite socialist newspaper. Another historian wanted to use the photo in a book about Jewish politics in New York; we sent him a copy and gave permission. Did we have any right to give permission? Who knows? The use wasn't conventionally transformative but may have been a fair use – the historian was using it to illustrate his argument about the importance of small differences in politics by showing that the choice of newspaper was significant enough for a family to use it as a means of self-definition. Regardless, the publisher wanted the empty ritual of permission.
More generally, authors are hard to trace, and if anything the problem is worse when the copyright owner was an organization that's now defunct. The successors often don't know what they own or if they own it. They worry about giving permission, so refuse or don't respond to inquiries, or they blithely give permission without owning the rights.
A story from the heirs' side: My grandfather, Leonard Tushnet, wrote short stories and a few books. They were all published after 1963, so renewal was automatic; he passed away before the first terms ended, so the renewal terms went to his heirs (my father and aunts). To my surprise, I found one of his stories reprinted in a recent anthology. I'm sure the publisher sought permission from the original publisher – and got it – in good faith, but it was nonetheless mistaken, and strictly liable. The heirs have no plans to enforce the copyright, but I tell this story to point out how easy it is even for repeat players to screw up.
The basic question I'm interested in: How hard should we make new users work? Carnegie Mellon invested several million dollars in digitization, a substantial chunk for permissions. Very roughly – read more here or here -- they found 1/3 of the publishers fairly easily, 1/3 with difficulty, and 1/3 not at all. (And, as noted above, some of the ones they found didn't necessarily have the rights.) Is this game worth the candle?
Monday, March 06, 2006
Orphan Works find home at AU
On February 24, I attended "Orphan Works: New Prospects for a Solution" at American University's Washington College of Law, sponsored by the Intellectual Property Law Clinic and introduced by Peter Jaszi. A webcast is available on the law school's site. The first panel considered what the orphan works problem is (if there is one).
Prue Adler, Association of American Libraries: She offered the library community perspective, which is similar to that of archives and museums. Libraries see solving the orphan works problem as offering huge benefits to scholarship from greater public accessibility. There are many rich special collections nationwide, and libraries are trying to digitize them, but massive numbers of the documents are orphan works. Many of these are on unstable, deteriorating media such as acidic paper. Moreover, users demand electronic formats – print and other media no longer satisfy.
Three examples from one institution, Cornell. First, Cornell has a core collection of agricultural texts from the mid-19th to mid-20th century, covering forestry, nutrition, etc. It took $50,000 in staff time solely to deal with copyright – contacting authors' children and publishing houses and dealing with international issues. For 14% of the works, Cornell was denied permission; the librarians couldn't determine ownership for 58% (and these are people who know how to research!). The killer – how many texts did that $50,000 cover? Three hundred and forty-three (343) mongraphs.
Second, Cornell's Center for Labor/Management Relations has 350,000 unpublished photographs. One percent (1%) have indications of who took them. Without orphan works, there is no way this collection will be digitized.
Third, the Rare Book and Manuscript collection includes a manuscript from a Japanese-American relocation camp from WWII. The author gave permission to reproduce it once, but has since disappeared, which means a wait of 120 years from creation before it can be used again.
Access and preservation are linked – each time someone handles many of these materials, they deteriorate. Orphan works protections are necessary, especially given the uniquely risk-adverse counsel who operate on-campus. Any doubt about whether the use requires permission leads to a veto.
Alex Curtis, Public Knowledge: We know that from 1923-1942, 3 million copyrights were registered, some of which were renewed; 2% were being commercially exploited in 1998. That 98% represents a great opportunity – including for commercial exploitation – except for the problem that the costs of seeking permission overwhelm the benefits to be had, especially since even those who do the work often can't find the owner.
The Copyright Office's proposal is pretty close to PK's goals of (1) encouraging registration, (2) matching works with lost owners, and (3) minimizing the risks and costs to users. PK thinks legislation needs to provide a high degree of certainty, since the search alone will be expensive. PK doesn't like the distinction between commercial and noncommercial endeavors for the absolute bar on damages, and also thinks the reasonable compensation requirement is too uncertain. The last decade saw lots of bad copyright policy – this is a big chance to go the other way.
Kathleen Franz, AU history department: Franz is a cultural historian who uses visual and sound sources. She's also a public historian, which means she works on all the things historians do outside the classroom, including museums and digital history. Her 20th century colleagues are often faced with questions of what they can use. Permissions take time and corporate archives charge a lot. Working in an early period, she often relies on fair use, but other historians don't have that choice.
She offered an example from museum life: doing a show with 500 to 1000 postcards, you could take up all your staff time looking for permissions. She'd like to see some legal changes to help out academic and public historians.
Mitch Glazer, RIAA: Here I will interrupt to say that Mr. Glazer was personable, reasonable, and very smart – but apparently not smart enough to avoid the heat for inserting a teeny, tiny change in the definition of works for hire back in 1999 (though Courtney Love spelled his name wrong).
Glazer was present to talk about commercial exploitation of orphan works. RIAA companies are both owners (sound recordings) and users (musical works). What we have here is a need to balance a reasonable degree of business certainty with fairness to creators. As with most copyright legislation, there are interests to respect on both sides. The RIAA always believes in licensing, but if you can't find the owner but do have the work, how do you make it available for public use?
The Copyright Office did a pretty good balancing job. Now we need to find the right examples to define a reasonably diligent search: there should be no automatic entitlement just by searching Copyright Office records, nor a zillion-step requirement. We need examples so Congress can give guidance without a regulatory scheme (I took this to mean that he wanted legislative history, not rulemaking).
Glazer made what I thought was the most interesting theoretical (and practical!) point of the session: the proposed attribution element cries out for balance as well. If you're 50% certain of a work's authorship, giving attribution may be inappropriate – you may falsely accuse the supposed author.
We also need guidance on reasonable compensation. He thinks the sunset provision proposed is appropriate – this should be a pilot program so we can evaluate it, though we need to figure out what happens to works used before the sunset. (Later on, one commenter said that he'd be happy to have an orphan works sunset if the copyright industries would trade us a section 1201 anticircumvention sunset.)
People not usually on the same sides agree: there's room for a legislative solution. Commercializing orphan works benefits the public by allowing access to material we wouldn't otherwise have heard.
Eugene Mopsik, American Society of Media Photographers: This proposal is a disaster of biblical proportions. (Good contrast to Glazer's conclusion!) Mopsik's organization, which mainly represents publication photographers, has come together with other artists' and photographers' organizations to object.
The basic problem is that, as a matter of trade practice, the vast majority of ASMP members' works are routinely reproduced without credit. They've done everything possible under the law, including registering, to protect themselves. They're not missing, not hiding, not making themselves hard to find. (And here's what nobody ever said to him directly: they're not making themselves hard to find; they're nonetheless hard – indeed, impossible -- to find. So it's not like the current rule is helping.) The orphan works proposal resurrects a notice requirement where context makes notice impossible.
It's been suggested that the Copyright Office create a searchable image registry. In the report, the Office said that was beyond the scope of its mandate and an administrative nightmare besides, but meanwhile it would be great if the photographers did that themselves. Mopsik said that, since they're already overwhelmed and underpaid, that's not going to happen.
The proposal encouarages theft by libraries at the expense of photographers. He understands the need for access; getting permission takes time and costs money, sure. He'd like free stuff too, say at the car dealership, but doesn't see why creators are supposed to pay.
At most, any orphan works solution should only allow noncommercial use by nonprofits. Congress should create a copyright small claims court so it's worth suing over ordinary infringements. Attorneys' fees should also be allowed where the user refuses to pay or is otherwise abusive.
I was the last speaker on the panel; I'll post about what I said in the next post. (It'll be shorter than this!)
Prue Adler, Association of American Libraries: She offered the library community perspective, which is similar to that of archives and museums. Libraries see solving the orphan works problem as offering huge benefits to scholarship from greater public accessibility. There are many rich special collections nationwide, and libraries are trying to digitize them, but massive numbers of the documents are orphan works. Many of these are on unstable, deteriorating media such as acidic paper. Moreover, users demand electronic formats – print and other media no longer satisfy.
Three examples from one institution, Cornell. First, Cornell has a core collection of agricultural texts from the mid-19th to mid-20th century, covering forestry, nutrition, etc. It took $50,000 in staff time solely to deal with copyright – contacting authors' children and publishing houses and dealing with international issues. For 14% of the works, Cornell was denied permission; the librarians couldn't determine ownership for 58% (and these are people who know how to research!). The killer – how many texts did that $50,000 cover? Three hundred and forty-three (343) mongraphs.
Second, Cornell's Center for Labor/Management Relations has 350,000 unpublished photographs. One percent (1%) have indications of who took them. Without orphan works, there is no way this collection will be digitized.
Third, the Rare Book and Manuscript collection includes a manuscript from a Japanese-American relocation camp from WWII. The author gave permission to reproduce it once, but has since disappeared, which means a wait of 120 years from creation before it can be used again.
Access and preservation are linked – each time someone handles many of these materials, they deteriorate. Orphan works protections are necessary, especially given the uniquely risk-adverse counsel who operate on-campus. Any doubt about whether the use requires permission leads to a veto.
Alex Curtis, Public Knowledge: We know that from 1923-1942, 3 million copyrights were registered, some of which were renewed; 2% were being commercially exploited in 1998. That 98% represents a great opportunity – including for commercial exploitation – except for the problem that the costs of seeking permission overwhelm the benefits to be had, especially since even those who do the work often can't find the owner.
The Copyright Office's proposal is pretty close to PK's goals of (1) encouraging registration, (2) matching works with lost owners, and (3) minimizing the risks and costs to users. PK thinks legislation needs to provide a high degree of certainty, since the search alone will be expensive. PK doesn't like the distinction between commercial and noncommercial endeavors for the absolute bar on damages, and also thinks the reasonable compensation requirement is too uncertain. The last decade saw lots of bad copyright policy – this is a big chance to go the other way.
Kathleen Franz, AU history department: Franz is a cultural historian who uses visual and sound sources. She's also a public historian, which means she works on all the things historians do outside the classroom, including museums and digital history. Her 20th century colleagues are often faced with questions of what they can use. Permissions take time and corporate archives charge a lot. Working in an early period, she often relies on fair use, but other historians don't have that choice.
She offered an example from museum life: doing a show with 500 to 1000 postcards, you could take up all your staff time looking for permissions. She'd like to see some legal changes to help out academic and public historians.
Mitch Glazer, RIAA: Here I will interrupt to say that Mr. Glazer was personable, reasonable, and very smart – but apparently not smart enough to avoid the heat for inserting a teeny, tiny change in the definition of works for hire back in 1999 (though Courtney Love spelled his name wrong).
Glazer was present to talk about commercial exploitation of orphan works. RIAA companies are both owners (sound recordings) and users (musical works). What we have here is a need to balance a reasonable degree of business certainty with fairness to creators. As with most copyright legislation, there are interests to respect on both sides. The RIAA always believes in licensing, but if you can't find the owner but do have the work, how do you make it available for public use?
The Copyright Office did a pretty good balancing job. Now we need to find the right examples to define a reasonably diligent search: there should be no automatic entitlement just by searching Copyright Office records, nor a zillion-step requirement. We need examples so Congress can give guidance without a regulatory scheme (I took this to mean that he wanted legislative history, not rulemaking).
Glazer made what I thought was the most interesting theoretical (and practical!) point of the session: the proposed attribution element cries out for balance as well. If you're 50% certain of a work's authorship, giving attribution may be inappropriate – you may falsely accuse the supposed author.
We also need guidance on reasonable compensation. He thinks the sunset provision proposed is appropriate – this should be a pilot program so we can evaluate it, though we need to figure out what happens to works used before the sunset. (Later on, one commenter said that he'd be happy to have an orphan works sunset if the copyright industries would trade us a section 1201 anticircumvention sunset.)
People not usually on the same sides agree: there's room for a legislative solution. Commercializing orphan works benefits the public by allowing access to material we wouldn't otherwise have heard.
Eugene Mopsik, American Society of Media Photographers: This proposal is a disaster of biblical proportions. (Good contrast to Glazer's conclusion!) Mopsik's organization, which mainly represents publication photographers, has come together with other artists' and photographers' organizations to object.
The basic problem is that, as a matter of trade practice, the vast majority of ASMP members' works are routinely reproduced without credit. They've done everything possible under the law, including registering, to protect themselves. They're not missing, not hiding, not making themselves hard to find. (And here's what nobody ever said to him directly: they're not making themselves hard to find; they're nonetheless hard – indeed, impossible -- to find. So it's not like the current rule is helping.) The orphan works proposal resurrects a notice requirement where context makes notice impossible.
It's been suggested that the Copyright Office create a searchable image registry. In the report, the Office said that was beyond the scope of its mandate and an administrative nightmare besides, but meanwhile it would be great if the photographers did that themselves. Mopsik said that, since they're already overwhelmed and underpaid, that's not going to happen.
The proposal encouarages theft by libraries at the expense of photographers. He understands the need for access; getting permission takes time and costs money, sure. He'd like free stuff too, say at the car dealership, but doesn't see why creators are supposed to pay.
At most, any orphan works solution should only allow noncommercial use by nonprofits. Congress should create a copyright small claims court so it's worth suing over ordinary infringements. Attorneys' fees should also be allowed where the user refuses to pay or is otherwise abusive.
I was the last speaker on the panel; I'll post about what I said in the next post. (It'll be shorter than this!)
Friday, March 03, 2006
BadBusinessBureau accused of monkey business
Hy Cite Corporation v. Badbusinessbureau.com, L.L.C., 2005 WL 3811420 (D.Ariz.)
According to plaintiff (which sells cookware), defendant is in the business of soliciting complaints about businesses – even offering compensation to good complainers – posting them on its website, and then offering to fix the problems thus generated by mediating between the targeted businesses and their disgruntled customers, for only $50,000 and a $1500 monthly fee. Rather than pay up, plaintiff sued.
Eric Goldman has written about the CDA section 230 immunity issues raised by the case, since it's one of the few in which a court rejected a section 230 defense by a service provider and refused to dismiss the defamation claims.
Plaintiff's RICO claims also survived defendant's motion to dismiss. Not so plaintiff's false advertising claim. Although plaintiff alleged that defendant solicited trumped-up complaints on its site, which it would then use to extort money from targeted businesses, the Lanham Act doesn't cover false claims made by noncompetitors. Another way to frame the conclusion, in this case, was that the complaints on the site weren't advertising, and thus didn't fall under the Lanham Act even if they were false and even if they were designed to generate business for defendant.
The court engages in what seems to me a superfluous discussion of Bosley Medical, a trademark case that held that allegations that the defendant's gripe site constituted extortion and prevented users from reaching the plaintiff's site wasn't enough to trigger Lanham Act liability. It is surely true that "no one will mistakenly purchase cookware or dinnerware from Defendants in the mistaken belief that it is Plaintiff's cookware or dinnerware," but that's not why the false advertising claim should fail. The court may have mushed the two causes of action together because (a) the Lanham Act does, which is actually a pretty good reason -- the standing requirements for false advertising are a judicial creation -- or (b) because lack of competition is relevant to trademark cases too; it's just not dispositive in a classic trademark infringement case the way it is in a classic false advertising case. Also, plaintiff brought common-law trade libel claims under the heading "trademark infringement and unfair competition," which likely muddied the waters further. Given its conclusion on the defamation issue, the court easily found that plaintiff had adequately alleged that strand of common law unfair competition, once again demonstrating the utility of the rump trade libel cause of action even with the Lanham Act's far lower standards for false advertising liability.
Speaking of trademark, anyone think that the Better Business Bureau has a claim against BadBusinessBureau?
According to plaintiff (which sells cookware), defendant is in the business of soliciting complaints about businesses – even offering compensation to good complainers – posting them on its website, and then offering to fix the problems thus generated by mediating between the targeted businesses and their disgruntled customers, for only $50,000 and a $1500 monthly fee. Rather than pay up, plaintiff sued.
Eric Goldman has written about the CDA section 230 immunity issues raised by the case, since it's one of the few in which a court rejected a section 230 defense by a service provider and refused to dismiss the defamation claims.
Plaintiff's RICO claims also survived defendant's motion to dismiss. Not so plaintiff's false advertising claim. Although plaintiff alleged that defendant solicited trumped-up complaints on its site, which it would then use to extort money from targeted businesses, the Lanham Act doesn't cover false claims made by noncompetitors. Another way to frame the conclusion, in this case, was that the complaints on the site weren't advertising, and thus didn't fall under the Lanham Act even if they were false and even if they were designed to generate business for defendant.
The court engages in what seems to me a superfluous discussion of Bosley Medical, a trademark case that held that allegations that the defendant's gripe site constituted extortion and prevented users from reaching the plaintiff's site wasn't enough to trigger Lanham Act liability. It is surely true that "no one will mistakenly purchase cookware or dinnerware from Defendants in the mistaken belief that it is Plaintiff's cookware or dinnerware," but that's not why the false advertising claim should fail. The court may have mushed the two causes of action together because (a) the Lanham Act does, which is actually a pretty good reason -- the standing requirements for false advertising are a judicial creation -- or (b) because lack of competition is relevant to trademark cases too; it's just not dispositive in a classic trademark infringement case the way it is in a classic false advertising case. Also, plaintiff brought common-law trade libel claims under the heading "trademark infringement and unfair competition," which likely muddied the waters further. Given its conclusion on the defamation issue, the court easily found that plaintiff had adequately alleged that strand of common law unfair competition, once again demonstrating the utility of the rump trade libel cause of action even with the Lanham Act's far lower standards for false advertising liability.
Speaking of trademark, anyone think that the Better Business Bureau has a claim against BadBusinessBureau?
Thursday, March 02, 2006
Recent Press
Downloading Empathy to Your iPod: The reporter found me, indirectly, through one of my favorite footnotes (it's a tossup between that one and the list of DC Elseworlds, with explanatory parentheticals, in the Trademark Reporter). But the clearest statement of the point that selection and arrangement of playlists are creative, self-defining acts comes from a grieving mother: "'I can't write a song, I can't write a poem, but this helps,' she explained. 'Whenever I find something that has helped me, I share it.'"
Saturday, February 25, 2006
Wednesday, February 22, 2006
Consumer protection and pleading with particularity
Bacon v. American International Group, 2006 WL 305970 (N.D.Cal.)
What are the pleading requirements for consumer protection claims under California state law? As this case shows, fraud-based allegations must be pled with particularity, but not all consumer protection claims are fraud-based.
Plaintiff, a 91-year-old under a conservatorship, brought a purported class action on behalf of all people 65 and older who purchased a deferred annuity from or marketed by the defendants and who have suffered or could suffer a penalty/surrender charge, including those incurred because of death, for accessing their money before its maturity date. Allegedly, sales agents purporting to offer free financial advice exploited plaintiff’s trust and manipulated her into buying deferred annuities that, though profitable for the defendants, are obviously unsuitable for seniors because they tie up money for many years, often beyond the seniors’ life expectancy, and because they may have little return. Defendants’ deceptive and obfuscatory sales tactics allegedly drive sales of deferred annuities to seniors.
Defendants argued that plaintiff hadn’t pled her fraud allegations with particularity; the court agreed, and dismissed the fraud claim with leave to amend. Defendants argued that her other claims, including consumer protection claims, should likewise be dismissed. Along with fraudulent conduct, however, plaintiff also alleged conduct that was unlawful and unfair, including negligently misleading statements. Thus, some of her causes of action survived, but, to the extent the plaintiff sought to rely on averments of fraudulent conduct, she had to plead them with particularity. (Courts have divided on what to do in the Lanham Act context; if some of the plaintiff’s allegations involve fraud but others don’t, some courts allow the entire claim to proceed without satisfying Rule 9’s heightened pleading requirements, which seems sensible since the plaintiff doesn’t need to prove fraud to win.)
Plaintiff’s Consumer Legal Remedies Act claim was dismissed because the CLRA covers only sales or leases of “goods or services,” and annuities are neither goods nor services but some tertium quid.
Epstein on Google, continued
My comments on Epstein on Google Book Search: Seeing fair use as being fundamentally about the necessity of quotation for critical purposes is a mistake; there are plenty of noncritical uses that are also important to a robust speech environment, including repetition of religious texts and positive reviews.
Epstein responded that fair use for positive reviews is also good because a positive review means more if the reader knows it didn’t require the copyright owner’s prior approval, and thus we can assume a kind of implied consent for fair use for any kind of review. But that is a just-so story; it relies on an awful lot of unevidenced assumptions about consumer knowledge and behavior. The justification should not be the implied consent of the copyright owner at all.
Epstein then turned the discussion to the situation in Texaco, where he argued that individual copying was okay because it provided an indirect benefit to the copyright holder (by increasing the value of a subscription), but when individual copying was aggregated, price discrimination became an issue. You don't want a uniform price for intensive and nonintensive users, so you license copying, at least once metering becomes possible. I'm not convinced this is an answer to my point about the purpose of fair use, but okay.
Now more from me: Epstein thinks that a market for a database of digitized books can develop. But right now, blanket licensing isn’t possible. The publishers don’t necessarily own the rights to books bearing their imprints, especially the older books. The fact that the Authors Guild has also filed suit is a harbinger of ownership disputes to come, just as the record companies and the recording artists started to fight about ownership in Napster. (C.E. Petit said a similar thing about rights ownership, from a very different perspective.)
This also affects Epstein's argument that Google's business model for net search is protected by implied consent even though it's not for Book Search: Google was sued for online copying despite the robots.txt opt-out, so not everyone has gotten the message that putting material on the web implies consent to copy. On the other side, if the publishers don’t own most of the books in the University of Michigan library, as noted above, then their lawsuit isn’t evidence that most owners reject digitization.
Epstein agreed that there were big ownership problems, though he thought that made Google's opt-out policy even less sensible. Someone will pop up claiming ownership in many cases, and Google will have to invest a lot to figure out who has the valid claim (or will just take a book out whenever a claim is asserted, valid or not). This is already occurring with the non-Library Project books in Book Search. Epstein's preferred solution was more radical. For low-revenue/old works, he'd have a fixed statutory royalty for use, paid into a fund: a weak compulsory license. For high-revenue/young works, you'd need the copyright owner's consent. (I didn't ask whether there'd be a payment for digitization, a payment for showing a snippet in a search result, or a payment when a searcher clicked on the result, or some combination, but that's only the first of the hard questions.) Given the huge problem of rights fragmentation, we need a voluntary or statutory blanket licensing scheme. With recent works, rights are clear enough that voluntary transactions can go forward.
As an aside, Epstein thought we should also have much shorter copyright terms, which would go a ways towards solving this problem. Too bad it's not going to happen!
On the air rights comparison: I said that this dispute reminds me of the (relatively) old saw “The Internet perceives censorship as damage and routes around it.” Opt-outs are somewhat harmful to the completeness of the system, just as the result in Tasini was harmful to the completeness of the proprietary databases concerned, but they don’t destroy the value of the system. Indeed, since the whole is greater than the sum of its parts, opt-outs (at least at a low level) are less harmful than their individual merits might suggest. Whether opt-outs can be allowed depends on the specifics of technology and social organization; it’s not a defining feature of an anticommons problem. If the US had been settled at a uniform level of population density, airspace opt-outs wouldn’t have been as problematic as they would be when there are obvious paths flights should take. In other words, disallowing opt-out may not be a necessary part of a commons-type scheme.
Some audience questions: What about collateral uses of works? By "collateral," the questioner meant cases like Bond v. Blum, 317 F.3d 385 (4th Cir. 2003), the Fourth Circuit case finding fair use where a work was copied as evidence in a court case (it was used to show that the author shouldn't have child custody because of the bad things he confessed to doing in his unpublished autobiography, Self-Portrait of a Patricide: How I Got Away with Murder). Epstein didn't say much about this, nor do I think that Bond offers a common enough scenario to help us analyze Google Book Search. Precedents allowing copying for reverse engineering, as another comment suggested, might be more helpful. Epstein says Book Search is very different from reverse engineering. He's highly sympathetic to contractual restrictions on reverse engineering because they enable price discrimination, though the majority of copyright scholars are on the other side.
Question: Will every book eventually be searchable/available in a digital database? Answer: Yes, but when? The usual rule is that information loses 25% of its value every year. In publishing, you get 6 months of glory and an eternity of oblivion. In the end, the obvious gains to everyone will lead to the universal database; the issues involve reducing transaction costs. The publishers want to be a little better off than "better off," though they concede they'd be "better off" under Google Book Search. That is, Google's best argument is that its scheme is already Pareto optimal. Again, the intensity of use is key to the publishers' agenda. Publishers, like many owners, would like to switch from sales to licenses.
At this point, I asked Epstein how he felt about that as a libertarian. He felt fine, since licensing is just a voluntary transaction, and if licenses are more efficient than sales, they should be allowed. (The reason I asked is that some versions of libertarianism suggest moral values in individual property ownership, and a world in which most of us don't own property, only rent it, might create a different kind of character and politics.)
Question: What about Kelly v. Arriba Soft? Answer: It's pretty much the same thing. If snippets are samples for which publishers should get paid, thumbnails are too. Shrinking size, like putting a Rubens painting on a postcard, isn't fair use. (At this point, I've got to assume that Epstein's consistent choice of out-of-copyright examples is a deliberate effort to show how he's not seduced by contemporary popular culture -- but I'd still think that Hemingway and Picasso would be better examples.) The really interesting issue, he thinks, is trespass to chattels. He helped litigate the eBay case, in order to establish the basic principle that if you own a site, you can exclude others from using it. If a use is fair use, can the site owner exclude others from entering to get the work? Or is it still a trespass? This is an important ongoing issue.
Epstein responded that fair use for positive reviews is also good because a positive review means more if the reader knows it didn’t require the copyright owner’s prior approval, and thus we can assume a kind of implied consent for fair use for any kind of review. But that is a just-so story; it relies on an awful lot of unevidenced assumptions about consumer knowledge and behavior. The justification should not be the implied consent of the copyright owner at all.
Epstein then turned the discussion to the situation in Texaco, where he argued that individual copying was okay because it provided an indirect benefit to the copyright holder (by increasing the value of a subscription), but when individual copying was aggregated, price discrimination became an issue. You don't want a uniform price for intensive and nonintensive users, so you license copying, at least once metering becomes possible. I'm not convinced this is an answer to my point about the purpose of fair use, but okay.
Now more from me: Epstein thinks that a market for a database of digitized books can develop. But right now, blanket licensing isn’t possible. The publishers don’t necessarily own the rights to books bearing their imprints, especially the older books. The fact that the Authors Guild has also filed suit is a harbinger of ownership disputes to come, just as the record companies and the recording artists started to fight about ownership in Napster. (C.E. Petit said a similar thing about rights ownership, from a very different perspective.)
This also affects Epstein's argument that Google's business model for net search is protected by implied consent even though it's not for Book Search: Google was sued for online copying despite the robots.txt opt-out, so not everyone has gotten the message that putting material on the web implies consent to copy. On the other side, if the publishers don’t own most of the books in the University of Michigan library, as noted above, then their lawsuit isn’t evidence that most owners reject digitization.
Epstein agreed that there were big ownership problems, though he thought that made Google's opt-out policy even less sensible. Someone will pop up claiming ownership in many cases, and Google will have to invest a lot to figure out who has the valid claim (or will just take a book out whenever a claim is asserted, valid or not). This is already occurring with the non-Library Project books in Book Search. Epstein's preferred solution was more radical. For low-revenue/old works, he'd have a fixed statutory royalty for use, paid into a fund: a weak compulsory license. For high-revenue/young works, you'd need the copyright owner's consent. (I didn't ask whether there'd be a payment for digitization, a payment for showing a snippet in a search result, or a payment when a searcher clicked on the result, or some combination, but that's only the first of the hard questions.) Given the huge problem of rights fragmentation, we need a voluntary or statutory blanket licensing scheme. With recent works, rights are clear enough that voluntary transactions can go forward.
As an aside, Epstein thought we should also have much shorter copyright terms, which would go a ways towards solving this problem. Too bad it's not going to happen!
On the air rights comparison: I said that this dispute reminds me of the (relatively) old saw “The Internet perceives censorship as damage and routes around it.” Opt-outs are somewhat harmful to the completeness of the system, just as the result in Tasini was harmful to the completeness of the proprietary databases concerned, but they don’t destroy the value of the system. Indeed, since the whole is greater than the sum of its parts, opt-outs (at least at a low level) are less harmful than their individual merits might suggest. Whether opt-outs can be allowed depends on the specifics of technology and social organization; it’s not a defining feature of an anticommons problem. If the US had been settled at a uniform level of population density, airspace opt-outs wouldn’t have been as problematic as they would be when there are obvious paths flights should take. In other words, disallowing opt-out may not be a necessary part of a commons-type scheme.
Some audience questions: What about collateral uses of works? By "collateral," the questioner meant cases like Bond v. Blum, 317 F.3d 385 (4th Cir. 2003), the Fourth Circuit case finding fair use where a work was copied as evidence in a court case (it was used to show that the author shouldn't have child custody because of the bad things he confessed to doing in his unpublished autobiography, Self-Portrait of a Patricide: How I Got Away with Murder). Epstein didn't say much about this, nor do I think that Bond offers a common enough scenario to help us analyze Google Book Search. Precedents allowing copying for reverse engineering, as another comment suggested, might be more helpful. Epstein says Book Search is very different from reverse engineering. He's highly sympathetic to contractual restrictions on reverse engineering because they enable price discrimination, though the majority of copyright scholars are on the other side.
Question: Will every book eventually be searchable/available in a digital database? Answer: Yes, but when? The usual rule is that information loses 25% of its value every year. In publishing, you get 6 months of glory and an eternity of oblivion. In the end, the obvious gains to everyone will lead to the universal database; the issues involve reducing transaction costs. The publishers want to be a little better off than "better off," though they concede they'd be "better off" under Google Book Search. That is, Google's best argument is that its scheme is already Pareto optimal. Again, the intensity of use is key to the publishers' agenda. Publishers, like many owners, would like to switch from sales to licenses.
At this point, I asked Epstein how he felt about that as a libertarian. He felt fine, since licensing is just a voluntary transaction, and if licenses are more efficient than sales, they should be allowed. (The reason I asked is that some versions of libertarianism suggest moral values in individual property ownership, and a world in which most of us don't own property, only rent it, might create a different kind of character and politics.)
Question: What about Kelly v. Arriba Soft? Answer: It's pretty much the same thing. If snippets are samples for which publishers should get paid, thumbnails are too. Shrinking size, like putting a Rubens painting on a postcard, isn't fair use. (At this point, I've got to assume that Epstein's consistent choice of out-of-copyright examples is a deliberate effort to show how he's not seduced by contemporary popular culture -- but I'd still think that Hemingway and Picasso would be better examples.) The really interesting issue, he thinks, is trespass to chattels. He helped litigate the eBay case, in order to establish the basic principle that if you own a site, you can exclude others from using it. If a use is fair use, can the site owner exclude others from entering to get the work? Or is it still a trespass? This is an important ongoing issue.
Saturday, February 18, 2006
False advertising doesn't violate the Sherman Act
Briggs & Stratton Corp. v. Kohler Co., 405 F.Supp.2d 986 (W.D. Wis. 2005)
Plaintiff sued defendant for patent infringement relating to an internal combustion engine (are there external combustion engines?). Defendant counterclaimed for violations of the Sherman Act, state antitrust law, and common law unfair competition. Plaintiff moved to strike the portion of defendant’s antitrust counterclaims that alleged false advertising of plaintiff’s engines’ horsepower. The court agreed that false advertising, in the absence of monopoly power, does not violate the antitrust laws. In the Microsoft case, false advertising about Java compatibility was part of Microsoft’s strategy to exclude other operating systems from the market, and thus violated the Sherman Act. The false advertising here, however, didn’t exclude the defendant from the market.
Question: Why not assert false advertising counterclaims? Possible answer, depending on the parties’ market positions (also, of course, relevant to the antitrust issues): Lanham Act standing for false advertising requires a showing of likely harm, which means that the counterclaimant would have to provide reasons to think that sales were diverted from it in particular rather than from other competitors. Perhaps that would have been difficult to prove.
Plaintiff sued defendant for patent infringement relating to an internal combustion engine (are there external combustion engines?). Defendant counterclaimed for violations of the Sherman Act, state antitrust law, and common law unfair competition. Plaintiff moved to strike the portion of defendant’s antitrust counterclaims that alleged false advertising of plaintiff’s engines’ horsepower. The court agreed that false advertising, in the absence of monopoly power, does not violate the antitrust laws. In the Microsoft case, false advertising about Java compatibility was part of Microsoft’s strategy to exclude other operating systems from the market, and thus violated the Sherman Act. The false advertising here, however, didn’t exclude the defendant from the market.
Question: Why not assert false advertising counterclaims? Possible answer, depending on the parties’ market positions (also, of course, relevant to the antitrust issues): Lanham Act standing for false advertising requires a showing of likely harm, which means that the counterclaimant would have to provide reasons to think that sales were diverted from it in particular rather than from other competitors. Perhaps that would have been difficult to prove.
Friday, February 17, 2006
Epstein on the Google Print Library Project
On Wednesday I introduced and commented on a presentation by Professor Richard Epstein of the University of Chicago on Google Print and Copyright, cosponsored by the Georgetown Federalist Society and Student Intellectual Property Law Association. Professor Epstein is an impressive speaker who speaks apparently extemporaneously. He also speaks fast with few wasted words, so my notes are necessarily incomplete.
Epstein identified a bicoastal split on academic assessments of Google. By this he meant that Jane Ginsburg at Columbia is pro-copyright owner, whereas the Left Coast inclines towards Google. Where you come from determines how you think on IP; he comes from real and personal property. A large number of academics start with a preference for the commons, with exceptions as islands of property therein. Epstein isn’t squarely on the other side, since his starting point is Roman law, which provides a framework for asking why some things are common and others privatized.
Land is relatively compact and permanent. To get development, the developers need a return on investment; thus, property. Reaping what you sow is the metaphor for a reason. Property allows internalization of costs/benefits. Water is more complicated; privatization destroys the going concern value of a river, so you get a mix of commons and private rights.
IP is more like water. With respect to land, use requires exclusion of others; not so with respect to ideas. So the explanation for any exclusion has to be instrumental, and it is: incentives to create. IP is a constant duet between the need for incentives and the waste generated by exclusions. Both are inescapable.
Law attempts approximation of a social ideal. With land, problems come up with exclusion: necessity (shelter from a storm) and eminent domain, and the law responds by allowing exceptions, with or without compensation. It’s the same with IP – private rights should yield in some circumstances. Epstein sees fair use as analogous to defamation’s fair comment privilege, necessary for open and robust debate. Fair use had the same narrow origins, protecting criticism by allowing quotation. We do, however, want to avoid surreptitious reproduction that undermines the core right – so we don’t allow reproduction of A Tale of Two Cities with a negative preface (odd example, given that we allow reproduction of that work in every possible way, but substitute in the latest Harry Potter if you like).
The question of Google Print is whether you have to bypass a market to create a good thing. Shall transfers be accomplished by consent (licensing) or necessity (fair use)? Google’s ambition is large, to make anything digital and easily searched, which allows extraction of value not replicable by traditional techniques. The really hot question is what Google will do with its copy. The publishers don’t fear the snippets; what they fear is unknown uses of the database to extract value – to show what works consumers prefer, for example, so as to advise young authors what’s hot. In Epstein’s discussions with publishers, this was their main concern; they feared being preempted out of their market (emphasis mine, not his).
What about opt-out as a solution? Google is using “opt-out” as a term of art, since it dictates the terms and conditions. Harper & Row won’t just be able to send a letter saying “take all our books out,” since Google is requiring specific ISBN and other information. There’s a deeper problem: If Google Print is fair use, Google’s entitled to do this independent of the publishers’ consent (I wrote about this before).
Google isn’t the only one who wants to organize the world’s information: Yahoo!, Amazon, etc. are looking for blanket licenses, suggesting that market transactions are possible. If they can work out ways to share advertising revenue with publishers, now that microtransactions are feasible, than no fair use will be necessary.
Epstein noted that his analysis hadn’t mentioned the statutory fair use factors. Indeed, those factors are not key; the critical issue is whether a viable market on a voluntary basis is possible. In earlier discussions, Robert Merges had said that Google’s project was no problem because there was no viable cash market, but later he qualified that claim – there may be a market in two years. It’s fair use now, but maybe not in 2008. (My question: Does the same logic apply to Sony v. Universal? My guess is that the answer’s yes, though we needn’t wait for 2008 for the market.) Then the issue is how to organize the transition.
Epstein believes that a voluntary market is feasible. If MSN and Yahoo! can deal, so can Google.
What about implied consent? People argue that, if the Google Print for Libraries model is defective, then Google itself is defective with respect to the web as a whole. Opt-out works the same way online. How to distinguish the situations? Epstein’s answer is both practical and theoretical. Practically, the publishers brought a class action rather than sending Google their ISBNs, showing that there is not really implied consent. We should imply consent when a formal consent requirement would debilitate the market too much, destroying the usefulness of the resource (here, the search engine); when there’s a high probability of people wanting in, as there is online, we can presume consent in the absence of objection, but that’s not so in print.
Ultimately, we have to balance the potential gain from the database versus transaction costs. All copyrighted works are not created equal (I’d say, they may be created equal, but they don’t make it to the finish line equal, but that’s either a quibble or a disagreement far too profound for this space). With a 1950 work, it’s so great to have online access that a copyright owner would probably be happy to have it online. But with the latest Stephen King (short review: creepy premise plus competent execution produces decent midlevel King), precise management of the property is critical and thus a voluntary market should prevail. In the latter case, the value of price discrimination and other work-specific techniques dwarfs the transaction costs of consent. We need to separate low- from high-value works and make different rules for each, as we do with respect to allowing solicitors onto property.
The only wrong argument, in Epstein’s opinion: We shouldn’t think of Google Print like the overflight problem (see the exquisite William Empson poem reproduced in comments: fair use?). The ancient ad coelum doctrine said that property owners could exclude others all the way down and all the way up into the sky, but once airplanes appeared, that created huge problems: everyone could exclude and no one could use the skies (the anticommons, though Epstein didn't use that term), destroying the value of this new mode of transport. To avoid this, we forced the top slice of property into the commons, redesignating the upper air as a highway. There were no losers from this change (my comment: really?). For technical reasons, we can never allow any opt-out from the air rights cutoff; only 1-2% optout would destroy the system.
This isn't the case with Google. No library requires all the books in the world to operate. Thus there's no overflight problem.
Back to the beginning: if the evidence is unclear (as it always is in copyright), people stick with their initial presumptions. Shall it be property or commons?
Long post already; comments period next. Possibly with more articles!
Epstein identified a bicoastal split on academic assessments of Google. By this he meant that Jane Ginsburg at Columbia is pro-copyright owner, whereas the Left Coast inclines towards Google. Where you come from determines how you think on IP; he comes from real and personal property. A large number of academics start with a preference for the commons, with exceptions as islands of property therein. Epstein isn’t squarely on the other side, since his starting point is Roman law, which provides a framework for asking why some things are common and others privatized.
Land is relatively compact and permanent. To get development, the developers need a return on investment; thus, property. Reaping what you sow is the metaphor for a reason. Property allows internalization of costs/benefits. Water is more complicated; privatization destroys the going concern value of a river, so you get a mix of commons and private rights.
IP is more like water. With respect to land, use requires exclusion of others; not so with respect to ideas. So the explanation for any exclusion has to be instrumental, and it is: incentives to create. IP is a constant duet between the need for incentives and the waste generated by exclusions. Both are inescapable.
Law attempts approximation of a social ideal. With land, problems come up with exclusion: necessity (shelter from a storm) and eminent domain, and the law responds by allowing exceptions, with or without compensation. It’s the same with IP – private rights should yield in some circumstances. Epstein sees fair use as analogous to defamation’s fair comment privilege, necessary for open and robust debate. Fair use had the same narrow origins, protecting criticism by allowing quotation. We do, however, want to avoid surreptitious reproduction that undermines the core right – so we don’t allow reproduction of A Tale of Two Cities with a negative preface (odd example, given that we allow reproduction of that work in every possible way, but substitute in the latest Harry Potter if you like).
The question of Google Print is whether you have to bypass a market to create a good thing. Shall transfers be accomplished by consent (licensing) or necessity (fair use)? Google’s ambition is large, to make anything digital and easily searched, which allows extraction of value not replicable by traditional techniques. The really hot question is what Google will do with its copy. The publishers don’t fear the snippets; what they fear is unknown uses of the database to extract value – to show what works consumers prefer, for example, so as to advise young authors what’s hot. In Epstein’s discussions with publishers, this was their main concern; they feared being preempted out of their market (emphasis mine, not his).
What about opt-out as a solution? Google is using “opt-out” as a term of art, since it dictates the terms and conditions. Harper & Row won’t just be able to send a letter saying “take all our books out,” since Google is requiring specific ISBN and other information. There’s a deeper problem: If Google Print is fair use, Google’s entitled to do this independent of the publishers’ consent (I wrote about this before).
Google isn’t the only one who wants to organize the world’s information: Yahoo!, Amazon, etc. are looking for blanket licenses, suggesting that market transactions are possible. If they can work out ways to share advertising revenue with publishers, now that microtransactions are feasible, than no fair use will be necessary.
Epstein noted that his analysis hadn’t mentioned the statutory fair use factors. Indeed, those factors are not key; the critical issue is whether a viable market on a voluntary basis is possible. In earlier discussions, Robert Merges had said that Google’s project was no problem because there was no viable cash market, but later he qualified that claim – there may be a market in two years. It’s fair use now, but maybe not in 2008. (My question: Does the same logic apply to Sony v. Universal? My guess is that the answer’s yes, though we needn’t wait for 2008 for the market.) Then the issue is how to organize the transition.
Epstein believes that a voluntary market is feasible. If MSN and Yahoo! can deal, so can Google.
What about implied consent? People argue that, if the Google Print for Libraries model is defective, then Google itself is defective with respect to the web as a whole. Opt-out works the same way online. How to distinguish the situations? Epstein’s answer is both practical and theoretical. Practically, the publishers brought a class action rather than sending Google their ISBNs, showing that there is not really implied consent. We should imply consent when a formal consent requirement would debilitate the market too much, destroying the usefulness of the resource (here, the search engine); when there’s a high probability of people wanting in, as there is online, we can presume consent in the absence of objection, but that’s not so in print.
Ultimately, we have to balance the potential gain from the database versus transaction costs. All copyrighted works are not created equal (I’d say, they may be created equal, but they don’t make it to the finish line equal, but that’s either a quibble or a disagreement far too profound for this space). With a 1950 work, it’s so great to have online access that a copyright owner would probably be happy to have it online. But with the latest Stephen King (short review: creepy premise plus competent execution produces decent midlevel King), precise management of the property is critical and thus a voluntary market should prevail. In the latter case, the value of price discrimination and other work-specific techniques dwarfs the transaction costs of consent. We need to separate low- from high-value works and make different rules for each, as we do with respect to allowing solicitors onto property.
The only wrong argument, in Epstein’s opinion: We shouldn’t think of Google Print like the overflight problem (see the exquisite William Empson poem reproduced in comments: fair use?). The ancient ad coelum doctrine said that property owners could exclude others all the way down and all the way up into the sky, but once airplanes appeared, that created huge problems: everyone could exclude and no one could use the skies (the anticommons, though Epstein didn't use that term), destroying the value of this new mode of transport. To avoid this, we forced the top slice of property into the commons, redesignating the upper air as a highway. There were no losers from this change (my comment: really?). For technical reasons, we can never allow any opt-out from the air rights cutoff; only 1-2% optout would destroy the system.
This isn't the case with Google. No library requires all the books in the world to operate. Thus there's no overflight problem.
Back to the beginning: if the evidence is unclear (as it always is in copyright), people stick with their initial presumptions. Shall it be property or commons?
Long post already; comments period next. Possibly with more articles!
Thursday, February 16, 2006
Protect your skin from false claims
Kennedy Industries, Inc. v. Aparo, 2005 WL 3752270 (E.D.Pa.)
Plaintiff sells skin protection and skin cream for wrestlers; its product protects skin from chafing and the FDA has determined that its main ingredient is safe as a skin protectant. Defendant Driving Force (Aparo is its president) sells competing products under the brand “99.”
Plaintiff sued defendant and several distributors for false advertising under the Lanham Act.
Driving Force attacked plaintiff directly in comparative advertising, stating “Kill or be Killed” and offering a graphic comparison:
| | 99 | Kennedy Skin Protectant |
| Kills Ringworm | YES | NO |
| Kills Impetigo | YES | NO |
| Kills Staph | YES | NO |
| Kills Strep | YES | NO |
| Kills E-Coli | YES | NO |
| Kills 99.9% of harmful bacteria | YES | NO |
| Kills Athlete’s Foot | YES | NO |
| Kills Planter’s [sic] warts | YES | NO |
| Hours of Kill Power | YES | NO |
In addition, the FDA has not approved benzethonium chloride as a skin protectant, but rather lists it as a substance not shown to be safe and effective as a skin protectant and antifungal.
The court appears to be treating most of the claims as necessarily implied establishment claims, which makes sense, as consumers are likely to believe that tests support medical/percentage claims of this sort, and possibly that the FDA has approved such claims. (The "special formulation for wrestlers" claim is not like the others, but that was shown to be false, too, since it was just a general product relabeled for wrestlers.) Alternatively, the court invoked the doctrine of Novartis Consumer Health v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578 (3d Cir.2002), that completely unsubstantiated claims are literally false.
Comment: In recent years, “falsity by lack of any evidence” has joined “falsity by necessary implication” as a way of decreasing the burden on plaintiffs challenging shady ad claims. The reckless claims here – which implicate public health – illustrate why courts are attracted to such doctrines.
As of Feb. 14, 2006, at least one site was still advertising that Driving Force’s 99 Antimicrobial Skin Sanitizer “is the only product specifically formulated for grapplers that actually kills harmful bacteria on contact.” The claims Driving Force makes for its 99 line on its site are now substantially more limited:
- Non-greasy
- No Alcohol Formulation - no sting!
- Non-aerosol can; safe for travel
- Non-Flammable
- Dye and Fragrance Free
A far cry from preventing VRE!
As long as it's the good kind of hate
An opposition has been filed to the registration of DYKES ON BIKES as a trademark for various services. Marty Schwimmer comments pithily: "Opposer argues that registration of the mark DYKES ON BIKES would foster hatred of men, because, you know, lesbians hate men. Although not so much hate as in a tracking them down and killing them kind of hate, but more of sort of a not having sex with them hate."
As he points out, the registration is likely to succeed despite the opposition. With all the reports of various agencies' politicization under this administration, the PTO may yet be exempt -- though recently an examiner refused LIAR LIAR BUSH ON FIRE and KATRINA BLOWS, BUSH SUCKS on the grounds that they were disparaging.
As he points out, the registration is likely to succeed despite the opposition. With all the reports of various agencies' politicization under this administration, the PTO may yet be exempt -- though recently an examiner refused LIAR LIAR BUSH ON FIRE and KATRINA BLOWS, BUSH SUCKS on the grounds that they were disparaging.
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