AU IP/Gender Panel II: Documenting Communities of Practice

Moderator – Meredith Jacob, American University Washington College of Law

 

Jhessica Reia, Center for Technology and Society at Fundacao Getulio Vargas (CTS-FGV) – DIY or Die! Gender and Creation in Marginal Music Production

 

Straight edge movement in Brazil: associated with vegetarianism, anarchism, as well as music, not consuming drugs/alcohol.  Collective Verdurada runs a festival in São Paulo. Largest DIY event in Latin America.  Talks every day of the festival about direct action, environmental issues, sometimes gender issues.  Ideology: anyone can be in the audience and anyone can be on the stage (maybe).  Internet is making things easier to spread the news, arrange snows. Broad support for downloading music: to check if they like it, if it’s unavailable to buy, or from major artists who are already rich. But not OK to make and sell CDs.  Supporting the scene is very important.  Go to the shows, buy the merchandise even if you download.

Bands at the festival are mostly male, never all female.  “Angry energy” at a hardcore show; mosh pit.  Few girls in the mosh pit.  You hear men say that girls come for the boys.  The ideal of autonomy—anyone can come here—is not exactly true.  Lesbo-anarchofeminist scene: many women started to leave this scene and go to their own, separate track.  Yet women are also present: organizing, disseminating information, attending.  Mix of very progressive guys and stereotypes.  Also issues surrounding LGBTQ participation/discriminatory attitudes. Ideology is that “girls don’t play because they just don’t want to play.” Some men leave when women play, or when there’s a talk on abortion.  General resistance to admitting a problem existed.  Copyright or lack thereof isn’t the issue in marginal cultural production: it’s not inviting women, silencing women.  Alternative licensing/access is very important.

 

Continuing struggles: revenge porn incident in the scene; anarchofeminists arguing that “we don’t need to be with these jerks.”

 

Betsy Rosenblatt, Whittier Law School (and Rebecca Tushnet) – Transformative Works: Young Women’s Voices on Fandom and Fair Use

 

Turned 80 pages of information into our chapter for a book on girls & eCitizenship.  Some data we turned up about fandom participation.  Think about what people are creating when they are creating.  Sometimes: think of it as stuff—fabric, film, stories. Or: they’re creating communities: family, family analogue, group identity. Or: they’re creating themselves.  All of these things are happening and more! In our community, this sense of community and sense of self were crucial elements in what the creative process was doing. Self-actualization and training ended up as big elements of the creative process.

 

Our fandom: media fandom, focused on creating fanworks, online communities.  Grew with the internet; overwhelmingly female—not the only kinds of fans, but it’s a massive set of interlinked communities, with tens of millions of works.  DeviantArt, Vimeo, fanfiction.net, Archive of Our Own, Livejournal/Dreamwidth. Focused on making noncommercial works, although there are occasional crossovers. The fact that the media has latched on to that demonstrates how exceptional that is v. common fannish gift economies.  These are pretty uncontroversially fair uses.  They transform meaning; they’re noncommercial; usually take small portions; don’t compete in original market and tend to grow that market.  10s of millions of works on the internet.

 

OTW established in 2007 to promote acceptance of noncommercial fanworks as legitimate creative works and to preserve the history of fan culture and protect/defend fanworks from commercial exploitation and legal challenge.  PTO/NTIA put out a Green Paper asking for commentary on remix. OTW called for personal accounts of how fanworks affected lives; received 107 responses and submitted our response describing themes we found in them.

 

Limitations: we couldn’t confirm the gender of respondents, but we depended on self-identification, which was what mattered to us.  Also a self-selected group; we didn’t ask about the drawbacks of creating fanworks and didn’t get answers about that.  This piece focuses on benefits for young women and girls, though there are also many benefits for men/boys in creating fanworks, and we received responses from many whose genders we couldn’t identify reporting similar benefits.  But many of the responses were very specific to gender and sexuality.

 

Trends: (1) Women and girls stated that creating fanworks provided unique opportunities to develop social and professional skills. (2) Broad concepts of fair use/fair dealing that permit noncommercial derivative works promote expression by often marginalized speakers and offers benefits that may not relate directly to the stuff they’re producing.

 

Fandom helped them understand themselves. Fandom as rescuer—often as saving lives: through fandom and fanworks, they found they were not alone, found a voice, learned to gain confidence in themselves and their opinions.  Women reported that fandom allowed them to talk back to a mass culture that didn’t adequately represent them—claim agency around popular narratives; explore gender & sexuality by changing those elements of popular characters; allowed them to explore race and disability when the mass media gave them few examples of girls of color or disabled girls. Although fanworks are often derided in mass culture, that derision seems bound up with negative attitudes towards feminine pursuits and young women’s attempts to make themselves. As women pointed out, fanworks gave them the opportunity to start bad and get good. Young writer is learning to find her voice—that’s the benefit! Reminds Rosenblatt of “fake geek girl” narrative in other areas of American fandom.

 

Remix also taught important skills, including language skills in translating fanworks; writing and editing skills through use of “beta readers”; critical thinking skills in looking behind narrative to find their own critical approaches; visual art, video editing, programming, other technical fields as they learned to create the works they wanted to see and share; many credited creation of fanworks with later career success.

 

Both transformativeness—the fact that these works were transforming the meaning of source works—and noncommerciality were crucial to how fan cultures manifested. The law favors such works. Hard to say cause/effect, but having a law that favors these things tends to promote the building of these self-actualization and skill-building communities. You don’t have to cater to a commercial market to create, so fanwriters could be more concerned with self-expression; knowing they had a built-in market let them experiment with forms and styles and content. Reward was support and feedback, which depended on culture of giving and learning, as well as empathy. This isn’t a priority in a lot of commercial endeavors.

 

Self-empowerment: you can tell the story the media isn’t telling.  Remix generally tends to come from underrepresented groups.

 

Implications for law: important not to require permission. Important to allow fans and others to use sources as they wish to, not as copyright owners would wish them to be able to. Uncertainty in law tends to silence those who feel disempowered, so greater certainty would promote the selfhood and community-building aspects of fanwork creation; seeking permission creates boundaries and barriers to entry.  If you think you might have to seek permission, you might just not make the thing.

 

Jacobs: Posit this: straight edge community is defined against all the things it isn’t: drinking, eating meat, etc. Thus you have to check all the boxes to belong.  High conflict nature—easy to fall outside. Fandom is less aggressively oppositional and more simply separate, which has provided more entry points to the community.  React?

 

Rosenblatt: the Q of is fandom a counterculture? may oversimplify.  Writ large, it is a counterculture in that it challenges the idea that media is for consumption, a one-way street.  But that idea of talking back to culture is now permeating more broadly.  Media fans often think of themselves very much as part of a broader expressive unit—everyone is creating, the writers of the show and us too.  (Show writers don’t think that way, she notes!)  There are a lot of box-checking internal norms in various fan communities, though.  She identifies as a Sherlockian, which is a different fan community from “Sherlock Holmes fans,” though crosspollination between the communities has been very productive.  They have different boxes to check to fit socially and culturally. Internal norms can be quite oppositional to the law and quite definitional; one widespread norm is that, while transformative creation is presumed and appreciated, plagiarism is evil and attribution is very important.

 

Reia: she had to prove she wasn’t a journalist to be allowed to research the Straight Edge community.  Subcultures don’t really have fixed boundaries: people have different identities with overlaps and sometimes they create borders. They’re trying to destroy the system—try to be far from regular people, and yet that often presses them into a different kind of conformity/rule system.  You can’t do drugs, but you can drink a lot of Coke. You can’t drink alcohol, but you can eat at McDonald’s three times a week. What it is to be straight edge is complicated.

 

Charles Colman:  Rosenblatt and RT reminded him of Silbey’s book: unabashedly qualitative work. What are the legal and nonlegal challenges?  Supernatural actually responded to characters being cast as gay in the fan world—tolerated but dismissed. Is that more damaging than legal action?  Are the writers mostly men?  Fans as community of women mentoring each other—absence of mentoring/teaching relationships when people don’t align in their identity groups.

 

Rosenblatt: there are a couple of different types of challenges.  Legal: no lawsuits (but occasional objections).  Nonlegal: respect challenges.  There is a lack of respect but it may not be what you fear it is. There is a sense that it is tolerated use and therefore women who make these works are marginalized; but there is increasing recognition that fanworks are really important to the market for the media they support.  So they may not respect the quality of creation in the first instance, but they respect the growth that comes out of it.  The idea that people who start making these works will make works ultimately that are establishment-quality.  (RT: Of course that need not be your goal!  Fandom is big!)  Writers’ rooms are usually majority male; the mentoring systems exist and they are not always explicitly gendered—better than law firms; but the hiring isn’t better than law firms because the execs are men and often more skeptical of young female writers than of young male writers.

 

DMCA challenges: often fanworks are ignored; but when machines do searches, fair uses get caught in the net. It’s more common for women to say they don’t want to fight a takedown because of even a small risk; men are relatively more likely to want to fight (and to want to commercialize their fanworks in the first place). When we get queries from people who have commercial projects, they more often come from men.  Women are more likely to just want to write noncommercial works.

 

Carys Craig: what happens in the transition from the community to outside?  “Pro” writers—how does that affect relations in the community?  What about the understanding of copyright norms and potential replacement of social norms with legal norms?

 

Rosenblatt: the crossover isn’t just from TV fan to TV writer; it’s often fan to professional person.  People who learn video editing and go on to become video editors, not necessarily for TV; technical writing/academics also benefit.  Shifting cultural norms: it may happen with a shift in status/perceived status, but not sure it always shifts.  Many TV writers understand that what they are doing is a form of fanwork to what came before, but they really want their residuals and they want to be recognized as pros.

 

RT: I’d say culture beats law almost every time, just as culture beats nature almost every time. People believe the law is one way because their culture induces them to do so.

AU IP/Gender Panel I: Women's Leadership in Traditional Cultural Production

Panel I: Community Structure and Women’s Leadership in Traditional Cultural Production

Moderator – Margaret Chon, Seattle University School of Law

 

Helen Chuma Okoro, Nigerian Institute of Advanced Legal Studies (and CC Nigeria), Traditional Knowledge, Intellectual Property Protection, and Matriarchal Dominance: The Case of Traditional Textiles in South Western Nigeria

 

Research looked at how to use communal TMs to promote products in Nigeria, esp. textiles. Findings: very difficult to use communal TM to promote textile sector particularly, because of structural organization of sector.  Characteristics of textiles: traditional knowledge; intergenerational in nature.  Good reputation: markets exist for the fabric (adire).  Method of production is natural, organic, by hand. 

 

A market leader, matriarchical structure: mother figure, very influential.  How can that relate to IP? There’s an idea that traditional knowledge is inconsistent with traditional IP.  But traditional textiles are fundamentally produced for commercial purposes, so the idea of noncommercial TK is not relevant; the reputation is what needs protecting.  Everyone wants to benefit from the reputation, so there’s lots of imitation.  Traditional textiles are more expensive to produce; have difficulty competing with copies/synthetic imitations.  Many families therefore may abandon the production.  Need incentive to continue in trade, and IP could provide that.  They understand they do have some kind of property/right, though they don’t call it IP. They do share designs, but against outsiders they won’t share. Maternal line transmits the knowledge.

 

Small, fragmented industry of producers.  Traditional model: result is lots of competition.  Communal methods can work better—protect designs individually by copyright, individual TM, but lack enforcement capacity. Nigerian TM act dates from 1965, substandard. Protection for certification marks but not GIs.

 

Market mother may be able to provide the necessary structure to make sure standards are maintained, work hand in hand with standard organization for certification marks.  If that works, can be transplanted to other sectors.

 

Lorraine Aragon, University of North Carolina, Cut From the Same Cloth? Reimagining Copyright’s Relationship with TCEs and Gender in Indonesia

 

Between 2003-2010, weaver argued w/district headman about his plan to © a textile design. Nela’s argument wasn’t technical/legal but about needs & customs of women.  Widely shared traditions exist across Indonesia; she was defending what women of the region (not the nation, a recent invention) customarily do—share designs/knowledge.  District head predicted econ. benefits to recently created district; drawing on recently enacted law saying state holds © over folklore and people’s cultural products—district’s procedures could be “cut from the same cloth” as national law.

 

Offers ways to rethink authorship and property models in light of gender, in a nonwestern context.

 

Textiles: how do the weavers view claims over their work? In Indonesia, this is women’s gendered domain (also pottery); where other TCEs are more male-controlled.  Convergence of IP and cultural property (CP) models in developing nations—discussed as provincialization of IP (though all IP can be discussed as provincialization).  Other literature calls it indigenization of IP. But that doesn’t work for Indonesia; may not work anywhere that lacks indigenous group membership/enrolled tribes/clear lines of authority/a state eager to appease indigenous groups. There’s no legal category of indigenous people in Indonesia, but over 300 ethnic groups.

 

Reverse anthropology: look at things w/logic of local people.  Materiality studies: the spirit/nature/agency of possessions. 

 

These textiles are handmade, used for ritual purposes/exchanges; regional market, sometimes internal or external. Internal market is shared and guarded, somewhat separate from external markets. Index ancestry & community status; you wouldn’t ordinarily want to make a design from another group.  Some dyes take years to make.  Producers describe themselves as conduits; say they learn the most complex, dangerous designs in dreams. (Conduit description is not limited to women—male producers in male genres say the same thing.) Splitting agency outside the self; carrying on traditions. They do make claims for themselves, but not ownership or origination claims even though they might be adding creativity the west would consider copyrightable.

 

Convergence of IP and CP in Indonesia and several other places. Variable dynamics of this convergence often go unrecognized.  Domestic concerns change response to TRIPs.  Settler states: North America, Australia, New Zealand—different process than in postcolonial states.  Settler states: indigenous groups can advance political goals through IP claims.  Postcolonial: individual producers have weak status—CP promises the actual producers very little, even as others get excited about it.  Idea of culture as property is not of interest to producers, because both IP and CP deny their distributive practices/informal management of system.

 

Indonesian law: state has © in folklore and people’s cultural products owned in common; includes stories, dances, clothes, sculptures, handicrafts, jewelry, traditional weavings, etc. with no time limits on folklore protection—very big state claim.  The design is not unfamiliar in Indonesia: echoes postcolonial eminent domain land law. In history of SE Asia, rulers’ interest was never land/ownership—there was plenty of land. Wanted to control labor. Only when Europeans came in did they look to control land as property.  The idea of private property is crosscultural—legacy of Dutch control.  Indonesia’s government controls oil; rainforests are being cut down; wants to diversify its resources = shift to CP.  Property law is there to remedy waste: idea is that if it’s not owned it’s not being well used—lawyers felt that Indonesians too freely and naively gave away cultural resources to outsiders, so state has to do it for them.

 

Repercussions of law: allegations against Malaysia for cultural theft of batik, beef curry, dances, etc. Accused Robert Wilson of appropriating a Bugis myth for int’l production of I La Galigo, 2004-2005—he asked for local permission but state said that wasn’t enough. Pursued w/tremendous passion b/c IP doesn’t offer them much in conventional form.

 

District leaders then sought to © elements of “their” local culture. Flores example on which paper is based is outstanding because there were no “foreign” cultural thieves at issue. District had been formed from other districts; district head got the idea that he could © the “chicken eye” design and collect royalties from weavers who were now outside the district.

 

Indonesia long defined geographic-political units according to ethnicity and TCEs, part of the nation-building project. In reality, people and TCEs move fluidly across these boundaries.

 

Weavers said: our ancestors didn’t live only in this new district; techniques are transferred through marriage and migration. We all come “from one bamboo clump.”  © will kill the small women entrepreneur—there are so few economic opportunities for women without capital here, but if some women own certain motifs, they lose that.

 

Other women: customary law is weightier and more accepted than state law. © in state was a solution looking for a problem. The language of the © law is not intrinsically gendered; makes all producers of TCE childlike wards of the state.

 

Can IP provincialization be done in a socially progressive way that helps indigenous groups?  It doesn’t work as formulated in Indonesia. Could positive law support women’s customary authority over TCE production?  Unless it does, we can expect them to walk away from it as much as they can.

 

Chon: Three major themes: (1) diversity, (2) hybridity, (3) pluralism.  Take us away from the metaphor of war we’ve worked with in the © field for so long.  Oppositional relation between free expression/exclusive rights—very tired as a metaphor. Hybridity, heterogeneity, multiplicity instead—but conflict and tension are still inherent in those relations. This isn’t shiny new happy world, but instead we have many things to figure out.

 

Okoro’s matriarchal figure: variations/nuances on this figure.  Existence of multiple markets: not just global postindustrial mass markets. We need to be more like antitrust/competition lawyers in looking at the market at issue and its particular needs.  Also: difference in power structures and leadership.  In Nigeria, power shifts to women in ways that the typical IP model doesn’t recognize.

 

Hybridity: both papers talk about TK or CP as it intersects/hybridizes with formal IP categories, particularly TM and ©, and how that affects traditional cultures: Okoro is a more positive story, Aragon more negative. Okoro = fill the needs of a high-end market if it can be connected to that market.  What could be the incentives to allow traditional weavers to continue work? She identifies certification mark; what really jumped out in paper is the idea that these textile production units are family based—going to biological daughters rather than daughters in law. Deeper commitment, as a result, to the production unit than in a typical business unit, which we might want to protect.  Can this deep commitment be translated to a highly decentralized, global market.  But one challenge is there’s no enforcement capacity for small local entrepreneurs and little capacity in the IP enforcement system period.

 

Final challenge: how do you signal the qualities—high quality, handmade, organic, credence attributes—with a relatively shallow right, TM?

 

Aragon: (1) Social norms, or IP without IP.  (2) Second enclosure movement: eminent domain laws have an analogue in use of © for TCE.  Jamie Boyle has identified this dynamic in West.  (3) Facially neutral laws with differential impacts, as in this case study. 

 

Aragon offers a solution from the people: look at what they’re doing creatively and think about how to address that production model.  Indigenization model doesn’t work in the context of Indonesia, v. New Zealand with a vocal minority community and a state eager to appease that community’s legal interests. That goes to hybridity: local circumstances may be very different from dominant models.  Also: these textiles are means of reflecting and indexing one’s place in the world: how do we hang on to the local identity in a globalized, marketized world? Use of IP to assert national sovereign power, vs. Malaysia for example; used as a way for Indonesia to assert its muscle in the world.  How does that work versus industrialized countries that might appropriate and monetize—Robert Wilson?  Power dynamic of Western grabbing & not sharing benefits. 

 

Finally, Q posed is whether and how IP can accommodate communal, local practices.  State-owned model Aragon gave is is clearly not the ideal model, but what is the alternative?

 

Betsy Rosenblatt: she saw distinctions between ingroup and outgroup dominating, and Qs of how we define the ingroup. The ingroup in both cases seemed perfectly capable of governing itself—Q is how they protect selves from intrusion/appropriation by some outside group, whether industrial copiers or the state. But Indonesian state saw the ingroup as the whole state, and wanted to protect against other states.

 

Okoro: the ingroup isn’t working correctly in Nigeria now because it’s very hard to protect from outsiders/globalization.  Need to go beyond the ingroup model, and IP/TM is a way to do that.

 

Aragon: some communities are being flooded w/cheap Chinese (or Indonesian) knockoffs. Bali deals w/it by info: trying to educate the tourist about machine/chemical production v. the real thing used in rituals w/2-year dye made from plants.  There are market conditions where people go to the cheap version b/c that’s what they can afford. SE Asians in general think the gov’t isn’t helping them with import issues/trade issues; they don’t specifically care about IP but about local support/trade laws.

 

Jessica Silbey: Nigeria—concerns over integrity and misuse. What counts as misuse?  Just copying or a particular use?

 

Aruna Ranganathan has been doing ethnographies in India of local craftmakers—experiments to figure out how they market their work differently. They will sell their work for less to people who appreciate authenticity; charge more for people who seem not to care whether it’s an imitation. Using market segmentation to preserve status, but in the reverse of what we’d normally see. Shows what people care about in different communities re: how their work is exchanged and experienced. Seen anything like that kind of price discrimination used to preserve status, identity, or value?

 

Okoro: Economic advantage is the primary concern. There are some textiles with symbolic meaning, but that is not as important here.  Profit means that misuse is knockoff/passing off.

 

Aragon: price discrimination goes on all the time in Indonesian markets, but it’s more what we expect—foreigners/nonrelatives get charged more.  May make indigenous designs with cheap dyes so that local people could afford them.  Indonesians wanted to control their own designs; didn’t care what foreigners did and kept their productions separate; misuse was generally not of great concern, with a few exceptions.

 

Irene Calboli: What do traditional people want? Everything: tradition, control, market access, the ability to set prices—they want what Westerners want; they want respect for their IP but they don’t care about knocking off TMs from the west.  They see the value of the model, but understand that w/in the bigger community they have to play a different game.  How IP can help is difficult—GIs are ways to guarantee geographical region origin, with variation.  If the fake Louis Vuitton helps sell the real ones, the Pier One knockoff may help sell the authentic versions—Pier One is often the first access.  Add to this the problem of corrupt governments.  Also the role of UNESCO certification—batik has this certification; tangible and intangible IP are eligible, and gives some legitimacy.

 

Aragon: that’s why Indonesia says UNESCO gave them the copyright and Malaysia can’t do it.  (Even though Calboli points out that is not what UNESCO did.)

 

Bali is really different from the rest of the country: commodified genre may worry about knockoffs; others say they want more gov’t support for things that are disappearing, but they don’t want access to law because they know that law doesn’t function for them—not looking to sue (or be sued).  Gov’t level and local producer level must be distinguished; semi- or partially-commodified markets either at the regional or int’l level. GIs might be something to think about, but not what they’re thinking about.

 

Okoro: Agrees they want everything, but textile producers want more economic advantage primarily. Just like every creator!  Dignity to some extent, but at this point they’re more worried about economic prospects.

 

Peter Jaszi: To what extent do the modes of regulation discussed interplay with the imperative for preserving space for dynamism in traditional culture?

 

Aragon: Copyright doesn’t seem to be the right measure.  Registered designs were ancient but being claimed by corps/big families. I would look for something grassroots, which isn’t there yet.

 

Okoro: the TM model would allow evolution w/in a controlled environment rather than being overly influenced by economic interests from outside. Just trying to meet demand from outside kills authenticity, but creating incentives to maintain traditional quality allows a different basis for competition.

 

Jaszi: discusses producers’ difficulty negotiating “living wage” price from Pier One—a problem not particularly susceptible to IP, but perhaps to consumer information and some militancy by well-meaning consumers. Even if Pier One is an entry point, right now those outlets are killing rather than sustaining the communities whose goods are being exported.

 

Chon: a problem of information flow rather than IP per se.

AU/IP Gender conference, part 1: me

Reimagining IP/Gender: The Next 10 Years of Feminist Engagement with IP Law

 

Welcome – Michael Carroll, American University Washington College of Law

IP program and Women & Law program do this together—longterm collaboration.

 

Opening Keynote

Meredith Jacobs, American University Washington College of Law – Introduction

[nice things about me; thank you!]

 

Rebecca Tushnet, Georgetown University Law Center- IP, Gender, and Creative Communities

 

Thank you.  AU offered me the opportunity to write anarticle early in my career about sex and gender in copyright fair use, which was very significant for me, and I greatly appreciate the program. Ten years: great diversity in topics, methodologies, building on foundations that are now strong.  The papers this time around are great examples of the variety and significance of scholarship in the area of gender and IP, and what I see as a larger theme of hybridity: drawing from multiple sources and refusing to accept simple binaries even though law often demands binary outcomes.  Communities of practice offer lessons formerly ignored in official accounts: and we’ve seen great strides in learning from those lessons, with projects like AU’s series of best practices in fair use; studies of IP’s negative spaces such as Betsy Rosenblatt’s work.

 

One of the key questions is well framed by Sandra Park’s paper on patent: asking the woman question: have women been left out, and how would their inclusion change things? My own experience at the DMCA hearings: mostly female group of vidders asking for an exemption because of the special ways in which remix enables women to talk back to mainstream culture; initially we were asked if maybe they could only give the exemption to women and minority men. We said no, but Francesca Coppa likes to say that where young men made videos about how awful copyright law was, the vidders went out and got a change in the law, if only a temporary change.  Our presence matters.

 

Park’s themes of isolation as lawyer’s trick also reinforced the importance of community to a feminist analysis: many of the things we investigate can’t be understood in isolation and to isolate them is to mistake what it is that we are analyzing, or granting rights to. Charles Colman’s paper relatedly asks the gender question: in what ways have gender norms affected issues that do not necessarily seem biased on the surface?  As he argues, design patents offer an intriguing example of such less visible effects, and as Carys Craig has shown there are many others in copyright as well.

 

So what are we to do with these regimes that are not just reductionist, but reductionist in ways that systematically reproduce gendered forms of disadvantage?  One answer is to focus on the reality of hybridity: the interaction of legal and illegal practices; the interdependence of market and nonmarket (in fandom our raw materials are what others think of as already “cooked”); the importance of visual and musical expression even when copyright law models its rules on text; the dialogue between the individual and community, whose mutual interdependence is both frustrating and foundational; the positive tension between the radical (rejecting copyright entirely) versus the liberal (the OTW, which finds room for fandom in existing law and tries to work to improve that law); the defense of pleasure (which deserves defense for its own sake) along with the defense of productivity (which tries to explain why the pleasures of creativity have positive effects on the rest of the world).

 

Feminist scholarship successfully investigates the interstices and outsides of the law, the places where people’s stories don’t fit the legal narrative—Jessica Silbey’s work is an important example of this kind of work.  Women’s work and women’s creativity has often been overlooked: we need to think about the detriments and the benefits of invisibility. As Rebecca Traister wrote of soap operas, in any “feminized (and thereby marginalized) genre,” the borders will be unpatrolled. But as visibility changes through increased surveillance and regulation, the balance of cost and benefit from trying to hide in one’s own space may shift—like vidders, groups may have to choose whether they’ll become visible on their own terms, or on someone else’s. In this context, I was struck by Lorraine Aragon’s example of claims to copyright over individual artist’s works by the local government in Indonesia; there are real dangers of being exploited by others’ claims of new forms of rights.  Amazon’s Kindle Worlds trying to monetize what it calls fan fiction—similar example of subaltern creativity being recognized but only for the purposes of monetization, like punk and other subcultural practices: Hybridity imposed from outside has particular dangers: we need the opportunity of picking and choosing which regimes make sense.

 

Part of the necessary hybridity is recognizing that we need to be fighting structures, not condemning people who make different choices within a system that constrains all of us.  Jhessica Rhea’s paper brilliantly quotes a Brazilian straight edger, who said that [a Brazilian Riot Grrrl band] “used to say that we should not worry about our appearance, but accepting this as the truth continues to tie me to the dialectic. Now I understand: to free me I need to know different points of views and make choices. Choosing to wear lipstick – or not wearing it at all – is something that makes me a victim of a discourse at the same extent.”  This is a double bind, but recognizing the double bind also offers important possibilities for making common cause and honoring the forms of creativity that we have, created as they are under a patriarchal system.  Or, to appropriate a  Tumblr meme: She wears short skirts/I wear T-shirts/she’s cheer captain/and I respect her right to wear whatever she wants and participate in traditionally ‘feminine’ activities because I understand that life is not about condemning another woman’s personal choices.”

 

Carys Craig adds to this recognition of diversity the question of community: she asks “what collaborative, accretive, cultural creativity can look like when the legal norms do not appear to apply either in practice or in principle.”  I’m attracted to this formulation because of my background in fan communities, where mostly women create new works usually based on existing popular copyrighted works.  Some of these new works feature same-sex relationships between characters coded heterosexual by the official narrative, known as slash; there are a lot of theories about this, but one I’ve always been attracted to is feminist theorist Joanna Russ’s argument that slash asks and tries to answer the question: what would love and sex look like if we were free of patriarchal constraints?  What would we be like if we were free?

 

So where are we now? Feminist IP scholarship reveals a diversity of form; diversity of genre in which we work as scholars and as activists.  I think progressive IP scholarship is distinctively feminist in its openness to the new, to the divergent, the previously undervalued. Also, we rely on the distinctive characteristics of remix, or appropriation: To borrow a famous line, women can make our own history, but we do not make it as we please; we do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.  In such a context, remix is a way of taking what we’re given and making it better.  Joanna Russ was not directly addressing Marx, but she could have been when she wrote of slash, “The writers and readers of these fantasies can do what most of us can’t do in reality (certainly not heterosexual reality), that is they can act sexually at their own pace and under conditions they themselves have chosen.”   For us as scholars and activists, it remains for us to keep choosing our conditions, recognizing that our choices are partial and constrained but not therefore meaningless.

UDRP expenses count as injury for purposes of TM case

Migliore & Associates, LLC v. Kentuckiana Reporters, LLC, No. 3:13–CV–315, 2015 WL 730058 (W.D. Ky. Feb. 19, 2015)

 

Note: a genuine pleasure to read! Thank you, Judge Heyburn. Migliore, a court reporter, sued Kentuckiana for trademark infringement and ACPA cybersquatting.  The court here denied Kentuckiana’s motion for summary judgment.

 

Intro: “The court reporter game is a tough racket. It’s tougher still when a competitor registers an internet domain name that is confusingly similar to your business name then links it to its own website.” Migliore’s website is at miglioreassociates.com. “Searches on popular internet search engines associate her with court reporting and Migliore & Associates,” and she’s spent thousands of dollars each year promoting her business through print ads, internet listing, and marketing materials.  Kentuckiana registered andorreporters.com, actionreporters.com, coultereporting.com, coulterreporters.com, kentuckycourtreporting.com, kycourtreporter.com, and lisamigliore.com. Five, including the last, were similar or identical to the business names of Kentuckiana competitors. Kentuckiana redirected hits to those websites to its own site.

 

Migliore sent a C&D; Kentuckiana discontinued the redirection but refused to transfer the domain name.  Migliore filed a UDRP action, during which Kentuckiana maintained that it registered the disputed domain name to use it as a possible “gripe site” or “fact check site” regarding Migliore’s public comments on policy issues related to the court reporter industry. But no content was ever developed for the website. The WIPO arbitrator decided that Kentuckiana acted in bad faith and ordered it to transfer the domain name to Migliore. But Kentuckiana still refused to reimburse Migliore for the costs of bringing the WIPO action, so Migliore sued.

 

Kentuckiana argued that Migliore lacked standing for want of injury in fact.  “[J]ust because an injury is difficult to measure or quantify does not mean that the injury is nonexistent.”  Injury can exist without provable money damages.  “Beyond legal niceties, it borders on the absurd to assert that purchasing a domain name that includes a variation of a competitor’s personal name, then linking that website to your own, would cause no injury to your competitor…. [A]t the very least, Migliore incurred damage control costs that satisfy the injury requirement for Article III standing.”

 

It’s important to distinguish the elements necessary to prove a violation of the Lanham Act from the elements necessary to justify a certain remedy. “Lanham Act plaintiffs can sometimes recover for damage control without showing actual confusion or actual damages”; these remedies serve to encourage quick response and the mitigation of damage.  Such costs are awardable when a plaintiff can show (1) likelihood of confusion or damage to profits, goodwill, or sales; (2) that the damage control expenses were caused by defendant’s Lanham Act violation; and (3) that the damage control efforts were reasonable and proportionate to the damage likely to occur.  This category of remedy would be appropriate here, viewing the facts in the light most favorable to Migliore. Thus, she had standing.

 

Kentuckiana argued that the Sixth Circuit limited damage control costs to false advertising cases, but the court disagreed—the Sixth Circuit has narrowly limited presumptive damages to cases of comparative false advertising, but damage control is a different kind of measure.

 

Kentuckiana also contended that Migliore lacked a protectable interest in lisamigliore.com and that its use of that domain name was not likely to cause confusion within the relevant purchasing community for court reporting services. The court found a genuine issue of material fact as to both.

 

Migliore provided sufficient evidence to allow a jury to conclude that “Lisa Migliore” had attained secondary meaning in the relevant purchaser market.  Though she had no consumers ready to testify about the distinctiveness of “Lisa Migliore” and no consumer surveys on the topic, Migliore had exclusive use in Louisville since 1997 (and possibly exclusive use of “Migliore” for court reporting in the US). She’d served thousands of customers.  “Other court reporters—even Kentuckiana at one point—have referred business to Migliore. And, most glaring, others have intentionally copied her name.”  Kentuckiana’s own copying helped establish secondary meaning: “Kentuckiana claims it meant to use the domain name as a gripe site. Fine. But no one would have visited this gripe site—and Kentuckiana’s copying would have been futile—if ‘Lisa Migliore’ had not attained some secondary meaning.”

 

Similarly, there was a genuine issue of material fact on confusion.  True, as with secondary meaning, Migliore was weak on some of the factors—there was no showing of actual confusion, and Kentuckiana continued to claim intent to use the site as a gripe site.  But a jury should decide.  “[T]here is reason to believe that “Lisa Migliore” is a stronger mark than Kentuckiana lets on. Remember: it copied the mark. It did so for a reason.”

 

The parties competed to provide fungible services (stenographic versus digital reporting), using the same marketing channel.  Though purchasers arguably are sophisticated clients, it wasn’t “unimaginable” that a lawyer “referred by a colleague to ‘Lisa Migliore’ may, after being redirected from www.lisamigliore.com to www.kentuckianareporters.com, believe that ‘Lisa Migliore’ is in fact associated with Kentuckiana and pay for Kentuckiana’s services without further inquiry.”  Kentuckiana claimed intent to create a gripe site, but it never did. Given the redirection, and its registration of multiple competitors’ names, “it is easy to infer that Kentuckiana merely wanted to redirect customers away from Migliore and other rivals to its own website.”

 

So too with ACPA.  Bad faith intent to profit could be inferred from the fact of registration of copycat names for several competitors, all redirected to Kentuckiana’s site.  Kentuckiana claimed that its webmaster was the only person with the know-how or ability to cause this redirection, and that because Kentuckiana never told him to redirect, this must have been an accident. “Fair enough. But Migliore claims otherwise, the bad faith inference is reasonable, so there is a genuine issue of material fact that warrants sending these questions to the jury.” 

 

The safe harbor for gripe sites was not dispositive.  “Kentuckiana asks this Court not to punish it for exercising its First Amendment right to take part in the political process via this nascent gripe site.”  But “troubling questions” remained: “If this was a gripe site, why was content never added? Why did Kentuckiana register similar domain names to other competitors, even when some of those competitors were not involved in the relevant public policy debate? Why did the domain names redirect to Kentuckiana’s site?”  Maybe the redirection was an accident, but the facts viewed in the light most favorable to Migliore entitled her to reach a jury, where she’d have to prove bad faith.

Irreparable harm teleseminar: rescheduled for March 6

Via the ABA Antitrust Section: Please click on the link below to register for a timely lunchtime teleseminar where our panel of experts will address the status of “irreparable harm” in Lanham Act false advertising cases.

 

Recent cases have suggested that courts no longer will “presume” irreparable harm in Lanham Act false advertising cases (where a preliminary injunction is sought).

 

Will this trend hold? Is this trend appropriate?

If the trend holds, the next question is, how do plaintiffs show irreparable harm going forward?

 

This is an important issue in the Lanham Act false advertising practice, and the panel discussion is sure to be a lively one.

 

Here is your all-star panel:

 

Moderator

• Sherrie Schiavetti, Kelley Drye

 

Panelists

• David Bernstein, Debevoise & Plimpton LLP

• Roger Colaizzi, Venable LLP

• Rebecca Tushnet, Georgetown University

 

Please register at the link below – it’s free for ABA Antitrust Section Members! 

 

http://www.americanbar.org/content/dam/aba/marketing/antitrust/20150306_at150306.pdf

kitsch doesn't violate the right of publicity

Rosa and Raymond Parks Institute for Self Development v. Target Corp., No. 2:13-CV-817 (M.D. Ala. Feb. 9, 2015)

 

The Parks Institute, a 501(c)(3) corporation, “owns the name and likeness of the late Rosa Parks,” an icon of the civil rights movement. Target sold “a collage-styled plaque” created by Stephanie Workman Marrott:

 

The elements of the plaque were: (1) the phrase “Civil Rights”; (2) an illustrated exhibit submitted in Browder v. Gayle, 142 F. Supp. 707 (M.D. Ala. 1956), depicting where Rosa Parks was sitting on the bus prior to her arrest; (3) the word “Change”; (4) an illustration of the Cleveland Avenue bus; (5) Rosa Parks’s name and dates of birth and death; (6) a picture of Rosa Parks’s Congressional Gold Medal; (7) a photograph of Rosa Parks and Martin Luther King, Jr.; and (8) an inspirational statement made by Rosa Parks: “People always say that I didn’t give up my seat because I was tired, but that isn’t true. I was not tired physically. . . I was not old . . . I was forty two. No, the only tired I was, was tired of giving in.”

 

The Parks Institute sued over this and eight other items sold by Target: seven books about Rosa Parks using her name in the title (including, as if that weren’t incredible enough, Rosa Parks: My Story, by Rosa Parks and Jim Haskins), and the film The Rosa Parks Story, which is exactly what it sounds like (and directed by Julie Dash).  (The commentary at this link suggests that the judge wrongly contracted (one says “tore down all protection for”) the right of publicity in rejecting these claims, though perhaps the authors only mean as to the plaque.  My level of disagreement cannot be textually rendered.)

 

Anyhow, the judge applied Michigan law to the claims for infringement of the right of publicity, common-law misappropriation, and unjust enrichment, which all had the same key issues. (Note: the Parks Institute initially brought federal claims, but dismissed them, presumably to avoid any leakage of the entirely appropriate Rogers analysis that dooms any federal claims onto the state law publicity claims.)

 

Ruffin-Steinback v. dePasse, 82 F. Supp. 2d 723 (E.D. Mich. 2000), applied Michigan law to reject claims based on a two-night miniseries covering the story of the musical group The Temptations.  The court looked to the Restatement (Third) of Unfair Competition § 46 (1995), which provides for liability for appropriating the commercial value of a person’s identity “for the purpose of trade.”  The Restatement explains that the purpose of trade means advertising (or merchandising), but not “ordinarily … the use of a person’s identity in news reporting, commentary, entertainment, works of fiction or nonfiction, or in advertising that is incidental to such uses.”  Comment c to § 47 specifically states that “the right of publicity is not infringed by the dissemination of an unauthorized print or broadcast biography.” Ruffin-Steinback noted that courts across various jurisdictions treat unlicensed biography similarly. Thus, the court concluded, “Michigan courts would not extend [the] right of publicity tort” to prohibit biographical works and dismissed all of the derivative claims – unjust enrichment, conspiracy, and negligence – finding that they were dependent on the plaintiffs’ right of publicity claims.

 

The Parks Institute challenged the sale of eight biographical works, mostly books for children “written to educate children about the Civil Rights movement and to demonstrate how one courageous individual can bring about significant change.”  There’s nothing false or defamatory about them.  The Parks Institute was wrong to claim that the First Amendment didn’t protect the unapproved sale of items depicting “the name, likeness, story, or image of Rosa Parks.”  Parks was an iconic heroine of the civil rights movement; the parties agreed that one couldn’t talk about that movement without including Parks.  “The importance of her story serves as an apt reminder of why First Amendment protection for biographical works is so vital.”  Summary judgment for Target on the books and movie.

 

And the plaque?  This was “less of a biographical work and more akin to a work of art.”  (Which is why courts ought not to be in the business of judging art.  Why isn’t it biographical art?  Is an article depicting only key moments in Parks’ life not biographical?)  Under Michigan’s invasion of privacy tort, there is a cause of acttion for misappropriation of name or likeness. However, because “the tort has the potential to offer a troublingly broad swath of protection,” courts uniformly impose the First Amendment as a barrier to liability for the use of name or likeness in publications concerning matters that are “newsworthy or of legitimate public concern.”

 

Newsworthiness/public concern is ordinarily a question of law.  The difference is between “predominately commercial purpose” versus “a redeeming public interest, news, or historical value.” Target’s sale of the plaque “served a commercial purpose,” but even profit-seeking endeavors can have a legitimate public interest privilege.  For example, a fundraising letter may use quotes from a person without their consent when the quotes speak to important policy issues. 

 

Plus, reference to current events isn’t required, because “matters related to education and information are . . . within the scope of legitimate concern.” The Restatement (Second) of Torts says that the privilege extends to “giving information to the public for purposes of education, amusement or enlightenment, when the public may reasonably be expected to have a legitimate interest in what is published.”  Armstrong v. Eagle Rock Entm’t, Inc., 655 F. Supp. 2d 779 (E.D. Mich. 2009), applying Michigan law, held that the First Amendment privilege includes “‘all types of factual, educational, and historical data, or even entertainment and amusement, concerning interesting phases of human activity in general.’”  Armstrong held that a picture of Louis Armstrong on the cover of a DVD depicting a historical jazz concert was protected by the First Amendment. “Michigan law and the First Amendment require a similar determination in this case.”

 

The plaque contained “several elements reminiscent of the historic Civil Rights movement.” The plaque’s creator stated that she sought to inspire viewers to “stand[ ] up for what [they] believe is right” while telling the important story of Rosa Parks’s courage during the Civil Rights movement. “There can be no doubt that Rosa Parks and her involvement in the Civil Rights movement are matters of utmost importance, both historically and educationally.” Thus, the use of her name and image was historically significant and protected by the First Amendment, entitling Target to summary judgment.

Transformative work of the day, Power Rangers edition

Words I never thought I'd type: Katee Sackhoff and James van der Beek star in a short fan film of the Mighty Morphin Power Rangers, all grown up, called Power/Rangers.  NB: the producer calls this his "Bootleg Series."

Fair Use Week!

The OTW supports Fair Use Week. And if you support fair use, why not support the OTW?

Also, I enjoyed Laura Quilter's post on the uses of parody.

Trademark/right of publicity questions of the day

Via Mycokerewards: Do the referenced bands have any claims against Coke, assuming this was done without permission?  Does New Kids apply to a promotional site like Mycokerewards?  Do the comparisons/food jokes suffice for transformativeness?

Coke's "vote for your favorite food-inspired music band" page: Chili Peppers, Cranberries, Cake, Meatloaf

False claims of third-party endorsement actionable as false advertising

Fringe Insurance Benefits, Inc. v. Beneco, Inc., No. A–13–CV–034, 2015 WL 631181 (W.D. Tex. Feb. 11, 2015) (magistrate judge)

 

The parties compete to provide employee benefit plans; FIBI and Beneco specialize in fringe benefit services to government contractors who must comply with prevailing wage laws.  Zane Smith, who worked for Beneco, copied significant portions of an article published by FIBI and used it in an email to potential Beneco customers, in an article for Construction Executive Magazine, and another article sent to over 200 prospective clients.  This was copyright infringement.  But the core of the case was Lanham Act false advertising; each of the challenged statements was made in commercial advertising, but only some were proven false. 

 

Of particular note, FIBI prevailed on its claim that Beneco falsely claimed to have Department of Labor approval and endorsements from the American Subcontractors Association and Associated Builders and Contractors. The court found these to be literally false claims: Beneco’s plan wasn’t approved or endorsed by any of these entities.  Beneco was endorsed by particular chapters of the two private organizations, but not by the national groups, which both sent it C&D letters demanding that Beneco stop using their logos in ads.  This result is notable because, as a traditional “false endorsement” §43(a)(1)(A) case, FIBI wouldn’t have had standing to object on these associations’ behalf. But that doesn’t mean that FIBI didn’t suffer injury of its own on a false advertising §43(a)(1)(B) theory.  (Compare this recent case, misunderstanding this distinction.)

 

Other claims: FIBI failed to produce sufficient evidence that Beneco’s claims that “we historically find that our ... plan is typically 50% less in cost than [FIBI’s] plan” were literally false.  Though FIBI showed that several specific cost comparisons sent to potential customers were literally false, and though Beneco never identified the analysis or study backing up this claim, FIBI didn’t provide evidence that Beneco never did any analysis justifying its claim or otherwise more thoroughly compare the products.  Moreover, the claim was clearly misleading, but FIBI didn’t provide evidence that this particular statement confused customers.

 

By contrast, specific cost comparisons were false. For example, one communication claimed that a specific customer would save “an estimated $1,523” by staying with Beneco. This estimate came from an attached spreadsheet containing several errors—misplacing a decimal point, increasing FIBI’s cost by over $1,900; using an outdated service fee, inflating FIBI’s cost by $1,541; and misstating a record keeping fee by $1/participant, inflating the cost by $108. This was literally false. (But was it commercial advertising or promotion?)  Beneco also provided inaccurate savings estimates to other customers, inflating FIBI’s costs by thousands of dollars and undercalculating its own total costs.  These estimates, “rife with errors,” were literally false.

 

FIBI failed to show that Beneco’s claims about FIBI’s higher fees and status as a target of legal investigation were literally false.  Beneco told one potential customer that FIBI’s “internal fees and expenses are 3 times higher” than Beneco’s, and that FIBI would hide its fees.  Later, it said that “FIBI has been under investigation by the Federal DoL.”  FIBI didn’t meet its burden of showing literal falsity as to the internal fees—it just provided testimony from a VP that he’d never seen any documentation supporting the claim.  FIBI also impeached Beneco’s only evidence, which compared the plans applied to a parcticular customer, but it didn’t show that the “three times higher fees” claim was wrong in every case, or even in a majority of cases.  And again, FIBI failed to show actual deception, treating the statement as merely misleading.

 

But the statement that FIBI hid its fees was literally false.  FIBI disclosed all its fees in written agreements and marketing materials. So was Beneco’s claim that FIBI lacked third-party trustee protection, forcing customers to bear certain risks themselves.

 

By contrast, the “DoL investigation” claim wasn’t false or misleading—though FIBI itself hadn’t been investigated, its affiliate, Plan Benefit Services, had been successfully sued by the Department of Labor for ERISA violations. Plan Benefit Services and FIBI shared common ownership, common control, and functioned together in the same market.  Thus, while the claim wasn’t entirely accurate, it wasn’t “sufficiently misleading to trigger Lanham Act liability.”  And FIBI didn’t prove likely consumer deception.

 

Coordinate claims of unfair competition under Texas law also succeeded based on the same facts, but a tortious interference claim didn’t, for want of evidence of interference with particular business relationships.

 

FIBI sought only a permanent injunction.  The Fifth Circuit doesn’t presume irreparable harm from literal falsity. However, the court found irreparable harm here, given testimony from a FIBI VP noting the small size of the benefit plan market and stating that “when information is provided that’s incorrect in those small circles, it gets around pretty quickly and can be damaging,” as well as testimony that many customers are small, “family-run” businesses easily influenced by false endorsements. “That many of the statements were contained in emails sent directly to customers makes an injunction all the more appropriate: as FIBI correctly notes, such ‘difficult-to-monitor channels’ are the most likely source of future harm.”

 

Thus, Beneco was ordered to refrain from making the statements found to be literally false, and to post a copy of the court’s order on its website, including a link to the judgment on its corporate home page, to persist for 30 days.  The link had to be no smaller than 12 point type “and readily apparent to the site’s visitors with no other accompanying commentary or explanatory statement.”  Aside from the posting requirement, the part of the injunction with the most bite is probably the part that barred Beneco from making “inaccurate and/or incomplete customer-specific comparisons between the costs, fees, or expenses of FIBI and Beneco products.”

 

Somewhat surprisingly and formalistically, the court then used the pre-eBay rule that copyright infringement leads to a presumption of irreparable harm, and also enjoined defendants “from infringing FIBI’s copyrights to publications, articles, literature or marketing material.”  (Also a pretty broad scope.)

 

Transformative work of the day, superhero edition

Superhero keyboard skin, via Deborah Gerhardt.  There's only one problem with it (hint: check out the W). 

Allegations of fake independent reviews state false advertising claim

Swiss America Trading Corp. v. Regal Assets, LLC, 2015 WL 631569, No. CV 14–04960 (C.D. Cal. Feb. 13, 2015)

 

Swiss competes with Regal to sell precious metals.  The parties promote themselves online and rely on internet reviews and recommendations.  Swiss alleged that Regal’s affiliate marketing program/Regal’s own controlled websites included “ostensibly independent consumer reviews” that disparaged Swiss; made false statements, including completely fabricated reviewer identities and credentials; and recommended Regal over Swiss.

 

Regal moved to dismiss, arguing that the complaint failed to satisfy Rule 9(b).  The court didn’t need to decide whether Rule 9(b) or 8 applied, because the complaint sufficed either way.  It was enough to allege that (1) Regal’s websites falsely represented that they were independent of Regal, then criticized Swiss and recommended Regal; (2) the sites used false information to make reviews seem trustworthy, including fabricated reviewer identities and backgrounds, such as that of “Mark C. Turner”; and (3) Regal made false, disparaging statements about Swiss, including claims that Swiss has been accused of baiting and switching, “steering” customers away from worthwhile investments, and irrationally emphasizing coins over bullion.  That was enough to provide Regal with sufficient notice.

 

Nor were the alleged misrepresentations mere puffery. “Regal’s sites are alleged to falsely represent that they are independently operated, to put forth the fabricated opinions of purportedly knowledgeable professionals in the field who, in reality, do not exist, and to accuse Swiss of specific misdeeds such as baiting and switching. These statements are not vague, exaggerated, or subjective, and are precisely the type of representations upon which consumers might rely.”

 

The trade libel claims survived as well.  Regal argued that Swiss failed to plead special damages, but it was enough to plead that Swiss depended on word of mouth, particularly online reviews.  Swiss alleged that it lost market share to Regal and suffered continuing irreparable harm to reputation and goodwill, and that was enough.

 

The intentional interference with prospective economic advantage claim, however, was inadequately pled: Swiss failed to identify an economic relationship with any specific third party, or a probability that such a relationship would yield an economic benefit.  Dismissed with leave to amend.

 

Misappropriating goodwill of abandoned mark is false advertising

ITEX Corp. v. Global Links Corp., No. 2:14–cv–00057, 2015 WL 557067 (D. Nev. Feb. 11, 2015)

 

A false advertising theory might not work in every case of a new entity adopting an abandoned mark, but it proved fruitful for the plaintiffs here. (Trademark portions of the case remain to be decided.)

 

ITEX is a barter and exchange company that provides a marketplace for commercial transactions, which enables member businesses to trade products and services without exchanging cash. ITEX trains and supports independent brokers who enroll new members, educate them in marketplace policies and procedures, and provide information about products and services available in the marketplace. ITEX’s revenue mainly comes from a percentage of each transaction that occurs within its marketplace.  ITEX is the product of mergers and acquisitions, including of BXI Trade Exchange, Inc./BX International, Inc., founded 1960, known as the original barter exchange company. With 20,000 members, it operated under the “BXI” word trademark and “BXI circular arrow” trademark as early as 1987. A company known as BXI Exchange, Inc. remains ITEX’s wholly-owned subsidiary.

Defendant Global Links is a real estate development company; defendant BXI Trade Exchange, Inc. (“BTE Nevada”) was formed in 2006 for the purpose of transferring pre-existing real estate assets between privately held corporations. In 2012, defendants discovered that the registration for the BXI mark had been cancelled in 2010. They then filed for “BXI Trade Exchange”; a registration issued in 2014.

 

In 2013, Global Links issued a press release titled “Global Links Corp. Acquires BXI Trade Exchange, Inc.—The Original Barter Company.” Among other things, the release stated:

 

BXI, formerly the world’s largest barter trade exchange, will soon be fully operational with plans to once again become the premier marketplace for the barter industry.... Saul Yarmak, the former Chairman and Principal Owner of BXI before taking a break from the industry, is committed to once again be a driving force in the day-to-day operations of the exchange. The company’s stated intention is to quickly make BXI the recognized “Gold–Standard” of the barter industry while maintaining the highest level of ethics and reputation it was previously known for. At its peak, prior to the widespread use of the Internet for online business communications and transactions, BXI had more than 100 offices and 22,000 business members.

 

(Yarmak was involved with a predecessor BXI entity to ITEX, but sold all his interest and ITEX owned all the goodwill.)  Subsequent statements were to similar effect, such as that BXI was “back in business with plans to again become the premier marketplace for the barter industry,”and “if you were a previous BXI member[,][w]e are anxious to welcome you back.”  Defendants posted a “Short History of BXI” claiming the history of the other BXI entities since 1960, including, “Because of its 36 years of solid service and proven record in the trade industry, BXI enjoys a prestigious position in barter circles and is well positioned to service the growing need for additional barter exchanges across the country. We continue our out of the box approach and look forward to 36 + more solid years.”

 

ITEX sued for false advertising and sought an injunction barring defendants from making any further statements that BTE Nevada was related in any way to the BXI exchange business that ITEX purchased in 1998 and then reacquired in 2005.

 

The court found that there was no material issue of fact about many of the statements at issue: they were clearly false, either facially or by necessary implication.  Equivocating about the meaning of “BXI” meant that the statements were literally false—the term either referred to the original BXI business (no legal relationship to defendants) or BTE Nevada’s exchange business, and either way there was falsity, since BTE Nevada was not the original barter company and Global Links did not acquire the original one. This was not puffery, but a claim about a specific entity that consumers would rely on due to the history of the BXI name.  “Back in business,” “re-opening” and the like were also false because BTE Nevada has never been in the exchange business, quit, and then reentered the market.

 

The court also found the statements misleading, since defendants were “adamant” that they established a new BXI, and even represented in regulatory filings that the “present BXI is in no way connected to the past BXI.”  But they presented their company as a continuation of the old one in their ads. 

 

While the validity of defendants’ mark wasn’t before the court at this time, it was clear that they were presenting BTE Nevada as the successor-in-interest of plaintiff’s BXI entities. Even assuming that the mark was valid and noninfringing, the mark wouldn’t allow them to misappropriate the goodwill of the original BXI exchange business. First, most of the statements at issue predated the registration date for the mark (though that really shouldn’t matter since trademark rights depend on use, not registration).  Second, the falsity here wasn’t problematic because of the BXI name; the statements were problematic “because they state that BXI is back, that it is re-opening, and that it will once again be the industry leader.” The necessary implication was a link between BTE Nevada and the earlier BXI.  Even assuming that ITEX abandoned the BXI mark, that didn’t make defendants’ statements any less false or misleading, “and regardless of whether ITEX uses the BXI name currently, it still owns what was the original BXI exchange business.”

 

Defendants’ statements were misleading “because a consumer in the industry would undoubtedly understand these statements to mean that BTE Nevada is the successor-in-interest to BX International.”  Defendants’ promotional claim that “the company has gained a tremendous amount of interest and outreach from former members” further solidified the misleadingness, since BTE Nevada had no former members. The context—press releases—showed a tendency to mislead by associating the two entities.

 

“[W]hile Defendants’ efforts to establish a competing barter and trade marketplace would alone not be actionable, their strategy in this case has been to usurp the goodwill of the original BXI business by relying on the reputation of BX International, BTE California, and BEI, which was accumulated over years of serving BXI members. This is something that Defendants cannot do, even if Yarmak contributed to those efforts.”  Yarmak sold his interest to ITEX, including BXI’s goodwill and reputation; part of ITEX’s acquisition was “the right to claim and utilize BXI’s past history.”

 

Defendants argued that they never claimed that BTE Nevada was the same legal entity as old BXI, and that “the same individual[ ] officers and principals who ran and operated the BXI Trade Exchange” through BX International “have reopened ‘BXI Trade Exchange’ under a valid federal trademark registration.” Nope.  Their press releases didn’t say anything about individuals “once affiliated” with BXI being back in business. And the participation of past BXI employees and affiliates in BTE Nevada’s new exchange enhanced misleadingness. For example, defendants posted photos on Facebook showing Yarmak and other former participants in the original BXI exchange business at BTE Nevada’s “Soft Launch & Training Session” accompanied by comments that “BXI has the management team to become number one again.” “A consumer in the industry familiar with the original BXI exchange business and its affiliates would surely be misled by these comments and photos into believing that BTE Nevada is related to the original BXI exchange business.”

 

Yarmak was free to “tout his experience, knowledge, and past involvement with BX International and the BXI exchange business as evidence that the new BTE Nevada exchange will become the modern ‘Gold-Standard’ in the barter industry.” But what he couldn’t do is imply that BTE Nevada was in any way affiliated with or related to the original BXI.

 

Finally, defendants argued that its statements related to a “company,” not to a “product.” But “a service-oriented company generates goodwill by efficiently and promptly performing the service for which it is hired. The company and its name, therefore, become synonymous with the quality of service it provides.” Thus, defendants’ references were the equivalent of product references (or, really, service references).

 

Literal falsity raises a presumption of deception, which defendants did not rebut. Plus, the record showed likely deception.  Defendants’ own statement about “a tremendous amount of interest and outreach from former members” demonstrated that at least some members of the original BXI exchange network believed and understood BTE Nevada to be affiliated with the BXI business that ITEX bought.

 

Literal falsity also allowed a presumption of materiality; materiality was also shown by the fact that  “the statements at issue here were made for the specific purpose of influencing consumers to join BTE Nevada’s new exchange network and pay the accompanying fees.”  The number of members in a barter exchange network was criticial to its success. “Prior to joining a particular network, it is common sense that potential brokers and members evaluate the exchange company’s operating history, market presence, size of its customer base, and reputation.”  And using the reputation of a previously operating network with a proven track record would obviously help.  “If the operating history of the original BXI exchange business was not material to consumers’ decision of which exchange network to join, Defendants would likely not have gone to so much effort to present BTE Nevada as a continuation of the original BXI.”

 

Defendants argued that ITEX didn’t show actual injury, but only likely injury was required for an injunction, as opposed to damages.  Without discussion of eBay or Winter, the court then quickly concluded that ITEX was entitled to a permanent injunction. The injunction covered “false or misleading statements that imply that BTE Nevada’s new exchange business is related to, affiliated with, or the successor-in-interest of the original BXI exchange.”

 

Defendants could claim that BTE Nevada was a new exchange business that would become the nation’s leader in the barter trade industry. Individuals previously involved with old BXI could truthfully represent their past experience, and defendants could claim that BTE Nevada would be successful because of its management team. They just couldn’t claim that, because those people were working with BTE Nevada, BTE Nevada was somehow a successor to old BXI.

 

BTE Nevada’s right to continue to use the BXI name and mark was still an issue to be decided; the injunction here would continue regardless of the outcome of the trademark infringement portion of the case.

 

The court found this to be an “exceptional” case deserving attorneys’ fees.  Exceptionality requires “fraudulent, deliberate, or willful” behavior.  (Is this still the standard after Icon Fitness?)  The court found willfulness to be an easy call.  Adopting such a similar name was “inherently confusing to consumers.”  Yarmak personally benefited from the sale of the original BXI business, when he parted with the right to use the name and benefit from its goodwill.

Yarmak seemed to want to “have his cake and eat it, too.” Plus, repeatedly claiming to be formerly the “largest” barter trade company, etc., “demonstrates a deliberate attempt to confuse consumers.” Defendants’ deliberate claim to BXI’s history showed an intent to benefit from old BXI’s goodwill. One BTE Nevada broker stated in promotional material that “[her] best years in barter were the 13 years [she] worked for this company starting in 1994, before they sold the membership in 2005.” (The court was unsure whether this showed willful deception by defendants or actual deception on the part of the broker—but either way, defendants’ use of the statement supported the finding of exceptionality.)  Likewise, defendants’ adoption of similar, if not identical, trademarks, also indicated a willful attempt to confuse, even if the marks were valid and non-infringing.  (Not sure how they could be, given this finding, but there’s no motion for summary judgment as to the marks.)